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23 Jul, 2015 13:57

‘Politics of the insane: Welcome to the euro’

‘Politics of the insane: Welcome to the euro’

The Greek government has been given the most insane shock therapy where it is going to increase taxes which will be impossible to collect, and a bailout that will be impossible to implement, global finance expert Patrick Young told RT.

Greek workers were protesting in front of the parliament building in Athens on Wednesday. They were calling for the government to scrap a new deal with European creditors and keep its promise to end austerity.

RT: Some economists insist the new bailout won't solve Greece's problems and an exit from the euro will be back on the table as soon as next year. So, why is the plan still being pushed through? 

Patrick Young: Here we sit in this incredible apotheosis of the ongoing train-crash suicide of the whole euro project. The difficulty we have here is: it’s all about politics; it’s all about this “more Europe”. Mr. Francois Hollande’s incredible vision for some kind of euro poverty, a nation united in one currency that doesn’t work, and indeed united by total unemployment. That’s what’s driving things forward at the moment. The EU cannot understand that you cannot create a political currency; it has to have roots in the real economy. And that is why ultimately they don’t care now they’re going to beggar the Greeks. The Greeks are going through stage-two of crafting this wonderfully perfect noose that is going to strangle the entire nation, because it’s all about a stupid political project that is based on sand.

READ MORE: Greek MPs back creditor-demanded reform plan to secure bailout

RT: The International Monetary Fund has criticized the bailout, saying the Greek debt is "highly unsustainable". This reminds us of the situation in the US in 2008. How come the creditors signed off on the plan if it's unlikely to work?

PY: That is exactly what we are seeing here. We are seeing ultimately the IMF is trying to back track on what it did five years ago, which was it broke its own by-laws: It lent money to a country that cannot afford to pay it back. Think about it: there is already 300 and something billion that has gone to the Greeks, let alone the funny money that has been shuffled around by the European Central Bank [ECB]. And now they are talking about another bailout. But nobody even knows how much it needs to be. The Greek economy is falling apart under the stupid strictures of being harangued by the EU’s parliamentarians, and sorted out by the likes of Mr. [Donald] Tusk and... Mr. [Jean-Claude] Juncker they all want to see the political whole structure carry on.

Ultimately the IMF staff are revolting because they realize that their own logical economic premise for business has been hijacked for the politicians, and it was hijacked years ago by the amazing Mr. [Dominique] Strauss-Kahn. Now they are saying: “Look, the economics fundamentally do not work.” Effectively we’re giving more vodka to an alcoholic with cirrhosis of the liver; they are never going to turn out to be a sober person while we keep killing them softly with more alcohol or more bailouts in this case.

RT: What will happen to the Greek economy under more austerity?

PY: I don’t even think this is about austerity; this is about crass economic stupidity. I mean, essentially what they are saying is: “We’ve got a patient in intensive care. And what we’re now going to do is – we’ll amputate a few of the limbs that we broke in the course of previous years. That’s not going to get them out running a marathon." So the whole austerity debate here is just stupidly wrong. What we have is a Greek state which is dysfunctional. It does not collect enough taxes; it has far too big a public sector.

Therefore, we’ve ended up with the most insane kind of shock therapy, a shock therapy where they bind the arms of the patient behind its head and expect it still to be able to be fully functional - that’s insane. What the actual result will be will appear like austerity. Yes, the Greek government is going to have to keep cutting back. The Greek government is going to have to increase taxes even though it can’t get them collected. And ultimately where are we going to end up - in a few weeks, a few months, or a few years this bailout will be exactly like all the bailouts before. It will not be possible to implement. And at that stage in time the only progress we will have made is we will have beggared more poor Greek citizens - that is the politics of the insane – welcome to the euro.

RT: If you were the Greek Prime Minister Alexis Tsipras right now, what would you do?

PY: Right now if I were Alexis Tsipras, I wouldn’t have agreed to the deal I got last week. Even when I got home last Friday I would have turned round and said: “I was financially water boarded by a group of essentially political terrorists who are not elected in Brussels, the commission held me down, told me I had to take this deal, and in the cold light of day what I understand is whatever we do in Greece, it’s going to be more pain, it’s going to be more economic hardship, but I want to lead you to a new promised land with a new drachma, a new opportunity, and a new chance of prosperity. It’s going to be a difficult ride, but it’s either that, or 50 years of subjugation to the Brussels axis power."


More Greek austerity, less taxes

“The more austerity you impose, the less taxes you collect; and the less taxes you collect, the less you can pay back to your creditors,” said Dr. Nick Skrekas, author, economist & international lawyer.

RT: Some economists say the billion euro bailout won't save Greece and an exit from the euro will soon be up for debate again. So, what is the point of this deal? 

Dr. Nick Skrekas: Well, I do agree with them, but for different reasons. I think that the bailout in terms of the amount of money is reasonable. I don’t think that not scrapping much of the former debt which is unsustainable is reasonable. And I believe that in the next 12 months we will see that Greece will not be able to implement most of these reforms. So an exit is a likely story in 2016.

RT: The European creditors know the plan won't get rid of Greece's debt mountain, at least according to the IMF. So why did they sign off on it?

Dr. NS: You have to lend the country more money so that it just stays afloat, and that is very important. You don’t want a humanitarian crisis on the doorstep of Europe. Further to that, even though the old debt needs to be restructured significantly with greater grace periods, longer durations, and lower interest rates. It can still be something sustainable in due course. 

READ MORE: Anti-austerity protest in Athens as MPs vote for second bailout reform package (PHOTOS, VIDEO)

RT: What do you think about the reforms that the creditors are pushing for? Does Greece need them?

Dr. NS: I think that Greece does need the structural reforms, and they have been long-delayed. Greece does need the privatizations, and they’ve been put off track. What Greece doesn’t need is more scorched earth austerity, which is also a part of the package and is particularly problematic. The more austerity you impose, the less taxes you collect; and the less taxes you collect, the less you can pay back to your creditors.

RT: The bailout deal led to fighting within the ruling Syriza party. Who benefits from a weak Syriza?

Dr. NS: I think the only person who will benefit from a weakened Syriza is the President of Syriza itself, Mr. [Alexis] Tsipras who is the Prime Minister. He will further clinch his grip on the party, and he will probably get rid of a third of the party, which is the left platform, and further he will also embolden and empower other smaller parties like The River, Independent Greeks, and maybe even PASOK [Panhellenic Socialist Movement]… after the next term of the elections. 

RT: We saw a lot of people protesting on the streets, and presumably many of them don’t want Mr. Tsipras to be staying in his position. Will the Greek PM be able to stay in power after sealing the bailout?

Dr. NS: It’s very strange, but what we see after his major back flip is that he is still continues to be the popular choice, because people don’t think there are too many other alternatives and they believe that this… was the only package that could have worked. So I think he will remain the leader of Syriza, and I think he will in the next elections probably in September or October win the first mandate to be able to create a coalition with other parties.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.