Part 1: What’s happening and why
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By William C. Shelton

(The opinions and views expressed in the commentaries of The Somerville Times belong solely to the authors of those commentaries and do not reflect the views or opinions of The Somerville Times, its staff or publishers)

The first wave of Greek immigrants to Somerville arrived from Alatsata, Ionia over a century ago, escaping a devastating depression and Ottoman Army conscription. They and their countrymen who followed quickly became contributing members of Somerville’s civil society and remain so.

Yet despite Greece’s recent prominence in the news, most ‘Villens remain unaware of the extent of current suffering in Greece, why it exists, and why the more perceptive analysts are repurposing Percy Shelly’s observation that “We are all Greeks.”

Greek suffering

The unembellished facts are stark. Greek unemployment is running at 25.6%, the worst rate in the developed world and higher than America’s at the depth of our great depression. For Greeks between the ages of 15 and 24, unemployment is at 53%. Most of the unemployed have been out of work for at least a year.

Businesses are closing at a rate of 59 per day, made insolvent by plummeting sales and the disappearance of credit. Cash-starved banks are rejecting 95% of loan applications.

A 2013 New York Times report documented the hunger and malnutrition spreading among Greek children, of whom Unicef said in 2012 that 41% were living in poverty. Conditions have since worsened.

Athens now experiences winter fog as Greeks who can’t pay energy bills are burning whatever they can find to keep warm. The environmental ministry has seized more than 13,000 tons of illegally cut trees.

The need for health services has increased as stress and stress-related illnesses have increased. But hospital budgets have been cut by half thus far this year, along with many preventative care programs, while 2.5 million Greeks have lost their health insurance. HIV and tuberculosis are surging, while malaria is back, after having been extinguished 40 years ago.

Since the crisis began, an estimated 12,000 Greeks have taken their own lives, a 50 percent increase in the suicide rate.

At the Dimosthenes Greek-American Democratic Club, directly across Somerville Avenue from where the Greek community built its first free-standing church in 1926, George Boretos tells me that life is tougher in the big Greek cities, where job losses from government cuts and large insolvent businesses are greater.

In villages and in smaller towns like Sparta, where he was born, people can grow some of their food on small plots of land. As owner of the Greek Corner Restaurant, George knows something about food and explains to me that Greece imports 70% of what it eats, and shortages are increasing.

George’s friend Bill Kesaris still has family on Corfu, island home of Ionian University. He tells me that 15,000 doctors have left Greece in search of employment. This is a small measure of the professionals who have been forced to emigrate, but whose skills could build the economy with adequate investment.

How it happened

Greece adopted the Euro as its currency in 2001, having been a European Union member since 1981. Over the next several years, per capita gross domestic product tripled. With the encouragement of the European Commission, European Central Bank (two of the institutions constituting the “troika” that now has Greece under economic siege) and large private banks, Greece borrowed heavily to invest in extensive infrastructure projects, including the 2004 Olympics.

With the self-interested assistance of certain Wall Street banks, Greece was able to conceal the extent of it growing deficits. Goldman Sachs, for example, has been described by Matt Taibbi as a “vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” It made $800 million off of concealing a portion of Greek debt, and ended up doubling that portion in the process.

Still, things would have probably worked out had it not been for the made-on-Wall-Street global meltdown of 2007-2008. All of Europe entered a recession, but debt-burdened Greece’s GDP dropped by 20% between 2008 and 2010. Unable to service its debt, Greece fell into a downward spiral of lowered credit ratings, higher interest rates, and growing deficits.

That spiral was greatly intensified by being bound to the Euro. If this were not the case, Greece could have printed more money and devalued its currency, thereby boosting exports, lowering domestic interest rates, and encouraging investment.

In the few cases where austerity measures have worked, nations employing them were able to take similar steps, such as Canada during the 1990s, or Iceland after the 2008 meltdown, or even Argentina’s decoupling its peso from the dollar.

Instead, the Greek government was obligated to take a €110 billion bailout package from the European Union and the International Monetary Fund, the third member of the troika. With the bailout came a series of five “austerity packages,” reducing government employment by 25%, cutting pensions, slashing other spending, and increasing taxes.

The inevitable result was widespread hardship and an economic depression that made debt service impossible. So the troika provided a second bailout and imposed more austerity, bringing the total bailout to €246 billion, which was 135% of Greece’s GDP in 2013. The same austerity poison produced the same outcome, requiring the third bailout that is the subject of current negotiations.

In January, Greece elected the Syriza governing coalition. Syriza had proposed negotiating reduced austerity terms with the troika so as to enable sufficient economic recovery for Greece to make debt payments. When the troika refused, Prime Minister Alex Tsipras called a national referendum on its brutal new terms, and 61% of voters rejected them. In response, the troika demanded even harsher terms.

And they quietly demanded and publicly obtained the firing of Greek Finance Minister Yanis Varoufakis, whose brilliant scholarship in works like The Global Minotaur had exposed “the true origins of the financial crisis” and the global financial order.

Varoufakis had called out the bankers, whose irresponsible lending caused the crisis as much or more so than Greece’s irresponsible borrowing. (Sound familiar?) He termed their bailout package “extend and pretend”—extend the same failed policies and pretend that this time they will produce a different result.

The troika bankers and their political operatives like German Chancellor Angela Merkel are not imposing brutal austerity measures because they believe they will work. In fact, an IMF report states that “Greece’s public finances will not be sustainable without substantial debt relief…” including significant write-downs. And in a radio interview on Friday, IMF Chief Christine Lagarde stated unequivocally that the plan “is not viable” without debt reduction.

The Eurozone bankers’ and politicians’ intransigence is, instead, a means of economic terrorism. Its purposes and methods are the subject of Part 2, along with why we are all Greeks.