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As I predicted in the book reviewed below, the Greek Debt Crisis is about to emerge again (4th time). The Troika have launched a repeat of their 2016 maneuvers to force Greece into more austerity concessions. Last year it was to put to rest a possible Greek debt crisis in summer 2016, before the Brexit vote might lead to unknown Greek follow up efforts to reject the austerity. This year a repeat is in progress, with IMF, German ministers, and ECB suggesting another austerity increase is necessary–this time before French, Dutch, and Italian elections this coming April-June (and German elections thereafter).

The following accurate review of my late 2016 book, ‘Looting Greece’, just appeared in the Winter 2017 edition of New Politics journal. It’s a fair assessment of the themes and predictions of the book (notably another Greek debt crisis was inevitable). The review by Aaron Amaral is offered here below. (watch this blog in coming weeks for my follow up article on the coming next Greek debt crisis, as well as forthcoming articles on the French elections).

“By Aaron Amaral
Aaron Amaral is a New York City-based labor lawyer and socialist activist. He is a member of AKNY-Greece Solidarity Movement (New York), writes for Socialist Worker and the International Socialist Review, and is a member of the New Politics editorial board.

Reflections on Opportunity Lost
Greece and the Syriza Experience

Looting Greece: A New Financial Imperialism Emerges
By: Jack Rasmus
Clarity Press, 2016, 315 pp., $24.95.

Stylistically, Looting Greece departs sharply from the memoir-like quality of Helena Sheehan’s book. Yet in writing such an analytically clear, historical account of the European and Greek debt crises, Jack Rasmus also has made a valuable contribution.

The book is divided into ten chapters, the first five of which deal with the evolution of the debt crisis prior to the coming to power of the Syriza government in January 2015. Chapters six through nine offer a blow-by-blow account of the failed strategy of Syriza in its dance with the creditors. The last chapter provides a broader overview and comparative analysis of how and why the Troika prevailed. Finally, in an extended conclusion, Rasmus puts forward an argument for financial imperialism as a new and growing form of imperialism.

For Europe, the creation of the European Monetary Union (EMU) and European Central Bank (ECB) in 1999, and the Lisbon Strategy, mark the origin of the current debt crisis. The ECB embarked on a devaluation of the EMU that led to external devaluation, which boosted trade.

Simultaneously, internal devaluation occurred through labor market flexibility, that is, reducing labor security, wages, and benefit costs. Germany was the first to engage in neoliberal policies, with internal labor market changes known as Hartz reforms undertaken by a Social Democratic government; these kept German wages stagnant for nearly a decade and created a base for the production of cheap exports. With the German Bundesbank essentially dictating policy to the ECB, and cheap money and cheap goods flowing into the European periphery, the structures of the European economies were transformed. And so long as the money flowed back to the European central economies, primarily Germany, it was a virtuous circle for European capital. However, with onset of the 2008 economic crisis, this dynamic changed:

In addition to bank-provided money capital, German private foreign direct investment into Greece also rose from 1.4 billion euros in 2005 to more than 10 billion by 2008. As the money and capital to Greece was recycled back to Germany and the northern core economies in the form of exports, Germany got business profits, economic growth, and its money capital returned to it. In addition, as financial intermediaries in the recycling of money capital, both core and Greek banks got interest payments from the Greek loans and Greek bonds, Greeks got German and core export goods for a few years, but loaded up on credit and debt in the process for what appears will remain an interminable period of debt repayments well into the future (63-64).

When the banking and financial systems froze up in the aftermath of 2008, the cycle and flow of credit and money stopped between the European core and periphery. And when the peripheral (Spanish, Portuguese, Greek, and other) economies started to slow down, German exports and investment began to shift overseas. This further slowed the flow of credit. As Greece had been running an internal trade deficit with Germany, the initial impact of the credit crunch in Greece was that private banks became loaded with debt, monies that had been borrowed to facilitate imports from Germany.

Rasmus does a good job of showing that this trade deficit was caused neither by higher wages to the Greek working class nor by escalation in Greek consumer spending. Rather the debt was driven up by European Union and ECB policy, in the interest of European capital.

Looting Greece then takes the reader, in exacting if painful detail, through the distinct though compounding circumstances that led to each of the three austerity memoranda.

The first memorandum provided that a total of 110 billion euros was “lent” to the Greek government, 91 percent of which went to bailing out the banks that had been left with bad loans following the 2008 crash. The initial austerity measures demanded by the Troika were premised on unrealistic economic projections of growth but caused very real cuts in wages, pensions, and social security. And the result was a shifting of the massive debt load, mainly from the private banks onto the Greek government.

Then the second memorandum, argues Rasmus, “was primarily to refinance, pay off, and reduce Greek debt held by … private investors” (99), many of whom had already taken advantage of the bond markets to ramp up interest rates paid on Greek debt. Looting Greece does a great job in explaining the ways in which both the rules adopted by the ECB and the neoliberal ideology of “the German Hypothesis” (91), which drove their adoption, played a role in the cycle of debt and austerity that led to a humanitarian catastrophe in Greece.

Chapters five through nine offer an account of the rise of Syriza and a blow-by-blow telling of their approach to the problem of debt and austerity and the process of negotiations once the party came to power in January 2015. Rasmus’ account of the “institutional taming” of the Syriza government is painful to relive, but offers strong support for his argument that in the run up to the third Greek debt restructuring deal of 2015, Syriza and Tsipras would discover there was no option to return to social democracy and social democratic policies without austerity. The choice was either to leave the euro and the neoliberal regime, or remain caretakers for that regime on the system’s periphery, condemned to some degree of perpetual indebtedness, austerity, and long-run negative economic growth (118).

The last chapter provides an explicit assessment of the relative strategies of Syriza and the Troika and the structural/institutional straitjacket within which Syriza was attempting to negotiate. It also unequivocally answers yes to the likelihood of a fourth memorandum, given the logic of indebtedness and austerity and the current strategic course of the Greek government:

To have succeeded in negotiations with the Troika, Syriza would have had to achieve one or more of the following: expand the space for fiscal spending on its domestic economy, end the dominance and control of the ECB by the German coalition, restore Greece’s central bank independence from the ECB, or end the control of its own Greek private banking system from northern Europe core banks. None of these objectives could have been achieved by Syriza alone. Syriza’s grand error, however, was to think that it could rally the remnants of European social democracy to its side and support and together achieve these goals (228-29).

An extended conclusion to Looting Greece is entitled “A New Financial Imperialism Emerges.” In part, Rasmus argues that the views found in Lenin, Bukharin, and Hilferding, that finance capital is subordinate to industrial capital, need to be revised. The space devoted to this argument, however, is limited. While he argues that Greece has become a state dominated by the supra-national imperialist state of the Troika, given the degree to which sections of the Greek left have historically argued for Greece as a neo-colony, or one for which national oppression is primary, the full implications are not untangled by Rasmus.

After one month of the Trump administration, the internecine fight between two wings of the US elite continues to intensify. What’s behind the ‘Flynn Resignation’ and has the ‘Taming of Trump’ now begun? Listen to my analysis from the February 19, Alternative Visions Radio show.

Go to:

http://www.alternativevisions.podbean.com

or to:

http://prn.fm/?s=Alternative+Visions

SHOW ANNOUNCEMENT

Dr. Rasmus discusses how the intensifying attacks on Trump administration represent an historic internecine conflict between old and new wings of the US ruling elites and not ‘democracy vs. fascism’. Rasmus offers an analysis of the first month of the Trump regime and its growing conflicts with the Media, the ‘deep state’ 17 intelligence communities, federal state bureaucracies, and political parties of Democrats and moderate Republicans. Revisiting his November article ‘Tameing Trump’, Rasmus explains the meaning of last week’s firing of NSA Flynn, Trump’s backtracking on China, his reassuring Canada and Japan prime ministers on trade, and his revisiting of his muslim country travel bans. How the Flynn affair was a warning ‘shot across the bow’ for Trump to back off his proposed foreign policy changes with Russia and NATO. How the US spends $700billion a year subsidizing NATO and Europe and how US control of NATO is key to control of Europe politically and economically. The policy areas of conflicts between Trump and the old elites. Rasmus explains how old neoliberal elites (media, parties, spy agencies, state bureaucracies) continue to build a case on Trump and either ‘tame’ him or dump him—but only after he delivers on massive corporate-investor tax cuts, deregulation of healthcare and banks, and checking his trade initiatives. The grass roots base of Trump vs. old elites is discussed.

I was recently asked to make a presentation on Free Trade to the Henry George Society on February 9, 2017. A video recording of about 70 minutes of that presentation is now available from my website. To view,

GO TO:

http://www.kyklosproductions.com/videos.html

(Click on the flashing TV icon to play)

For a limited time the presentation may also be available on Youtube at:

PRESENTATION ANNOUNCEMENT:

Dr. Rasmus explains the real facts about free trade and how it’s more about money capital flows, multinational corporations’ foreign direct investment, and job offshoring. Why free trade is a centerpiece of Neoliberal policy since Reagan. The origins of modern free trade in the 1970s-80s and its evolution From Reagan to Obama and now Trump. Free trade and the creation of US ‘twin deficits’ (trade and budget). How free trade and twin deficits enable massive corporate tax cuts and war spending by the US. Trump as free trader not protectionist. How free trade is destroying national sovereignty and representative democracy. Free trade as emerging global corporate government. Why free trade does not ‘benefit all’ and who are the losers and gainers. Rasmus debunks economists’ holy grail of ‘comparative advantage theory’ and how the economic ideology of free trade has served as the theoretical justification of free trade in practice. Free trade as economic lynchpin for neoliberal global economic policy.

Europe is growing politically more unstable. 2017 will prove a junctural year for Europe, politically and economically. To listen to my Alternative Visions radio show of Feb. 10, 2017, and discussion with guest, Alan Benjamin, a commentator and union activist, who currently works with labor unions in France,

GO TO: http://www.alternativevisions.podbean.com

Or TO: http://prn.fm/alternative-visions-french-elections-2017-le-pen-macron-united-left-02-10-17/

SHOW ANNOUNCEMENT

Jack Rasmus invites guest, Alan Benjamin, to discuss the pending April-May elections in France. How goes France goes Europe, the saying goes. Will Le Pen’s right wing National Front Party pull off a ‘Trump Surprise’ and win the elections, pulling France out of the European Union as she promised? Will the independent Macron united the remnants of capitalist parties and right wing social democracy in the Socialist Party and win? What is the ‘united left’ in formation in France? What does it mean by ‘left frexit’. Benjamin provides a ‘on site’ analysis from his work in Europe and France today not available in mainstream media. Rasmus and Benjamin discuss the collapse of traditional social democracy in Europe as it has aligned with European Neoliberalism and the rise of both right wing populist parties and emerging left wing alternatives. The positions of all the major parties in the French election are explained. Comparisons to the UK Labor Party, Germany’s SPD and AfD, Spain’s Podemos, and with US ‘Sanders-Warren’ efforts to ‘reform’ the US Democrat party are discussed.

Less than a week after assuming office, President Donald Trump signed an executive order abandoning the 12 nation Trans-Pacific Partnership free trade agreement negotiated by former President Barack Obama, but not yet ratified by the U.S. Congress. He then quickly attacked Mexico — abruptly cut short a phone conversation with Mexico’s President Peña Nieto, canceled a meeting with Peña Nieto after demanding Mexico pay for a wall on the U.S. border and threatened to impose a 20 percent border tax on goods exported to the United States based on the North American Free Trade Agreement.

Trump’s trade representative, Peter Navarro, then dropped another trade policy bomb by publicly declaring Germany was manipulating the euro currency unfairly to its advantage, stealing U.S. exports, while similarly exploiting the rest of the Eurozone economy as well.

Trump, meanwhile, continued to declare that China and Japan were also currency manipulators who were taking advantage of U.S. businesses and increasing their exports at the expense of the U.S. Their currencies declined by 8 percent and 15 percent, respectively, in recent months. The Mexican peso fell by 16 percent after the U.S. election and the euro and British pound each by around 20 percent in 2016.

Trump’s flurry of executive orders canceling trade deals, his phone calls to country leaders, his appointed representatives public statements, and his constant tweets on social media suggest to some, including the U.S. mainstream media, that Trump is anti-free trade, that Trump is ushering in a new trade protectionism, and that his attacks on free trade agreements, like TPP and NAFTA, will precipitate a global trade war. It is this writer’s view, however, that none of this is likely.

Trump is a dedicated free trader. He just rejects multilateral, multi-country free trade deals like TPP and NAFTA. He wants even stronger, pro-U.S. business free trade deals and intends to renegotiate the existing multilateral treaties — to the benefit of U.S. multinational corporations and at the expense of the U.S. trading partners. Trump’s threats of protectionist measures, like the 20 percent border tax and previous election promises of imposing a 45 percent import tax on goods from China, are primarily tactical and aimed at conditioning U.S. trading partners to make major concessions once U.S. renegotiation of past deals and agreements begin.

And as for a trade war, the answer is also a very likely “no.” The big ‘four’ targeted trading partners — China, Japan, Germany, and Mexico — currently exchange goods and services with the huge U.S. economy amounting between US$1 to US$2 trillion a year. China-U.S. two-way trade amounts to nearly US$500 billion a year, Mexico about as large, and Japan and Germany also account for hundreds of billions of dollars of trade with the U.S. per year. These are the countries with which the U.S. has the largest trade deficits: China’s about US$360 billion and the largest, Japan’s close to US$80 billion, Mexico and Germany around US$60-$70 billion. Given the large volume of lucrative trade with the U.S., these countries will eventually agree to renegotiate existing free trade treaties and trade arrangements with the U.S.

What Trump trade policies represent is a major shift by U.S. economic elites and Trump toward bilateral free trade, country to country. Trump believes he and the U.S. have stronger negotiating leverage “one on one” with these countries and that prior U.S. policies of multilateral free trade only weakened U.S. positions and gains. But free trade is free trade, whether multi or bilateral. Workers, consumers and the environment pay for the profits of corporations on both sides of the trade deals, regardless how the profits are re-distributed between the companies benefiting from free trade.

Trump’s shift to bilateral trade represents the intent of U.S. economic elites to increase their share of trade profits and benefits at the expense of their capitalist trading cousins. And this is not the first time the U.S. has set out to “shake up” trade relations to its advantage. In 1985 and 1986, when the U.S. under Reagan was losing out exports to Europe and Japan, the U.S. forced Japan to the bargaining table and negotiated the “Plaza Accords,” in which Japan was forced to make major concessions to the U.S. This was immediately followed up by the “Louvre Agreements” with Europe, with the same results.

The Reagan team, led by James Baker of the U.S. Treasury, decided to abandon multilateral trade negotiations through the then global General Agreements on Tariffs and Trade, or GATT. GATT was an attempt to negotiate trade on a global scale involving scores of countries. The U.S. could not get the deal it wanted from GATT trade negotiations, so it turned its fire on its biggest capitalist trading partners — Europe and Japan — and forced the Plaza and Louvre Agreements on them. The results were great for U.S. business, especially multinational corporations. But the agreements play a large part in leading to banking crashes in the early 1990s in Europe and in Japan. Japan thereafter went into chronic recession for the rest of the decade and Germany in the 1990s ended up being described as the “poor man” of Europe.

Similarly today, Trump’s nixing of the TPP and his attacks on Mexico, NAFTA, Germany, and Japan reflect a strategic shift from multilateral free trade strategies and a U.S. policy turn to bilateral approaches to free trade where the U.S. can extract even more concessions from competitors in the critical decade ahead.

One reason for this strategic shift is that global trade volumes have been slowing rapidly in recent years. The global trade pie is shrinking, especially since 2010, when global trade grew at a 20 percent rate; but this past year the growth will be less than 2 percent. Capitalist elites are thus increasingly fighting over a smaller share of trade. For the first time, in the past year, the growth of global trade is slower than the growth of global Gross Domestic Product, even as GDP itself is slowing globally.

Another explanation for the Trump shift is that the U.S. dollar and interest rates are expected to continue to rise. That will result in an increase in inflation in the US. The rising dollar and U.S. prices will mean U.S. multinational corporations’ profits from trade will take a hit. They already are. The Trump shift to bilateral trade is therefore in anticipation of having competitors make up the expected losses of U.S. businesses from trade due to the rising U.S. dollar and U.S. price inflation.

The consequences of the Trump trade shift for the “big four” trade deficit trading partners are mostly negative. Eighty percent of all Mexico exports now go to the U.S. and 30 percent of Mexico’s GDP is from U.S. trade. Mexico’s peso will continue to fall, import inflation rise and undermine standards of living. Mexico’s central bank will raise interest rates to try to slow capital flight and that will cause more unemployment in addition to import inflation and a slowing economy.

For Europe, the U.S. turn from multilateral free trade will add impetus to Britain’s “Brexit” from the European Union, as well as further legitimize other countries in the EU exiting the Eurozone. France could be next, should the pro-Trump French National Front party there win the upcoming elections this spring, which the polls show it is leading.

Japan appears to want to be the first major U.S. trading partner to cut a bilateral deal with Trump. Japanese prime minister, Shinzo Abe, continues to shuttle back and forth to Washington to meet with Trump. The first to strike a Trump bilateral deal may get the best terms. Britain’s Theresa May is not far behind, however, equally desperate to cut a bilateral deal to enable the U.K. to “Brexit” sooner than later.

Where the U.S. clearly loses from the trade policy shift is with China. The end of the TPP means that China will likely expand its own free trade zone, the Regional Comprehensive Economic Partnership, negotiated now with South Korea, Australia, India and also Japan. The TPP was the U.S. economic cornerstone for its so-called pivot to Asia (China) politically and militarily. That has now been set back. The expansion of China’s regional trade zone will also further solidify its currency, the yuan, as a global trading currency, as well as strengthen its recent Industrial Bank and “One Belt-One Road” initiatives.

The biggest negative impact of the Trump shift on free trade will be the global economy itself. The shift will take time, produce a lot of uncertainty, as well as reactions and counter-measures. That will only serve to slow global trade volumes even further. All emerging market economies will consequently pay a price in lower exports sales for Trump’s strategic trade shift, the ultimate aim of which is to restore U.S. economic hegemony in trade relations over trading partners — a hegemony that has been weakening in recent years. But this is not 1985. And a safe bet is that restoration will not prevail.

Listen to my radio show of Feb. 3 for analysis of the pieces of Trump’s strategy beginning to emerge and its relationship to past offensives of Nixon and Reagan.

Go To:

http://www.alternativevisions.podbean.com

SHOW ANNOUNCEMENT:

“Jack Rasmus describes Trump’s grand strategy that is now beginning to take shape–economic, social and foreign elements, noting how the Trump strategy reveals great similarities with Nixon in the 1970s and Reagan in 1980s. Trump is Nixon-Reagan on steroids. Rasmus reviews similarities with Nixon and Reagan in Trump’s current attack on US trading partners in Europe, Mexico, Japan, Australia, Germany, Australia and soon China—comparing them with Nixon’s New Economic Program in 1971-72 and Reagan’s 1985-86 attacks on Japan and Europe with the Plaza and Louvre accords. Trump is not against Free Trade, but for bilateral free trade instead of Clinton-Obama multilateral free trade. Trump’s protectionism is tactical. The goal is to advance US corporate interests vis a vis foreign competitors, just as Nixon and Reagan did. Rasmus describes Trump Grand Strategy to date as: Congress drives deregulation of ACA and Dodd-Frank and then focuses on corporate-investor tax cuts. Trump meantime paves the way with Executive Orders, while using EOs to attack immigrants, domestic and foreign; Trump goes slow on major foreign policy changes involving Russia, middle east and Asia, while aggressively attacking immigrants, law and order, proposing election reform and advancing religious groups’ interests. Strong similarities between Nixon, Reagan, and Trump on policies involving defense spending, social program cuts, deficits, strong dollar, attacking the liberal media, undermining unions, massive deregulation, cutting pensions and social security, promoting police and law and order attacks on protestors, and domestic spying and surveillance. (Next week: France and the Future of Europe)”

RT-TV’s Crosstalk Show of January 31, 2017 focused on the subject of whether there is such a thing as ‘Trumpology’. What does Trump represent and is the liberal media vs. Trump something new? As one of three participants on the show, I offered my view that Trump is both something old and something new. He reflects the resurrection of Nixon law and order, silent majority/forgotten Americans, confront the media, force foreign allies to give back conditions to advance US corporate interests, shake up global alignments, etc., taken to a more aggressive level. But he also reflects Reagan Neoliberal economic policies giving even bigger tax cuts to corporations and investors, deregulating business (ACA, Dodd-Frank and more), and he is a bilateral free trader, not a multilateralist. Threats of protectionism are tactical, to soften up the opposition as preparation to renegotiating free trade deals even more favorable to US business. Trump is old wine in new bottles, as they say. But a more ascerbic wine, a harsher form of neoliberalism, with an even stronger domestic policy emphasis of attacks on the ‘new jews’ (immigrants domestic and foreign), law and order (let’s punish the protestors), and an even greater threat to civil liberties, democratic rights, and even more income transfer to the rich than under the old elites in the Democrat-Republican wings of the party of the US elites. Unlike the other show participants, however, I argue Trump is not about to be impeached or removed, especially until he delivers to them the ‘big 3’ programs of bigger tax cuts, deregulation, and a rearrangement of free trade rules that benefit US business even more than before. His tweets and confrontation with media style is designed to keep his right wing base agitated. Steve Bannon is there to communicate directly to that base, and to mobilize it if and when necessary to more directly confront the elites in Congress, their party, the government bureaucracy, and their media.

TO LISTEN TO THE CROSSTALK SHOW GO TO YOUTUBE AT: