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25 Truths by the “Economist of the Year” Thomas Piketty on the Greek debt.

by Salim Lamrani.

source Al Mayadeen
translation Cuba - Network in Defense of Humanity

Author of the book Capital in the 21st century denounces the hypocrisy of the troika and the International Monetary Fund on the issue of the deft.

1. In the past public debts were much more important than the current debt of Greece. This has risen to 312 000 million Euros that represents 170% of the annual production of the country. The Greek debt, in truth, is laughable because the economy of the country only represents 2% of the GDP of the Euro zone. Therefore the debt merely

represents 3% of the GDP of the Euro zone and does not constitute a danger to the economic balance of Europe.

2 The large European powers such as France, Germany and the United Kingdom also had debts during the 19th and 20th centuries that were higher than 200% of the GDP. Every time this happened a solution was found.

3. “In the 20th century France and Germany are the countries that never paid their public debt”.

4. “It is ironic” to demand that Greece pay its debt forgetting that “Europe was built up after the Second World War on certain principles primarily the cancellation of debts of the past to invest in the future”.

5. Thus in 1953 Europe decided to collectively cancel the entire foreign debt of Germany since it had “chosen the future”

6. There are several methods to confront the problem of the debt.

There is a slow and inefficient method that is applied to Greece today that consists on requesting the nation to accumulate budget surplus (through taxes higher than public expenditure) and those dedicated to pay off the credits. This has the defect that it can last even a century, undermine economic growth and have a very high social cost.

7. “Once a certain level of the public debt has been covered then more rapid methods have to be used”. There are three that were used in the past: a moderate inflation, exceptional taxes on private legacies and above all the cancelation of the debts.

8. “There have been cancellations of the debts in the past and there will be in the future”.

9.”The governments fear putting the subject of the cancellation of the debt on the table”, that otherwise is inevitable if they want to surpass the crisis and “the sooner the better”.

10. The Greek people are seen as living above their resources. However, today under the government of Alexis Tsipras the Greek budget is balances without considering service of the debt. There is even “a slight primary surplus” equivalent to 1% of the GDP that represents 1.830 million Euros. The payment of the debt becomes untenable above all considering the fact that the private Banks granted Greece a loan with usurious interest that could reach 18% making the debt mathematically impossible to be paid.

11. The international financial institutions demand that Greece according to the taxes imposed in 2012 dedicate 4% of its GDP to pay the debt during the next 30 years. “The total budget of the entire Greek higher education system represents less than 1% of the GDP.

This then means that the Greek population dedicates during the next 30 years four times the money it must pay for the debt of the past than all that it invests in higher learning in the country. Is this the best way to prepare for the future? Of course not! It is absurd”.

12. Fortunately never were Germany, France and the European countries asked that after the Second World War. They proceeded to cancel the debts and allowed the reconstruction of Europe in the following years.

We were freed of the debt and invested in public resources in infrastucture, education and growth.”

13. “Europe through the Budget Treaty of 2012 chose the British model of the 19th century of penance during decades and decades instead of the European method of the postwar that consisted of planning for the future”.

14. There is a very serious historical amnesia. The historic ignorance of our leaders is absolutely dismaying.”

15. “The French Government has a very serious responsibility” in this situation by not opposing the intransigence of Germany. President Holland must assume his responsibility and say the time to

restructure the debt is now”.

16. Without a firm stance there is a risk of “prolonging the period of uncertainty” that has an impact on growth and “will sink Greece in a recession that is extremely grave.”

17. “The problem of the debt in Europe is not more important than in Japan or the United States”.

18. “There is a lot of hypocrisy in all this since the French and German banks are content to see the financial assets of the rich Greek be transferred to those banks and, of course, this information is not told to the Greek Treasury,” depriving Greece of strong incomes and making them accomplices in the large scale fiscal fraud.

19. Since 2010, international financial institutions have made"huge mistakes in Greece" "Even the IMF acknowledged having underestimated the consequences of the austerity measures in terms of recession."

20. These measures of austerity “led to an incredible increase of the Greek debt since the GDP fell 25% between 2010 and 2015. “This was the reason for the explosion of the debt to 170% of the GDP while it only

represented 110%.

21. “I place myself in the point of view of the young Greek generations. Are they responsible for the actions of the [prime minister] Papandreo in 2000 and 2002? Are they more responsible for those errors of the German youth from 1950 to 1960 for the errors of the past? God knows, however, that the German government did much more

serious actions than the Greek governments”.

22. “All the debts of the Euro zone should be restructured. A large part should be cancelled as had happened in history”.

23. “For six months the Greek Government has been asking for a restructuring of the debt and each time receives the obstinate rejection of the Euro group.

24. However in 2012 Europe “promised the Greeks that when the country was in a situation of surplus the entire debt would be re negotiated.” Today Europe refuses to honor its promise.

25.”The charlatans that think that expelling a member of the European Union to discipline the rest are extremely dangerous. The European ideal is may be destroyed by decisions of those charlatans”.

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