In return for the new bailout, Greece must implement a savage austerity programme, accept an “enhanced and permanent” presence of EU officials supervising Greek finances and set up a blocked account with three months debt interest payments in it at any time.
«First, let’s be clear that the ‘bailout’ is not really a bailout of Greece, but rather of the mainly German and French banks. Why? Over the past decade, Germany kept domestic wages flat, helping it to run a massive trade surplus with Greece and other peripheral Eurozone (EZ) countries. These surpluses have been recycled by private banks lending to the periphery (pdf1 and pdf2), much in the same way as the 1973/79 oil surpluses were recycled largely through London in the form of highly profitable loans to Latin America. And just as Latin America (and other peripheral countries) suffered a debt crisis in the 1980s, while IMF-imposed austerity designed to repay the debt led to riots and trade union resistance, so we are witnessing much the same thing in the EZ. Nowhere more than Greece has troika-imposed austerity brought such pain, the country’s GDP having fallen by 15 per cent since early 2009 and unemployment affecting nearly half of all youth. Now that German banks have cut their exposure to Greek debt, Germany is having second thoughts about Greece staying in the euro. Whether it happens in the coming weeks or months, a decision by the troika that Greece is in breach of its loan obligations could lead to the ECB halting its weekly refinancing operations with the Central Bank of Greece thereby forcing an immediate Greek default. It is generally agreed that if default leads to contagion in the EZ, the economic consequences for the EU could be disastrous.
The implication is clear. The troika’s actions in Greece are disastrous. Without a stable government, Greece’s departure from the euro will entail growing political chaos, and chaos will bring military intervention to ‘restore order’. Those old enough to remember the civil war of 1946-48 or the colonel’s coup of 1967 will remember that the West turned a blind eye to the repression which followed; thousands were tortured or killed and both the communist and social democratic parties were illegal for more than a generation. History may be about to repeat itself.», George Irvin.