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Date: 2024-03-03 Page is: DBtxt001.php txt00010109

Country ... Greece
People ... Robert Reich

Tipping point in the global economy ... Greece is all over the news this week—but how come so few people are talking about Wall Street's role in creating the crisis, or what people like us can do to change the outcome?

Burgess COMMENTARY

Peter Burgess

Tipping point in the global economy 10:58 AM (6 hours ago) to me Dear MoveOn member,

Greece is all over the news this week—but how come so few people are talking about Wall Street's role in creating the crisis, or what people like us can do to change the outcome? Let's talk about it—and do something about it.

Read on to see how I see it. Once you've read this, please chip in to help MoveOn launch an emergency global campaign for progress, not austerity.

People seem to forget that the Greek debt crisis—which is becoming a European and even possibly a world economic crisis—grew out of a deal with Goldman Sachs, engineered by Goldman's Lloyd Blankfein.

Several years ago, Blankfein and his Goldman team helped Greece hide the true extent of its debt—and in the process almost doubled it. When the first debt deal was struck in 2001, Greece owed about 600 million euros ($793 million) more than the 2.8 billion euros it had borrowed. Goldman then cooked up an off-the-books derivative for Greece that disguised the shortfall but increased the government's losses to 5.1 billion euros.

In 2005, the deal was restructured and the 5.1 billion euro debt was locked in. After that, Goldman and the rest of Wall Street pulled the global economy to its knees—whacking Greece even harder.

Undoubtedly, Greece suffers from years of corruption and tax avoidance by its wealthy. But Goldman Sachs isn't exactly innocent. It padded its profits by catastrophically leveraging up the global economy with secret, off-balance-sheet debt deals.

Did any of its executives ever go to jail? Of course not. They all got fat bonuses and promotions. Blankfein, now CEO, raked in $24 million in 2014 alone. Meanwhile, the people of Greece struggle to buy medicine and food.

Economists Thomas Piketty and Jeffrey Sachs also have weighed in, writing in The Nation that the results of European austerity in Greece have hit the vulnerable the worst—'40 percent of children now live in poverty, infant mortality is sky-rocketing and youth unemployment is close to 50 percent.'1

Now the European powers are demanding more of the same failed austerity measures from Greece. They've been saying debt restructuring must be part of any solution for economic reforms in the country.

The U.S. can play a role to make things better (instead of worse, like Goldman Sachs did). In addition to diplomatic power, the U.S. has voting power in the International Monetary Fund—one of Greece's creditors.

President Obama and Secretary of the Treasury Jack Lew can use their pulpit and their votes to yield a positive and just outcome. The Greek parliament just yesterday approved a new plan that Prime Minister Alexis Tsipras has proposed, but so far the European parties aren't offering up the debt relief that's needed for a real solution and instead are demanding even more draconian austerity measures that make a positive outcome all but impossible. (That's bad for Greece and bad for the world economy.)

That's why I wanted to write you this note, to try and sift through what's going on and ask for your help on a special campaign that's pretty different from what MoveOn's done before.

As you can imagine, MoveOn hadn't budgeted for a big campaign to save Greece and reject global austerity. So I'm speaking up to help MoveOn raise the funds now if we're going to be able to do this.

Here's what MoveOn can do if you help raise the emergency funds:

  • Take out an ad in a major Washington publication calling on President Obama to use the U.S.'s power in the IMF to yield a positive outcome. Few are speaking out like this in the U.S., so a little firepower can go a long way.

  • Drive phone calls to the IMF offices—they're not used to taking calls from regular folks, so we can really get their attention.

  • Join a global day of action with allies across Europe to show solidarity with the Greek people and to stand up to global austerity. MoveOn is part of a global network of technology-wielding progressive organizations called OPEN—and now is just the kind of moment when this network can be most powerful.

  • Keep on campaigning to hold banks like Goldman Sachs accountable.

This is a tipping point in the global economy—austerity, or progress?

What happens in Greece will have ripple effects around the world.

Thanks for all you do.

–Robert Reich


Robert Reich Robert Reich, Chancellor's Professor of Public Policy at the University of California at Berkeley, was secretary of labor in the Clinton administration. He has written thirteen books, including the best-sellers 'Aftershock' and 'The Work of Nations.' His latest, 'Beyond Outrage,' is now out in paperback. His new film, 'Inequality for All,' is now available on Netflix, iTunes, DVD, and on demand.

Source: 1. 'Austerity Has Failed: An Open Letter From Thomas Piketty to Angela Merkel,' The Nation, July 7, 2015 http://www.moveon.org/r/?r=305385&id=124107-20152613-TY%3D0s1x&t=2

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Robert Reich
July 12, 2015
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