Dear FRIEND,
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.
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
Debt restructuring must be part of any solution for economic reforms in Greece. But instead of doing that, the European powers have made eleventh-hour, draconian demands: slash pensions, privatize even more core state functions, and attack unions and workers' collective bargaining rights.2
The U.S. can help 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 pulpits and their votes to yield a positive and just outcome. The Greek parliament on Friday approved a new plan that Prime Minister Alexis Tsipras proposed, but so far the European parties aren't offering up the debt restructuring that's needed for a real solution and instead are demanding even more draconian austerity measures from Greece to even keep talking.
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.
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 and diplomatic influence with the European Central Bank 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 and Treasury Department offices—they're not used to taking calls from regular folks, so we can really get their attention.
- Join with allies across Europe to show solidarity with the Greek people and 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 impact the economic agenda in America, and it will have ripple effects around the world.
Can you make a donation and help launch MoveOn's emergency global campaign for progress, not austerity?
Thanks for all you do.
–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.
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Extract from article by Gareth Rubin
