Sir, – The circular financial arrangement that has impoverished the Greek people is now evident. A government sells its bond to a bank. The bank uses the bond as collateral for a loan from the ECB. The ECB creates money from nothing and makes a profit in the process. The ECB profits are repatriated to the local government via the local central bank. The persistent borrowing by the state, hides persistent real losses in the economy.
The failure of previous Greek governments to break even has caused a massive debt burden and capital loss to fall on this generation of citizens.
Austerity is not the problem. Circular borrowing and inflation of money supply, which hide losses, are the problem. Continuous borrowing, coupled with continuous losses, cannot continue forever. – Yours, etc,
GEOFF WALES
Fermoy,
Co Cork. Sir, – Diarmaid Ferriter laments (Opinion, June 27th) that "the institutions are deemed to come first" in the current EU crisis with Greece, instead of putting people first. However the EU institutions of the Monnet-inspired "community method", the parliament and commission, have actually been pushed aside by the member states since the beginning of the euro crisis.
We have seen much more inter-governmental decision-making in general and indeed the eurogroup itself is not even an EU institution but an informal gathering of finance ministers without much parliamentary oversight.
Maybe that is what we should lament? – Yours, etc,
JANNEKE VAN VEEN
Rue GJ Martin,
Brussels. Sir, – Capitalism accepts that individual entities that have debts that cannot be repaid can either be declared bankrupt, or can go into receivership.
One would assume that a civilised union of nation states, such as the EU, would have a similar civilised means of dealing with member countries that have debts that they are unable to repay. Otherwise the capitalist system within that country collapses to the detriment of the whole. This is what the troika is doing to Greece.
Capitalism has learned from past experiences that entities which are overburdened with debt are detrimental to the capitalist system, and in the end must be helped to get out of their predicament. – Yours, etc,
BRENDAN O’DONOGHUE
Killerig,
Carlow.