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Bill Black questions the authenticity of the coverage in the NYT and WSJ about the impact of austerity measures in Greece

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SHARMINI PERIES, EXEC. PRODUCER, TR NN: Welcome to The Real News Network. I’m Sharmini Peries, coming to you from Baltimore. And welcome to this edition of the Bill Black report. Two opinion polls shows that Greece’s left SYRIZA Party is poised to win the next election by a slight margin. The polls showed that SYRIZA Party, which opposes Greece’s financial bailout and its economic reforms, garnering between 28.5 percent and 31.6 percent of the vote, placing it ahead of the governing New Democracy Party, which has been implementing the economic austerity measures. Bill Black has some issues with how the mainstream media is covering the economic controversies in Greece. In New Economic Perspectives he says:

I’ve written recently about the embarrassing nature of the New York Times’ coverage of Greece (and the eurozone more generally), so it is time to describe the even more appalling coverage by the Wall Street Journal. Joining us now from Kansas City, Missouri, to explain himself is Bill Black. Bill is an associate professor of economics and law at the University of Missouri-Kansas City. He is a white-collar criminologist and a former financial regulator and author of The Best Way to Rob a Bank Is to Own One. Thank you again for joining us, Bill. BILL BLACK, ASSOC. PROF. ECONOMICS AND LAW, UMKC: Happy new year. But I’m actually in even more frigid Minneapolis. PERIES: Bill, so give us your take on the coverage of Greece by The New York Times and The Wall Street Journal. BLACK: So I’ve written a couple of columns, as you said, and I’m going to begin a series on The Wall Street Journal’s coverage. But their chief economic correspondent/communicator/whatever, Mr. Nixon, has an interesting idea of Greece. One of his titles, for example, is basically how the Greeks are snatching defeat from triumph. So this is the supposed triumph of austerity, which has reduced Greece to more than Great Depression levels of unemployment. In other words, unemployment is actually more severe in Greece during this crisis, and for a considerably longer period than it was during the Great Depression. PERIES: So last time I looked at numbers it was, like, 30 percent, and almost 50 percent for youth. Is that right? BLACK: Yes. The overall unemployment is down slightly. But, yes, youth unemployment is still above 50 percent. Again, these are numbers that are shocking. They should be considered a world crisis. There should be enormous aid coming to Greece. Instead, it’s a war against the Greek people and the Greek economy through austerity. So Mr. Nixon is someone who has a degree in history and then served as an investment–or acted as an investment banker before becoming a journalist. And his take–the article I’m discussing is supposedly explaining why the Eurozone is not doing so well. And the first two things he says are: here are sources of reduced demand to purchase German exports. Right? And these are reduced demand in China and reduced demand in Russia. Both of those things have happened. But they are much, much smaller than the effects of reduced demand within each of the Eurozone countries and reduced demand among the Eurozone economies to buy exports from each other. So now that he’s admitted that the problem is demand, a lack of demand, of course there’s an obvious answer. The government should be spending money. It should be buying goods and services, useful goods and services, like health, education, infrastructure, dealing with corruption, trying to jail the bankster crooks that caused the crisis. All of those would be good things to spend. It would make the world better. And they would add to demand. And you could have a job guarantee program, and within a year you’d have full employment within Greece. PERIES: Now, does the Greek government have the money to spend, given the economic crisis they’ve been in? And they’ve borrowed so much money from the European Central Bank. Do they actually have the money for public spending of this nature? BLACK: Okay. So, first, they’re not allowed to spend. And so there is this wonderfully oxymoronic title, the Stability and Growth Pact, in Europe, which forbids governments to spend really substantially when you’re in a crisis like this, to do the things that we’ve known for 75 years will dramatically reduce the human suffering, will reduce the length and severity of the crisis. And so this thing produces instability and it destroys growth, and they of course call it the Stability and Growth Pact. Now, that was done to the Europeans by the Europeans so they could get rid of that at any given time. You are correct that Greece, because, like the other Eurozone nations, gave up its sovereign currency when it joined the euro, that there are more problems in a place like Greece than in, say, the United States and the United Kingdom in using normal stimulus spending. But it is possible, and the European Central Bank can make it possible. They simply refuse to do so, because the Germans insist there is no alternative–TINA–that austerity is the only thing that can be permitted. And so this is the economic equivalent of bleeding a patient. And when that doesn’t make them healthier, you bleed ’em some more. And it has caused immense suffering, completely gratuitous, in Greece and in Spain and in Italy, both of which also have Great Depression levels of unemployment that, again, have lasted longer than the actual thing that we call a Great Depression. So what is Nixon’s answer and the Wall Street Journal answer to this inadequate demand? Well, we need more austerity. And then to blame the Greeks: how dare the Greeks turn on the Greek government that acceded to the extortion of what’s called the European troika. The troika is the European Commission; the European Parliament, which is dominated by ultra-right groups, from a U.S. perspective; the European Central Bank (the ECB); and the International Monetary Fund, the IMF. Right? And so they forced Greece to adopt these austerity principles, and they actually caused the Greek government to fall when a prior Greek government wanted to allow the Greek people to vote on whether they wanted to do austerity. The Europeans, these troika, expressly forbade Greece, the home of democracy, from engaging in democracy, because that’s not a Western value, apparently, anymore. So the Greek government that gave in to the extortion has now fallen. And there are about to be elections very soon, this month. And the party, at least right now, that’s leading in the polls is one that totally opposes austerity, has rational economists that don’t want to continue this self-defeating economic malpractice of austerity. And this is freaking out the Germans, who are doing every thing possible to threaten the Greeks, that if they dare to elect real Greek leaders that restore democracy, restore the rule of law, kill this stupid deal, and stop austerity, that they’ll cut off Greece and basically throw it away and let the bond vigilantes bring it down. PERIES: Bill, does SYRIZA have a plan of how they’re planning to manage the economy and how they might actually consider exiting the euro and, yeah, using the euro as currency? BLACK: Well, their official position is that they don’t want to leave the euro. The decision whether to leave the euro at this juncture is complex. And there’s no good answer, right? All the answers involve severe pain. They should have never joined the euro. But they have, and they’re now somewhat stuck with it. Their Greek rival parties, the more conservative parties, are claiming that if they lose the election, Greece will be, basically, removed from the euro system. And that could happen. The Germans completely dominate the troika, and the Germans detest the Greeks. German discussions, you know, social media and such, is full of attacks on the Greeks as alleged shiftless leeches, etc., etc. So there are possibilities that Greece be forced out of the euro. But that’s not the system. The economic plan is to end the austerity regime, to have the government provide vital services. It isn’t just that there’s enormous unemployment. There’s acute poverty. The forests of Greece have been cut down just for fuel, as people can’t afford to buy regular fuel anymore. Hundreds of thousands of Greeks are at the level where they have to scrounge for food. Tens of thousands of Greeks on a regular basis are scrounging through trash to try to get food. This is an obscenity in Europe, and you have only one party that is willing to say enough is enough. Now, this, by the way, has a historical antecedent. This current austerity is the same mindless economic malpractice of the Washington Consensus, which caused the lost decade or two in Latin America and led to the election of many political leaders throughout much of Latin America who ran on an anti-austerity platform. And that’s the real fear of conservatives, that the Greeks might lead the way, and that once the elections occur–which they won’t for some time in Spain, in Portugal–that you’ll get a wave of people elected on anti-austerity platforms, and that the German diktat, which now rules the Eurozone, will be broken. PERIES: Bill, we at The Real News will be following the elections and SYRIZA very closely over the next few weeks. And I hope you continue to give us an update on what’s happening in terms of Greece and the austerity measures. Thank you for joining us. BLACK: Thank you. PERIES: And thank you for joining us on The Real News Network.


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William K. Black, author of The Best Way to Rob a Bank is to Own One, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics.

Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement.

Black developed the concept of "control fraud" frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae's former senior management.