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Professor William Black says the mainstream media has failed to explain the ordinary Greek’s experience of austerity policy

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SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome back to The Real News Network. I’m Sharmini Peries, coming to you from Baltimore. Our next guest, Bill Black, has been a great critic of how The Wall Street Journal and The New York Times have covered the Greek debt crisis and austerity measures. So now joining us to discuss this further from Bloomington, Minnesota, is Bill Black. Bill is an associate professor of economics and law at the University of Missouri-Kansas City. He’s a white-collar criminologist and a former financial regulator and the 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: Thank you. PERIES: So, Bill, you are peeved with the way The Wall Street Journal and The New York Times have been covering Greece and the plight of Greek people. But what were your thoughts as the election was unfolding? BLACK: So it was basically the coverage was so bad that it would be really hard to figure out why the Greek people would so strongly repudiate the parties in Greece that gave into German demands that they adopt austerity. And so the columns read like, well, you know, what are these ungrateful Greeks doing? Maybe growth hasn’t been robust, but it’s made possible by austerity. And exactly the opposite is true. Greece was forced by the austerity demands back into a great depression that has now lasted longer than the Greek Great Depression of the 1930s and has more severe unemployment rates six years after the onset of this Great Depression than they had probably at any time during their Great Depression of the 1930s. And Greece is not alone in this. Italy and Spain are also at Great Depression levels of unemployment. And collectively, those three nations have roughly 100 million in population, or roughly one-third of the entire Eurozone. And so these are people that have been thrown on the scrap heap by Germany, and it’s just a complete waste to force millions of people into unemployment. That is obviously going to harm them, and it’s going to harm the recovery, and it’s going to harm the nation, and it’s going to harm Europe. So what we’ve been saying from the beginning is that the German insistence on austerity and on these debt repayments was going to force Greece into a great depression. It did exactly that. Unemployment is still in the 26 percent range overall, and for young workers it’s in the 55 percent range. And so the first thing that most Greeks do when they get their new university degree is to emigrate. So that too is an enormous loss. PERIES: So this war with now the new government of Greece and the troika and the power centers of Europe is getting played out in the media and in the newspapers, as you have pointed out. How are the plight of the Greek people being portrayed in these papers in terms of the levels of unemployment, the levels–as the level of suffering? How is it being covered in terms of what the ordinary people are experiencing? BLACK: Well, first, over half of the stories don’t even mention it. Second, those that do, it’s almost always an afterthought, simply a statistic in the next-to-last paragraph. And more to the point, they don’t ever tie it to austerity having caused it and that it being was completely gratuitous. So the normal thing that we do in the commercial world, when we’re just dealing with businesses in these circumstances, is we don’t try to insist that they repay every bit of their debt, because that’ll just force them into a collapse. We create a renegotiated debt that is reduced. And by the way, this was famously done after World War II for this nation called Germany, and it was done for Poland in 1991, where more than half of the debts were written off, many of them owed to Germany. And then, eventually, 100 percent of the debts were written off for a large number of African nations. And debts were written off in the range of 50 percent to nearly 100 percent for a number of Latin American nations. But in the case of the Greeks, the Germans are now insisting that they pay 100 cents on the dollar when–or euro, in this case–when that is not possible and it will cause a catastrophe. And the real remarkable thing is, of course, we’ve seen this pattern before in the 1990s when the Washington Consensus and its insistence on austerity caused the lost decade in Latin America, financial crises in many nations in Latin America, very weak growth, rolling recessions and such. And it led to the election of now over a dozen controlling officials through democratic processes in Latin America who were elected on platforms saying that they were going to oppose austerity. And we’ve been saying this has got to break out in Europe eventually, and Greece is the first place that has done so. And that’s what’s really scaring–. PERIES: That it’ll have a ripple effect in Europe, and more and more progressive governments might get elected, as in Spain polls are showing that Podemos is, like SYRIZA, taking a lead in the polls. BLACK: Yes. And it was only created about a year ago. So that is an astonishing surge in popularity, and the Spanish will be greatly encouraged by what they’ve seen in Greece. And there’s also the possibility in Portugal to get similar results. Italy is more complex, but you’re going to see parties that strongly oppose austerity, and you’re going to see it in France as well. Now, Europe’s more complicated than Latin America, in that many of the strong opponents to austerity in Europe are actually right-wing parties. PERIES: Explain that. BLACK: Well, they don’t like, basically, the fact that their governments have been turned over that to the Germans. Of course, what you have to remember is that most of the nations of Europe were occupied by Germany. And they do not have good memories of being occupied by Germany. And now Germany doesn’t have to send an army; it just used the bond vigilantes as its shock troops, the Schwerpunkt, to produce a disaster in much of Europe. And now German diktats have ruled most of Europe for roughly five to six years. But that looks like it’s going to continue unless there is a break led by folks like Syria that the German hegemony over the European Union seems to be unshakable, absent that kind of resistance. PERIES: And what do you think of the SYRIZA government’s collision course with Europe right now? How do you think it’s going to play out? BLACK: Well, first, nobody knows, and we shouldn’t pretend that we know. The Europeans have to find a way to climb down, because what they’ve established will produce what it has already produced: a disaster that will grow. So, as I said, there are many, many precedents where European nations, including Germany, have both been the beneficiaries of debt write-downs and people that have made huge debt write-downs. So it’s time for them to find a way. Politically, of course, they’re saying they’re not going to do it, and that’s exactly what you would expect going into negotiations. SYRIZA is, I think, doing exactly the right thing. It’s being, basically, calm and saying, well, this is what we’re going to attempt to achieve. And we’ll see whether Europe basically recovers its spine and says to the Germans, no, sorry, you’re one nation, you don’t get to dictate everything that happens in Europe. PERIES: Bill, thank you so much for joining us today. BLACK: Thank you. And /greɪtbluː/. 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.