EuroZone Profiteers: How German and French Banks Helped Bankrupt Greece
Today Greece owes its creditors €323 billion ($366 billion), some 175 percent of the country’s gross domestic product. How did it end up owing so much money?
“We should be clear: almost none of the huge amount of money loaned
to Greece has actually gone there,” Joseph Stiglitz, former chief
economist of the World Bank and a Nobel Prize winner in economics, wrote
in the Guardian newspaper today. “It has gone to pay out private-sector creditors – including German and French banks.”
A recent CorpWatch report - The EuroZone Profiteers -
can help shed further light on this matter. While it’s true that
corrupt Greek politicians borrowed billions for shaky government schemes
from these banks, there was a very good reason that the financiers made
these rash loans: they were under pressure from European Union
bureaucrats to compete in a global marketplace with U.K. and U.S. banks.
Take the German banks.
While Anglo-American banking is dominated by many branches of a few
major banks, Germany had some 4,000 unique institutions in 1990 that
made up a three-pillar system of savings banks, co-operative banks, and
private banks. These banks lived modestly on miniscule profits of one
percent in comparison to Britain’s four mega-banks, which boasted
returns as high as 30 percent on equity. Under pressure from Brussels,
the German government agreed to push some of the bigger banks to become
more “market oriented” by withdrawing state guarantees known as
“anstaltslast” and “gewährträgerhaftung” to back them up in times of
failure.
Likewise Prime Minister Jacques Chirac began a process of privatizing French banks in
the late 1980s to “shoulder its responsibilities to the business
community.” (The banks that had been nationalized over time by General
Charles de Gaulle in 1945 and by President Pierre Mauroy in 1982) Like
the Germans, the French banks enjoyed state protection, and thus were
easily able to raise money to lend out.
Image: (Cartoon: CorpWatch / by Khalil Bendib)
