Jun 172015
 June 17, 2015  Posted by at 2:57 pm Finance Tagged with: , , , ,

Jack Delano Street scene on a rainy day in Norwich, Connecticut 1940

For a while now, I’ve had a German saying floating around my files, that I didn’t really know what to do with. I know now. The saying is:

In der Not ist der Mittelweg der Tod.

Which loosely translates as:

In emergencies, the middle ground is lethal.

It seems like the Greek parliament thinks along just those lines. A preliminary report issued today declares all debt illegal. You can read the entire report behind the link. Here is chapter 8, Asessments of the Debt. I’d say this is somewhat inflammatory.

Hellenic Parliament’s Debt Truth Committee Preliminary Findings – Executive Summary of the report

Chapter 8, Assessment of the Debts as regards illegtimacy, odiousness, illegality, and unsustainability, provides an assessment of the Greek public debt according to the definitions regarding illegitimate, odious, illegal, and unsustainable debt adopted by the Committee.

Chapter 8 concludes that the Greek public debt as of June 2015 is unsustainable, since Greece is currently unable to service its debt without seriously impairing its capacity to fulfill its basic human rights obligations. Furthermore, for each creditor, the report provides evidence of indicative cases of illegal, illegitimate and odious debts.

• Debt to the IMF should be considered illegal since its concession breached the IMF’s own statutes, and its conditions breached the Greek Constitution, international customary law, and treaties to which Greece is a party. It is also illegitimate, since conditions included policy prescriptions that infringed human rights obligations. Finally, it is odious since the IMF knew that the imposed measures were undemocratic, ineffective, and would lead to serious violations of socio-economic rights.

• Debts to the ECB should be considered illegal since the ECB over-stepped its mandate by imposing the application of macroeconomic adjustment programs (e.g. labour market deregulation) via its participation in the Troïka. Debts to the ECB are also illegitimate and odious, since the principal raison d’etre of the Securities Market Programme (SMP) was to serve the interests of the financial institutions, allowing the major European and Greek private banks to dispose of their Greek bonds.

• The EFSF engages in cash-less loans which should be considered illegal because Article 122(2) of the Treaty on the Functioning of the European Union (TFEU) was violated, and further they breach several socio-economic rights and civil liberties. Moreover, the EFSF Framework Agreement 2010 and the Master Financial Assistance Agreement of 2012 contain several abusive clauses revealing clear misconduct on the part of the lender. The EFSF also acts against democratic principles, rendering these particular debts illegitimate and odious.

• The bilateral loans should be considered illegal since they violate the procedure provided by the Greek constitution. The loans involved clear misconduct by the lenders, and had conditions that contravened law or public policy. Both EU law and international law were breached in order to sideline human rights in the design of the macroeconomic programmes. The bilateral loans are furthermore illegitimate, since they were not used for the benefit of the population, but merely enabled the private creditors of Greece to be bailed out. Finally, the bilateral loans are odious since the lender states and the European Commission knew of potential violations, but in 2010 and 2012 avoided to assess the human rights impacts of the macroeconomic adjustment and fiscal consolidation that were the conditions for the loans.

• The debt to private creditors should be considered illegal because private banks conducted themselves irresponsibly before the Troika came into being, failing to observe due diligence, while some private creditors such as hedge funds also acted in bad faith. Parts of the debts to private banks and hedge funds are illegitimate for the same reasons that they are illegal; furthermore, Greek banks were illegitimately recapitalized by tax-payers. Debts to private banks and hedge funds are odious, since major private creditors were aware that these debts were not incurred in the best interests of the population but rather for their own benefit.

The report concludes, fittingly, with a quote from Pericles’ funeral oration:

People’s dignity is worth more than illegal, illegitimate, odious and unsustainable debt

Having concluded a preliminary investigation, the Committee considers that Greece has been and still is the victim of an attack premeditated and organized by the International Monetary Fund, the European Central Bank, and the European Commission. This violent, illegal, and immoral mission aimed exclusively at shifting private debt onto the public sector.

Making this preliminary report available to the Greek authorities and the Greek people, the Committee considers to have fulfilled the first part of its mission as defined in the decision of the President of Parliament of 4 April 2015. The Committee hopes that the report will be a useful tool for those who want to exit the destructive logic of austerity and stand up for what is endangered today: human rights, democracy, peoples’ dignity, and the future of generations to come.

In response to those who impose unjust measures, the Greek people might invoke what Thucydides mentioned about the constitution of the Athenian people:

“As for the name, it is called a democracy, for the administration is run with a view to the interests of the many, not of the few”

(Pericles’ Funeral Oration, in the speech from Thucydides’ History of the Peloponnesian War).

Home Forums Greek Parliamentary Debt Committee Declares All Debt Illegal

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    Jack Delano Street scene on a rainy day in Norwich, Connecticut 1940 For a while now, I’ve had a German saying floating around my files, that I didn’t
    [See the full post at: Greek Parliamentary Debt Committee Declares All Debt Illegal]


    Alrighty then! They have been studying their history, and are putting it to use.

    Anybody here remember my comments- when Syriza was elected- that the historical pathway in these situations is to simply declare the debts illegal, and the lenders criminals, then arrest them, seize their assets and execute them? Step one!

    And I pointed out – this is only possible for a sovereign entity – which has actual control of its military… but then, it’s been done many, many times.


    Incidentally, your German aphorism gets around; one of the things from The Karate Kid worth listening to:


    Well the lenders are not Greeks so nothing is going to be seized and nobody is going to be hung.

    As far as what’s legal that is what the more powerful say is legal. A declaration by the Greek Parliament does not pass muster.

    It’s astounding but not surprising that the IMF’s advising/ordering Ukraine to default has gone unnoticed here. I guess hardly anyone knows that this is the perfect opposite of what happened with Greece in 2010. Of course the Ukrainian government in Kiev is a paragon of virtue and the people under its rule saints. Unlike the dirty lazy Greeks who deserve to suffer.


    Greece was loaned the money, even though the elites knew that they couldn’t possibly pay it back. I wonder if it wasn’t this way all along: we’ll bail out the banks (that’s really all we care about), go through the motions of talking, then walking away, talking some more, then pretend that Greece isn’t playing ball (though all along we know they’re not going to play and will eventually default). That doesn’t matter, though, as we’re really looking for time, our friends in the media will make Greece look bad, and the European taxpayers (who will eventually be saddled with the debt) will be angry at the Greeks, not the banks, not the elites.

    It was just years of going through the motions of trying to get Greece to pay the money back, putting some much-needed time between the initial bank robbery by the elite and the bankers, making it look like they were playing hardball with Greece. The taxpayers are the ones on the hook (as usual), so who cares! Laughter (by them).

    Does anybody seriously believe the various political hacks thought any differently right from the get-go? Wasn’t this baked into the cake long ago? Will the politicians and elites really be angry and indignant, or will they just pretend to be? The real looting has already occurred. Just wondering.


    “The loans to Greece benefited both Europe’s financial Aristocracy and Greece’s oligarchies/ kleptocracies. This is ably demonstrated in the recent essay Misrule of the Few: How the Oligarchs Ruined Greece.

    Although much has been written about the Troika (the International Monetary Fund–IMF, the European Central Bank–ECB, and the Eurozone), this chart reveals that the IMF and the ECB have relatively little skin in the game. If Greece defaults on all its debts, neither the IMF (only owed 10%) nor the ECB (only owed 6%) will be dealt a crippling blow.
    The Eurozone’s constituent nations will not be so fortunate: they are on the hook for most of Greece’s loans. Should the loans be written off, the losses will go directly to the nations that ponied up the bailouts and other funds.”


    John Day

    War is a bad idea in a world of dwindling resources, and is most uncertain in it’s course, as well.
    Financial elites need to preserve their system, and can let lower tier elites and upper middle class take the losses. That will mean the bubbles bursting, while the order remains intact.
    The Greek taxpayers cannot pay the German taxpayers, but there is that WW-2 debt thing.
    Really, the underlying problem is the massive debt bubble, which is beyond what can be serviced by economies.
    Varoufakis has it right. First figure out how much service an economy can provide, then figure out how it should best be divided for the overall good.
    All of Europe; all of the world is actually in this same position.
    As was the case under FDR, the elites can maintain position, but will have to accept a lot of paper losses, and those in the 0.1% to top 10% range will bear the load.
    The retirement fairy is dead, too, y’all.
    All retirement accounts will be merged and everybody will get something, whatever the economies can bear.
    The alternative really is disorder, and the elites know it, and do fear disorder, as is appropriate.


    Rapier- you’re still clinging to the idea that legal reality matters. “The King” can just say “yep this one is guilty of all these crimes”, hang them, and all will believe. It’s pretty well known that there is an abundance of wealthy families in Greece; and that they are notorious for not paying taxes. I’m fully aware the majority of them; and their movable cash, is now elsewhere; but their estates are not movable – and would easily be seized. For back taxes, if nothing else. It’s a very messy procedure, when practiced, and generates horrified historians for centuries- but it works. 🙂 Actual execution may not be necessary these days; simply declaring them convicted criminals, subject to arrest by Greece and any allies- would put a considerable dent in their lifestyles these days.

    Dr. Diablo

    Congratulations Raul, looks like you’re first with this, what a scoop!

    Nailed it. And very likely nationalizing the banks, just as they promised. Defaulting, because from day 1 they were clear it couldn’t be paid. If Europe doesn’t want to work with them, given every chance, that’s how it goes. “Europe”, read: “The Elite” don’t care because all they needed was time to transfer (also illegally) all the bank and fund exposure to Euro taxpayers. So long as the important people are in the clear, who cares, right?

    Not so fast. While that may be true, what makes you think Euro citizens (long forgotten term) are going to be in the mood to be generous with banks and elites anymore? Winning the round, losing the field. When that happens, the precedent of voiding illegal debt will become a fashion, and if there’s one thing we’ve learned in the last 15 years it’s that it’s ALL illegal. There’s hardly a debt out there that was written in good faith in accordance with law. Robosigning, anyone? If EVERYONE reneges on illegal, fraudulent debt, there won’t be much left, because what makes “The Rich,” rich, is what they are owed. If the debtors say they owe nothing, the rich aren’t rich anymore, are they? And at that point, where is their leverage over society?

    I guess we’ll see.

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