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Investigative reporter and bestselling author Greg Palast discusses with Truthout the results of his investigation into the actions of so-called vulture funds and their role in the destruction of the Greek economy. He also examines the eurozone and alternative examples of economic development available.

Michael Nevradakis: In light of the upcoming elections, Greece at the present time has unemployment that has surpassed 27 percent, youth unemployment at around 60 percent, hundreds of thousands of Greeks who have migrated abroad, a social state in shambles, and a government in the process of selling off key state industries, public lands and utilities. What is your take on the current economic situation in Greece?

Greg Palast: Well, it’s fascinating, because if you read the Western press, Greece is now a “success story.” By success meaning you’re paying off your creditors; your stock market has recovered and the bond market has recovered somewhat. So as far as most of the press is concerned, everything is fine in Greece. The fact that people are unemployed, that people are still losing their homes and livelihoods, doesn’t mean much to the press, because all that matters is the stock market and your creditors.

I’ve been investigating the causes of Greece’s collapse; it’s a crime scene; it’s not something that was a matter of Greeks living beyond their means or being lazy, olive pit-spewing slackers, as the Germans would have it. In fact, I actually looked it up: The average Greek worker works 400 hours more a year than the average German worker. It’s a hard-working nation. In fact, I think Greeks are harder on themselves than even the Germans are. It’s a hard-working nation, a successful nation, and what happened was your economy was stolen from you.

Continuing this narrative of Greece being a so-called success story: After so many years of IMF and troika involvement in Greece, there are many who still maintain that Greece has no other choice but to continue along this path. You’ve done a lot of investigating into what entities such as the IMF and the World Bank have done elsewhere, in Latin America and in Asia. What has been the impact of IMF involvement and austerity policies in these other regions?

Well, as my fellow economists Paul Krugman and Joe Stiglitz have noted, the austerity programs are like medieval bloodletting. If you’re sick, they would drain the blood from you, and if you didn’t get better, they would say “oh, the problem is that we didn’t drain enough blood” and they would bleed you some more. That’s how austerity works.

No one has yet beaten Keynes’ formula, which is that when there’s no demand for products, your economy is going to fall apart. Rebuilding demand is the opposite of austerity. This is when you need to borrow; this is when you need to go into deficit. This is when you need to devalue your currency so you can once again export. But you are chained like a prison sentence to the Deutsche mark, which is called the euro right now. You are forced to accept Germany’s currency, which makes Greece and its exports overpriced.

So the way that your economy is balanced is by reducing wages rather than by reducing the value of your currency, and that’s disastrous in many ways, because it’s a death spiral. The fact that money is being sliced out of your gut to pay off bondholders – to me that is not a sign of health, that is not a sign of recovery: that’s a sign of jackals and vultures chewing at the national economic corpse.

Greg, the main opposition party, Syriza, is currently leading in the polls. Syriza’s economic program does not mention anything about a departure from the eurozone or a unilateral stoppage of payments or even a write-down of Greece’s debt. Instead, it calls for a renegotiation of the debt load within the confines of the eurozone. What is your reaction to such proposals?

We know which economies have succeeded, that ran into these crises when there was an attack by international financiers. You’ve had Argentina, you’ve had Brazil, you’ve had Ecuador, and the way that they have recovered is, you have to tell these creditor nations and the IMF you’re not going to pay. What is the reason that they would renegotiate, what fantasy world do you live in if you’re going to say “well, we’ll stay in the eurozone, we’ll keep paying, but we’re begging you to give us a break”?

I remember speaking with the president of Ecuador, [Alfredo] Palacio, many years ago when he went into office and Ecuador was on its back financially. The IMF was dictating the terms of its economy – it was suffering from austerity – and he said he was going to go and try to speak to then-president George Bush and the IMF in Washington and explain to them that if you kill us, if our nation dies economically, we can’t pay you: Dead people can’t pay off a debt. But unfortunately, the idea of using reason and getting sympathy didn’t work at all, so his successor, Rafael Correa, who I also spoke with, said something simple: we’re not paying. We’re not going to pay this usurious interest; we’re not going to pay vulture funds; we’re not going to pay ransom for our own economy – and the result was that Ecuador has grown enormously by saying no, and the same with Brazil, which threatened default, and same with Argentina, which did the same thing that Greece should do, which is get rid of the euro.

Argentina was tied to the dollar. Right now they’re going through another fight with international financial vultures, and they’re holding strong, and their economy has not only recovered, but they’ve roared ahead like a rocket, with high employment, and huge increases in national wealth and huge increases in salary in the past decade and a half while they were resisting the IMF diktats. So that’s the path for Greece, I mean: Follow Brazil; follow Argentina; follow Ecuador. They did it, they said no. You can’t beg your way out of this problem.

Sticking with what you’ve just said about Argentina in particular, you’ve done extensive investigative reporting on the activities of so-called vulture funds and how they have targeted countries such as Greece or such as those in Latin America or Africa. One individual in particular, Paul Singer, has been at the heart of your investigations, and is tied both to Greece and to Argentina. Who is Paul Singer and what does he have to do with the cases of these two countries?

Well, if you read my book Vulture’s Picnic, which should be coming out in Greek quite soon, these vulture funds – and I didn’t give them the name vulture funds, that’s what they called themselves for many years – they buy up debts of nations when there’s a crisis like in Greece, when you can buy up the debts at pennies at the dollar, at a fraction of their face value, and then after a deal has been worked out with everyone else, they are the final holdouts and they demand, in the case of Greece for example, you had creditors who accepted a large cut in the principal of the bonds; the bonds were revalued downward, interest rates were cut – Singer and one of his associates were the holdouts, and they not only didn’t take a loss on their bonds, they were paid multiples and earned something in the area of 200 to 300 percent profit on their bonds. The Greek government made exceptions and paid them additional money.

What they do is they hold your nation ransom. They’re doing the same thing in Argentina, but Argentina has said, the president of Argentina Christina Fernandez Kirchner, said “I do not pay ransom, I will not pay vultures.” And they are simply refusing to pay these creditors. They’re simply not going to pay ransom. Other nations have fought these vultures, and in fact, their activities. The people who have been attacking Greece like Paul Singer, the vulture, his activities have been outlawed in, for example, the British Commonwealth . . . England, Canada, and throughout the British Commonwealth. These are rogue financiers, their activities are banned and are criminal or quasi-criminal in some parts of the world, but these are the people who are dictating to your economics ministers.

Sticking on the topic of Paul Singer and his activities, there have been certain very notable cases, such as the examples of Peru and also the Congo, where he basically shook these countries down for large amounts of money . . .

Right. I did a story for BBC television . . . If you go to my website, gregpalast.com, you can see my reports from the Congo. Paul Singer effectively grabbed the money that was set aside to fight a cholera epidemic in the Republic of the Congo. These are not nice guys. Other creditors, the treasuries of the United States or Europe, are used to help bail out countries that are in trouble, whether it’s Greece or the Congo or Peru, and after the taxpayers of the US and Europe put up funds to help nations recover, Paul “The Vulture” Singer and his vulture fund friends – remember, they called themselves vultures until recently; they are proud of it – they swoop down, and they say, “Well, now that you’ve been given money by Europeans and Americans, now we’re going to take your resources.” And they have seized oil shipments on the high seas; they’ve seized metal resources, they’re basically quasi-illegal pirates, and in fact, they actually seized a pirate ship, no kidding, one old, masted pirate ship they seized from the Argentine Navy, but Argentina got it back.

How has the Argentine government responded to the recent court decision that came out of the United States which led to the country’s “default,” and to the continued demands and pressure from Paul Singer?

What’s happened is that the Argentine government, because it told the IMF to go to hell and it told its creditors to go to hell back in the year 2000-2001, under the current president’s husband . . . that allowed Argentina time to recover. And in return, while Argentina, 15 years ago, defaulted on its bonds deliberately, it did say that “we will pay back this money eventually, but only when we recover.” And in effect, banks were given stock in the economy of Argentina. As the economy grew, they were paid off. So Argentina actually ended up paying the banks $165 billion, but then Singer said, “I don’t want what everyone else has,” because that would give him only a 300 percent profit. Instead, he’s demanded a 3,000 percent profit on the old bonds he holds. And he found some crazy, 84-year old judge in the United States to not only order Argentina to pay him, but ordered Argentina to stop paying its other creditors, banks such as the United Bank of Switzerland, Citibank, the Bank of New York. George Soros was one of the bankers that was being paid by Argentina and had accepted its terms. So literally, a judge ordered Argentina to stop paying its creditors, and therefore, technically the nation has gone into default. Yet still, Argentina said “that’s too bad, we’d rather be in default than pay ransom to vultures . . . we’d rather be in default than let our people starve or allow these pirates to seize our economy.”

Once again, part of the way that they recovered was by getting rid of the US dollar as their currency, just as, at the moment, Greece is tied to the German currency, and that’s just insane. People in Greece are so used to having the euro, they’re told that the sky will fall if you step out of the euro. Well the sky has already fallen on Greece. You can’t do worse. And if you had your own currency, if you freed yourself from the bondage of German currency, you would be able to begin to restore your economy. And then you could declare that you would pay your creditors in your own currency. The drachma was good enough for Plato, I’m sure it’s good enough for you today.

Greg, we’ve seen the recent re-election of President Rousseff in Brazil and President Morales in Bolivia; we’ve seen the continued strong popularity of the governments in countries such as Venezuela and Argentina as well. What are some of the economic policies that these countries have followed that allowed them to break free from the shackles that were placed on them by the IMF?

Well, for example, in Brazil, President Lula, who is from the Worker’s Party, which is the socialist party, threatened a default: he refused the actions of the IMF; he refused to privatize the state banks; he refused to privatize the state oil company; he refused to privatize and continue privatizing the state electric and water companies – and, as a result, the nation was able to keep its own resources, and when oil went up, the Brazilian oil company, the state oil company, was able to cash in.

The other thing that he did was while he was told to stop running deficits and to impose austerity, he did the opposite. He created something called the “Bolsa Social.” It is basically a payment to all people, so that everyone has a minimum income in Brazil now, so everyone receives a minimum income; so it ended starvation; it ended desperation. That money going into the hands of the poorest people, because it gets spent, built up the economy enormously. Brazil was growing at 7, 8, 9 percent. Now there’s been a slowdown, as the world economy has been in trouble. China, one of Brazil’s biggest trading partners, the US, as a trading partner, have slowed way down. So that’s hurt Brazil, but still, on net, the economy has done incredibly well compared to the rest of the world and certainly compared to Greece. As a result, Wilma Rousseff, Lula’s successor for president from his party, was re-elected. And I believe that one of the reasons why the Brazilian economy slowed down is, she tried to begin a return to some IMF policies of austerity and cutting state pensions, so she decided to compromise with the IMF and it was disastrous for Brazil.

The IMF is basically a society of poisoners. They require nations to sign, effectively, economic suicide pacts. Every nation which has followed the IMF-World Bank diktats has found itself drowning, with its economy in collapse. Those who have ignored the IMF and World Bank and gone in the opposite direction are thriving. At what point do you say, bleeding the patient is not good medicine? It isn’t! We see that; we can actually measure it now; it’s not even a question.

With elections coming up, what do you believe the Greek people should do to help bring about this change, and do you believe there are any political forces in Greece that can accomplish this?

I can’t tell you who your best politicians are. I can tell you what they must do. First of all, you have to get rid of this fear of what would happen if you left the euro. The euro has been poisonous for Greece. My God, how much more punishment are you ready to accept to be in Germany’s currency? It’s completely crazy.

I’m an economist by training, and in fact I knew Robert Mundell, the man who invented the euro. He was a very, very right-wing Thatcherite; he was an adviser to Ronald Reagan; he was the man who created the so-called supply-side economics fantasy – that if you cut taxes on the rich your economy would grow. It all turned out to be nonsense. The euro is part of his nonsensical, supply-side, Thatcherite, Reaganite economics. It’s a strait-jacket which was meant to force nations who are locked to the euro, because you give up your fiscal policy; you give up your ability to change interest rates; you give up your ability to change your money supply; you give up your ability to change your exchange rates with other nations. For Greece to give up the power over its economic destiny is insane, and those who leave the Euro . . . it doesn’t mean that you won’t be able to trade with Europe, that you won’t have tourists.

Now, in a way, you’ve gotten lucky as Turkey has decided to blow itself up with its idiotic religious president, but Turkey was growing and stealing all of your tourism business. I think that at a certain point you have to give up the fantasy that the euro is some kind of advantage. That’s got to go. As long as you’re tied to the euro, you don’t stand a chance of a full recovery.