Bernie Sanders Warns of the Rise of Nazis if the Fed Helps ECB Further Destabilize Greece

Bernie Sanders just wrote a letter to Fed Chair Janet Yellen asking why she is doing nothing as the European Central Bank destabilizes Greece’s newly elected Syriza government.

Several weeks ago the Greek people voted for a new government. This government canceled the privatization of key public assets, raised the minimum wage, and restored electricity to the needy. This government is seeking to restructure its relationship with the European Union to encourage economic growth in Greece and to escape from a deflationary cycle.

Recently, the European Central Bank (ECB) announced that it will no longer accept Greek official debt as collateral for loans to financial institutions in that country on the grounds that the new government is not following the dictates of the previous, failed policies. This move had an immediate destabilizing effect on the U.S. and world markets, and further moves could provoke a run on the Greek banking system in the days or weeks ahead.

The United States cannot stand idly by while the European Central Bank undermines the new democratically elected government of Greece, induces deflation and risks financial instability.  President Barack Obama was right when he recently noted, with regard to Greece: “You cannot keep on squeezing countries that are in the midst of a depression.  At some point, there has to be a growth strategy in order for them to pay off their debts to eliminate some of their deficits.”

It would be a terrible mistake for the world to forget what happens when a democratically-elected government, as was the case in Germany in the 1920s, is unable to relieve the severe economic suffering of its people.  We must remember that waiting in the wings should this recently elected Greek government fail is the neo-Nazi Golden Dawn party.  We cannot allow fascism to come to power in a European country due to our unwillingness to reverse harmful austerity policies.

I doubt it’ll do much good — Yves Smith has more on how the biases of the Fed make its tacit support for ECB unsurprising.

But I love that Sanders wrote such a letter and laid out the stakes so clearly. In both Greece and Ukraine, the US seems intent on pursuing counterproductive approaches, as if it can manage any unintended consequences. Except both countries are proof that the US and its allies have failed to be able to do so.

Austerity policies have failed in Europe, as they fail almost everywhere. And yet the elite seems intent on doubling down, as if their ideological beliefs can create a reality that has thus far failed to materialize.

7 replies
  1. scribe says:

    “After all, they hired the money.”
    For those of you who’ve forgotten, that was the negative response of Rethuglican Calvin Coolidge to pleas that the US relent on its demands for payments of WWI debt by the UK and France. Which, in turn, fueled those countries’ (more the French) demands on Weimar Germany for reparations. Which led down the road Bernie Sanders is sketching.
    I’m not expecting anything from the USG or anyone else other than doubling down on their policies to date. And, I have to say, I really am coming to the conclusion that TPTB really like the idea of Nazis, neo or otherwise. Until Germany went on its rampage in ’39, Nazi-ism, Italian Fascism, and other authoritarian -isms were quite popular among the monied set. (Hell, Studebaker even had a prewar model called the “Dictator”. After all, dictators and other authoritarians generally could be counted on keeping the proles in line.
    I’m waiting for some of these sovereign governments being afflicted by the international banksters to start acting like sovereign governments receiving a threat. Then it’ll get interesting.

  2. galljdaj says:

    When the goal is to be the First Trillionaire, then its fuck the lil people, because there is no way to earn it Just like there is no way to earn a billionaireship.

    Now when governments are owned by the few in the race, they become tools, tools to skim off the cream and when there not enough cream, the lil folks’ skimpy fare, it the next ‘Target’.

    All just plain economics of the greedy.

  3. Ed Walker says:

    Golden Dawn drew nearly 7% of the vote even though many of its leaders were jailed for violence. If Syriza fails, it won’t be replaced by the old parties, which are corrupt to the bone. Golden Dawn is up next. And it may be that only one group of thugs can deal with another.

  4. Jonf says:

    I am sympathetic to Sanders, but can anyone say what exactly the fed can do about this? Can they arbitrarily loan them money with no approval from congress?

    • Anon says:

      Left unstated in a lot of this discussion is that the debt is held or routed through many American financial institutions. Goldman Sachs was in part responsible for Greece’s early run-up of debt by acting as an enabler and helping them to hide the true quality of the debt much as they did with the houing market.
      The FED could not force the ECB to back down although they could talk banker to banker about it.
      What they could do is lean on the American banks to take haircuts or to stop backing the Austerity Austrians in Europe for the good of the world economy. This would take some of the pressure off.

      • jonf says:

        Yes, I agree they can lean on people in banking and maybe the ECB/IMF. And perhaps that would help. But it still seems rather limited to me, and it could be too political for Yellen. Now if they could buy up Greek debt or loan them money that would be good.

        Personally, if Obama would jump in the fray, that could have an impact. He may have said all he is going to on that front. And I agree with Sanders sentiment. But…

      • jonf says:

        “Informed sources tell us that Obama and Treasury are looking to Germany to moderate the positions of even more recalcitrant members of the Eurozone.”

        From Yves today. Also some talk Greece may seek help from US, China or Russia.

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