Live blogging the former Greek finance minister.
The Greek words for debt and money have the same entomology and are nearly the same word. We are all in each other’s debt. Humans are collaborative. The first forms of money were tokens of debt.
The industrial revolution reversed the sequence between production distribution and debt. Under feudalism, the crop was produced, and debt came at the end of the distribution chain. Under enclosure, the land became a commodity and peasants became the proletariat. Debt was at the start the of the chain. Entrepreneurs would borrow to rent land, then hire workers, distributing ahead of harvest. This made loads of money and loads of poverty.
Debt is essential to capitalism. The banker is central in a rapid production system. The banker grabs value that doors not yet exist and lends it to the people who will create it.
Investors buy shares in companies with the anticipation of price increases. This a bet. You can also buy insurance in case it doesn’t go up. You can also buy obligation to buy future shares at the current price. Whether or not it goes up, you must but at the current price. These are financial derivatives.
In 2010, Greece went bankrupt. Partly because the financial system in Europe resembles the 1920’s. A German banker said ‘life was brilliant before the euro’. He got courted by everyone. He could consider loans. After the euro, he had to lend billions a week. He had to go begging people to take loans. The banks also sold debt to each other.
The finance minister suggested in an article that they accept bankruptcy. Instead, they got the largest loan in history, under the conditions that their income decrease. Do they owe more money and have less ability to repay it.
He went to institutions saying this was stupid. They knew it couldn’t work. But t they had invested a lot of political capital in this. He refused to sign agreements that would deepen the depression.
