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The immovable Greece and the irresistible European Central Bank

In reading the first article below, you would think that the outcome of Greece's problems is either a strict austerity program (the banks win) or an Icelandic-style financial revolution (the people win).

In reading the second article, it becomes clear that neither is possible.

Michael Hudson: Introduction of the euro in 1999 explicitly prevented the ECB or any national central bank from financing government deficits. This means that no nation has a central bank able to do what those of Britain and the United States were created to do: monetize credit to domestic banks. The public sector has been made dependent on commercial banks and bondholders. This is a bonanza for them, rolling back three centuries of attempts to create a mixed economy financially and industrially, by privatizing the credit creation monopoly as well as capital investment in public infrastructure monopolies now being pushed onto the sales block for bidders -- on credit, with the winner being the one who promises to pay out the most interest to bankers to absorb the access fees ("economic rent") that can be extracted.

Vanity Fair: The evening after I met with the minister of finance, I had coffee with one tax collector at one hotel, then walked down the street and had a beer with another tax collector at another hotel. Both had already suffered demotions, after their attempts to blow the whistle on colleagues who had accepted big bribes to sign off on fraudulent tax returns. Both had been removed from high-status fieldwork to low-status work in the back office, where they could no longer witness tax crimes.

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