In 2010 journalist Matt Taibbi shot to a new level of prominence with his 'vampire squid' label for Goldman Sachs '… relentlessly jamming its blood funnel into anything that smells like money.'
Greece's Establishment has chosen to use that as a model. In a moment, we will look at the official scam known as 'Hercules'.
As with the concentration of political power, there is a natural tendency for wealth to accumulate in the hands of a minority. This is accelerated by mass misfortunes in which small businesses and the self-employed go under while well-advised big money seizes opportunities to get dollars for cents. A 'World Inequality Report' published in December 2021 noted how Covid became a bonanza for the super-rich:
'Billionaires this year collectively own 3.5% of global household wealth, up from slightly above 2% at the start of the pandemic in early 2020.'
In Greece as elsewhere, the increasing disparities of affluence are causing dangerous rumblings: the Left is on the move. In yesterday's national elections the moderate-left contender Syriza has lost an estimated 15 seats, down to 71, but Pasok (social-democrat) and KKE (Communist) now have 67 between them - an 81% increase in their Parliamentary seats.
The current PM, New Democracy's Kyriakos Mitsotakis (conservative) has marginally failed to get an overall majority (as predicted, given the suspension of the additional-seats system used in 2019) but seems disinclined to use the three-day window of opportunity to seek a coalition. Absent a successful combination of his squabbling rivals, he can look forward to a fresh election on June 25 when the reinstated supermajority arrangement can give him victory; there should only be one ruler under Heaven, as China has believed since the eleventh century.
Perhaps, as with New Labour, the 'new' in New Democracy has the meaning 'not' but we shall have to see whether sitting on a pressure cooker with its valve blocked is a sound long-term strategy.
Sadly, Yanis Varoufakis' systemic-reformist MeRA-25 party got less than the threshold 3% this time and so is quite shut out of Parliament. It is just not enough to be correct; I think he spent too much time speaking to his natural sympathisers instead of to the middle. That is a shame, because his analysis of root causes is much better than the farrago of benefits bribery and fiery iconoclastic tosh offered by traditional Right and Left.
And so we come to 'Hercules.' New Democracy came to power in July 2019; five months later the Parliament it now controlled launched the Hellenic Asset Protection Scheme (HAPS). This was designed to deal with the Eurobillions of bad, 'non performing loans' (NPL) choking the Greek banking system.
You will remember that one of Hercules' labours was to cleanse the Augean stables, which he did by diverting a river through them. In the case of HAPS, the 'dung' was shifted into a separate institution and sorted into three tiers. The least bad debt would be underwritten by the government (i.e. taxpayers), provided the worse and utter worst were sold off. This would improve Greece's credit rating and so the European Central Bank would then start to back Greek government bonds, as it has done - in fact Hellenic bonds are now offering better yields than Germany's.
Foreign investors are oddly keen to buy the rubbish, and Varoufakis explained why to Jacobin.com a few days ago:
Recent years saw a world first, a mechanism for extracting wealth from the bankrupt. The powers that be have instituted the so-called Hercules plan, taking bonds off the books of banks and selling them to vulture funds based in the Cayman Islands. They belong partly to foreign investors, partly to people who run the Greek banks, partly to the extended families of the political class.
They can, for instance, buy a nonperforming loan of €100,000 but for just €3,000. They don't expect to get the money back; but if they can sell the collateral for €50,000 they have extracted €47,000 in rent to the Caymans without paying a cent in tax. This can extract around €70 billion from a sub-€200-billion-a-year economy.
Perhaps it is fair to dub these offshore investor groups - many with insider Greek connections - as 'Vampire Squid Rings.'
The 'Hercules' nickname may hide a deeper meaning for debt defaulters: when King Augeas failed to pay the hero his fee, Herakles killed him. Goodness knows how many ordinary people and businesses embodying decades of hard work have been wiped out by such foreclosures.
Varoufakis' critique is difficult to communicate to average voters as anything mathematical or technical tends to make their eyes glaze over. If only they understood the workings of crooked high (aka low) finance, instead of finding out the hard way. 'Pathema mathema' as the Greek saying goes: 'I suffered, I learned.'
Here is MeRA-25's alternative:
'A publicly owned bank to replace Hercules and stop the buying and selling of nonperforming loans on secondary markets. Rather, this bank — called Odysseus — would register these loans and allow those whose home or small shop or farm is at risk to avoid the foreclosure, dispossession, and auctioning of their property, for a small fee not exceeding one-sixth of their disposable income.'
As you know, King Odysseus finally restored order to Ithaca when he returned after twenty years' absence.
Just possibly, as with 'Hercules', the name is chosen with an additional reference in mind. Odysseus slew Penelope's foreign suitors who had attempted to exploit his kingdom's temporary vulnerability, together with the domestic traitors who had tried to help them; happy endings are not always easy.
But Varoufakis is a civilised modern man, so surely not !