do, short of violence ± as long as the police and military side with thegovernment that itself is siding with foreign creditors?
The most effective tactic is to demand a national referendum on whether toaccept the ECB¶s terms for austerity, tax increases, public spendingcutbacks and selloffs. This is how Iceland¶s President stopped his country¶sSocial Democratic leadership from committing the economy to ruinous(and legally unnecessary) payments to Gordon Brown¶s Labour Partydemands and those of the Dutch for the Icesave and even the Kaupthing bailouts.
The only legal basis for demanding payment of the EU¶s bailout of Frenchand German banks ± and U.S. Treasury Secretary Tim Geithner¶s demandthat debts be sacrosanct, not the lives of citizens ± is public acceptance andacquiescence in such policy. Otherwise the imposition of debt may betreated simply as an act of financial warfare.
National economies have the right to defend themselves against suchaggression. The crowd¶s leaders can insist that in the absence of areferendum, they intend to elect a political slate committed to outright debtannulment. Across the board, including the Greek banks as well as foreign banks, the IMF and EU central planners. International law prohibits nationsfrom treating their own nationals differently from foreigners, so all debts inspecified categories would have to be annulled to create a Clean Slate. (TheGerman Monetary Reform of 1947 imposed by the Allied Powers was themost successful Clean Slate in modern times. Freeing the German economyfrom debt, it became the basis of that nation¶s economic miracle.)
This is not the first such proposal for Greece. Toward the end of the 3rdcentury BC, Sparta¶s kings Agis and Cleomenes urged a debt cancellation,as did Nabis after them. Plutarch tells the story, and also explains the tragicflaw of this policy. Absentee owners who had borrowed to buy real estate backed the debt cancellation, gaining an enormous windfall.
This would be much more the case today than in times past, now that thegreat bulk of debt is mortgage debt. Imagine what a debt cancellationwould do for the Donald Trumps of the economy ± having acquired property on credit with minimum equity investment of their own, suddenlyowing nothing to the banks! The aim of financial-fiscal reform should be tofree the economy from financial overhead that is technologicallyunnecessary. To avoid a free lunch to absentee owners, a debt cancellationwould have to go hand in hand with an economic rent tax. The publicsector would receive the land¶s rental value as its fiscal base.