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Keeping Greece in austerity profitable for the ECB as the central bank reaps windfall from holding their debt

Keeping Greece in austerity profitable for the ECB as the central bank reaps windfall from holding their debt

For almost the past decade Greece has become Europe’s poster child of economic decline, with nearly every financial institution within the Eurozone bent on keeping the Southern European country in poverty and austerity.  And even with an extreme changes in their political structure through the election of the Syriza Party, Greece has remained virtually enslaved to the debts they incurred leading up to the financial crisis of 2008.

Ironically however, there is one entity that has profited from Greece’s troubles, and in fact they have been also been intrinsically involved in keeping Greece down during negotiations between them and the Troika over the past several years.  And in a report out on Oct. 12, that profit comes in the amount of $8 billion of windfall interest from holding onto Greek debt.

The European Central Bank (ECB) has profited handsomely from its holdings of Greek government debt, according to a document seen by the Financial Times.

A written response to a request from a Greek MEP showed the bank collected €7.8 billion in interest payments between 2012-2016 on Greek sovereign bonds acquired under its Securities and Markets bond-buying program (SMP).

Profits are usually redistributed among the 19 eurozone central banks.

In 2016, the ECB collected more than €1.1 billion in interest payments on the nearly €20 billion worth of Greek bonds it holds, according to German daily Suddeutsche Zeitung.

An analysis from the Jubilee Debt Campaign estimated Greece’s other creditor, the International Monetary Fund, had made €2.5 billion from its loans to the country.

According to Leo Hoffmann-Axthelm from Transparency International, the ECB’s participation in Greece’s bailout had led to a “conflict of interest.”

“The ECB expects repayments on its Greek bonds with one hand while approving Greece’s reform progress with the other. The Bank is literally sitting on all sides of the table,” said Hoffmann-Axthelm. – Russia Today

Image result for troika greek austerity

The European Central Bank has the power to print Euros out of thin air similar to the power the Federal Reserve, Bank of Japan, and the myriad of other privately owned central banks have.  And one would have expected since the ECB has embarked on a bond buying spree over the past few years that they would have seen fit to absolve some of this debt in order to aid a EU member to recover from the effects of the 2008 financial crisis.  But the ECB is not in the business of aiding and assisting EU countries in helping to build a stronger Europe, as seen by how they focus more on buying German debt over that of Spain, Portugal, Greece, and nations who need their assistance much more to help grow and recover their economies.

The decade following the 2008 financial crisis has shown that the true purpose of the central banks has been to funnel the wealth of nations into the hands of a few, where in nearly all Western countries outside of Germany, these nations have lost most of their Middle Class while the 1% now own most of the wealth.  And to add insult to injury, even the central banks themselves are profiting from the poverty they have helped engineer onto the Greek people.

Kenneth Schortgen Jr is a writer for The Daily EconomistSecretsofthefed.comRoguemoney.net, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.


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