In case you missed the media hubbub, a one-week Indiegogo crowdfunding campaign was started back on June 29th with the goal of raising €1.6 billion to pay off Greece’s most recent debt repayment and set it back on the road to prosperity. The campaign of course came nowhere near the repayment amount, and although it amassed a massive reaction across the Internet, it barely made it past the 0.1% mark of its goal – €1,930,366. But seeing how it had no realistic chance of achieving its goal in the first place, it’s inherent that its failure isn’t its biggest disappointment. That mark of distinction goes straight to its existence in the first place, and in particular the dumbing down it has foisted upon a very serious situation.
The brainchild of a Mr. Thom Feeney, a marketing co-ordinator in London, the Indiegogo campaign came with the tagline of being "by the people, for the people," a great gimmick if there ever was one. Since Feeney stated that he was "fed up with the dithering of our politicians" and that he "would have prefer[red] that we had governments that listened and connected with the public," it seems that European politicians forced his hand in the matter and left him with no choice but to single-handedly save Greece. Or so one gathers from his statements. Furthermore, and being the 21st century with all its techno-wizardry, the idea behind the crowdfunding campaign he started was that
The beauty of the internet and social media means that a campaign like this can become possible by word-of-mouth and people all across the world can get involved very quickly.
In other words, slap up a page on the Internet, put in your dues in the right social (media) circles, and whammo – you’ve suddenly saved a country! As Feeney then put it,
The chance to use a crowdfunding site for social good is really exciting and I hope that others will follow my lead in future and start or get behind projects like this.
This is of course completely absurd, and is actually little more than an exercise in 21st century techno-fuelled do-gooder naïveté, which got a marketer his fifteen minutes of fame and crowdfunding website Indiegogo a massive amount of free advertising (at one point its servers were so overwhelmed that the website crashed).
For hypothetically speaking, and supposing that the campaign actually did succeed, it still would have only bought Greece a few months of respite until the next chunk of money was due. For not only did the IMF recently point out that Greece will need another €10 billion over the next few months, but that it will need another €50 billion over the next three years, followed by tens of billions every few years after that. In other words, if €1.6 billion is such a tough amount to come by now, how can it be expected that tens of billions of euros, never mind hundreds of billions of euros, ever be paid off? Truth be told, Greece’s debt is not really expected to be paid off, largely because there’s no way that it ever can be, and and partially because some people would rather them not be paid off. I’ll digress.
In short, not only is the vast amount of "money" in circulation not created by governments, but it is created by private banks, as debt. That is, when a person goes into a bank to get a loan, the bank does not lend out money from other depositors – it creates the money, there and then, out of thin air, under the fractional-reserve banking system. Furthermore, not only do private banks create the vast majority of "money" that we use, but they then expect interest back on those loans they make. In effect, because banks don’t create the interest but only the principal, there is actually more money owed back than exists in the system.
In other words, even if we wanted to, we can’t actually pay back all the loans. Yes, some loans can be paid back, but not all of them can, and so some people/entities must remain "losers" in this scheme. In this case, the biggest eurozone "loser" of all is Greece. (On top of that, it’s safe to say that some people like the system just the way it is, thank you very much, and prefer to keep their debtors in debt peonage for perpetuity.)
That’s a bit of a tangent to be going off on, but the applicable point is this: since there inherently isn’t enough money in existence to pay back all the loans, more loans must be continually made out to at least pay off the interest, lest the current system implode in on itself (that is essentially how Ponzi / pyramid schemes operate). This is a large reason why one continually hears politicians of pretty much every stripe – including Syriza’s former finance minister, Yanis Varoufakis – repeatedly calling for growth, so that loans to banks can be serviced. That being said, this penchant for economic growth leads to another problem, and which has now come home to roost.
In order to increase economic growth, a corollary increase of energy supplies is needed to power it. However, as the reality of peak oil is now showing, the peak of conventional oil supplies occurred back in 2005, with the peak of overall supplies expected to occur by 2020, if not sooner. This has all put a damper on growth.
With high oil prices deemed by some as the trigger for the bursting of the housing bubble back in 2008, the effects of the ensuing US economic crash rippled across the world. And not only were some countries hit harder than others, but some have had a rather hard time making a recovery – getting out of contraction and returning back to growth. Although the reasons vary, a significant contributor to a country’s lack of growth can simply be low domestic energy supplies.
Modern industrial economies run on plentiful supplies of concentrated energy, which predominantly means oil. If you don’t have oil, or very much of it, you don’t have much of an economy (or at least an industrial one). On top of that, nor are you generating much income to pay back loans, if not just the interest. (Greece has racked up €2.5 billion in interest charges to the IMF since 2010.)
(graph: The Global Economy, data: EIA)
As you may have guessed by now, Greece is one of the countries out there that doesn’t have much of a domestic energy supply. In effect, and as put in a recent post of mine, (Is Greece Planning to Print Energy?), "Greece isn’t short on money, it is short on energy." Similarly, and as Ugo Bardi recently put it, what’s going on isn’t simply a financial collapse, but a systemic collapse. In other words, this is what happens to economies, and eventually the world economy, when they are forced to cope with decreasing supplies of energy, all of which are seeing their EROEIs (Energy Return Over Energy Invested) decrease as well.
(graph: The Global Economy, data: EIA)
So while tightening energy supplies are currently hitting Greece, they’re eventually going to take their toll on the European economy as a whole, and eventually the entire world economy. As inevitable as this is, governments of all kinds (and their corporate overseers) tend to avoid acknowledging this, and have all become quite formidable at fighting over who can kick the can down the road first and furthest.
Ultimately, and since growth is essentially deemed the main factor here, the current issue with Greece isn’t about the survival of Greeks, but is about saving the banking system (and whether it’s going to be done in a left-wing fashion or a right-wing fashion). As Ambrose Evans-Pritchard recently put it,
This default is doubly shameful given that the original IMF-Troika loan in 2010 was not intended to save Greece. The extra debt was imposed on an already bankrupt Greek state to buy time for the euro, against Greek interests. Leaked documents leave no doubt that the real purpose was to save monetary union and the European banking system – and to avert a “Euro-Lehman”, in the IMF’s own words – at a time when the eurozone had no defences against contagion.
A new drachma spec (image courtesy of Pavlos Vatikiotis)
That all said, is it possible then that with the recent "oxi" vote in Greece, and a possible expulsion from the euro, that a Greek reversion to a new drachma could fix things? Unfortunately, no. While the "no" vote will avoid "depression almost without end" and what would effectively be slavery under the euro, the outcome of it will likely amount to little more than further starvation thanks to vanishing subsidies of money to import increasingly costly fossil fuels to maintain Greece’s modern industrial way of life.
In effect, Greece is essentially a second dry rehearsal (after Cyprus) for what is first going to happen to weak economies – Spain, Italy, Portugal, etc. – then eventually to all other economies.
Can anything be done? Well, to stave off the collapse of industrial civilization, no. Industrial civilization is based on copious amounts of cheap concentrated energy which can’t be replaced with other sources, no matter which way you look at it. What is going to be required then, to a very large extent, is the localizing of most facets of our economies and ways of life, to go along with a drastic cut in energy usage, that then supplied by wind, solar, etc. Furthermore, seeing how money has been the hot topic that everybody’s been clamouring on about, it should be pointed out that currencies can be created at the local level (such as the Tem in Volos, Greece), while agitation for the nationalization of our currencies can also be undertaken.
Otherwise, a good question is to wonder is, if the collapse of industrial civilization is upon us, is it ever going to stop? Of course it will, and as Ugo Bardi also put it,
it will stop when the size of the world’s economy will have become compatible with the quality of the energy supporting it (that we can measure in terms of the energy return on energy invested, EROEI).
So while the Indiegogo crowdfunding campaign accomplished little else than obfuscating the underlying issues of Greece’s (and the world’s) systemic collapse, and in light of what has just been mentioned, it’s hard to deem the crowdfunding campaign as being much more than a rude joke. Oddly enough this seems a bit fitting, seeing how the campaign’s originator, Mr. Feeney, is a marketing coordinator for a comedy festival. But supposing that the campaign wasn’t intended as a massive joke, and as things stand, it nonetheless appears that a vast joke is being pulled on us.
Note: Upon completion of the Indiegogo campaign a new one has arisen in its place, this time not seeking the entire €1.6 billion, but any amount of which will be donated. Although it is apparent that the campaign is not a joke, it is nonetheless a band-aid.
