How PASOK and New Democracy Robbed Banks

Lost in the shuffle of scandals surrounding Greek banks is that the one of biggest heists was committed by the two parties ruling the country.

Lost in the shuffle of scandals surrounding Greek banks is that the one of biggest heists was committed by the two parties ruling the country they took turns ruining for the last four decades.

Prime Minister Antonis Samaras’ New Democracy Capitalists and his partner-in-crime the PASOK Anti-Socialists received 37 million euros ($50.8 million) in free money from the public treasury under a law – voted by the lawmakers who control the government – allotting themselves the slush fund cash based on the percentage of the vote they get.

You’d think 50 million bucks might be enough to run a political party, but New Democracy and PASOK instead used their share as collateral to get 232 million euros ($318.7 million) in “loans” from Greek banks.

Only they weren’t really loans because they’re not being paid back because the banks – dependent on the government for state deposits and 50 billion euros ($68.6 billion) for recapitalization – either forked over the dough or they wouldn’t get the quid pro quo.

A pretty good deal: put up 37 million and get 232 million back – 16 percent collateral. But it’s even better for the banks. Give New Democracy and PASOK 37 million and get back 50 BILLION – a 1,351 percent return on investment, even better than Bonnie and Clyde got.

Leandros Rakintzis, Greece’s independent but essentially powerless Inspector-General of Public Administration, told Reuters the game is obvious. “This is all about the exchange of favors,” he said. “These parties cannot pay the debt so it’s a vicious circle in which they come to depend on the banks. It creates an interdependence of politicians and banks.”

Except that the hypocrisy runs deeper. While Samaras and his cohort, PASOK leader Evangelos Venizelos – who was made Deputy Premier/Foreign Minister in return for backing harsh austerity measures – are insisting that Greeks buried by pay cuts, tax hikes, and slashed pensions have to pay their loans.

New Democracy and PASOK don’t and weasels have nothing on Venizelos who, while finance minister in a previous PASOK government, supported a moratorium on foreclosures to help people who couldn’t pay because of austerity imposed by the government.

With his party at 3-5 percent in polls, Venizelos, who can’t stand being out of the limelight, then went along with ending the protection to allow banks – flush with 50 billion euros of international bailout money that isn’t going to social services – to seize people’s homes, none of them politicians.

Samaras is just as heartless. He’s reneged on so many promises to protect people, including the gullible of the Diaspora who invested in Greeks bonds only to be nearly wiped out when the government hit them with 74 percent losses, that you’d need a Cray Supercomputer to keep count.

The big question is where the 232 million euros went because PASOK doesn’t pay its rent or staff so maybe if the banks cared (they don’t) they could start checking places like Switzerland, Luxembourg, London, and the Cayman Islands. No one will ever know because the parties don’t keep an accounting and don’t have to worry about being investigated because they gave immunity to the loan officers who gave them the free money. It’s a swell game if only you’re part of it.

This is Modern Greek math from the people whose ancient ancestors perfected it. The next time you want some free money from the bank, say $100,000 in a personal loan you have no chance of repaying, tell them you have a car worth $12,000, around the same 8-to-1 ratio deal New Democracy and PASOK got.

So it’s curious why the government is going after the former heads of the failed state-owned Hellenic Postbank for giving out 500 million euros ($674.39 million) in bad loans, which prosecutors said was a scam almost as good as that PASOK and New Democracy came up with.

Two years ago, Costas Tsimaras, New Democracy’s General Manager, told Reuters the party was trying to repay its loans but couldn’t, and he said they should be restructured, which is code for not paying them back in full.

That’s the deal that many Greek households wanted when the government violated its contract with them by cutting their pay, but doesn’t want them to do the same to banks, which are essentially private ATM’s for politicians.

“It will be very difficult for the parties to pay back the debt if there is no arrangement. Down the road, a political decision needs to be made to give parties the capacity to service their liabilities, some type of settlement on these loans,” Tsimaras said.

You can bet that political decision will be made because that’s the favored tactic of people like Samaras and Venizelos, who’ve never held real jobs, never missed a meal, never got a late notice from the electric company, never had to stand in line at a hospital, never had to scrounge through the glove compartment of their Mercedes looking for change to buy souvlaki or milk for a hungry child, and never had to worry about paying banks because banks are there to pay them.

Now Samaras is going to ask the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) to let Greece walk away from much of the $325 billion it owes in bailouts. If the Troika won’t, he can just fall back on the same ploy: don’t pay them at all. That’s the real Greek Way.