{"id":62782,"date":"2015-08-24T12:00:52","date_gmt":"2015-08-24T11:00:52","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=62782"},"modified":"2015-08-22T14:44:57","modified_gmt":"2015-08-22T13:44:57","slug":"from-greece-to-spain-to-britain-national-debt-audits-are-challenging-austerity","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2015\/08\/from-greece-to-spain-to-britain-national-debt-audits-are-challenging-austerity\/","title":{"rendered":"From Greece to Spain to Britain: National Debt Audits Are Challenging Austerity"},"content":{"rendered":"

17 Aug 2015 – <\/em>Across Europe, debt audits are emerging as a key instrument to challenge austerity, a financial doctrine that continues to asphyxiate democracy and the economic outlook for the majority.<\/p>\n

\"debt-graphics<\/a><\/p>\n

Somewhat recent phenomenons, debt audits analyze what debt is illegitimate \u2013 and should therefore be cancelled. For example, after being ravaged by austerity measures and unjust debts for years, Ecuador\u2019s 2008 Debt Audit Commission found a large portion of the nation’s debt to be “illegal and illegitimate.” Consequently, Ecuador\u00a0cut repayments and instead redirected<\/a>\u00a0millions of dollars into public services.<\/p>\n

Democracy vs. European Institutions<\/strong><\/p>\n

In mid-June, the Greek Truth Committee on Public Debt reported similar findings, with the most official assertion to date that the cuts enforced on the southern European country by the European Union, IMF and European Central Bank, known as the Troika, are in fact\u00a0illegal<\/a>.<\/p>\n

For years a citizen-led movement, the debt audit in Greece further raised the public awareness and influenced the 60% No vote in the country’s June referendum on new E.U. austerity measures. Unlike Ecuador, however, Greece appears to be not a fully independent nation; after the popular vote, the European powers led by Germany ignored that democratic process and in a Euro summit meeting on July 12, forced Greece to sign away its power to independently create legislation without the engagement of the large European financial institutions.<\/p>\n

This came with a raft of even more draconian austerity measures. Greece\u2019s former Finance Minister Yanis Varoufakis provided an annotated copy in which\u00a0he suggested<\/a>\u00a0the terms meant, \u201cGreece must subject itself to fiscal waterboarding, even before any financing is offered.\u201d The financing Varoufakis referred to was the third bailout, still under negotiation, which ignores the legal case for why Greece\u2019s debt is both illegitimate and illegal.<\/p>\n

The post-referendum outcome in Greece can be interpreted as having both strengthened and weakened the proponents of austerity \u2013 giving them a temporary victory, while revealing in full view how debt and austerity serve as a framework to circumvent and erode democracy.<\/p>\n

\"homeless<\/a><\/p>\n

El Pueblo, Unido, Jam\u00e1s Ser\u00e1 Vencido<\/strong><\/p>\n

Another country facing austerity imposed by European institutions is Spain, where a debt audit process is also gathering momentum. Initiated in 2012, the Spanish Citizen Debt Audit Platform (PACD)\u00a0enabled<\/a>\u00a0more than half a million Spaniards to obtain information about their local municipalities\u2019 budgets by 2014. And that number continues to rise. The PACD ethos is thus: authorities will only work in the public interest if the people oversee their accounts.<\/p>\n

The PACD platform provides open-source software accessible to anyone in Spain to assist them auditing their own local authorities\u2019 debts. With the meteoric rise of progressive politicians like Barcelona\u2019s Mayor Ada Colau in the elections of early June, it’s realistic to assume Spain’s debt audit work will continue to advance and challenge austerity.\u00a0According to many<\/a>, Spanish local authorities’ legitimacy in regards to debts incurred on the public may soon be tested legally, providing a means to reverse the cuts and make financial decision makers pay for their own mistakes.<\/p>\n

Stopping Bank Crimes Against U.K. Councils<\/strong><\/p>\n

In Britain also, a challenge to the legitimacy of local authority debt is underway. Debt Resistance UK has\u00a0started a local authority debt audit campaign<\/a>\u00a0and is investigating Lender Option Borrower Option (LOBO) loans by sending masses of Freedom of Information requests to each council to scrutinize their borrowing.<\/p>\n

Debt Resistance UK\u2019s research featured in Channel Four\u2019s Dispatches documentary in July. Since then, a Parliamentary inquiry into LOBOs has been launched, as banks in the U.K. (like RBS and others) have been lending councils these types of loans with interest rates\u00a0as high as 7.5% to 8%<\/a>\u00a0per year.<\/p>\n

LOBO loans often last 50 to 70 years and their interest rates are subject to variation \u2013 meaning they’re fundamentally a bet on rates going up, as they’re expensive in the current low-interest environment.<\/p>\n

In Edinburgh alone, the loans are calculated to cost Edinburgh City council \u00a3110 million. Alternatively, councils\u00a0could be borrowing<\/a>\u00a0from government via the Public Works Loan Board at interest rates between half to a third of the LOBO rate.<\/p>\n

Another advantage<\/a>\u00a0of the Public Works Loans Board is that the profits remain within the public sector, rather than further enriching bankers.<\/p>\n

\u201cThese loans could be illegal, as was the case with Hammersmith & Fulham\u2019s derivative speculation in 1989,” Vica Rogers of Debt Resistance UK told me. “Following the ruling Hammersmith & Fulham v Goldman Sachs, local authorities were prohibited from taking out derivatives [like] LOBOs.\u201d<\/p>\n

Debt Resistance UK highlights how British Chancellor George Osborne has pushed local councils into borrowing from banks and money markets. In 2010, Osborne\u00a0increased the interest rates<\/a>\u00a0on the Public Work Loans Board.<\/p>\n

The group says its aim isn’t to attack councils \u2013 which they want to see made more democratic and accountable \u2013 but to assign blame properly to the banks. Debt Resistance UK wants foremost to expose the collusion between supposedly independent financial advisers and those selling the LOBO loans.<\/p>\n

\u201cWhat we have found is a cabal of private financial firms, banks, brokers and advisers acting in unison to plunder the public purse, costing taxpayers millions,\u201d\u00a0wrote<\/a>\u00a0Joel Benjamin in an article published on Novara media.<\/p>\n

Rogers explained further that the problem lies in banks co-opting local governments. \u201cThe LOBO scandal shows how the private sectors are increasingly finding ways to engineer around regulations [and] to put their hands on public funds at the citizens\u2019 expense,” he said.<\/p>\n

Debt Resistance UK has\u00a0created a detailed map<\/a>\u00a0of each council comparing how much is being borrowed by LOBOs versus the Public Works Loan Board. The group also presents clear information and solutions about how councils can work better.<\/p>\n

\u201cThese educational tools are an important part of the campaign \u2013 when people can understand their council\u2019s finances, they can reclaim them,” added Rogers, who said their work was inspired by their colleagues in Spain.<\/p>\n

\u201cWe are trying to replicate the Spanish model where a platform and tools were created to empower local groups to self-organize and take autonomous action. This is a very interesting form of organizing that steps away from the centralized structures of NGOs, encouraging citizens to take action themselves.\u201d<\/p>\n

Go to Original \u2013 occupy.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

After being ravaged by austerity measures and unjust debts for years, Ecuador\u2019s 2008 Debt Audit Commission found a large portion to be “illegal and illegitimate.” Consequently, Ecuador cut repayments and instead redirected millions of dollars into public services.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[146],"tags":[],"class_list":["post-62782","post","type-post","status-publish","format-standard","hentry","category-economics"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/62782","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=62782"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/62782\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=62782"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=62782"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=62782"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}