Yet, considering Krasner (1999) and Simpson’s (2004) claims it can be demonstrated that probably sovereignty has not been used by powerful states as a straw man (as it would be too naïve an act), but rather as a political tool for justifying certain acts which could have not otherwise be accepted within the framework of international law. The concept of sovereignty has evolved and is still evolving, however its controversial and questionable nature has not evolved, as the world keeps on witnessing the same disasters and the same usurpations of the most powerful towards the weaker states.
From The History Of Greek Sovereign Debt Defaults:
Ancient Default
The first recorded default in Greek history occurred in the fourth century B.C., when 13 Greek city states borrowed funds from the Temple of Delos. Most of the borrowers never made good on the loans and the temple took an 80% loss on its principal.
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The Greek War of Independence began in 1821 and targeted the end of Ottoman authority, which had ruled most of that region for centuries. In 1824, a loan of 472,000 pounds was secured on the London Stock Exchange to continue this fight. This offering was oversubscribed and buyers were required to put down only 10% of the purchase price with a promise to pay the balance over time. An additional loan of 1.1 million pounds was floated in 1825.
The unfortunate fact about these two loans was that speculators and middlemen in London skimmed off much of the proceeds before Greece received any funds. Another issue was that the Greek War of Independence soon descended into civil war between rival factions, making it difficult to even figure out who should receive these funds.
No interest payments were ever made to the bondholders on these two loans, and the value of the paper eventually plummeted to a fraction of the par value. It wasn't until 1878 that the Greek government settled on the loans, which by then with accrued interest had increased to over 10 million pounds.
From The Greek Bankruptcy and Bailout - A History Review (or Old Habits Die Hard)
The history of the Greek loans and bankruptcies starts in1824, before even Greece was established as a state. Two loans were taken; one in 1824 and one in 1825. The first loan was issued for 800,000 British pounds sterling (call them GBP), but only 308,000 pounds and army supplies worth 11,900 were ever given to Greece.
The second loan, was issued for 2,000,000 sterling. Greece barely received 529,000 of that, as the rest was held for interest, expenses, brokerage fees, previous charges, you name it.
But the “party” did not end there. Of the remaining 529,000 pound sterling, 156,000 was sent to the United States, for the construction of two steamboat - frigates – and 123,000 would remain in England for the construction of six steamboats. Also 37,000 was given as compensation to the British admiral Cochran, who took the lead for the establishment of the (under construction) Greek Navy.
So 190,000 of that loan remained in Greece and were wasted in civil wars and clashes, while Ibrahim Pasha was marching unimpeded south, in Peloponnese. (Remember, much of Greece was still under Turkish occupation at the time).
The first official loan default was expected and came about three years later, in 1827, as Greece was unable to pay the interest on these first two loans.
The second default was in 1843, when Greece defaulted on a loan of 60,000 gold French Francs (GF) . This loan was taken by the government of the installed Bavarian King Otto, and was guaranteed by the three great powers, (France, England, America) each of which was guaranteeing 1/3 of it. This loan was spent in payments of the previous two British loans.
Interest in the affairs of Greece now began to be awakened, especially among the English; and the result was a loan of 800,000 [pounds] raised in London for the Greek government, at the rate of 59 for 100. Greece really obtained only 280,000 [pounds], while it contracted a debt of 800,000 [pounds].
From Micro-Usury Shows its Ugly Face:
First they were stripped of their utensils, furniture, mobile phones, televisions, ration cards and heirloom gold jewelry. Then, some of them drank pesticide. One woman threw herself in a pond. Another jumped into a well with her childr
en. Sometimes, the debt collectors watched nearby.
More than 200 poor, debt-ridden residents of Andhra Pradesh killed themselves in late 2010, according to media reports compiled by the government of the south Indian state. The state blamed microfinance companies — which give small loans intended to lift up the very poor...
From Sacred Economics – Life After Capitalism:
Sacred Economics argues that what economists commonly refer to as growth is the expansion of scarcity into areas of life once characterized by abundance. Fresh water, which was once abundant, has become scarce following its transformation into a commodity we have to pay for.
The fractional reserve banking system, which allows bankers to create money out of thin air – as debt – accentuates the pressure to convert more and more of the commons into commodities. Because the debt and interest created is always greater than the money supply (current global debt is estimated at $75 trillion, in contrast to global wealth of $30 trillion), there is always constant pressure to create more goods and services to repay it. This explains why there are always people willing to cut down the last forest and catch the last fish.
From 9th Edition of Encyclopedia Britannica:
In Athens about the time of Solon's legislation (594 u.c.) the bulk of the population, who had originally been small proprietors or metayers, became gradually indebted to the rich to such an extent that they were practically slaves. Those who still kept their property nominally were in the position of Irish cottiers : they owed more than they could pay, and stone pillars erected on their land showed the amount of the debts and the names of the lenders. Usury had given all the power of the state to a small plutocracy. The remedy which Solon adopted was of a kind that we are accustomed to consider as purely modern. In the first place, it is true that according to ancient practice he proclaimed a general seisachtheia, or shaking off of burdens : he cancelled all the debts made on the security of the land or the person of the debtor. This measure alone would, however, have been of little service, had he not at the same time enacted that henceforth no loans could be made on the bodily security of the debtor, and the creditor was confined to a share of the property. The consequence of this simple but effective reform was that Athens was never again disturbed by the agitation of insolvent debtors.
From Debt and Democracy: Has the Link been Broken? by Prof. Michael Hudson:
As the practice was privatized by royal collectors of user fees and rents, “divine kingship” protected agrarian debtors. Hammurabi’s laws (c. 1750 BC) cancelled their debts in times of flood or drought. All the rulers of his Babylonian dynasty began their first full year on the throne by cancelling agrarian debts so as to clear out payment arrears by proclaiming a clean slate. Bondservants, land or crop rights and other pledges were returned to the debtors to “restore order” in an idealized “original” condition of balance. This practice survived in the Jubilee Year of Mosaic Law in Leviticus 25.
The logic was clear enough. Ancient societies needed to field armies to defend their land, and this required liberating indebted citizens from bondage. Hammurabi’s laws protected charioteers and other fighters from being reduced to debt bondage, and blocked creditors from taking the crops of tenants on royal and other public lands and on communal land that owed manpower and military service to the palace.
In Egypt, the pharaoh Bakenranef (c. 720-715 BC, “Bocchoris” in Greek) proclaimed a debt amnesty and abolished debt-servitude when faced with a military threat from Ethiopia. According to Diodorus of Sicily (I, 79, writing in 40-30 BC), he ruled that if a debtor contested the claim, the debt was nullified if the creditor could not back up his claim by producing a written contract. (It seems that creditors always have been prone to exaggerate the balances due.) The pharaoh reasoned that “the bodies of citizens should belong to the state, to the end that it might avail itself of the services which its citizens owed it, in times of both war and peace. For he felt that it would be absurd for a soldier … to be haled to prison by his creditor for an unpaid loan, and that the greed of private citizens should in this way endanger the safety of all.”
The fact that the main Near Eastern creditors were the palace, temples and their collectors made it politically easy to cancel the debts. It always is easy to annul debts owed to oneself. Even Roman emperors burned the tax records to prevent a crisis.
From Greece - Round III, In Which We Learn That Greek Debt Actually INCREASED Post-Default:
The somewhat amusing part of this entire transaction is that the debt of Greece has been INCREASED. Greece and the EU handed private holders $138Bn in write-offs but with the addition of the new loan, $171Bn, the gross debt for Greece increased by $33Bn and this is if all of the legal challenges favor Greece. The total debt of Greece (sovereign, municipal, corporate and bank) has just increased from $1.20 Trillion to $1.233 Trillion and all accomplished by this brilliant plan that did nothing except to tag investors and ramp up the debt load for the country.
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