Late yesterday, Greece’s Parliament just passed the latest round of austerity measures, a total of over three billion in cuts. As they debated and voted, the population raged in the streets, battling police lines and setting at least ten buildings aflame. Hopes at reaching a bailout agreement and write-down of Greece’s debt will now continue, in the hopes of preventing another financial system meltdown, but given the deteriorating situation so far, I can’t say I’m hopeful.

What got Greek protesters so angry?

Perhaps it’s the total failure of austerity measures so far. The cuts in wages, benefits, jobs security and pensions have devastated the already crumbling Greek economy. This has meant increasing trouble keeping up with creditor payments, rather than the intended effect, and inflicted even more brutal hardship on the people of Greece. Blaming the Greek “national character” for these problems likely doesn’t help either. The rage may also have to do with the recent “regime change”, where former PM George Papandreou was replaced with “technocrat” Lucas Papademoms after threatening a referendum on this issue, a coup perpetrated openly and directly by the financial elites of Europe. Overall, it probably has most to do with the general feeling that Greece is being “thrown under the bus” by the rest of Europe.

There is a very important lesson to be learned here. Debt is political. Economists and pundits love to claim that national debts are only a monetary tool for financing public spending. They aren’t. This is money owed to people, and those debts can be called in (or sold short) as a means of achieving political and economic goals. This is a lesson the Third World has been learning for decades through the IMF’s “structural adjustment policies“. Entire countries across Africa, Asia and Latin America were restructured for the good of their creditors – with rampant deregulation, cuts and privatizations. Like Greece, economic “progress” actually slowed as a result, and the populations often suffered in ways First-Worlders find unimaginable, but it was terrifically profitable. For every dollar in aid which flows to poor nations like these, there’s a dozen or so dollars going back in debt repayments. What’s been happening to Greece and many others in the last five years shows that First World nations can suffer this fate too, and it’s likely that Greece won’t be the last where things get this bad. In all of these cases, public debt was leveraged in order to gain massive concessions which voters, unions and other “democratic” institutions would never have agreed to under other circumstances.

Even for countries like Canada with ‘sustainable’ debts (by debt-to-GDP ratio), the language of debt-crisis has clearly infected nearly all political and economic discussions. From Reagan to Mike Harris to Rob Ford, this strategy has been incredibly successful. Social programs, rights and benefits which took decades of struggle to achieve now threaten to be eroded, not because we couldn’t afford them, but because of the way we’ve been paying for them. From public health care to workplace rights, welfare and others, this claw-back is immense. The moderate left hasn’t helped with knee-jerk defenses of these problems which critique simply the math behind them and not the deeper motivations.

Financial elites have deposed two heads of state (Papandreau and Berlusconi) directly in the last few months. These coups didn’t come as a covertly funded insurrection, an act of aggression by proxies like the US military or over-funded establishment political parties. They simply demanded it and it happened. This isn’t a conspiracy theory – it was widely reported in the world press. This demonstrates very clearly who is really in charge here, and makes their goals very obvious.

There are limits to austerity. Both in the limits of real-world economies to function under sustained cuts and in the willingness of populations to put up with them. These policies destroy countries. Greece is only the latest example, and there will be more. As traditional means of social pressure prove increasingly ineffective against it, the only options left open are far less “civil”. There is a very good chance that the Greek government will not survive this ordeal, and I don’t just mean the ruling party. This latest hurdle will avoid short-term problems at the price of again worsening the long-term crisis – this isn’t over, not for Greece, and not for Europe. The smoke may be clearing over Athens, but the fires are far from out.