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July 5, 2015 2:09 PM   Subscribe

Early results indicate Greeks have voted No in a landslide.

Emerging ‘No’ Vote in Greece Poses Merkel’s Biggest Challenge
After speaking by phone with French President François Hollande, the two called for eurozone leaders to hold summit on Tuesday, Ms. Merkel’s spokesman Steffen Seibert late Sunday. “Both agree that the vote of the Greek citizens is to be respected,” Mr. Seibert said.
posted by 445supermag (406 comments total) 50 users marked this as a favorite
 


This was a question which had no good answer. It was a choice of dreadful outcomes with no ray of hope to be seen.

No matter how this comes out, a lot of people are going to suffer. This won't be like rubbernecking at a car accident; it's more like watching a city burn to the ground. Not entertaining, genuinely horrifying, but you won't be able to turn your eyes away.
posted by Chocolate Pickle at 2:19 PM on July 5, 2015 [8 favorites]


Good for them. That's enough of this austerity nonsense.
posted by evilDoug at 2:20 PM on July 5, 2015 [37 favorites]




The ripples from this are what frighten me. And nobody even knows what the ripples are, because this has never happened before.

Living in interesting times, indeed.
posted by hippybear at 2:21 PM on July 5, 2015 [8 favorites]


I'm nervous for what this means for average Greeks. But, that said, the way the rest of Europe tried to interfere with Greece's democracy (and this vote, particularly) and push austerity on them was not a pleasant thing to witness. In a way, a "no" vote is as much a welcome referendum on political leadership and banking outside of Greece.
posted by a lungful of dragon at 2:23 PM on July 5, 2015 [30 favorites]


For more context, there's a a post from June about Greece and the Euro.
posted by WalkingAround at 2:23 PM on July 5, 2015 [1 favorite]


Good. What was being done to Greece was profoundly undemocratic under the guise of monetary policy. Even if we end up in the same situation as before after a few weeks of upheaval, it's good for the overlords to be reminded that being stupidly abusive of debtors has repercussions.
posted by chortly at 2:24 PM on July 5, 2015 [32 favorites]


[A few comments deleted; please refresh before responding. Thanks.]
posted by LobsterMitten (staff) at 2:24 PM on July 5, 2015




Maybe disaster is preferable to disbeing after all?
posted by klue at 2:25 PM on July 5, 2015 [1 favorite]


There's plenty of blame to go around, here. From the banks, to the other EU state leaders, to the long-term problems with the Greek economy, to the Greek leadership at the time.
posted by Justinian at 2:26 PM on July 5, 2015 [4 favorites]


ECB to Greek public: "Hello! I've been kicking you in the head for the past five years—for your own good, of course. Would you like me to continue for another ten? (By the way, if you vote 'no' I'll shoot your dog.)"

Greek public to ECB: "FOAD".

ECB: ...

(to be continued in Monday's thrilling installment!)
posted by cstross at 2:26 PM on July 5, 2015 [80 favorites]


Interfluidity has a very informative (and impassioned) take from yesterday.
posted by ropeladder at 2:28 PM on July 5, 2015 [50 favorites]


RoomThreeSeventeen: Greece's economy is a shambles. The government is paying out far more money than it is taking in via taxes, in part because evasion of taxes is very widespread, but more because its economy is in ruins.

The whole world suffered in 2008, but Greece suffered much worse than average. And as a result, the national debt has ballooned to unsustainable levels.

For the last few years Greece has been surviving on loans from the IMF and from other members of the EU, but in both cases the loaners insisted that Greece should implement rather drastic austerity measures: cut pension payments to retirees, lay off government workers, and a bunch of other things that would bring serious pain to the people of Greece.

The previous government tried it, and it caused pain but didn't bring about any kind of recovery. Finally, in an election about 6 months ago the voters of Greece got pissed off and elected a new party to control the government, who had campaigned on a platform of standing up to the Germans (who are viewed as being the main bullies forcing Greece to do all this).

Well, the new government has tried to negotiate better terms for its loans and the other parties didn't budge, which brings us to the current crisis. Greece cannot pay back its loans. Not possible.

The current plebiscite is about whether the government should give in to the demands of the creditors, and "no" is winning because the people of Greece are tired of suffering. What they want is for northern Europe to bail them out again, but even if that happened it would only be a short term solution.

Traditionally when a government got into this kind of fix, the solution was to inflate the debt away. But Greece cannot do that because it gave up the Drachma and joined the Euro. What will probably happen now is that Greece will leave the Euro, return to the Drachma, and then inflate it like nobody's business.

But that's going to have other side effects. For one thing it's likely at this point that Greece's banking system is going to collapse. There began a mass run on the banks about a week ago and the banks have been closed for the last week, while the government has imposed draconian limits on currency movement. In particular, on currency leaving the country. Like you can't do it any more.

Which is already cause serious problems. I read this morning about the fact that Greece is going to run out of pharmaceuticals because they can't pay for new deliveries. One pharmacy said it would run out of insulin within a week, for instance.

The Greeks want the pain to end. I can understand that, but it isn't possible. All they can do now is choose one or another kind of near-fatal pain. And with this vote they've probably chosen to leave the Euro.
posted by Chocolate Pickle at 2:30 PM on July 5, 2015 [64 favorites]


The intransigence of the EU (principally Germany) and ECB has been a frontal assault on the idea that an anti-austerity politics can be built within the Eurozone. New coalitions like Syriza are beckoning in southern Europe (particularly Spain's PODEMOS) and capital is desperate to stop its spread.

I hope the Greeks giving the finger to these undemocratic toadies of the bankers is the first step in building a long-term political and international alternative to austerity politics. The coming period will be very difficult for the Greek people, but they've likely chosen a path (since this means an exit from the Euro is all but certain) that doesn't keep them permanently hostage to other countries.
posted by graymouser at 2:34 PM on July 5, 2015 [21 favorites]


So the question is how much debt do the Greeks really have? NYT did a great article about a guy who thinks the real number is €7.8 billion. However, according to creditors it is close to €38 billion. The Greeks got into this mess because its previous conservative government borrowed a lot of money to fund the Olympics, a usual failure of a cultural policy (Montreal, the UK/London, etc) as well as take unproductive workers out of the market with generous pensions to let the next one in, as a way to (mostly successfully, even today) reduce the brain drain to Europe and the USA from Greece's towns and cities.
I think the EU Commision hate the Greeks have run all over their plans to be a credit facility by borrowing too much and not paying it back. I am surprised the EU has never acknowledged that the Greek government did not acknowledge its own borrowing in public until after the Greek government could no longer pay, announcing this publicly.

Greece is a pretty resilient country but I know many will suffer and I feel bad for that. Default is a new beginning which will require the Greeks to feed their own people from their own breadbasket for at least four years. Iceland is a great model for Greece, having recovered the way it has I feel confident in expecting five percent economic growth by 2019.
The question is whether people will scramble to leave. Doctors are because they are not getting paid. That is a problem. Who can contact Cuba? The real threat is whether the referendum is final. I doubt it. Germans want their pensions back. Merkel is lucky that the German voters blame Helmut Kohl and Gerhard Schroder for this catastrophe. I would like to hope this intervention in the credit market forces the entire EU to question what the EU is for and for whom.
posted by parmanparman at 2:34 PM on July 5, 2015 [8 favorites]




This whole thing is fascinating and awful to watch. The thing I find most amazing is that the present state of affairs has persisted for more than 5 years now, long enough for millions of people to make their way out of the country and any reasonably competent business to hide its assets in other countries. In that amount of time, the EU should have been able to pull it together and resolve the issue -- we're talking about just a couple percent of EU GDP over that time period. And despite all that it looks like this could easily go on another five years.

Also ironic that Greece has produced many of the world's foremost economists and financiers ... Who are busy making very successful policies in other countries.
posted by miyabo at 2:51 PM on July 5, 2015 [1 favorite]


Interfluidity has a very informative (and impassioned) take from yesterday.

I thought that made a lot of compelling arguments (and Lord, that graph of the GDP predictions). The most interesting to me was how through a refusal to accept their own role in this crisis, the elites at the EU and ECB betrayed not only the Greeks, but the whole idea of European unity itself. There was a way for this to play out that didn't turn into a fight between the supposedly sober and prudent Germans vs. the profligate Greeks, but that would have required creditors to admit their mistakes and not fall back on the very national stereotypes and infighting that the EU was designed to end. If this does tear the EU apart, it won't be the fault of Greece but of those who preferred a scapegoat to actually believing in the ideals they espoused.
posted by Copronymus at 2:52 PM on July 5, 2015 [45 favorites]


So the question is how much debt do the Greeks really have? NYT did a great article about a guy who thinks the real number is €7.8 billion. However, according to creditors it is close to €38 billion.

No: "Amid fears of a Greek default on its huge public debt of €323bn...." (BBC June 30).
posted by sylvanshine at 2:55 PM on July 5, 2015 [1 favorite]


The tax evasion aspect is nuts. Swimming pools affect tax rates. People in Athens neighborhoods claim to have only 324 swimming pools, and the real number was determined to be 16,974.

They don't need austerity. They need law and order.
posted by Cool Papa Bell at 2:58 PM on July 5, 2015 [37 favorites]


Maybe disaster is preferable to disbeing after all?

I wish disbeing was a word, but apparently it is not. Perhaps death is the word that was sought? I know that to become the opposite of ones self-image is in some ways equivalent to a concept of death for some. However, I must point out that the concept of the death by the imposition of loss of self concept is not strictly relevant at the level of the nation state as it relates to the individual.

Individuals are subject the state, and perhaps the point is that we have the chance now to define ourselves by choice, not by the state or the prevailing monetary policy. I prefer to think of rejecting an externally imposed monetary (belief) system as a rebirth than a death or "disbeing".

This is paradoxical as one posits concepts between the individual and state level. Can Greece as a nation state reject imposed global economic norms? No, by defintion. Can individuals choose to act and live differently? Yes.
posted by thebestusernameever at 3:01 PM on July 5, 2015 [1 favorite]


In case you missed it from the previous thread, there are a couple live blogs that appear to still be updating: links

Here are some snippets from the Guardian:

22:34
Barclays analysts have issued a research note, warning that Greece is likely to leave the euro.

They write: [...]

21:45
Today’s vote does not mean Greece is heading out of the eurozone, says Tsipras.

The Greek people did not answer a question on Europe, he insists - we must take that question ‘off the table completely’.

(last week, several European leaders warned that a No vote would mean Greece was voting to leave the eurozone, although there has been some rowing back since)

posted by Peter J. Prufrock at 3:01 PM on July 5, 2015


It sounds like it's the upper classes that does most of the evasion, though. So again, rich people ruing everything.
posted by ymgve at 3:03 PM on July 5, 2015 [13 favorites]


Anyone that wants to read sanity should read the interfluidity link posted above.


At this point, the full manufactured echochamber morality-play hysteria of the market will steamroller these kind of sober analyses unless leadership is displayed and the whining of creditors who can afford a damn haircut is withstood.
posted by lalochezia at 3:04 PM on July 5, 2015 [14 favorites]


The interfluidity link from ropeladder above is great. Here are a few more things I've read on the situation that I think are very good:

Paul Krugman: Does Greece Need More Austerity?

Frances Coppola: Morality in the Greek Crisis:

The standard story goes that lazy, ne’er-do-well Greeks borrowed and spent excessively to support a lavish lifestyle well beyond their means. And to make matters worse they lied about their true financial position in order to gain admission to the Euro club. Unsuspecting German and French banks lent to them believing they were financially in better shape than they actually were. And when the Greeks finally admitted they couldn’t actually pay the money back, hard-working thrifty Germans had to bail them out. Now the Greeks are complaining about the reforms that the virtuous Germans and saintly official creditors are requiring of them. But they are only pretending to do reforms, In reality they are still shirking. No wonder the creditors’ patience has run out. The Greeks just can’t be trusted.

I hear this story a lot. But it’s not true. And even if it were, it would not be helpful.


Joseph Stiglitz: What is the Real Greek Morality Tale?

If there is a moral hazard, it is on the part of the lenders -- especially in the private sector -- who have been bailed out repeatedly. If Europe has allowed these debts to move from the private sector to the public sector -- a well-established pattern over the past half-century -- it is Europe, not Greece, that should bear the consequences. Indeed, Greece's current plight, including the massive run-up in the debt ratio, is largely the fault of the misguided troika programs foisted on it.

VoxEU: Grexit: The staggering cost of central bank dependence (emphasis mine)

The deep reason for the Eurozone sovereign crisis is that the euro is a foreign currency for member countries. It also provides an example of how deeply politicized the ECB has become. No other central bank in the world tells its government what reforms it should conduct, nor how sharp should fiscal consolidating be. As a member of the Troika, the ECB was instructing Greece to carry out deeply redistributive policies, for which only elected politicians have a democratic mandate. In the end, it must accept the blame for poorly designed policies that have provoked a deep depression and its political consequences.

A debt forgiveness program, like a Jubilee Debt or Paris Agreement should have happened years ago. Because you know who else benefited mightily from debt forgiveness when they most needed it? That's right. What has happened instead is the Greek people have become the victims not only of fuck-ups by the big banks but also a Eurozone design that was fundamentally flawed from the beginning.
posted by triggerfinger at 3:06 PM on July 5, 2015 [33 favorites]


I think this was the least worst decision for the Greeks to make for themselves, even though the next three or four years are probably going to to be pretty bleak for them. But what was the alternative, 20 more years of depression and austerity and effectively handing over national sovereignty to their creditors? What a surprise that most Greeks didn't want to vote their country into a colony.

And indeed, what a failure of vision and an unforced error from the EU, and from the Germans in particular. I'm sure Russia will be trying its hardest to pry Greece out of the European orbit and in to its own, too. If this had happened a few years ago when they were flush themselves, you can bet that there would be a Russian bailout on the way. They must still be loving that the centrifugal forces at work within the EU seem to be gathering more and more force now.
posted by strangely stunted trees at 3:07 PM on July 5, 2015 [2 favorites]


It sounds like it's the upper classes that does most of the evasion, though. So again, rich people ruining everything.

Read the article. It touches every level.
posted by Cool Papa Bell at 3:08 PM on July 5, 2015 [3 favorites]


The primary argument made was that if you vote no, your savings and pensions would be destroyed.

The youth vote went "Hahahahahaha nice joke" and came out and voted no. They're the ones who've really suffered in the austerity push, the ones with the worst unemployment, and so forth. The "yes" vote literally offered them nothing, so they came out and voted no. Nobody expected that -- and no polls showed that, because, well, they couldn't afford phones, so they were basically unpollable.

So, Europe has demanded Austerity or else, and Greece has just said "Or else what?"

Now we find out just how serious that threat was.

What to really watch.

1) Will they force the Greek Exit?

2) What does this do to Italy and Spain -- who would be next on the Grexit Train if the idea of leaving the Euro goes from something one does not do to something that can be done? Because even if it's initially posited as something that's only done as a last resort, it always seems that last resorts get relied on more and more frequently in these sorts of thing.

3) What does this do to the Eurozone as a whole? Do the other nations suddenly look at Germany and France and go "Wait...are we getting a fair deal, or are you just going to dump on us if anything goes sour?"

It's really tempting to blame Greece entirely for this -- and they have done a lot wrong. But there are a lot of bad actors here outside of Greece that you would be letting off completely by doing so, and it is a mistake to do so. A fundamental rule of loans is it is the bank's fault for making a bad loan -- it is entirely the bank's responsibility to do due diligence before making the loan. And not only did the banks not do that, they actively helped hide the problems with the Greek economy to get Greece into the Euro.

So, blame Greece for its faults. But a large part of this problem lies in Eurozone banks that happily hid Greek problems and loaned them a bunch of money repeatedly to get them into and keep them in the Euro, and used that to make sure that Greece kept buying goods from Germany to keep the German economy humming.

This is *not* a simple problem with one bad guy. Not at all.

The problem is the people who are going to pay are not the people who borrowed that money. They're not the people who are dodging large amounts of tax. It's the young unemployed of Greece, who are pretty much fucked no matter what happens.

At least by voting no, they're getting a say in how they're going to get screwed over.
posted by eriko at 3:09 PM on July 5, 2015 [71 favorites]


Greece has a primary surplus, even after growth forecasts were adjusted downwards. The IMF recently reported that greek debt is unsustainable and if you read between the lines, that the assumptions that the relief plan was based on were wildly optimistic.

My short analysis: Greece is leaving the Euro, and the EU is about to open a festering wound that will not heal for a long, long time.

There is no amount of austerity that will allow Greece to pay down the debt. Austerity in this case means cutting spending and raising taxes; it's pulling money out of the economy and will invariably have a negative affect on growth. The only way expansionary austerity works, even theoretically, is if the spending cuts are used for tax relief.

The domestic politics of Germany will not allow a solution involving debt relief. The Germans see the Greeks as profligate spenders who lived beyond their means (this is true) and now must suffer the consequences. The Greeks see the Germans as hypocritical autocrats who have benefited massively from previous debt relief and the competitive advantage the Euro gave their manufacturing sector and having reaped the benefits want to offload the costs of the Euro onto the periphery (this is also true) and think they can go to hell.

So the EU will demand austerity, more austerity, and nothing but austerity; and will probably give into the temptation to 'make them sweat' and pull the plug on support the Greek financial system. The Greek response to this will likely be a formal default. This will drive Greece out of the Eurozone, and they'll be forced to switch back to the Drachma and cause massive pain in Greece.

The festering wound will be to the legitimacy of the Euro project in general, because if the EU response to losing a vote is to try and collapse a country's economy and government it will give every Euroskeptic a bloody shirt to wave to inflame nationalist sentiment in their countries. The festering wound will turn to general sepsis if Greece manages a recovery.
posted by Grimgrin at 3:09 PM on July 5, 2015 [34 favorites]


The next week will determine a lot about the future of the country. I'll keep my fingers crossed, but I somehow suspect the PM will be presented a harsher -take-it-or-leave it offer and then all bets are off.

Maybe disaster is preferable to disbeing after all?

Personally, disasters kind of ruin my day decade and I'd rather not see the count of the poor, the unemployed and underemployed, as well as the number of suicides go even higher. It would be nice if pro-European politicians were still a thing in Europe (because let's face it, Greece is in dire straits, but the economy of Europe has been in a bad place for a long time).
posted by ersatz at 3:10 PM on July 5, 2015 [1 favorite]


They don't need austerity. They need law and order.

One analyst pointed out quite rightly that a "yes" vote would have likely made such a strong antidemocratic impression that it would have motivated far right-wing nationalists to further power and to implement "law and order" in its typically, historically strong-armed way. A "no" vote is bad for bankers, true, but there's an argument that it might help keep Europe from dragging itself further towards right-wing fascism, in the long term.
posted by a lungful of dragon at 3:11 PM on July 5, 2015 [11 favorites]


a good critique of austerity and clear thinking on europe (re: bad idea, but no matter what everyone still loses)
posted by Reasonably Everything Happens at 3:18 PM on July 5, 2015


"If you need an "Explain like I'm 5" resource like I do"

No, that's a shitty and misleading analysis. The framing that the referendum is in practical terms a question of staying or leaving the euro is absolutely wrong and essentially propaganda.

It's harmful in two different respects at the same time -- first, because the Greek people very much don't like the status quo and the offered deal but also very much don't want to leave the euro, saying that the referendum was really about whether to leave the euro was a message sent by all the European interests that want Greece to accept the offered deal. So this message was a scare tactic. Second, it's harmful because a whole lot of people don't understand that it's a scare tactic and accept it as an informed and realistic analysis. That's basically been the case with most of the anglophone media -- in the NYT stories I've read in the last week, it's been about 90% that way and only 10% not.

No one knows what's going to happen this week and Vox's and similar analysis are all flawed when they flatly predict that the troika won't re-open negotiations. Just in the last few days the landscape has changed some, with several leaders and others sending out signals that they'd want to negotiate in the event of a "no" result.

And this is going to dramatically intensify, as the markets open tomorrow sharply down as a result of this and people have an urgent sense that a deal is a much better alternative than not. There are a great many powerful interests who think the economic and political costs of even risking a Greek exit from the euro are unacceptable. Those interests are what Tsipras is counting on, and they absolutely will be a huge factor, beginning now but you'll see a lot of messaging like this tomorrow. Expect the IMF to signal this direction.

However, there's two complicating factors in this that could make it go the other way. The first is that because the Greek people don't want to leave the euro, and because Tsipras has said over and over, and again just now, that leaving the euro isn't on the table, then the simple reality is that Greek doesn't actually have any real bargaining leverage. Ultimately the only alternative they have to accepting the offered deal is to default, and if they default, they'd eventually have to leave the euro, which they don't want to do and they've told the troika this, the troika knows this. So all the troika has to do is wait for Greece to capitulate. Second, there is very intense domestic political pressure, particularly in Germany, against offering a better deal or, I think, in the wake of this referendum result, to even continue to negotiate at all.

"For the last few years Greece has been surviving on loans from the IMF and from other members of the EU..."

No, that's not true. The loans from the troika -- what is being negotiated -- entirely go right back out of Greece to pay the debt it owed from its sovereign debt crisis. It is not funding the government, these loans only service its older debt. Otherwise, Greece is now running a primary surplus. If Greece defaulted on that debt, it would have a budget surplus.

"Greece cannot pay back its loans. Not possible."

This is true, but it's been an open secret. Even under the terms of the proposed deal, and even assuming the long-disproven assumptions about the Greek economy growing under these austerity conditions, it's still the case that paying back the amount owed would take many, many decades. It's totally unrealistic and in a sane world everyone would have already agreed to writing-off a big portion of the remaining debt, which is the big sticking point for Greece -- they want the deal to include writing off some more of this debt. The troika insists that it won't negotiate on that point now, but at some indefinite point in the future.

"All they can do now is choose one or another kind of near-fatal pain. And with this vote they've probably chosen to leave the Euro.

No, that's not true. All Syriza has been asking for -- and keep in mind that the referendum was about the specific deal being offered by the troika -- has been some relatively small adjustments to the deal, mostly to make the tax increases more progressive (instead of increasing the VAT, which is regressive, increasing rates on high incomes, etc), not as big a set of cuts to the pensions, and then including some amount of debt relief. All of this doesn't actually amount to very much. And, in fact, it won't really make that much difference to the austerity -- it's still a lot of austerity and nothing that Syriza is asking for will drastically improve current conditions. And it's not that much money on the troika's side, either.

Syriza is insistent on these issues because they believe that these are the bottom-line issues where the Greek people demanded that this new anti-austerity government would fight for in new negotiations. And the troika is insistent on not compromising on these things because ... well, because they absolutely loathe Syriza and their negotiators and there's a huge amount of anti-Greek sentiment in the rest of Europe. Also -- per what I wrote above, they don't think they have to negotiate, anyway, given that the Greek people don't want to leave the euro and Syriza has repeatedly said that leaving the euro isn't an option.

"If this does tear the EU apart, it won't be the fault of Greece but of those who preferred a scapegoat to actually believing in the ideals they espoused."

Ultimately this is the result of the VSP narrative about the 2008 global economic crisis. Rather than being a global financial bubble that intersected (in this context) with some deep structural malincentives in the euro, instead it was supposedly all about irresponsible governments running up debt that they can't afford. And Greece, of course, is the poster child for this. So Greece was set up not only as the villain of its own particular story, but as the representative villain of all villains of this global story. And this false narrative completely elides all the responsibility for the crisis on all the other institutions that profited from disaster before it happened -- for example, huge multinational banks and a big export economy that I won't bother to mention -- while creating an argument for austerity policies that cut social spending. This narrative hugely serves many powerful interests.

In that context, this situation had to evolve as it did, because that narrative -- a narrative that must be maintained because it's so valuable to the powerful -- creates very narrow political limits on what is widely acceptable or even possible.

On preview: I agree with Grimgrin's comment excepting that I don't think a grexit is inevitable. I think right now it's about even whether or not the troika sits back down at the negotiating table. I totally agree about the German domestic politics, and I think this is generally (but not as universally or intensely) true in France and elsewhere, but that there's also a huge amount of countering pressure to avoid grexit in Europe. Do not underestimate the political power of the idea of European integration and of the corresponding fears and resistance to anything that signals disintegration. And, more immediately, fears about widespread economic disruption, especially in the context of this sudden and intense Chinese stock decline.
posted by Ivan Fyodorovich at 3:20 PM on July 5, 2015 [83 favorites]


I know the Golden Dawn leadership is all locked up and gagged, but did their rear guard do any publicity for a NO vote? Googling doesn't even tell me if they had any stance on the referendum.
posted by bukvich at 3:21 PM on July 5, 2015


One of the things that bugs me about all of this, and I am by no means an expert, is that it sure seems like a lot of EU countries (especially Germany) that fattened their wallets by effectively selling things to Greece they knew it couldn't afford, are keeping the money and telling Greece they were irresponsible for getting those things and need to subsist on bread and water as a result. It seems to me that many of the economically strong a EU countries wouldn't be so strong if it weren't for all the ones that are now weak.
posted by slkinsey at 3:24 PM on July 5, 2015 [20 favorites]


Interesting interview, translated from German:
Thomas Piketty: “Germany has never repaid.”
posted by Jacqueline at 3:25 PM on July 5, 2015 [27 favorites]


bukvich, some of them were let go due to expiry of their detention (still pending trial) and GD supported a no.
posted by ersatz at 3:27 PM on July 5, 2015


Has Austerity, as a financial policy, EVER worked? I'm not an expert, so don't listen to anything I say about this, but one gets the sense that people push austerity policies for moral and not practical reasons.
posted by LastOfHisKind at 3:29 PM on July 5, 2015 [8 favorites]


And of course this is the year I finally gave in and got my girlfriend and I a two week vacation in Greece.
Because of course I did.
posted by Senor Cardgage at 3:31 PM on July 5, 2015 [2 favorites]


Do not underestimate the political power of the idea of European integration and of the corresponding fears and resistance to anything that signals disintegration.

Yes. This is important. I've felt all along that there would not be a Grexit and I would still be surprised to see one (though the odds are a little higher now). It would likely be better for Greece (despite tremendous pain in the shorter term), but it would be catastrophic for the eurozone from both a political viewpoint as well as an economic viewpoint if Italy, Spain or Portugal start to get ideas.

I haven't read anything about it for a few weeks but I am also very curious about where Russia currently stands in all of this.
posted by triggerfinger at 3:34 PM on July 5, 2015


And of course this is the year I finally gave in and got my girlfriend and I a two week vacation in Greece.
Because of course I did.


Favourable exchange rate, at least.
posted by saturday_morning at 3:36 PM on July 5, 2015


I suggest watching this recent video (4th July) by Channel 4 interviewing Varoufakis to get the greek point of view.

edit: as well as this one (longer, about 1 hour interview)
posted by elpapacito at 3:38 PM on July 5, 2015 [1 favorite]


And of course this is the year I finally gave in and got my girlfriend and I a two week vacation in Greece.

Well you'll probably get some great deals while you're there.
posted by Jacqueline at 3:38 PM on July 5, 2015




A debt forgiveness program, like a Jubilee Debt or Paris Agreement should have happened years ago.

Well, the PSI haircut in 2012, part of the second bailout, took around 100 billion euros off the dept, so it's not like no dept has been forgiven.
posted by effbot at 3:41 PM on July 5, 2015 [3 favorites]


Historical Greek "No"s.
posted by kenko at 3:43 PM on July 5, 2015 [4 favorites]


Just rolling over some interesting articles linked in the long tail of the June thread:

- NYT behind-the-scenes in Brussels last week

- James K Galbraith's 9 myths about the Greek crisis

- n+1 colourful but in-depth analysis & critique No Exit

- Felix Salmon's explainer

- Jeffrey D. Sachs' four-step plan.
posted by progosk at 3:47 PM on July 5, 2015 [5 favorites]


The question I'm left with is why the Greeks ever adopted the Euro in the first place, and why any other small nations would in the future. It seems like a terrible deal: you lose control of your currency -- which means you can't inflate away debt -- but you're still responsible for fiscal policy. So you can only ever be the bad guy in that scenario.

Countries which have joined the EU but retained their own currencies, e.g. Hungary, Croatia, and the UK, seem to be the smart ones here. (Although the UK's economy is big enough that I think it probably could have joined up on an equal footing, although it's interesting that it didn't, despite that. Hungary and Croatia and many of the rest have to feel like they dodged a gigantic Franco-German bullet, though.) They get the benefits of EU membership but without being chained to the Euro oar.

The benefit, at least as it's been explained to me, at the national level, of joining the Eurozone was lower borrowing costs. But that only holds true if one Eurozone government's debt is as good as any other's -- if all of them are backed by the ECB, which is to say, basically the Germans and the French. If that's not the case, then there's no reason why Greek debt ought to be cheap just because it's denominated in Euros vs drachmas: the default risk (in Euros) absent ECB backing ought to almost exactly equal the inflation risk (in drachmas).
posted by Kadin2048 at 3:48 PM on July 5, 2015 [3 favorites]


While there is rampant tax cheating in Greece, tax collection revenues are still 22.5% of gdp, which is double what it is in the United States according to World Bank data. They are in the middle range of other European countries in terms of taxes collected relative to GDP.
posted by humanfont at 3:49 PM on July 5, 2015 [35 favorites]


Can Greece as a nation state reject imposed global economic norms? No, by defintion.

The No vote is a first step in precisely that direction. Anyway, to clarify the reference:

The twentieth-century desire to destroy one version of being human in order to replace it with another can be abandoned, [Badiou] thinks, while something of the revolutionary creativity and fidelity that blossomed in the past century can still be preserved. In this respect, Badiou does not wish to succumb to the well-grounded fears of the reactionary, who can be said to be giving up on the creation of a new present, wishing instead to preserve the present roughly as it is, since all the alternatives are terror-prone, and thus far worse. [...] In a much-cited phrase, he wrote that a disaster is better than a dis-being [désêtre] – by which he means a dismantling and abandoning of what is genuinely and uniquely human. (Badiou: A Philosophy of the New, by Ed Pluth, p. 7.)
posted by klue at 3:51 PM on July 5, 2015 [5 favorites]


And of course this is the year I finally gave in and got my girlfriend and I a two week vacation in Greece.

Heh. The centre of Athens is overrun by tourists as usual, so I'd just take some extra cash to avoid ATMs queues and enjoy the visit.
posted by ersatz at 3:53 PM on July 5, 2015 [3 favorites]


And of course this is the year I finally gave in and got my girlfriend and I a two week vacation in Greece.

If you ordered it via the Greek Bailout Indiegogo Fund, chances are you'll get your money back.
posted by effbot at 3:55 PM on July 5, 2015 [3 favorites]


I'll add to the recommendation of the interfluidity link. I was especially pleased to see a call-out of the term moral hazard which I see thrown around all the time.

Here's the TL;DR version of the piece (but really, read it if you have the time):

Having recast a crisis caused by a combustible mix of regulatory failure and elite venality into a morality play about profligate Greeks who must be punished, Eurocrats are now engaged in what might be described as “loan-shark theater”. They are putting on a show for the electorates they inflamed in order to preserve their own prestige. The show must go on.
posted by Peter J. Prufrock at 4:03 PM on July 5, 2015 [9 favorites]


nai.
posted by chavenet at 4:05 PM on July 5, 2015


No, that's not true. The loans from the troika -- what is being negotiated -- entirely go right back out of Greece to pay the debt it owed from its sovereign debt crisis.

Or do they? "... contrary to widespread popular opinion, the net flow of funds (new loans and subsidies minus repayments) went from the Troika to Greece from 2010 to mid-2014, with a modest flow in the other direction after Greece stalled on its structural reforms."
posted by effbot at 4:37 PM on July 5, 2015 [1 favorite]


The ripples from this are what frighten me. And nobody even knows what the ripples are, because this has never happened before.

Rest assured that our corporate and financial overlords will take this opportunity to fuck with everything as much as possible, whether or not Greece actually has any impact on their industries and services. "Because Greece" will be the stock excuse for gas going back through the roof, another siphoning of your retirement savings because "market volatility", etc. etc.
posted by Thorzdad at 4:40 PM on July 5, 2015 [17 favorites]


Ropeladder thank you for that excellent link giving the historical background for why Greece is where it is now. Once again the banksters walk away and the people suffer.
What also has not been mentioned so much is how the 2010 bailout didn't go to the Greeks but to the German and French government arms trade.
posted by adamvasco at 4:48 PM on July 5, 2015 [1 favorite]


"Has Austerity, as a financial policy, EVER worked? I'm not an expert, so don't listen to anything I say about this, but one gets the sense that people push austerity policies for moral and not practical reasons."

Of course it's worked! Bankers and financial elites have made trillions from the devil's bargains made through IMF structural adjustment plans (now largely abandoned by the IMF) and austerity measures privileging capital over sustainable development! Stuff that in your Keyneshole!
posted by klangklangston at 4:58 PM on July 5, 2015 [19 favorites]


[Couple comments deleted. There's plenty of actual substance to talk about here, let's skip the digression into a snarky fight over what one member thinks.]
posted by LobsterMitten (staff) at 4:59 PM on July 5, 2015 [2 favorites]


"... contrary to widespread popular opinion, the net flow of funds (new loans and subsidies minus repayments) went from the Troika to Greece from 2010 to mid-2014[...]"

Hm...per "table 2" this appears to only be a true statement if you include the 106 billion(?) euro writedown of earlier debt as though it were truly money flowing into the country, no?
posted by nobody at 4:59 PM on July 5, 2015 [1 favorite]


For my fellow Canadian MeFites.

I am not too well versed in finance or economics but this article makes the claim that this default is unlikely to impact us here in Canada.
A total collapse of debt talks between the European Commission and Greece could affect some other countries in the euro area, such as Portugal, Spain and Italy, “through their direct financial and economic exposure to Greece,” the central bank warned. But it is “less likely to have extensive spillover effects across the euro area that are (then) transmitted back to Canada” and the chance of a significant fallout hitting our financial system is “moderate.”
posted by Fizz at 5:09 PM on July 5, 2015


The Euro is finished.
posted by humanfont at 5:11 PM on July 5, 2015


"...that this default is unlikely to impact us here in Canada."

That's a (correct) argument that the primary effects won't be felt in Canada. The concern is about secondary effects -- a combination of things that could push the EU back into a severe recession which would, in turn, push the rest of the global economy into recession. The US recovery has been very weak and it's arguably pretty fragile and China has been weakening for some time (and there's some very recent bad signs there). The EU is the world's biggest economy, what happens there affects everyone else.
posted by Ivan Fyodorovich at 5:16 PM on July 5, 2015 [4 favorites]


Fizz, yeah. I was reading the other day that our big bank exposure is really low. ISTR the biggest is Scotia (?) at like $300MM, next on the list was Royal (?) at like, $11MM.

I worry about how people on the Danforth are feeling right now, though; I grew up there. (For those not in the city, the Danforth is the nucleus of Greektown, the biggest Greek community outside of Greece itself.)
posted by feckless fecal fear mongering at 5:18 PM on July 5, 2015 [3 favorites]


The EU is the world's biggest economy, what happens there affects everyone else.

*sound of dominoes falling*
posted by Fizz at 5:21 PM on July 5, 2015


What also has not been mentioned so much is how the 2010 bailout didn't go to the Greeks but to the German and French government arms trade.

The reason it isn't mentioned much is probably because the numbers are tiny; from 2010 onwards, they've bought weapons from Germany for around 500 million euro, for same period Germany's part of the bailouts is around 60 billion euros in guarantees, or over 80 if you include the ELA. I suspect the Germans could have used that in a more efficient way if the main purpose was to back German arms trade. In fact, Greek military equipment procurement has seen drastic reductions from 2010 and onwards.

Also, Tsipras refused to cut the defense budget as much as asked for in the latest round of negotiations (it's not mentioned much, but he's ruling the country together with the nationalist and pro-military Independent Greeks, the head of which last year claimed that part of the problem is that Jews are tax evaders, and just the other day thought it was appropriate to remind people that the armed forces will "guarantee the country’s internal stability".)
posted by effbot at 5:30 PM on July 5, 2015 [3 favorites]


Danforth is the nucleus of Greektown, the biggest Greek community outside of Greece itself.)
I was always told Melbourne AU was the second largest Greek speaking city in the world.

If I was Tsipras, I think I would be asking the Chinese, Arabs or maybe Russia for a loan of a few billion EU (or the gold or USD equivalent) to tide them over through a default.
They can then repudiate all EU denominated debt, and inject enough money into the banks to keep them afloat. Perhaps leave some capital controls in place for a time.

At a stroke the Greek economy moves to surplus, they remain in the Euro and have a very small debt to repay. Sure, the northern Europeans would be seething, but with no avenue to eject the Greeks from monetary union, they will likely have to accept it.
posted by bystander at 5:35 PM on July 5, 2015


Bystander, missing from your plan is any explanation of why the Chinese and Arabs would be willing to do such a thing.

And the Russians are not really in a position to come up with the amount of money that would be required.
posted by Chocolate Pickle at 5:46 PM on July 5, 2015 [3 favorites]


NOT unrelated: After the historic 1900 Galveston Hurricane, Death Gangs were formed to collect bodies around the city to be identified. A man in one of these brigades found the body of a child with a rope tied around its waist that led to another child and another child until it finally reached the body of a nun. Then another nun. It was a group from St. Mary’s Orphanage, and in all: 10 nuns perished along with 90 of the children. The rope, supposedly a safety measure, led to the deaths of them all.

Today's Euro corresponds to the rope.
posted by spock at 5:51 PM on July 5, 2015 [8 favorites]


I suspect that, in the long run, the best answer for the Greeks is exiting the Euro. That will allow them to control their currency, massively devalue, and ultimately rebuild their shattered economy. On the other hand, that will also mean several more years of grinding economic dislocation and distress. There really are no "good" options for the poor Greeks at this point.
posted by yoink at 5:52 PM on July 5, 2015


The answer would be the same for all of them: watching their sphere of influence grow.

China, arguably, has the most to lose if the dominoes really start toppling--if the European and American economies start tanking, they're left with an enormous amount of surplus manufacturing capability. Keeping Greece solvent is absolutely in China's interests.
posted by feckless fecal fear mongering at 5:53 PM on July 5, 2015 [5 favorites]


why the Chinese and Arabs would be willing to do such a thing.

At a purely commercial level, Greece can offer them attractive returns. Geopolitically, the Chinese/Arabs may desire a stronger relationship with Greece. Certainly, the Russians do.
If you couldn't cut a deal otherwise, offer them a 99-year lease on an island or two as collateral.

And it wouldn't require that much money. Just enough to give the average Greek confidence that their bank accounts aren't going to disappear. If reasonable capital controls are left in place to restrict large withdrawals they would be able to get through the chaos of the first few days.

I think such a plan would be very saleable to the Greek people, and if it does result in a bank run, well, so what? They are having one anyway!
posted by bystander at 5:58 PM on July 5, 2015 [1 favorite]


Solon The Lawgiver is what the world needs now.
posted by ovvl at 6:33 PM on July 5, 2015 [1 favorite]


If you couldn't cut a deal otherwise, offer them a 99-year lease on an island or two as collateral.

The last thing anyone should offer Russia right now is a lease on real estate.
posted by scaryblackdeath at 6:37 PM on July 5, 2015 [18 favorites]


Sure, the northern Europeans would be seething [if Greece got a loan from the Russians or the Chinese or somewhere outside of the West], but with no avenue to eject the Greeks from monetary union, they will likely have to accept it.

Well, that would solve the immediate problem of keeping Greece's banks afloat, and it would do so in a way that might be perceived as giving the Germans and the French a black eye, but it doesn't seem like it would be that good for Greece. It'd be good for German banks and other holders of Greek debt, though—they'd get paid, which is what they want but have basically all but given up on.

In a few months Greece would have yet another another payment due, and they'd have to repeat the process to avoid default. Eventually, even the Russians or the Chinese might decide that it's a fairly expensive way to score points on Europe. And when they decide to turn off the tap, then it's back to the same situation Greece is in today. Plus, who's to say they'd actually want to loan Greece money on good terms in the first place? It might already look like an overpriced way to count coup.

It seems like a "...and then you have two problems" sort of scenario.
posted by Kadin2048 at 6:40 PM on July 5, 2015 [3 favorites]


Just to add to the Canadian digression... There was a fascinating note in the Stiglitz article about a historical parallel that I was unaware of:
If Europe says no to Greek voters' demand for a change of course, it is saying that democracy is of no importance, at least when it comes to economics. Why not just shut down democracy, as Newfoundland effectively did when it entered into receivership before World War II?
posted by ~ at 7:01 PM on July 5, 2015 [2 favorites]


In a few months Greece would have yet another another payment due,
No, default on the troika debt. Use the new China/Arab loan to support the banking system.
The primary surplus would cover repayments on the China/Arab loan. And it could likely be repaid in the medium term anyway, as supporting the banks takes the form of a loan from the Greek Government to the banks, which would not be required after the fears leading to a bank run declined.
posted by bystander at 7:05 PM on July 5, 2015


To put it in personal finance terms:
- Greece has massive credit card debt to Troika VISA. They are kiting checks to pay off the minimum balance each month.
- They have a steady job, and could pay their bills if they didn't have this pesky interest.
- They need a little bit of breathing space credit to cover the bills until next month's pay check, so they declare bankruptcy, but then quickly borrow a month's pay from uncle Vladimir.
- With no interest to pay because their credit card debt is gone, a month later their budget looks healthy so they can begin repaying Uncle Vlad.
- In a few years with prudent management they have paid off Uncle, and getting things in order to rebuild their credit history when the bankruptcy rolls off their credit score. It has been tough to live within their means, but easier than trying to repay that massive credit card debt.
- 7 years ticks over and the Greeks have savings in the bank, restored credit ratings and access to bond markets. The Troika still holds a grudge, but they don't wield any real power over Greece as long as they stay solvent. Their job (tax collections) continue to bring income in Euro so they don't need to deal with the ECB.
posted by bystander at 7:15 PM on July 5, 2015 [1 favorite]


That all seems to assume too much goodwill on the part of the uncles and that the uncle won't turn out to be a loan shark or wind up asking for favors of its own that will make the troika look like a good deal.
posted by Karaage at 7:22 PM on July 5, 2015 [3 favorites]


Chinese stock market just crashed this past week. I don't think China is in a position to help Greece.
posted by Carius at 7:23 PM on July 5, 2015


I thought this comment on Hacker News was interesting.
posted by Slothrup at 7:31 PM on July 5, 2015 [5 favorites]


The single reason Greece has not defaulted is a desire to remain in the EU currency.
As things stand, if they open the banks, people will race to withdraw their money in Euros.
To prevent a "It's a Wonderful Life" bank run, they have relied on the ECB to continue loaning Euros to the Greek banking system.
This gives the ECB (and by extension the Troika) substantial power to coerce Greece.

If they can devise a plan that prevents a run on the banks, Greece can default on existing debt, as they can pay their bills if there is no debt.
If that plan is a loan from a 3rd party, or some other mechanism (hell, a Jimmy Stewart style speech saying it is disloyal to Greece to withdraw more than X euro per day might be enough!).

The idea that owing, say $3b to the Russians/Arabs/Chinese and holding no other debt, and an economy in the black could be worse than owing $300b to the troika with their demands to grind the Greek economy into the dust is a no brainer.
posted by bystander at 7:34 PM on July 5, 2015 [1 favorite]


No, default on the troika debt. Use the new China/Arab loan to support the banking system.

How would *you* price that loan?
posted by Slothrup at 7:37 PM on July 5, 2015 [1 favorite]


I thought this comment on Hacker News was interesting.

The numbers look reasonable, but just to clarify, Portugal and everyone else has put up "irrevocable and unconditional guarantees" backing the European Financial Stability Facility (EFSF), not cash. If Greece defaults, the money will have to paid back over a period of 30-40 years (the EFSF program runs until 2056 iiuc).
posted by effbot at 7:53 PM on July 5, 2015 [2 favorites]


Chinese stock market just crashed this past week. I don't think China is in a position to help Greece.

Without commenting on the validity of the proposal, the correction in the Chinese share markets of around 30% is nothing compared to gains of over 150% in the last twelve months. The ccp's response to this correction is, however, somewhat worrying.
posted by smoke at 7:54 PM on July 5, 2015 [2 favorites]


No, default on the troika debt. Use the new China/Arab loan to support the banking system.

How would *you* price that loan?


The price on that loan should be quite reasonable. Greece is running a budget surplus so paying interest on that relatively small loan should be no big stretch. The loan would be low risk.

Do you know that if you file bankruptcy in the U.S., that banks will then shower you with credit card offers? The reason is quite simple. Would you rather loan money to someone who is up to their neck in debt or to someone who has just had the slate swept clean and has no debt? Who is more likely and able to pay you back?
posted by JackFlash at 8:17 PM on July 5, 2015 [2 favorites]


It's all fun and games until someone repossesses the Parthenon.
posted by dr_dank at 8:36 PM on July 5, 2015 [4 favorites]


The loan would be low risk.

I suspect your definition of "low risk" is very different than the people who'd actually do the lending. In general, a willingness to stiff one's creditors does not do much to endear oneself to other lenders. To your other point, I'll note that before the 2005 changes to the law, it was next to impossible to get credit after bankruptcy in the US. And the offers that people do get today after bankruptcy are typically attached to interest rates in excess of 20%. That's not the kind of rate I think of as "quite reasonable".

But this is a moot point anyway. I mean, I get that it's fun to think about flipping a bird to international banksters and other incarnations of "the man", but this is just not a realistic scenario.
posted by Slothrup at 8:57 PM on July 5, 2015 [1 favorite]


JackFlash, yes, the bank is willing to loan you money at 25% interest, because they're pricing a high chance of another bankrupcy into the rate.

All the suggestion here about Greece just walking away from all their debts kind of ignores one question: what happens to banks and governments elsewhere when $300 billion suddenly disappears into smoke?

Could there be runs on banks in Germany, for instance? Even if Greece is no longer part of the Euro, could it cause the Euro to collapse? Would it result in an economic collapse in the EU?
posted by Chocolate Pickle at 8:58 PM on July 5, 2015


Would it result in an economic collapse in the EU?

The ECB says they have firewalls in place to protect their banks. $350b is big, but it isn't Euro wrecking big. But frankly, why should the Greeks care at this point? The troika has shown a willingness to a second great depression on Greece, I hardly think an unemployed single mum in Athens is going to lose any sleep over the German banking system.

but this is just not a realistic scenario
We'll see. If ever there has been an unconventional leadership team it is Varoufakis and Tsipras.
posted by bystander at 9:20 PM on July 5, 2015 [1 favorite]




more interfluidity: Banks and Greece’s bailouts

Ian Welsh:Consequences of the Greek OXI (No) Vote
In the short to medium term, this referendum matters more to Greece than Europe. Unless the monetary authorities are completely incompetent, they should be able to contain the shocks. Greece’s economy is small; the amount of debt involved is, actually, small as well.

One should not discount the possibility that the ECB and “Institutions” are incompetent and will screw it up, mind you. Their behaviour thus far hasn’t just been cruel, it has been stunningly stupid from a clean, technocratic POV. Mandos’s article about “How EUians see this” was important, but also necessary to understand that the actual austerity policies followed were delusional if the ECB (or anyone else) thought they would lead to a sustainable debt load for Greece. They could not and did not.
posted by the man of twists and turns at 9:34 PM on July 5, 2015 [1 favorite]


Greece just taught capitalists a lesson about what capitalism really means.
posted by adamvasco at 9:44 PM on July 5, 2015 [17 favorites]


At this point, I expect all the lapdogs here tomorrow to start wagging their tails and practice their "good dog" routines for Brussels while threatening to add more austerity, because someone will pay for this ("this", being you know, respecting the people's opinions like in that pesky "democracy" thingy), and Portugal is next in line.

At least in Greece there was courage to go off the path. Here in September we'll see the usual half-time substitution.
posted by lmfsilva at 10:42 PM on July 5, 2015


Varoufakis resigns: "I shall wear the creditors' loathing with pride."
posted by kliuless at 10:49 PM on July 5, 2015 [10 favorites]


everyone's favorite admiral, James Stavridis, reminding us that there's more going on: What Are the Geostrategic Implications of a Grexit? - "A spurned Greece could become a nightmare for the EU and NATO."
posted by the man of twists and turns at 11:01 PM on July 5, 2015 [1 favorite]


Edward Harrison's take: "With @yanisvaroufakis no longer at the finance ministry, how can the Institutions not come to a deal? Will there be debt relief after IMF?"
  • 1/ 2 biggest changes: IMF shows the institutions negotiating for deal w/o debt relief despite IMF’s conclusion debt relief necessary
  • 2/ Institutions have said @yanisvaroufakis was the problem. Now that he is no longer there, becomes difficult to maintain that stance
  • 3/ Institutions' position undermined by IMF debt relief report and Greek FinMin resignation. Past negotiating stance now untenable
  • 4/ Combine a big no vote with IMF and resignation and u have a wholesale change in political environment on Greek debt negotiation
  • 5/ Greece will not ‘leave’ the eurozone. They will now have to be ‘forced out’ by specific ECB actions - and the moves will be seen as such
  • 6/ So again the ball is in ECB’s court regarding acceptable collateral, ELA, Greek banking system
posted by kliuless at 11:09 PM on July 5, 2015 [3 favorites]


The Ideologues of the Eurozone
The hypocrisy of some of the commentary on Greece is amazing. When the ‘adolescent ideologue’ Mr Tsipras shows a statesman-like maturity in being prepared to compromise in an effort to get a deal, he is accused of inconsistency and not being able to make up his mind. When those who he is negotiating with push him further than he is prepared to go, he is accused of ‘taking Greece to the brink’ by having the temerity to ask the Greek people to choose. (Any mature politician knows that in modern Europe you only call a referendum when you know you will get the answer you want, and when that does not happen you ignore the result and call another one.) Mr Tsipras is accused of failing to grasp that other nations too have democracies, as if the Troika had shown huge respect for democracy by acting as if nothing was changed by Syriza’s election.
How Eurocrats, Greeks, Germans, and Eastern Europeans View the Greek Crisis
To EUians, this can only be confirmation that, at the national-political level, Europeans are only a hair’s breadth away from poking each other with sharp sticks in order to maintain ethnoreligious homogeneity. And they may be. But is it a sustainable solution to gradually dilute their democratic rights? To EUians, it is the only answer.
The Old Continent Creaks - "Austerity and the failures of the technocratic elite have created the current populist backlash. France’s experience is instructive—and, possibly, ominous."
posted by the man of twists and turns at 11:16 PM on July 5, 2015 [3 favorites]


from adamvasco's link:
Debt is not a guarantee of future payments in full. Rather, it is a risk that creditors take, in hopes of maybe being paid tomorrow.

This, this, a trillion times, this. All the talk of morality (Greece, and in the US, the home owners deciding to walk away) is just absolute, total, bullshit meant to guilt the debtors into forgoing their own best interests.
posted by MikeKD at 11:38 PM on July 5, 2015 [28 favorites]


On the bright side, the two most likely candidates to become ministers of finance (Dragasakis/Tsakalotos) work harder behind cameras than in front of them.
posted by ersatz at 11:43 PM on July 5, 2015 [1 favorite]


Is this Groxi?
posted by colie at 11:45 PM on July 5, 2015 [2 favorites]


It's The Politics, Stupid - outlines how structrual incentives have created and driven the various 'sides' of the Greek debt crisis

Path To Grexit Tragedy Paved By Political Incompotence - argues that we're in a pickle because politicans are stupid.

Langue Log has a scan and translation of the Greek ballot measure

more, at Omnivore: Stuff you should know about Greece before you lose your shit
posted by the man of twists and turns at 11:59 PM on July 5, 2015


Varoufakis resigns

Well, that's unexpected! But why do I have the suspicion that the troika objected to him being in the government because he's such an eloquent spokesman for why the troika are a bunch of buffoons?

It's disappointing of Tsipras to capitulate like that in the wake of a resounding victory. It doesn't particularly bode well for the future.

On the other hand, I wonder if we can take the reasons of his resignation at face value. Perhaps this is just the better-sounding version of some internal SYRIZA squabble that ousted him.

Presumably Varoufakis knew about this in advance. In that light, his pledge to resign if the referendum vote came out as a 'Yes' doesn't look so bold anymore. He was going to end up outside the government either way.
posted by Noisy Pink Bubbles at 12:43 AM on July 6, 2015 [1 favorite]


I don't expect Vafroukis to be out of the loop decision making wise. He'll still be contributing, just not with the title 'Minister of Finance'.
posted by PenDevil at 12:52 AM on July 6, 2015


It's disappointing of Tsipras to capitulate like that in the wake of a resounding victory.

On the contrary: this way Tsipras is denying Dijsselbloem and Schäuble one of their last whining points, further forcing them to face bare facts.
posted by progosk at 12:56 AM on July 6, 2015 [10 favorites]


(Oh, and: though Dutch and Greek (subs) are both beyond me, this rap battle sure strikes some notes.)

On review: ENG subs!
posted by progosk at 1:03 AM on July 6, 2015 [1 favorite]


The CBC hourly news just played a report from an earnest BBC reporter saying that the Greeks were getting a really good deal with a really low interest rate. They really couldn't expect a better deal from their creditors, he said incredulously. Because a "low" interest rate on a huge, unmanageable debt makes everything all right, I guess.
posted by maudlin at 1:05 AM on July 6, 2015 [8 favorites]


There have been reports of strong objection to Varoufakis' style inside Syriza for some time now - given the fact that the man loves a camera but contradicts himself with every third word (yesterday he was promising a deal in 24 hours), I do not find them hard to believe.

My reading is that Tsipras is using this strong result to set his house in order.
posted by Dr Dracator at 1:05 AM on July 6, 2015 [1 favorite]


Varoufakis is still an MP who sits with SYRIZA, just not a SYRIZA member, btw.
posted by Noisy Pink Bubbles at 1:07 AM on July 6, 2015 [1 favorite]


It was a smart political move from Tsipras, gets to show a united front and etc. but the horse already left the barn last Friday.

Watching a talk show last night (in Germany) a CDU guy (republican like conservatives) basically laid out the "lazy Greeks!" line. The Syrzia Leadership member sitting opposite him answered along the lines of "Quit foisting your protestant save-save-save shit on us. We'll work it out in our own way, but we will work it out." Which is to say, there is a significant cultural element at play - one that on the one hand gets played down but on the other is still very very much present.

My take is better expressed by John Cassidy, writing for the New Yorker.

Germany and France don't want Greece to go (seriously, think of the hole that puts in Europe! it's laughable) - I'll be astonished if Greece does actually go. The banks will take it in the neck on the loans, Greece will slowly recover.

posted by From Bklyn at 1:20 AM on July 6, 2015 [1 favorite]


the man loves a camera but contradicts himself with every third word

That describes pretty much every politician in the world more than it does Varoufakis, who published everything he said and did on his blog.
posted by colie at 1:27 AM on July 6, 2015 [7 favorites]


Not to mention the press' penchant for twisting Varoufakis' words, amply documented on his Twitter feed / blog.
posted by Noisy Pink Bubbles at 1:36 AM on July 6, 2015 [5 favorites]


On Friday he was on the radio claiming a better deal has already been reached, and will be made formal after a No vote, and also that banks are definitely going to open tomorrow. Yesterday he said a deal will be reached in 24 hours.

Let's wait and see if those are the kind of statements that get twisted by the press.
posted by Dr Dracator at 1:43 AM on July 6, 2015




Well, I "could" also be struck by lightning, but I don't go telling the press about it - this is exactly the kind of thing I'm talking about: make a statement sure to make headlines, then backpedal when it's pointed out it isn't very close to reality.

But anyway, this is not really all that important - maybe I don't have a clear view of things, being in the middle of it so I'm dropping this here.
posted by Dr Dracator at 1:55 AM on July 6, 2015 [1 favorite]


Varoufakis has resigned as finance minister and will avoid having to clean up the mess he's made.

The problem is not lazy Greeks, but incompetent Greeks. There was an article in the Swedish DN by the former director of Sweden's tax authorities who had been employed by the IMF to review and help modernize Greece's tax collection. His conclusion "That corruption is widespread is well known, but that competence is missing is is not as well-known."

He mentions how the tax authorities put a lot of energy into physical controls - ensuring that transported items have the right paperwork - which is meaningless - and very little effort into requiring that businesses file tax returns and conduct proper bookkeeping.

That real estate registers are not centralised and spread across different places makes it difficult to assess real-estate taxes.

He notes hat the head of the tax authorities does not having hiring authority and most employees lack the basic skills needed to do the job.

"There has to be a will from the Greek side to create order within the tax system."

Hs conclusion is that Greece lacks the will to make any changes and the NO vote certainly underscores this.

This is less a failure of democracy than a failure of representative democracy. The PM and his party were elected with a mandate to work out an agreement - which they massively incompetently failed to do - and so they throw this responsibility back onto to electorate which is loathe to vote for any change to a system where German taxpayers pay for Greek pensions.

So the German taxpayers, via Angela Merkel, will change the system for them.

Austerity beats the hell out of bankruptcy and being booted out of the Euro, but that's the only thing that can happen if Greece refuses to change its ways.
posted by three blind mice at 1:57 AM on July 6, 2015 [4 favorites]


I think when the press covers news of your resignation with headlines like "Greece’s flamboyant finance minister goes out in his typical combative way," (to say nothing of its content!) it's pretty clear that they're not giving you a fair shake.
posted by Noisy Pink Bubbles at 2:01 AM on July 6, 2015 [5 favorites]


Austerity beats the hell out of bankruptcy

Tell that to the Greeks, who have seen their GDP contract 25% over the last 5 years, with no end in sight. And a 50% youth unemployment rate. Etc.

Varoufakis has resigned as finance minister and will avoid having to clean up the mess he's made.

The idea that Varoufakis is personally responsible for Greece's deficient tax collection apparatus is pretty hilarious. He has only been in the government for how long? By the way, I believe that the SYRIZA government has actually been increasing tax receipts (I heard this on the radio, can't source it).

I mean, I don't think of myself as a partisan Varoufakis defender, but his critics really have to come with some stronger game than this to discredit him.
posted by Noisy Pink Bubbles at 2:11 AM on July 6, 2015 [18 favorites]


There is no serious discussion to be had about whether Greece's problems are the 'fault' of Varoufakis. That's just propaganda talk that you can hear all over the corporate media if you like.
posted by colie at 2:11 AM on July 6, 2015 [10 favorites]


"This is less a failure of democracy than a failure of representative democracy. The PM and his party were elected with a mandate to work out an agreement - which they massively incompetently failed to do - and so they throw this responsibility back onto to electorate which is loathe to vote for any change to a system where German taxpayers pay for Greek pensions. "

… that's certainly one way to describe it.

Shouldn't a unified Europe mean that all the countries were paying all the pensions? If they share a currency, their expenditures are fungible, they have a direct interest in the solvencies of national pensions.

"Austerity beats the hell out of bankruptcy and being booted out of the Euro, but that's the only thing that can happen if Greece refuses to change its ways."

sorry austerity, the economic recovery is in another castle
posted by klangklangston at 2:16 AM on July 6, 2015 [9 favorites]


"It's disappointing of Tsipras to capitulate like that in the wake of a resounding victory. It doesn't particularly bode well for the future."

No, this is all part of the script that Syriza has been following. I now feel certain that Syriza has been hearing from intermediaries and others with influence that the troika would be or could be persuaded to re-open negotiations in the wake of a "no" vote but only if there's something or combination of things that Syriza does to ameliorate the (German) backlash against the "no" result.

So Tsipras in the last two days has been loudly and repeatedly saying that they will immediately want to negotiate in the wake of a "no" result -- which signals that a) they're truly not thinking about leaving the euro, and b) they really, really do want to conclude a successful negotiation. And now in the wake of the strong "no" result -- and the powerful message that sends from the Greek people about the deal that was offered and which provides Syriza a lot more credibility for holding firm to its position -- Tsipras isn't waiting for anyone to officially demand the resignation of Varoufakis or to shake up his cabinet and negotiating team, he's doing it pre-emptively. With the stick of the "no" result in one hand, he's holding out an olive branch to the troika in the other.

And the thing is, as I wrote yesterday, people really ought not underestimate two powerful forces in Europe that want a resolution to this crisis and strongly oppose a grexit. The first are all the people whose economic interests are threatened by the instability that a grexit would risk. The second are all the people -- which is most of Europe -- who have a very strong attachment to the idea of a unified Europe and hugely dislike the idea that it could fall apart. Well, I should also mention all the rest of the world, particularly the US, which doesn't like the economic risks associated with a grexit.

One institution that is important on this side is the IMF. The IMF is institutionally pretty hard line -- insisting on reform and austerity and such is its standard playbook for this. It's not political in the sense that the EU's, Merkel's, and the ECB's hardline positions have been. It's just the way that the IMF sees the world and its mission. But there are limits on this, and the IMF especially in recent years has proven to be more pragmatic and amenable to less hardline positions, especially with regard to, um, the developed world. So that's why we're seeing that inside the negotiations right before they fell apart, it was the IMF which was signaling that some debt relief isn't unreasonable and trying to get some compromise. And then in the last few days they've publicly talked about the need for debt relief. That was kind of a big deal -- one leg of the troika publicly talking about something that the troika in general had repeatedly denied it was willing to consider at this time.

So the IMF's recent signaling is a harbinger of the position of all these others who really don't want a grexit and aren't so much beholden to furious German voters who wish that Greece would just fall into the ocean.

Tsipras has anticipated this, I think, and so his main problem with a "no" result would be that it would just further infuriate those German voters and those who are like-minded, which would make it even more difficult, in terms of domestic politics, for Merkel and other people involved on the troika side to be seen to capitulate to Greece in the wake of a "no". The answer is for Greece to be seen to make a major concession. And given that everyone hated Varoufakis (whether justifiably or not) and in general there was a lot of animosity toward the Greek negotiating team, then pre-emptively getting rid of Varoufakis, reshuffling the cabinet, and altering the negotiating team all are big concessions by Syriza that are, on the one hand, seemingly unnecessary considering that the "no" result strengthens Syriza's credibility and position but are really, on the other hand, necessary in order for Syriza to get the result it wants -- everyone back to the negotiating table with a willingness from the troika to compromise where they previously have said they wouldn't. Merkel and others can point to Varoufakis's resignation and the cabinet shake-up as some sort of vindication and say that, well, with these new people, maybe we ought to be willing to talk. Those furious German voters will still be furious, but more towards the center where there is great anger at Greece but also a deep desire to protect the European ideal, there will be more support for negotiation.

I feel certain everyone will be at the negotiating table before the end of the week. I also wouldn't be surprised at the ECB somewhat changing its mind about the Greek banks and finding some way to ease open the tap, at least a little.

I've written that I think that ultimately Syriza hasn't much bargaining leverage because the Greek people don't want a grexit and, anyway, even if Syriza wanted to leave the euro, it would be difficult to do and would take a while and, meanwhile, the Greek people would very badly suffer. And it's far from clear that in terms of domestic politics, Syriza could even manage a Greek exit from the euro -- I think the government would collapse if it tried to go that direction. So in that sense, the troika has always had the upper hand because really, ultimately, Greece hasn't any option other than to accept whatever terms the troika offers. And so the troika has been negotiating this way, along with the simple fact that domestic politics for the troika have sort of demanded that they negotiate this way.

But that analysis leaves out what I wrote about earlier -- that the simple fear of a grexit is itself a powerful force, even when everyone involved says that they don't want it, won't do it, and when the Greek people say they don't want it. It's still easy to imagine that somehow it would work out to that conclusion. And that alone provides for a strong motivation to avoid a last minute plunge over the cliff.

I think what we're seeing is that Tsipras understood the existence and power of these forces and has used them to Greece's advantage because somehow, someway, he's been aware that elements within the troika would be wiling to re-open negotiations in the wake of a "no" vote ... if Syriza made some pre-emptive concessions.

It seems to me that it's now quite likely that Syriza will get what it's been asking for. I expect that some formal discussion of debt relief will be on the table and that maybe the troika will give a little ground on the VAT, but ultimately the result will be something about halfway between the deal the troika offered and what Syriza demanded. This will be enough to satisfy everyone, at least for now. The Greek people will be happy for just having sent such a strong signal of their displeasure and the unwillingness to be held hostage to eurocrats ... even though, in the end, they will continue to be. The troika will be happy to reach a deal that calms everyone's fears about a grexit and questions about the integrity of the European project.
posted by Ivan Fyodorovich at 2:17 AM on July 6, 2015 [23 favorites]


I think that's a reasonable interpretation, Ivan Fyodorovich. I guess I just see the troika (sans the waffling IMF, which is primarily a US-dominated institution, and the US has much less of a direct interest than the Europeans here) as content with nothing short of a prostrate Greece that has re-implemented the pre-SYRIZA austerity program. Since the Greeks elected SYRIZA to oppose just that outcome, I believe the inevitable result to be a Grexit. I fear that any sacrifices that Tsipras makes as goodwill gestures will ultimately be futile as the other Europeans demand complete submission, since they know the alternative of a Grexit is so horrible. The left-wing of SYRIZA's advocacy for a planned Grexit may seem nuts to the mainstream, but I think that's where Greece is going to end up (except it gets less and less planned as the days go by...).
posted by Noisy Pink Bubbles at 2:31 AM on July 6, 2015 [1 favorite]


His conclusion "That corruption is widespread is well known, but that competence is missing is is not as well-known."

The bailout conditions (Economic Adjustment Programmes) contain things like "set up phone services and internet services so citizens can get tax information without actually walking to a tax office", "reduce the number of offices once you've figured out how many you have", "get the tax offices onto the same intranet so they can communicate with each other and get them modern IT support", "move tax officials between offices now and then, so the same officials don't handle the same person's/company's taxes for decades (and also audit tax official's assets)". Plus a ton of stuff about reforming the tax system. So I suspect that at least the general incompetence was well-known, but that they at least assumed that there were competent people to be found somewhere in the system.
posted by effbot at 2:35 AM on July 6, 2015 [2 favorites]


"I think that's a reasonable interpretation, Ivan Fyodorovich."

Yeah, I think your gloomy view is quite reasonable, too.

I've had a hard time getting a handle on this -- the politics of it, not the economics -- because there's these very strong contrary forces and you can pretty credibly argue for things going strongly either way. That applies to the result of the referendum, too -- there was deep anger in Greece against the troika (thus "no") but also a lot of fear of the possibility of grexit (thus "yes"). You can see both views strongly in interviews of voters. Likewise, there's the very strong force in Europe wanting to avoid grexit and an opposing very strong force that wants "a prostate Greece", as you wrote. I can easily see it going either way.

But the reason why I'm now pretty confident that we're going to see a deal is because of the particular combination of certain important figures in recent days signaling a willingness to re-open negotiations on the troika's side (the IMF, a couple of statements from the French, etc), just how shocked and surprised and nervous financial observers are at the "no" result (so people are suddenly taking the possibility of a grexit much more seriously), and finally and very importantly, that some of the moves made by Syriza in the last few days, and especially Varoufakis's resignation and some things that Tsipras is now saying all really argue that Tsipras is responding to things he's been unofficially told about what could get the troika to the table.
posted by Ivan Fyodorovich at 2:44 AM on July 6, 2015


"One institution that is important on this side is the IMF. The IMF is institutionally pretty hard line -- insisting on reform and austerity and such is its standard playbook for this. "

That was something that shifted after the switch from structural adjustment programs to poverty reduction plans back in 2002. They still have problems and I think fair to characterize generally as pro-austerity, but they haven't been hardline for over a decade.
posted by klangklangston at 2:45 AM on July 6, 2015 [2 favorites]


Watching a talk show last night (in Germany) a CDU guy (republican like conservatives) basically laid out the "lazy Greeks!" line. The Syrzia Leadership member sitting opposite him answered along the lines of "Quit foisting your protestant save-save-save shit on us. We'll work it out in our own way, but we will work it out." Which is to say, there is a significant cultural element at play - one that on the one hand gets played down but on the other is still very very much present.

I've seen this outside of Germany, too. Many people in Europe believe that there's some kind of imaginary latitude beyond which people are just lazy, apparently because it's too darn hot. Heck, that belief seems to drive Italian politics a good deal... Wish the C*U people would stop beating that populist drum.

But, yes, cultural elements play a huge role here. The German fear of inflation and general belief in just getting through things by saving money is one part of that. I'm not the biggest fan of Merkel and even less so of Schäuble, but I don't think there's actual malice or ill will towards Greece in their policy. Hanlon's razor...

It also doesn't help if your talk show guest is a conservative tax accountant . There seems to be a huuuge divide between taxation culture between Germany and Greece, and it was just magically assumed that this could be changed within a very short time. I'm not sure whether austerity would've worked even then, but without it, there's just no big chance.

But now that Tsipras basically got elected twice, he should have a more solid ground to enact some more drastic measures. It would be a pretty good PR move.
posted by pseudocode at 3:08 AM on July 6, 2015 [1 favorite]


Surely if Greece have to convert to the Drachma, and it hyperinflates, then Greek savings and super will be next to worthless within a year. You could take half of everybody's money now and the outcome would still be better than what is looming for Greece if they're forced out.

The best course for EU is probably to simply forgive Greece it's debt. But if they do that, they'll come under pressure to forgive Portugal, Spain and Italy. Certainly, the political parties in those countries will have reason run on such a platform. I don't know if ECB are willing to go that far. And the IMF will lose credibility as a lending institution if Greek debt is forgiven.

I can picture a Greece in two years time where all of the tourists have to pay for everything in Euros, but get their change in Drachma.
posted by kisch mokusch at 3:18 AM on July 6, 2015 [1 favorite]


("dept" forgiveness? embarrassing. I'll blame it on the heat.)
posted by effbot at 3:37 AM on July 6, 2015


adamvaso: Greece just taught capitalists a lesson about what capitalism really means.
Quite. My theory on this is that the last 30 years have been so favourable for capital that the capitalist class has effectively experienced what the aviation industry terms "deskilling." Deskilled commercial pilots will engage the autopilot at the first opportunity and have as little to do with actually flying the plane as possible. Deskilled capitalists effectively have no understanding of how economies actually work, but do have handy buttons that say MANUFACTURE CONSENT WITH CORPORATE MEDIA and EXTRACT RENT and pressing those by and large worked up until 2008. Deskilled pilots use autopilot so much they effectively lose touch with their flight training and the principles of aerodynamics they learn during it. Deskilled capitalists are so insulated from the populations they govern that they lose sight of basics like the laws of supply and demand, hierarchies of need, and what people need to stay happy. This state of affairs is sustainable as long as conditions remain calm. Fly into a storm, though, and the deskilled capitalist runs into problems. "What is AERODYNAMIC STALL? Why economy in freefall? Pull back on stick and press CORPORATE MEDIA button again!"

Air France 447 and AirAsia QZ8501 apparently crashed because deskilled pilots pulled back on the control stick to try and recover from a high speed stall, something that may instinctively feel right but starves the wings of airflow and puts the plane into the water. My sense is that austerity is the economic equivalent of trying to recover from a stall by raising the nose. The key is to raise demand, the economic equivalent of lowering the nose and diving to increase airspeed: endless austerity can never do that. The only possible consequence is a hard impact with the ground, sooner or later.
posted by Sonny Jim at 3:41 AM on July 6, 2015 [101 favorites]


naju: If you need an "Explain like I'm 5" resource like I do

Agh, I was going to say something about that but see that Ivan has already commented on it with far more knowledge than I’d have. It IS a "shitty and misleading analysis". I got irritated right at the start with that bit "Tsipras and his party, Syriza, urged their countrymen to vote no. … Almost all non-Greek observers think this is wrong". I don’t even know where to start to explain how irritating and misleading that is.

If you’re in Europe and have been following this a bit in depth, you’ll see what’s wrong with that sentence. If you aren’t, please just avoid these explainers and give up altogether tring to understand, ok? Better to acknowledge it’s difficult to get a proper picture of what’s been happening – because this is bound to be covered with a huge amount of bias (and it takes a huge lot of time to read up on the background leading to this from multiple sources to even begin to distinguish the bullshit from something closer to the complicated messy reality) – than to take this kind of "simple explainer" as honest reporting of the bare facts.

Speaking for myself there too, I don’t presume to have an informed opinion and understand the situation, it is complex and it goes back to when Greece joined the Euro, but, one thing I’m sure of: as a European (Italian living in Germany), following media in three different languages, the worst coverage I’ve seen in the English-language media (with the exception of maybe the Guardian, which in general has a wider and more diversified coverage of European issues and lots of local correspondents). Especially, I’m sorry to say, American media, and even more so this kind of tech/new media like Vox.

So much oversimplification it’s a joke! A few days ago Mashable had another one of these "explain it to our readers like they’re kids" - and they literally used an analogy with cleaning your room so you can get your allowance from your parents. Literally talking to their readers like they’re children.

This is not just ignorance or superficiality, it’s a creepy kind of unaware, automatic bias that makes you wonder about the future of journalism, nevermind the future of Greece and Europe and the Euro and all of us living in this world where the fate of an entire country and its people becomes a betting game for banks.
posted by bitteschoen at 4:50 AM on July 6, 2015 [25 favorites]


Argh. Deep apologies for posting that Vox link. I should've known better, given their track record. I appreciate people correcting it.
posted by naju at 5:00 AM on July 6, 2015 [3 favorites]


The stories of Greek Tax Evasion are interesting mostly because they are examples of people evading taxes in a relatable human scale way. The rest of the developed world enforces the taxes on its people but not so much on its corporations. There was a big scandal about the UKs HMRC negotiating sweetheart pennies on the pound deal for major highly profitable corporations who flat out refused to pay their taxes. American corporations routinely offshore profits and then lobby endlessly for a "onetime tax amnesty" every two years and get one on a regular enough schedule that they now count on it.

Greek Tax Evasion Tales are essentially Daily Mail's Benefit Fraud stories. Inconsequential but compelling stories while the real cheating is going on beneath the surface in amounts so massive it is incomprehensible.
posted by srboisvert at 5:14 AM on July 6, 2015 [16 favorites]


In other matters of fiscal responsibility: Bookmakers Paddy Power may regret their premature decision to pay out on a Yes outcome to the referendum vote.

“Our punters are on a roll calling elections the right way. Despite some polls suggesting it’s neck and neck, over the last few days we've seen enough to be convinced. In a race with two potential outcomes we’ve seen over 85 per cent of money go one way and that’s massive. If you’ve had a bet, it’s time to collect,” said Paddy Power

posted by rongorongo at 5:24 AM on July 6, 2015


Has Austerity, as a financial policy, EVER worked?

Depends on if you're for it or against it, I think. Things like Germany's integration (or Germany in general) and Sweden from the mid-nineties are some examples brought up by fans (often to the right). People who don't like it (often to the left) says otherwise. The net is full of arguments in both directions.
posted by effbot at 5:25 AM on July 6, 2015



Has Austerity, as a financial policy, EVER worked?


depends for who "worked" is a descriptor.
posted by lalochezia at 5:29 AM on July 6, 2015 [3 favorites]


This is how Fortune Magazine editor describes the latest Greek news. The dislocation from the real word is extraordinary:

"Sunday's vote in Greece - with over 60% of the public saying "no" to European creditors - means a line has been crossed. The odds of Greece eventually exiting the euro have gone from something less than 50% to something more than 50%.

Markets are down as a result, but hardly panicked. To understand why, take a look at this chart prepared by Peter Vanham of the World Economic Forum showing how the ownership of Greece's debt has changed in the last three years. European governments, the IMF and the ECB now own three quarters of that debt, and they can create all the money they need to cover it. That means this crisis isn't really an economic crisis at all - it's a political one.

Except in Greece. There, the economic effects are very real. Banks will have to remain closed until either the ECB provides more credit - which is unlikely, absent an agreement - or the Greeks come up with some sort of alternative to the euro - a proto-drachma. A very messy and painful time ahead, regardless of the outcome.

Oh yes, and Greece's finance minister, Yanis Varoufakis, resigned. That's a good thing for the world, but a bad thing for journalists. Varoufakis has been the source of endless irritation to European ministers and endless diversion for scribes - crediting Marx for framing his world view, comparing the European Union to the Hotel California, and quoting Dylan Thomas to describe Greek politics. "I wear the creditors' loathing with pride," he said in his resignation statement.

With July 4th fireworks still ringing in our ears, it's probably worth remembering that the architects of democracy never intended for tough decisions to get punted to the public. The Greek vote was an abdication of leadership - which is why it didn't solve anything."
posted by bystander at 5:29 AM on July 6, 2015


"Surely if Greece have to convert to the Drachma, and it hyperinflates..."

Greece wouldn't necessarily have very high inflation or "hyperinflation" if it leaves the euro. That's another example of people unconsciously accepting and promulgating a very biased, scare-mongering narrative.

It's possible, because Greece's history about this sort of thing doesn't lead one to expect prudence. But there's a difference between a moderate probability on the basis of irresponsible governance and something that is a necessary economic outcome -- the latter is how this is usually presented, implicitly. That it's just what would happen, by necessity. Which is false.

Greece would have some moderate or moderately high inflation on a new drachma -- by design, that's how it would devalue its currency to make it more competitive and where the inflation would act as a stimulus to counteract the contractionary austerity. But if it defaults it would be running a moderate surplus, which gives it a good position to switch to moderate, stimulative deficit. It wouldn't have to run big deficits unless it just reverted back to massive overspending. And I'm not saying that is impossible, or even that it's highly unlikely. Arguably, it's quite likely. But it's not some necessary economic consequence of leaving the euro.
posted by Ivan Fyodorovich at 5:38 AM on July 6, 2015 [2 favorites]


What I'm seeing right now is that the Germans, predictably, are signaling a "no compromise" stance, but that many other people are signaling a desire that negotiations re-open. I don't think this implies that we won't get new negotiations this week -- rather, I think that at these very first public moments, the Germans for domestic political reasons have to retain their hardline stance and can only be expected to relent after both they've been chivvied by others and after some suitable period to satisfy German voters. But the clock is ticking -- I expect the IMF to exert some influence and I also expect -- contrary to most people's predictions -- that the ECB will reconsider its funding into Greek banks and open the taps a little. Maybe not -- this would be strongly opposed by the Germans. The people who want to keep the hardline and wait for Greece to somehow capitulate absolutely need the screws to tighten in Greece and the capital controls and closed banks are a key aspect of that. But for that to work, it would take weeks or months under these worsening conditions to basically cause Syriza to fall in light of the countervailing political sentiment of the "no" result of the referendum. In other words, I think that a hardline position that expects to outlast the Greeks and for Greece to capitulate is far too risky and won't be tolerated by basically anyone else in Europe which is why I think this is more theater than not and negotiations are quite likely to resume sometime this week.
posted by Ivan Fyodorovich at 5:58 AM on July 6, 2015 [1 favorite]


In an interview with German newspaper Die Zeit, economist Thomas Piketty calls for a major conference on debt. Germany, in particular, should not withhold help from Greece.
posted by adamvasco at 6:18 AM on July 6, 2015 [2 favorites]


Strictly speaking, there is no way that Greece can be thrown out of the Euro. Even if it leaves the EU, there's no way that Brussels can stop Greece from using the Euro as currency, short of an invasion. A bit of a pedantic point since Greece is unlikely to use the Euro as, say, Ecuador uses the US dollar, but you never know...
posted by Noisy Pink Bubbles at 6:36 AM on July 6, 2015




The problem with "explain this to me like I'm five years old" summaries with this situation is that there is no simple explanation or summary for this.

The causes are decades old - the roots of tax evasion in the occupation by Turkey, the corruption and patronage of public sector spending after the dictatorship, the size of the military versus the size of the country, the financial gymnastics involved in getting into the EuroZone, the size of the black economy compared to the declared, the poor lending decisions, etc, etc. All of these have got massive, massive, massive, massive amounts of detail behind them. That's just getting up to the bail outs.

After that you've got to have the financial understanding of what the various bail outs were, what write offs and restructuring already took place, and who Greece actually owes money to now and why. You've got to understand the political implications in the other Eurozone countries like Slovakia and the other Eastern Europeans who have lower standards of living than Greece, you've got the massive absolute amounts owed to other Southern European countries like Spain and Italy (rather than the Greece vs Germany meme), and the impact in relative GDP to smaller countries like Malta or Slovenia. You need to get your head around the the risks of contagion from a Greek default or exit from the Euro five years ago compared to now, how Cyprus was or wasn't a test run for that, if Banco Espírito Santo shows that banks won't act as dominoes or doesn't.

My personal opinion is that Syriza assumed that the rest of the Eurozone saw a Greek default as a massive risk to the entire Eurozone, but massively over-estimated that. If they'd gone with a direct negotiation on the exceptional origins of Greece's debt and the need for an exceptional response, then there might have been the ability for the other Eurozone country ministers to work something out. Either debt forgiveness, or re-structuring to the degree that it had the same effect (0% interest, ten year payment holiday, whatever), alongside continuing reform within Greece on things like tax evasion, pensions and similar. For whatever reason they came across as rather belligerent towards the lenders, over-played their hand, and made it harder and harder for anyone to be able to support concessions towards them due to the risks with their domestic electorate.

It's like watching a horrific multiple car crash in slow motion. People have got hurt, and people are going to continue suffering from the damage already done. At the moment I think we're waiting to see if the lights in the fog are another truck about to hit the wreck, or if the emergency services are arriving.
posted by MattWPBS at 6:48 AM on July 6, 2015 [13 favorites]


Germany, in particular, should not withhold help from Greece.

Not sure how many he'll convince by comparing a period of reckless spending with two devastating world wars, but ok.

Also yet another article that talks about how great it is with debt forgiveness and restructuring, without mentioning the debt forgiveness and restructuring what was part of the second bailout; an effort that lowered Greece's debt with 30% and greatly reduced their interest burden, something that might mean that they need only a small GDP growth to stay solvent, instead of a constant budget surplus .

there's no way that Brussels can stop Greece from using the Euro as currency

The ECB owns the copyright and there's extensive EU legislation around counterfeit euros, so if they continue printing their own, they sure have to make sure it stays inside the borders...
posted by effbot at 6:48 AM on July 6, 2015 [1 favorite]


From my limited perspective as an American living in Ireland (watching Ireland early on take substantial and difficult steps) I would encourage all to (re)read MattWPBS post several comments back. The moralizing, castigating, blaming and righteousness have little do with solving an extremely complex, social, economic, cultural dilemma that would have been better addressed when Greece was admitted to the EU and again in 2008. As for now--it is a car crash and I truly hope that the various bodies will be triaged and saved.
posted by rmhsinc at 7:31 AM on July 6, 2015


The BBC coverage this morning consisted of interviewing 'young people' who voted no and asking them how much money they had in their pockets. Then when they answered, I don't have money but I do have hope, the presenter would then infer that they were too young to understand how things work in the real world when you have to 'feed your wife and family'.

Condescend much?

It is refreshing to be able to see some intelligent commentary which is not from the 'adults in the room' whose motivation is somewhat suspect.
posted by asok at 7:48 AM on July 6, 2015 [4 favorites]


effbot:
Not sure how many he'll convince by comparing a period of reckless spending with two devastating world wars, but ok.
Couldn't you turn that around and frame it as Greece recklessly spending on maintaining a status quo rather than recklessly spending on atrocity?
posted by whittaker at 8:00 AM on July 6, 2015 [3 favorites]


With Greek apparently moving to a national unity government or something close to it, and Tsipras and Merkel talking on the phone about Greece bringing some proposals to the meeting, I think that it's obvious that we're moving toward re-opened negotiations and an eventual agreement (timing will depend upon what both the ECB and the IMF do). Most or all the opposition uniting with Syriza means that any hopes that the hardliners in the troika might have had for Greece to fold under pressure are much more unrealistic -- an attempt to freeze-out Greece will more likely result in grexit than a collapse of the government and a capitulation. The hardliners have to know this now. Meanwhile, there's this signaling of a willingness to re-open negotiations. Just Merkel and Tsipras talking is a sign of that.
posted by Ivan Fyodorovich at 8:06 AM on July 6, 2015 [1 favorite]


Every year the US rust belt states learn that they're paid more in taxes than the government services they've received, while for those lazy, good-for-nothing southern states it's the opposite. And so every year, the productive northern states threaten to throw the lazy southern states out of the Union, and insist on all kinds of austerity, cutting pensions, firing state workers...

Yeah, no. In the USA, everybody knew this at one time and just forgot about it. If the EU valued its union as much as the US does, they'd just accept that over time, some members make out better on the deal and some make out worse but on the whole, it's better for everybody to take some minor hits tax-wise and not have to wonder about what members are going to exit next week and what the giant horrific consequences of that might be.
posted by newdaddy at 8:25 AM on July 6, 2015 [4 favorites]


If the EU valued its union as much as the US does, they'd just accept that over time, some members make out better on the deal

The thing is that this is *already* the case; the richer members already subsidize the poorer ones with direct cash transfers for things like agriculture.
posted by Slothrup at 8:40 AM on July 6, 2015 [1 favorite]


If the EU valued its union as much as the US does, they'd just accept that over time, some members make out better on the deal

In some ways this is a useful analogy but in other ways it is not. Europe does not have a Federal branch of government that institutes uniform policy across all states in the same way that we do in the states. Additionally, the fluidity of movement in the United States contrasts with certain restrictions in Europe. For example, for a Greek worker who is having difficulty finding work in Greece, moving to Germany or France to find work is problematic: work visas, language barriers, etc. Whereas in the States, moving from Alabama to Texas to find work, while still costly, is much easier to do.
posted by (Arsenio) Hall and (Warren) Oates at 8:53 AM on July 6, 2015 [3 favorites]


We're talking big numbers here, so I'd like to throw some numbers in:
Population of the Euro zone: 334,57 million
Population of the EU: 507,42 million (both numbers are for 2014)

GDP of the Euro zone (2013): 9,600 billion (American billions)
GDP of the EU (2013): 13,700 billion

So the whole thing is, imho, not an economic problem. If that BBC number quoted above is true (323 billion), it's about 2.4 % of the EU GDP, which obviously wouldn't have to be recuperated in one year.
So let's say Greece would have to massively fuck itself up in austerity schemes for the next 10 years, the gain would be a quarter percent of the GDP. Losing this will not lead to an economic crisis, famines or the end of the world as we know it.

BTW, that German stance (German speaking here)? Piling up massive debts was the leading force behind Germany's economic success since the 1950's. And tax evasion is rampant here, too - one doesn't talk about it very much, though, as only the affluent can evade taxes, for everybody in employment, they're deducted automatically from your paycheck.

So my point is, this is a political thing. The bailout 2010, you could only blame the banks (but Merkel said they're "system relevant", meaning they had a Get Out Of Jail Free Card), or the general population, which is bad if you want to be re-elected... But here you have a scapegoat: the Greek. One nicely defined group, not too powerful. And you can make an example of them. And as added bonus, they voted for a pretty left government, and we can't have that. (Btw, Cynics here say that the Euro achieved what Hitler aimed for - I wouldn't go so far, although quite a lot of protesters in Greece had that same idea.)

Well, just my opinion.
posted by ojemine at 8:59 AM on July 6, 2015 [5 favorites]


That Stiglitz thing suggests a pretty sunny picture of Allied collections after WWI. It seems like the connection between a too arduous reparations regime and the rise of right wing nationalism in that case is a historical precedent you'd want not to underemphasize.
posted by batfish at 9:05 AM on July 6, 2015


Quoting Stiglitz: If Europe says no to Greek voters' demand for a change of course, it is saying that democracy is of no importance, at least when it comes to economics. Why not just shut down democracy, as Newfoundland effectively did when it entered into receivership before World War II?

What does "change of course" mean? Does it involve handing over more money to Greece? And if it does, shouldn't we also ask the voters in the other 18 Euro countries what they think of that, for the sake of democracy? Because I have a feeling I know how that would turn out...
posted by sour cream at 9:18 AM on July 6, 2015 [4 favorites]


Can't see that translation of the Piketty interview "Germany has never paid" linked to above."
posted by newdaddy at 9:18 AM on July 6, 2015


For example, for a Greek worker who is having difficulty finding work in Greece, moving to Germany or France to find work is problematic: work visas,

FYI, the ability for EU nationals to work anywhere in the EU is (absent occasional ramp up periods for new entrants) a core EU policy choice.
posted by jaduncan at 9:18 AM on July 6, 2015 [6 favorites]


In some ways this is a useful analogy but in other ways it is not. Europe does not have a Federal branch of government

I agree with all this, these are all good points. USA citizens think of themselves, universally, as 'Americans' first, and I doubt that's common for EU citizens (if that's even a thing.)
posted by newdaddy at 9:21 AM on July 6, 2015


With July 4th fireworks still ringing in our ears, it's probably worth remembering that the architects of democracy never intended for tough decisions to get punted to the public.

The Athenian model of democracy was by direct participation so it did put the tough decisions to the (eligible) public.
posted by biffa at 9:31 AM on July 6, 2015 [3 favorites]


biffa:
The Athenian model of democracy was by direct participation so it did put the tough decisions to the (eligible) public.
The direct participation of social elites, so you can read it either way…
posted by whittaker at 9:38 AM on July 6, 2015 [3 favorites]




A better analogy might be Puerto Rico, which uses US currency and whose citizens are also US citizens, but who are considered distinct and not exactly "American". Puerto Rico is also a deep recession and dept crisis, and the US government is not planning to bail them out.
posted by Emanuel at 9:42 AM on July 6, 2015 [3 favorites]


I think the main difference between the US and the EU is not so much lack of fiscal integration, as much as lack of political integration so that politicians remain beholden mostly to internal pressures. We only managed to make the President of the EC an elected position this cycle (against the wishes of certain politicians).
posted by ersatz at 9:45 AM on July 6, 2015


Banks are now remaining closed for Tuesday and Wednesday as well.
posted by MattWPBS at 10:02 AM on July 6, 2015


The European Union is much less a union than people like to think. Most people I know (in the Netherlands) view the EU as something that is bothersome and doesn't really help us as a nation. I don't agree with them but I understand the sentiment.
posted by Pendragon at 10:35 AM on July 6, 2015 [3 favorites]


So, today Varoufakis quit. His publisher took advantage of the renewed media attention on the #MinisterOfAwesome
posted by chavenet at 10:58 AM on July 6, 2015


If that BBC number quoted above is true (323 billion), it's about 2.4 % of the EU GDP, which obviously wouldn't have to be recuperated in one year.

Not an expert but I would guess the problem is who is lining up behind Greece and what it would mean for their debt if Greek gets off the hook.
posted by biffa at 10:58 AM on July 6, 2015


Now that he's free to comment: Yanis on Angela's choice of button.
posted by progosk at 11:24 AM on July 6, 2015 [6 favorites]


Actually if you read Yanis's article all the way to the end (it is very interesting) it notes that as an extract from his extant book which was published in February 2013.
posted by bukvich at 11:40 AM on July 6, 2015 [1 favorite]


I'm surprised at the direction the ECB just went -- I really expected them to go the other way. Draghi has proven in the past a willingness to move away from jumping off ledges, even if the Germans really want to push the Eurozone off the ledge, and so I expected it to be a voice for moderation right now because tightening the screws on Greek banks is going to make it harder this week to back away from the ledge, not easier.
posted by Ivan Fyodorovich at 11:58 AM on July 6, 2015 [1 favorite]


Now I understand something else: on this talk show I was watching last night Giorgos Chondos (Syrzia spokesman) says 'Don't give me your "neoliberal capitalism"' and I had no idea what he might have meant. Now I know, he was quoting Varoufakis.
posted by From Bklyn at 12:01 PM on July 6, 2015 [1 favorite]


Huh. The Guardian has a new live blog up ('Greece debt crisis: ECB tightens screw on Greek banks').
posted by Peter J. Prufrock at 12:11 PM on July 6, 2015


It's interesting, and depressingly predictable, to see how right wing shills are using the Greece Referendum to attack Socialism aka "big government".
posted by Beholder at 12:11 PM on July 6, 2015 [1 favorite]


Not an expert but I would guess the problem is who is lining up behind Greece and what it would mean for their debt if Greek gets off the hook

Thus the make an example of them part. Otherwise the whole kerfuffle could be quite a non- or at least minor topic.

I mean, if you really wanted Gross-Eurostan, and some people (basically Germany) certainly wanted it, and then admitted, or better: nudged countries which were not quite ready for it, into the Eurozone, you could have foreseen that eventually you would have to pay the price for that hubris (or to put it more favourably: political project).

I guess the birth deficiencies of the Euro (being bloated, lacking a common fiscal policy etc. etc.) are showing, and as long as they can blame the Greeks (now, in a year or so it'll be another country), nobody has to address the real issues.

Anyway, yesterday the Greeks said quite emphatically "No, we will not not hold still when you fuck us", and now harsh Mistress Merkel will have to find a way to sell a sensible solution to the German populace, after a, frankly, quite disgusting campaign against Greece (which didn't shy away of using rather ugly stereotypes). For what it's worth, Berlin's main tabloid (generally a mouthpiece of conservative politics) had a quite ambiguous headline today: "Greece says: Europe, no thanks". Some weeks ago, they rallied for boycotting Greek businesses, if I remember correctly.
posted by ojemine at 12:26 PM on July 6, 2015 [3 favorites]


@Ivan - it's probably as far as they can fudge it. There's no agreement in place to support the Greek government's finances, and that ties in with the guarantees for the liquidity loans.

(for those following at home, the ECB extended the ELA for Greek banks, but increased the collateral they need to be holding to qualify. Means they can still access liquidity for withdrawals for now, but they're on life support)
posted by MattWPBS at 12:32 PM on July 6, 2015


Berlin's main tabloid (generally a mouthpiece of conservative politics) had a quite ambiguous headline today: "Greece says: Europe, no thanks". Some weeks ago, they rallied for boycotting Greek businesses, if I remember correctly.
posted by ojemine at 9:26 AM on July 6
[2 favorites +] [!]

Eponisterisch!

posted by progosk at 12:58 PM on July 6, 2015


Eponisterisch!

I chose my metafilter name to comply with my general outlook on life... /smiley/

(for non-german speakers: ojemine means something like: Oh Bugger)
posted by ojemine at 1:17 PM on July 6, 2015


I believe the exact translation is: Oy vey.
posted by progosk at 1:39 PM on July 6, 2015 [4 favorites]


> Can't see that translation of the Piketty interview "Germany has never paid" linked to above."

Archive.org to the rescue!
posted by Bangaioh at 1:43 PM on July 6, 2015 [3 favorites]


So what does the #ministerOfAwesome do after finishing his duties? Rides to the bar, grabs a cold one.

#80sMovieEnding
posted by Noisy Pink Bubbles at 1:48 PM on July 6, 2015 [3 favorites]


the renewed media attention on the #MinisterOfAwesome

Truth is, the Germans can't get enough of him!
posted by progosk at 1:56 PM on July 6, 2015 [2 favorites]


EP President Martin Schulz' post-referendum hard-lining seems to be causing some friction in his own group.
posted by progosk at 3:44 PM on July 6, 2015


naju: please don’t apologise about the Vox link! in fact thank you posting it, I find it fascinating to see more examples of that kind of coverage.

bystander: This is how Fortune Magazine editor describes the latest Greek news.
oh god, thank you for that too! I’m just in awe by now of how shamelessly the bias can be. Then again this is Fortune Magazine, what do you expect. Varoufakis is someone who talks about "the Global Minotaur of neoliberal capitalism", of course they’d ridicule him.

And you know what, the last point about the referendum as an abdication of political leadership, could have been made in a much more thoughtful and honest manner - if it had been a honest point, because there was also a valid argument to be made against calling a referendum on such an issue, and in those terms (not saying it’s my opinion that a referendum was wrong, just that I’ve read actual honest thoughtful arguments in that direction) – but for fuck’s sake, "With July 4th fireworks still ringing in our ears, it's probably worth remembering that the architects of democracy never intended for tough decisions to get punted to the public" is so not the way to make the argument. Awful. It’s like a parody really.
posted by bitteschoen at 5:14 PM on July 6, 2015 [4 favorites]


WaPo: Why the Greeks rejected Europe’s bailout

CEPR:It's Monday Morning and Robert Samuelson Is Once Again Confused About the Economy
and
Balloon Juice help point out why you may not want to listen to the Washington Post

Let's look at some history: The Ticking Euro Bomb 10/5/2011
He is a middleman between two Europes, the north and the south. The euro was intended as a currency that would help Europe grow together, but the first major euro crisis is in fact pitting the north and the south, the deutschmark economy and the lira economy, against each other. To make matters worse, there are also two different speeds in Europe, with one part of Europe moving at the high-paced speed of financial markets and banks, while the other drags along at the speed of governments and parliaments. And then there is also the Europe of two versions of the truth. One is at home in Brussels, Berlin and Paris, in the centers of power, while the other resides in the living rooms and on the streets of European cities.

As admirable as it is for Reichenbach and his 30 nation-builders to be bringing order to Athens, no amount of reorganizing can simply do away with €350 billion ($473 billion) in government debt. How to cope with this debt without ruining the European project is the most pressing question of recent weeks. After 20 years of bad decisions, spineless reforms and postponed actions, it isn't the citizens but the markets that have forced united Europe into an endgame over the euro. How can this currency have a future? Is there a risk that Greece is only the first domino in a row that could end with Germany? Is the euro zone a faulty design?
How the Euro Zone Ignored Its Own Rules 10/6/2011
In 2002, the German government had other things on its mind than examining Greece's public finances. It was having troubles of its own, with the European Commission threatening to send a warning to Berlin. Germany was expected to borrow more than had been forecast, thereby exceeding the allowed 3 percent of GDP limit for its budget deficit. The result was not, however, an example of German fiscal discipline and exemplary adherence to European rules, but a two-year battle by the Schröder administration against the slap on the wrist from Brussels.

Few within the European Commission openly criticized the loosening of the Maastricht rules. And the Germans, together with the French -- both facing the threat of an excessive debt procedure -- were too busy undermining the Maastricht Treaty. The two countries, determined not to submit to sanctions, managed to secure a majority in the EU's Council of Economic and Finance Ministers to cancel the European Commission's sanction procedure. It was a serious breach of the rules whose consequences would only become apparent later.
What Options Are Left for the Common Currency? 10/7/2011
Greece was adrift in a storm of mistrust, unleashed by the rating agencies and reinforced by the financial markets. The lower the country's rating fell, the more expensive it became to refinance debts, the greater the debts became, the lower the rating went, and so on. All of this spelled a golden opportunity for foreign currency traders, hedge funds and speculators. They could bet on the decline of the euro and on the euro partners bailing out the Greeks. One of the instruments they used was the credit default swap, which the financial crisis had already spread around the globe following the Lehman bankruptcy.
Although CDSs were designed to insure against the risk of credit default, someone who holds government bonds can also use them to speculate. It's as if someone had purchased fire protection insurance for a house he didn't own. He could conceivably have a strong interest in the house actually going up in flames. Those who bought CDSs for Greek bonds without owning any bonds themselves were betting that the bonds would lose value. If that happened, they could sell the swaps later on at a higher price.

A €26 trillion gray market for CDSs had developed outside the official markets. The premium that had to be paid to hedge a Greek government bond doubled within a few weeks, and by now it was 10 times as high as the premium for a German bond.
ECB Is Trying To Break Greece

I guess if you're a superwonk you could read the position papers from the April 2013 conference at UC Berkeley titled Future of the Euro: Lessons from History

more DeLong: A Non-Post on the Greek Crisis and the Eurozone
Why are you still looking at me? Do you think I have answers to these questions? I do not. I do not understand European politics, and do not claim to. And I am not briefed up enough on the economics of the eurozone and Greece for me to understand where the line is between Troika offers to Greece that are better then exit, and those that are worse.
speaking of shared costs and free-riders: Are Germans Free-Riding On American Security?

I have become very tired of reading analysis and comment from the Anglosphere. What else is there?

Die Zeit:Deutsch-französische Stimmprobe vor dem Krisengipfel
Deshalb werden Hollande und Merkel versuchen, im Einklang eine Lösung zu finden, mit der beide Seiten ihr Gesicht wahren können. Die Griechen, weil sie weiter finanzielle Unterstützung erhalten und in der Eurozone bleiben können. Und die Schar der verbitterten Gläubiger, weil Athen im Gegenzug doch Konzessionen machen muss. "Europa hat eine auf Kompromissen basierende Geschichte. Sie waren oft künstlich und wackelig, aber dennoch Kompromisse", sagt Hans Stark, Forscher am Französischen Institut für internationale Beziehungen. "Griechenland muss akzeptieren, dass es nicht alles haben kann." Ein Dialog sei nach wie vor möglich, "wenn beide Seiten bereit sind, sich zu bewegen".

Hilfreich dafür dürfte sein, dass Finanzminister Yanis Varoufakis das Konzert nicht mehr mit Misstönen stört.
Die Zeit: Juncker will Grexit verhindern - "Was das Votum der Griechen bedeute, müsse man diskutieren, sagt EU-Kommissionspräsident Juncker. Er hat sich gegen einen Grexit ausgesprochen. Die Ereignisse im Live-Blog"

Die Zeit: Brüssel improvisiert
Und nun das: ein klares Nein. Was heißt das nun? Soll man Griechenland nun den Austritt aus dem Euro nahelegen – was juristisch eigentlich unmöglich ist, wenn Athen nicht selber will? Oder werden sich beide Seiten auf neue, kräftezehrende, noch schwierigere Verhandlungen einlassen?

Keine Frage, in Brüssel, aber auch in Frankfurt am Main, dem Sitz der Europäischen Zentralbank, wird in den nächsten Tagen über die Zukunft Griechenlands im Euro entschieden. So sehen die wichtigsten Verhandlungspositionen aus:
RT: Greece wants to be part of a democratic Europe, not one of austerity – deputy interior minister
RT: Greece may apply for BRICS bank, but not discussed officially – Putin's aide

Stern: EZB hält weiterhin an Notfallhilfe fest - "Zwei Tage nach dem Referendum wollen heute Euro-Spitzenpolitiker in Brüssel nach einem Weg aus der Griechenland-Krise suchen. Die Europäische Zentralbank hält derweil Notkredite auf aktuellem Stand."
Stern:Warum die Lage für Merkel so heikel ist

Focus: Umschuldung darf "kein Tabuthema" seinFrankreichs Premier Valls geht auf Konfrontationskurs mit Merkel - "Eine Umschuldung für Griechenland darf nach Ansicht von Frankreichs Premierminister Manuel Valls "kein Tabuthema" sein. Europa dürfe einen Austritt des Landes aus der Währungsunion nicht riskieren. Damit stellt er sich klar gegen die Position der deutschen Bundesregierung."

FAZ: Nein Der Euro ist kein Geschenk der Götter

Το Ποντίκι: Νέος γύρος διαπραγματεύσεων υπό τον κλοιό ασφυκτικών πιέσεων

Το Βήμα: Μεταξύ Grexit... και Χαλάρωσης
Το Βήμα: Τηλεφωνική επικοινωνία Πούτιν-Λαγκάρντ με θέμα την Ελλάδα
Το Βήμα: Με Τσίπρα και Τσακαλώτο επικοινώνησε ο Τζάκ Λιού - "Ο υπουργός των ΗΠΑ εξέφρασε την ελπίδα του για ένα αποτέλεσμα"

Η Καθημερινή: Τρία σενάρια εξετάζουν οι Βρυξέλλες

perhaps the Greeks are just following the internet philosopher? No, he's following
posted by the man of twists and turns at 12:56 AM on July 7, 2015 [3 favorites]


from adamvasco's link:
Debt is not a guarantee of future payments in full. Rather, it is a risk that creditors take, in hopes of maybe being paid tomorrow.

This, this, a trillion times, this.


Etymological aside: creditors, from latin credere, are literally "believers". The German "Gläubiger" is even more directly linked.
posted by progosk at 2:20 AM on July 7, 2015 [1 favorite]


Etymological aside: creditors, from latin credere, are literally "believers". The German "Gläubiger" is even more directly linked.

In addition, "debtors" are "in debt".
In German, they are "Schuldner". "Schuld" means "guilt", so they are literally "in guilt".

I think the best solution would be a haircut of however much the Greeks need to get their economy on track again, combined with not a single new Euro of debt. If anything, humanitarian assistance should be given, but it would be nice if at least the Greeks would stop calling the creditor countries "terrorists" or "Nazis".
posted by sour cream at 2:31 AM on July 7, 2015 [1 favorite]


So, it seems to be a simple (but probably unrealistic in the face of modern capitalism) solution to this problem would be to freeze all repayments required by Greece for 10 years, along with all interest accruements, and then give them a solid decade to rebuild their economy and adjust the culture when it comes to tax evasion and let people get their lives back together a bit... maybe not pegged on a year mark like a decade, but at some level where the economy can support repayment of the debt... and then the repayments kick back in again.

This cycle they are in right now about having to borrow more in order to pay on the previous debt is basically the EU/IMF/ANAGRAM version of payday lending, and it's illegal in a lot of places, and it should be here.
posted by hippybear at 2:35 AM on July 7, 2015 [1 favorite]


In bad faith is a fairly icy review of IMF sketchy tomfoolery in the Greek case from Brussels think tank Breugel
posted by chavenet at 2:49 AM on July 7, 2015 [7 favorites]


Hippybear: that's where they already are with a lot of the debt, especially their debt to the EFSF, which is 144bn out of the 315bn or so. They don't start repaying it until 2023, they don't pay interest until then, and when they do the interest rate is 1.5%. And something similar happened to a lot of the private sector debt in 2012 (some of it was written off, some of it had the repayment dates pushed back). It does seem as though more might be required though. (Maybe ESM loans on similar terms, seeing as the EFSF is closed for new lending, and use that money to refinance the other debt at lower interest rates and longer terms).
posted by Pink Frost at 3:09 AM on July 7, 2015 [1 favorite]


Chavenet, that was a good piece, thanks for linking. The comments on all these articles are soooooooo depressing.
posted by smoke at 4:57 AM on July 7, 2015




I have become very tired of reading analysis and comment from the Anglosphere. What else is there?

Oh I should have linked to this earlier – an excellent resource for European issues is Voxeurop (formerly Presseurop, originally funded by the European Commission), a non-profit independent European news portal, it’s run by professional journalists and translators, they publish in English translation (and other languages) articles from all major European newspapers, from all EU countries. They have lots of recent ones on Greece and the referendum, of course, including press reviews from multiple sources. Highly recommended to get a more diverse perspective.
posted by bitteschoen at 5:38 AM on July 7, 2015 [4 favorites]


Well, danke schoen, bitte schoen!
posted by Peter J. Prufrock at 5:41 AM on July 7, 2015 [1 favorite]


Greek journalist: Acc to info:Greeks came without proposals.Tomorrow will submit new request and proposals.#Eurogroup

Elbarbie on twitter
posted by MattWPBS at 5:42 AM on July 7, 2015


(@Elbarbie is the EU correspondent for Kathimerini, which has a pretty good English edition.)
posted by effbot at 6:10 AM on July 7, 2015


You know what?
I think the EU is already finished.
Even if the Troika gets their 'win' on Greek austerity to keep the other PIIGS in line, doesn't it already explicitly say "we will throw your common people under the bus, let them go hungry with no money".
How do you feel if somebody makes you go hungry when they have plenty on their table?Pretty fucking angry, I would suggest. IT doesn't have to manifest in torches and pitchforks, but I suggest it will definitely manifest in UK style anti-EU politics. People know who is looking out for them politically.
This will turn out to be the biggest shot-in-the-foot in history, as the desire of the northern Europeans to gain an extra few percent (nobody can pretend Greece will ever make good on their debts at face value) will poison the Euro well for generations.
Wake up, you fools!
posted by bystander at 6:15 AM on July 7, 2015 [4 favorites]


Greek journalist: Acc to info:Greeks came without proposals.Tomorrow will submit new request and proposals.#Eurogroup

Other Greek media (including state TV) is discussing the content of the proposals being submitted - either something funny going on or just poor reporting.
posted by Dr Dracator at 6:46 AM on July 7, 2015 [1 favorite]


Wake up, you fools!

It's not that the people of certain parts of the EU don't know that austerity policies are bad for them. They just are faced with a choice: more austerity or short-term (at least) economic collapse. The Lesser of Two Evils (tm) in that case seems like austerity. Even SYRIZA thinks so (at least, not the left wing of SYRIZA). At any particular point that is going to be the decision, unless there is some banding together of lesser-income countries to act collectively to change that.

The EU is very far from finished. Why can't people's living standards in lower-income EU countries continue to fall within the context of the EU, as is currently happening? What is going to be the force that causes the rupture? Even a 25% contraction of GDP hasn't been enough for Greece.
posted by Noisy Pink Bubbles at 7:05 AM on July 7, 2015


How do you feel if somebody makes you go hungry when they have plenty on their table? Pretty fucking angry, I would suggest.

Some of the poorer EU countries agree with that sentiment.
posted by (Arsenio) Hall and (Warren) Oates at 7:09 AM on July 7, 2015


According to FT's sources, "the Greeks gave an outline of what they intend to propose orally at the eurogroup meeting" but there's no written proposal. "The lack of a new plan shocked eurozone finance ministers meeting in Brussels, angering several in the room."

Dijsselbloem will make a short statement in about 20 minutes.
posted by effbot at 7:09 AM on July 7, 2015


The Greeks are winging it now, they're playing Calvinball. Not a bad strategy faced with the po-faced EU formalities, but not likely at this point to avoid a painful ending.
posted by chavenet at 7:12 AM on July 7, 2015


@bystander

Even if the Troika gets their 'win' on Greek austerity to keep the other PIIGS in line, doesn't it already explicitly say "we will throw your common people under the bus, let them go hungry with no money".

PIIGS - Portugal, Ireland, Italy, Greece, Spain.

Portugal - owed about €5bn/3.2% of its own GDP by Greece. Finance minister point of view: "We have very comfortable financial reserves lasting several months, so even if there was some disruption, it wouldn’t have any impact on the financing of the Portuguese state."
Ireland - owed about €4bn/2% of its own GDP by Greece. Finance minister point of view: "I have said here on several occasions that the Greek government should follow the example of the approach we took in Ireland and restructure the debt," noting that Ireland had extended loan maturities, reduced interest rates, a re-engineering of the Anglo Irish promissory note and refinanced €18. 5 billion of IMF loans.
Italy - owed about €43bn/2.2% of its own GDP by Greece. Foreign minister point of view: Greeks have their own leaders to blame for the crisis in their country, and not “mean Germans”, Gentiloni said Tuesday. The current crisis “...is not the fault of mean Germans, but is the responsibility of the Greek governments which have followed one another these past 15-20 years,” he told the Italian daily Corriere della Sera. Italian finance minister point of view: We are going into this meeting with a constructive spirit to find a deal. Obviously a lot will depend on how the Greek government poses itself. We will listen to Greece's specific requests and commitments (answering question on how Eurogroup would react to a Greek request for a bridge loan).
Spain - owed about €25bn/2.5% of its own GDP by Greece. Finance minister point of view: We are almost out of time. We are in the last few seconds of this issue. We are going to listen to what the Greek government is asking for. A Grexit is not a solution that suits anyone but the Greek government needs to put something on the table. It is fundamental that they play by the rules. (Asked about debt restructuring) That is not the point right now. It is much more important to create the conditions so that Greece can grow again.

How do you feel if somebody makes you go hungry when they have plenty on their table?Pretty fucking angry, I would suggest. IT doesn't have to manifest in torches and pitchforks, but I suggest it will definitely manifest in UK style anti-EU politics. People know who is looking out for them politically.
This will turn out to be the biggest shot-in-the-foot in history, as the desire of the northern Europeans to gain an extra few percent (nobody can pretend Greece will ever make good on their debts at face value) will poison the Euro well for generations.
Wake up, you fools!


This is what I was getting at earlier when I said there's no simple cause or answer in this. "How do you feel if somebody makes you go hungry when they have plenty on the table?" is a question that you could ask the Eastern European members of the Eurozone in comparison to Greece. This is part of the political side of the horror story - the debt we're talking about isn't just going to come from Germany and France if it's cut, it's going to come from all the other members of the Eurozone, including those who have lower standards of living, lower earnings and less benefits than Greece. Some of the worst exposed in terms of debt to their own GDP are either recovering countries like Portugal, or poorer developing ones like Slovenia. The Slovakian Finance Minister Peter Kazimir is one of the most opposed to debt relief or restructuring, his reaction to the No vote on Twitter: I'm disappointed with what now seems to be the final result of the referendum in #Greece. We will not go gently into this good night. We stand united and we need to respond to this situation as soon as possible. Rejection of reforms by #Greece cannot mean that they will get the money easier.

This isn't a Northern Europe/Germany vs Southern Europe/Greece situation, no matter how much the media plays it as such. There's so many internal political motivations that most of the other Eurozone members have to act against debt relief towards Greece that it's not even funny. It's going to take a lot of hard and exacting political work for Greece to get some sort of resolution now.
posted by MattWPBS at 7:13 AM on July 7, 2015 [5 favorites]


Some of the poorer EU countries agree with that sentiment.

That's the "other side" article I posted earlier. I suspect bystander didn't read it :-)

(for reference, Slovakia currently has a slightly higher GDP per capita as Greece, but an average monthly salary below 1000 euro. Slovakia stayed out of the first bailout round, but was more or less forced into the second, and their part of the guarantees is around €1.1 billion. The PM has promised to call a referendum if Greece defaults and they're asked to pay up...)
posted by effbot at 7:28 AM on July 7, 2015 [2 favorites]


(First I laughed, but then I felt a bit sorry for him.)

(but maybe he should write in Greek next time, to delay the snark a bit.)
posted by effbot at 7:54 AM on July 7, 2015


"This isn't a Northern Europe/Germany vs Southern Europe/Greece situation, no matter how much the media plays it as such."

Yes, it's the core versus the periphery. All your examples show is that the countries and their center-right governments that acquiesced to harsh austerity measures have a strong emotional investment in seeing Greece negatively. What Ireland and Estonia did, in different respects, was masochistic insanity. People who have willingly suffered so much on the insistence of supposedly wiser and more powerful authorities have a powerful need to believe that their decision was the correct one.

But you'll find many, many people in the periphery, but especially in Portugal, Italy, and Spain, who are just as angry and harshly critical of the center-right neoliberal policies that have accepted the rationale for and consequent suffering from austerity.

From my perspective, the American bias in the analysis of the politics in the EU is a big underestimation of how strongly Europeans have a commitment to the European project. But, likewise, the European bias has consistently been that the views of the population are in accordance with the Brussels bureaucrats -- there's consistent surprise at left- and right-wing populist backlashes against EU policies. With regard to Greece, I think that people who look to the Baltics as representing popular sentiment about austerity are egregiously cherry-picking. For the Baltics, Russia looms very, very large and so European integration and the western neoliberal consensus is something of an act of essential political defense. They are not a model for how southern Europeans under austerity feel.
posted by Ivan Fyodorovich at 7:55 AM on July 7, 2015 [7 favorites]


From effbot's FT link:

"According to a Greek government official, the Greek delegation presented the same proposal that Athens had sent to officials last week -- a plan that was roundly rejected by creditors."

Good for them. They got a large majority "no" result in the referendum, something close to a national unity government, and they removed Varoufakis and changed the negotiating team. They have no reason and, in fact, don't have political room to concede to a deal that their voters decisively rejected, but they have said that they want to continue negotiations and they've made some changes to ameliorate some of the personal conflicts.

If the ECB and others at this point want to push Greek out of the euro, then they should just admit to that. Is that the outcome that Europe really wants? I don't think it is, and I continue to think that as this becomes more and more likely, there will be escalating pressure to compromise with Greece on a deal.
posted by Ivan Fyodorovich at 8:03 AM on July 7, 2015 [1 favorite]


@Ivan Fyodorovich

Yes, it's the core versus the periphery. All your examples show is that the countries and their center-right governments that acquiesced to harsh austerity measures have a strong emotional investment in seeing Greece negatively. What Ireland and Estonia did, in different respects, was masochistic insanity. People who have willingly suffered so much on the insistence of supposedly wiser and more powerful authorities have a powerful need to believe that their decision was the correct one.

Aye, it's a 'mare of a situation. Especially given that Greece is a magnitude worse than they were, and does need an exceptional response. I'm not saying I agree with what the Irish, Estonians or Portuguese did, I'm saying that this is the political situation that Syriza needed/needs to navigate through. The problem is that everyone's got backed into corners with very little room to maneuver politically, not just Syriza. They don't want to leave the Euro, the rest of the Eurozone probably doesn't want them to leave the Euro, but nobody wants to risk looking like they conceded.

I hope you're right and the escalating pressure forces both sides to compromise, but I worry that Greece will exit through inertia and inaction.
posted by MattWPBS at 8:24 AM on July 7, 2015


fwiw, from the FT's liveblog yday:
Five of Greece’s six political party leaders have signed a joint statement declaring they are committed to keeping Greece in the eurozone (the sixth, Dimitris Koutsoumbas, secretary general of the Greek community party opted out) – Kerin Hope reports.

According to one source, the statement was requested by French president Francois Hollande as part of his initiative to avert a Grexit.

The top priority, the statement says, is to get liquidity flowing back into Greek banks in cooperation with the European Central Bank.

In an ununusally co-operative move for a Greek politician, prime minister Alexis Tsipras has undertaken to brief the political leaders himself not only after Tuesday’s EU summit but during the course of the bailout negotiations.

There are four lines of agreement:

- The aim is to secure a “socially just” bailout agreement

- The deal must include fiscal and structural reforms needed to get Greece’s economy back in shape, with “the least possible recessionary impact”

- It must include a sizeable chunk of financing to boost economic growth

- It should include a commitment by the creditors to begin a “substantive discussion” on making Greece’s mountainous debt viable.
oh and more EH from yday on the ECB's message re: the ELA collateral haircut/'margin call' - "The ECB's ELA moves are a big deal. They essentially say that the euro is reversible and set the stage for eurozone exit"
  • 1/ The ECB has moved: "Haircuts on collateral for ELA adjusted"
  • 2/ The ECB is specifically re-coupling Greek banks and sovereigns together as a reason to increase haircuts for ELA
  • 3/ An increase in ELA haircuts effectively DEcreases the amount of ELA available or increases amount of collateral to be used
  • 4/ The ECB has effectively made the Greek banking system unviable. The Greek banking system is now on its knees.
  • 5/ I think this move by the ECB means it's game over
  • 6/ The key takeaway here - not just for Greece - is that an explicit re-coupling of bank/natl government can lead to a death spiral
  • 7/ The ECB has effectively made the one move that will force Grexit.
  • 8/ Either Tsipras capitulates or it’s over. The ECB has decided.
  • 9/ As a group, Greek banks are over collateralized. But on an individual level? We don't know. Banks will stay shut. Tsipras needs a deal now
altho perhaps a measured signal...
"I assume @ecb worked out how much collateral was left at Greek banks before raising haircuts. Don't want to run risk of being executioners"

martin sandbu goes ballistic as the ECB defies the whole raison d'etre of central banking: Strangling Greek banks is legally and economically unjustifiable
Recall that the closure of Greece's banks was caused by the ECB's decision to do the opposite of what Walter Bagehot taught, which was that to stem a bank run, the central bank should lend against collateral that, but for the crisis, is solid. In Greece, fearful people have wanted cash, but the banks have little cash left. The normal course of action would be for the banks to get cash from the central bank, pledging their investments as security for the loan. But after Athens declared a referendum, the ECB said no further such loans should (for now) be given.

What were they thinking? If Greece ends up leaving the euro, it will have been because of this. The overarching question about the eurozone's financial management, therefore, is not about the Greek referendum, but about how its central bank could refuse cash to all the major banks in one of its member states. As Charles Wyplosz has explained in a recent column, this is "a political decision of historical importance ... By not keeping the Greek banking system afloat, the ECB is failing on a core responsibility."

This is unjustifiable. The EU Treaty lays out explicitly what the ECB has to do, in collaboration with the national central banks (look at Article 127)... The specific task is to "promote the smooth operation of payment systems". Ask the pensioners in line at Greek banks, or the importers finding their letters of credit turned down, how smoothly the payment system is working.

The general task is to "support the general economic policies in the Union with a view to contributing to the achievement of the objectives of the Union" as laid down in the treaty. One such economic policy is the "imperative to break the vicious circle between banks and sovereigns" - that is to say, to make sure that the functioning of banks does not depend on the solvency of the state (and vice versa). And the stated objectives of the EU include "the sustainable development of Europe based on balanced economic growth and price stability ... full employment ... economic, social and territorial cohesion"... We must draw the rather dramatic conclusion that the ECB is violating its mandate and making a bad economic situation worse.
while the FT editorial board is more diplomatic it gives a veiled warning: ECB should not make a deal harder to reach
Mario Draghi, ECB president, only ended that crisis in 2012 with his “whatever it takes” promise to stand behind sovereign debt. Mr Draghi therefore has it within his power either to keep Greece on life support, or pull the plug. But it must not be his decision. Despite being embroiled in past bailouts — and hence a member of the loathed “troika” supposedly squeezing the Greek people — the credibility of the ECB remains essential to the eurozone. Governing a currency without the fiscal institutions to match, it has to rely on tools and instructions that are a work in progress. Were they complete, there would be jointly backed “eurobonds” to underpin Greek bank loans, and the ECB would not be in such an invidious position...

[I]t should neither be the act nor the indecision of the ECB that finally drives Greece from the eurozone. Every day that passes, plummeting confidence and shuttered banks are propelling it into a downward spiral. If the Bank of Greece asks that the cap on ELA be lifted, Mr Draghi should urge the ECB governing council to agree and give the political negotiations the space to conclude. The financial risks are the same either way — eurozone governments already stand behind the ECB.

From first being allowed into the eurozone, through two bailouts to the cliff-edge posturing of Syriza this year, the decisions that have marked Greece’s sorry experience of the euro have been thoroughly political. If the saga now ends in Grexit it will be a political failure too. Mr Draghi’s role is to make that clear, and pass the buck to the politicians.
perry mehrling sez: "Notwithstanding everything that has been done since the Great Financial Crisis, it is not at all safe to go back in the water. Indeed danger of financial fragility is greater now than a year ago. The danger this time comes, interestingly, not so much from the banks as from the policymakers, who persist in using empirically discredited pre-crisis thinking as a guide to macroeconomic policy... In this respect, the biggest danger comes from the largest policy actors, the Fed and the ECB."

also btw...
-In a democracy endless austerity and depression would eventually be rejected
-Greek euro exit would scar a generation
-Greeks Stand Up to 'Lemon Socialism'
-More on Greek Tax Anticipation Note IOUs
-Tax Anticipation note register should use Blockchain technology
-A summary of the Greek crisis for the benefit of fintech people
-A radical idea to bypass the Greek government
-The Global Financial Ecosystem 2000-2020: Evolution, Disruption, Calibration [pdf]
posted by kliuless at 8:44 AM on July 7, 2015 [13 favorites]


"I hope you're right and the escalating pressure forces both sides to compromise, but I worry that Greece will exit through inertia and inaction."

That's my worry, too. But I'm frustrated with the ECB, Merkel, and others in that the only thing preventing them from compromising is domestic politics in the north, while with the referendum result Greece really cannot compromise and accept a deal that the referendum specifically rejected (and any compromise Greece could pre-emptively offer right now would basically accept what the Greek voters rejected), and meanwhile without a deal within this week the most likely outcome is grexit. It's not just Syriza anymore, it's something very close to a national unity government, and if the EU politicians and negotiators are counting on the government to fall and to capitulate, this is much, much less likely than it was -- and it already was unlikely, given the "no" result.

The Greek people and almost all the political parties have rejected the offered deal. It's insane to expect Greece to capitulate to what was expected of them before the referendum, and it's nearly insane at this point to expect that it will eventually capitulate if the troika stands firm. If the EU doesn't want a grexit, then the troika side has to be the side to offer a concession. Once that happens, then active negotiation could work something out where Greece also compromises. But it's just stupid to expect Greece to make the first concession in this context. Acting as if this is only right and reasonable is either implicitly a move to throw Greece out of the euro, or it's a very mistaken expectation that within the present Greek political context it is possible for the government to make such a compromise. So if it's not the former, and it's not the latter, then it's a self-destructive inaction out of fear of furious German voters.

Because, frankly, the strongest rhetoric I'm hearing is coming from Merkel and the Germans. Others are taking a hard-line, but at any hint of softening from the Germans you could expect many others to follow because there's already a lot of people in Europe softening because while those furious German voters and those like-minded would be happy to see a grexit, everyone else really, really doesn't want that to happen.
posted by Ivan Fyodorovich at 8:44 AM on July 7, 2015 [1 favorite]


But you'll find many, many people in the periphery, but especially in Portugal, Italy, and Spain, who are just as angry and harshly critical of the center-right neoliberal policies that have accepted the rationale for and consequent suffering from austerity.

Indeed, both right wing and left wing responses have sprung up to the EU's austerity program in the periphery countries (and beyond). Although, none of them has taken power except in Greece. For every statement of a national finance minister that MattWPBS listed, we could probably find one in contradistinction (or very close) made by one of the anti-austerity parties: Podemos, UKIP, Sinn Fein etc.
posted by Noisy Pink Bubbles at 8:50 AM on July 7, 2015


Jeebus I'd read that the previous bailout rounds had shifted private debt over to the public, but MattWPBS's list above really drives the point home -- and it very clearly shows the difficult political battlefield the banksters have shaped.

Piketty's solution -- a debt reduction deal that includes everybody -- seems like the best way out. Who will lead them to it?
posted by notyou at 9:30 AM on July 7, 2015




Because, frankly, the strongest rhetoric I'm hearing is coming from Merkel and the Germans.

Really? Can you give us a quote? Because Merkel isn't exactly known for strong rhetoric...
posted by sour cream at 9:57 AM on July 7, 2015


@ Ivan Fyodorovich

That's my worry, too. But I'm frustrated with the ECB, Merkel, and others in that the only thing preventing them from compromising is domestic politics in the north, while with the referendum result Greece really cannot compromise and accept a deal that the referendum specifically rejected (and any compromise Greece could pre-emptively offer right now would basically accept what the Greek voters rejected), and meanwhile without a deal within this week the most likely outcome is grexit. It's not just Syriza anymore, it's something very close to a national unity government, and if the EU politicians and negotiators are counting on the government to fall and to capitulate, this is much, much less likely than it was -- and it already was unlikely, given the "no" result.

That's the problem. Syriza have set up this situation where they can't really negotiate beyond a certain point due to domestic politics, but at the same time they've spent the last five months putting so many of the other governments in positions where they can't move beyond a certain point due to how it will be perceived domestically. If they had more time then maybe they could sell it, but I think there's so much political weight they need to shift that it's going to be very difficult. I mean, the Slovaks were talking about a referendum on whether or not to support Greece if the rest of the Eurozone wanted to. How do you go from that to a compromise deal in a matter of days? How do you get the Italians to go from "their own successive governments are to blame" to agreeing to funding? How do you get the Latvians from "the brave Greek nation has voted itself out of the Eurozone" to supporting a write off? How do you do all of this when the other side now has a mandate restricting them from compromising in the other direction?

I'll say it again, it's not 'domestic politics in the north', it's domestic politics in near enough every one of the other Eurozone countries. They need to get to a situation where each party in power isn't going to be going against their own platform, or is at least able to argue that they aren't, or that Greece is an exceptional case. Read the comments from the ministers going into the meetings today on the Guardian Liveblog. The mood music doesn't sound like that's coming through.

@ Noisy Pink Bubbles
Indeed, both right wing and left wing responses have sprung up to the EU's austerity program in the periphery countries (and beyond). Although, none of them has taken power except in Greece. For every statement of a national finance minister that MattWPBS listed, we could probably find one in contradistinction (or very close) made by one of the anti-austerity parties: Podemos, UKIP, Sinn Fein etc.

Quick one first, Podemos, UKIP, Sinn Fein - one of these things is not like the others. UKIP definitely aren't an anti-austerity party.

As to the meat of the point, I'm sure you're right that we could find a contradictory statement from anti-austerity parties in each country where the finance minister has come out in a way that makes a bailout difficult. How many of them are around the negotiating table with the Greeks though? That's where the problem is, and that's where the finance ministers are.
posted by MattWPBS at 10:30 AM on July 7, 2015 [4 favorites]


the other side now has a mandate restricting them from compromising in the other direction?

Don't bet on this - mandates are very much a matter of perception.
posted by Dr Dracator at 10:38 AM on July 7, 2015


This isn't a Northern Europe/Germany vs Southern Europe/Greece situation, no matter how much the media plays it as such.

Oh but politically it is, not so much in terms of the usual clichés about lazier tax-evading childlike Southerners resenting harsh but necessary fiscal measures from "the adults in the room”, to quote a reputable source, but in terms of who calls the shots.

And there is a common front in Southern Europe in many respects. Among the people at least, if not in the governments or finance ministers. In terms of popular sentiment, it’s exactly like Ivan says above, it is the center vs the periphery, and yes, absolutely, …you’ll find many, many people in the periphery, but especially in Portugal, Italy, and Spain, who are just as angry and harshly critical of the center-right neoliberal policies that have accepted the rationale for and consequent suffering from austerity.

I’m actually surprised this needs to be pointed out again at all, especially given the recent electoral results in those countries. Anti-austerity parties / populists (depending on your point of view) are gaining more and more support.

Speaking of Italy, whenever I’m back I hear rants against Germany and the "Eurocrats" and austerity and financial elites all the time, each year more so. I’d say the popular sentiment is very much pro-Greece at the moment, and not just because of a special affinity between Italians and Greeks but because Italy has its own reasons to resent austerity measures and even though its economic crisis is not as catastrophical as in Greece (it is a bigger-sized country and always had a bigger economy), if there was a Syriza running for elections there they’d win hands down. Grillo’s Five Star moment almost did, after all. They’d probably get even more of a majority today. The other party gaining more and more support is the Northern League, even more ferociously anti-EU and anti-establishment.

The old left/right wing distinction doesn’t make a difference in that respect. (And in much of Europe anyway but especially in the South, that divide has always been very different to the same divide in US in particular, in terms of social policies and things like pensions and national healthcare - those are sacred, a given, for both right and left wing.)
posted by bitteschoen at 11:02 AM on July 7, 2015 [4 favorites]


"Really? Can you give us a quote? Because Merkel isn't exactly known for strong rhetoric..."

Not as in confrontational, but as in they're not going to compromise on anything. I can't find a direct quote, but the Guardian and others are reporting that Merkel said this afternoon that given the "no" result there is no basis for negotiations. I don't know what the original quote was, but that echoes what she and other Germans have been saying for the last two days -- that the referendum was "no" and so basically what is there to talk about?

Which makes sense to me, given that I totally agree with the Greek's position that the referendum means that obviously Greece isn't going to suddenly decide to accept the deal that the referendum rejected or, more generally, accept the the problematic stuff in the deal that the referendum rejected. Greece's position today (or at least a paper out of the government today) is that last Tuesday's offer is their offer. And I think that's perfectly reasonable as an opening offer -- if the troika is willing to negotiation, then they should accept that as a opening offer and then sit down and negotiate a compromise. Instead, the message is that Greece has to compromise as its opening offer, otherwise the troika has nothing to talk about.

That only makes sense if Germany's position is that somehow the "no" result really meant "yes". In other words, the German position is that the "no" result is necessarily a vote to leave the euro and it's up the Greek government to repudiate that and to capitulate to the troika's demands. From their position, those are the only two possibilities.

Politically that makes sense from the perspective of German domestic politics. But it doesn't make sense for avoiding a grexit.
posted by Ivan Fyodorovich at 11:22 AM on July 7, 2015 [1 favorite]


By the way, speaking of clichés about the tax-evading Southerners vs efficient Northeners: clichés always contain some truth, and as an Italian I know too well about the awful levels of tax evasion in Italy, and the corruption, and the overspending in public sector etc. Just like in Greece, maybe worse, probably worse, even just in size.

Before I moved to Germany, I had this image of the German system as the exact opposite, of a country with an efficient government and public management, and rules being respected, and laws being observed, and taxes being paid...

Well, a lot of that cliché is also true, but I’ve also seen a lot of examples of the darker side of German public affairs that rarely get much attention outside of Germany.

For one thing, there is unfortunately quite a bit of tax evasion here too, at low-level, in many aspects of daily life, it’s far more widespread and even accepted than I would have dreamt of as an Italian moving to Germany, and yet doesn’t get anywhere as much attention. The construction business, for instance, it relies abundantly on undocumented foreign workers, paid in cash, completely untaxed. And then there’s the higher level. I’ve heard and read in local media about more big tax evasion and corruption scandals than I’d have imagined. And public spending? I don’t know the figures now, but even from daily life here you notice the sheer number of public entities and employees in Germany is astounding, and they definitely pay them better than in Italy or Greece. Germany produces more, exports more, has a bigger and far more solid economy but their government and media shouldn’t be lecturing anybody about wasting public money really.

Take the mess they did with the new BER airport for example. Quoting from the global edition of Handelblatt, German business newspaper, Germany wasted about €59 billion on avoidable mistakes over four decades while building public infrastructure:
The unfinished airport, designed to be a symbol of German efficiency, innovation and modernity, has become an embarrassing, costly reminder of the opposite. Its costs have more than doubled, from €2.5 billion to a projected €5.4 billion ($2.7 billion to $5.9 billion).

A hulking, empty shell located southeast of the German capital, the airport, to be named after the former chancellor Willy Brandt, has been plagued by management ineptitude and corruption. Its owners – the city-state of Berlin, the surrounding state of Brandenburg and the German federal government – have refused publicly to commit to a final opening date.
Imagine if that had happened in Greece or Italy? You wouldn’t hear the end of it. Instead, it oddly gets a mention here and there, but no major coverage outside of Germany really, unless you’re deliberately following German news, that is.

And here, from a far less “neutral” (?) source but still, the figures quoted are interesting:
White elephants in the room: How EU projects blow billions of euros amidst austerity talks
Austerity may be hitting some countries hard, but looking at certain EU funded projects, one would never know…
This is also one of the reasons that has made me a lot more skeptical about global reporting on European issues. I see with my own eyes how Germany gets a free pass in international media, about stuff for which other countries get excoriated. Too much bias, too much resorting to clichés, even when the reality is far more messy and complex and contradictory. I wish global coverage and discussions gave us a bit less opinions, less commentary, and a bit more reports and data.
posted by bitteschoen at 11:31 AM on July 7, 2015 [12 favorites]


And here, from a far less “neutral” (?) source but still, the figures quoted are interesting

Less neutral? A Russian propaganda outlet cutting and pasting from a British propaganda outlet, with at least some of the examples pulled from a "europeans are smelly" report from a British right-wing think tank and others not even being about EU-funded projects? With commenters ranting about how the jews control everything?

And even we for a moment ignore that and assume that all numbers are correct and all projects are real, the article's premise is just plain stupid. EU doesn't build airports in Germany or arenas in Spain; that's done by the local authorities, possibly with contributions from the shared EU budget (for which Germany is by far the biggest net contributor, followed by France and Italy). And if you actually look at the numbers quoted in the article, the EU-funded part is usually just a tiny part of the overall budget, when there's a EU part at all. So what was the point, again?
posted by effbot at 12:30 PM on July 7, 2015 [1 favorite]


Slavoj Žižek on Greece: This is a chance for Europe to awaken
The Greek prime minister, Alexis Tsipras, recently remarked that if he were to meet alone with Angela Merkel for dinner, they would have found a formula in two hours. His point was that he and Merkel, the two politicians, would treat the disagreement as a political one, in contrast to technocratic administrators such as the Eurogroup president, Jeroen Dijsselbloem. If there is an emblematic bad guy in this whole story, it is Dijsselbloem whose motto is: “If I get into the ideological side of things, I won’t achieve anything.”

This brings us to the crux of the matter: Tsipras and Yanis Varoufakis, the former finance minister who resigned on 6 July, talk as if they are part of an open political process where decisions are ultimately “ideological” (based on normative preferences), while the EU technocrats talk as if it is all a matter of detailed regulatory measures. When the Greeks reject this approach and raise more fundamental political issues, they are accused of lying, of avoiding concrete solutions, and so on. And it is clear that the truth here is on the Greek side: the denial of “the ideological side” advocated by Dijsselbloem is ideology at its purest. It masks (falsely presents) as purely expert regulatory measures that are effectively grounded in politico-ideological decisions... This passage from politics proper to neutral expert administration characterises our entire political process: strategic decisions based on power are more and more masked as administrative regulations based on neutral expert knowledge, and they are more and more negotiated in secrecy and enforced without democratic consultation.
posted by junco at 1:03 PM on July 7, 2015 [7 favorites]


Democracy Now! had an awesome couple segments today with Paul Mason, one of the few reporters who, in my opinion, is consistently high-quality and reliable on Greece.
posted by Noisy Pink Bubbles at 1:22 PM on July 7, 2015 [2 favorites]


Swimming pools affect tax rates. People in Athens neighborhoods claim to have only 324 swimming pools, and the real number was determined to be 16,974.

They don't need austerity. They need law and order.


When tax money goes to things that people think are illegitimate, and money the government is supposed to pay does not come, one can see why it becomes a national sport to avoid taxes. It's a symptom, not the problem.
posted by corb at 1:35 PM on July 7, 2015


When tax money goes to things that people think are illegitimate

Which has fuck-all to do with Greece. There is no evidence that Greeks cheat on their taxes because they don't like where the money is going. They're cheating because (a) they'd rather keep their money, and (b) there are no consequences.

Regardless of what a government is doing with its money, one can always find the proverbial $500 toilet seat to rationalize their decision not to comply with the letter or spirit of tax law. When there are no consequences to bending/breaking the laws, then there's no alternate scenario where the government spending money on "legitimate" expenses suddenly gets people to stop cheating. We'll always find something to explain away our selfish human nature.
posted by tonycpsu at 1:51 PM on July 7, 2015 [1 favorite]


effbot: calma, please, there’s no need to go off on a rant about Russia, the point of the link wasn’t an endorsement of the wondrous beauty that is state-sponsored Russian media in English, I assure you, it was a reference to some specific examples of abuse of EU funds - a well known issue - including the infamous "new Berlin airport" which still hasn’t been built.

I had to quickly google in English to find some English language sources quoting the cost of the BER airport, because I’ve read and heard TONS about it in the German media, but so little about it in English, that I didn’t have a source handy.

That was the point. If you’re searching in English, you’re more likely to find this stuff on RT than I don’t know CNN! isn’t that fascinating in itself?

(And for the record, I didn’t read below the line comments but you’ll find plenty of racist and awful comments anywhere below the line of news articles, even in the moderated and otherwise good to excellent comment sections of say The Guardian. Huffington Post, etc..)

The "?" after neutral was not about RT, but generic, about, you know, the question of how neutral are media in general? since we were talking about how biased the anglo-media can be and so many people noticed a disconnect there.

And yes you are correct that the EU part is sometimes a small contribution to the budget, but not always, and yes you are also correct of course it’s the individual states, or regions, or cities, abusing those funds - and by the way the EU also finances a lot of good stuff too - but it should monitor where its money goes a bit more closely, especially when preaching austerity, and apply standards more consistently across countries - that was the point. And that point is just as valid whether it’s made in a non-opinion piece on RT, or by a member of the EU Parliment, or, go figure, by the European Anti-Fraud Office itself - here you go, quick link, from Euractiv, another European news portal in English:
The European Union's anti-fraud body recovered a record €691 million last year, it said on Tuesday, but expressed concern that public bodies were getting more reluctant to tip it off for fear of damaging national reputations.

The European Anti-Fraud Office (OLAF) - which monitors the use of EU funds and investigates wrongdoing within EU institutions - saw an increase in private tip-offs thanks to a new internet notification system, it said in its 2011 annual report.

But information from EU institutions and member states was becoming more scarce, said OLAF's director-general.

"This decrease in information from public authorities worries us," Giovanni Kessler told reporters.

Many of the larger fraud cases concern EU Structural Funds, which pay for regional infrastructure projects and are overseen by member states. One such investigation, into the financing of road works in Italy, yielded €389 million in recovered EU funds last year.

Member states may under-report instances of fraud to give the appearance of better ranking in corruption tables, but the growing cross-border nature of such crimes meant that assigning national blame was not useful, Kessler said.


Scrutinising EU institutions themselves, Kessler said OLAF had come into conflict with some members of the European Parliament when, during an investigation into accepting payments for adding amendments to legislation, OLAF was barred from entering their offices.

The agency eventually succeeded in gaining access, but after a considerable delay. Two of the politicians targeted by the probe later resigned, and OLAF recommended judicial action against a third.

Kessler said that although it had since been clarified that OLAF does have the power to enter the offices of MEPs, some politicians still want to limit its powers.
posted by bitteschoen at 2:27 PM on July 7, 2015


bitteschoen there are german media published in English.

Mayday: Berlin's Ill-Fated Airport Faces Insolvency for the airport story

and this one

Angela's Ashes: How Merkel Failed Greece and Europe on Greece & finance has this Merkel quote:

" . . . at a Monday meeting of leading members of her Christian Democratic Union (CDU), she hinted at the depth of her disappointment in Tsipras. His policies are "hard and ideological," she said, adding that he is steering his country into a brick wall "with his eyes wide open."
posted by bukvich at 2:56 PM on July 7, 2015


They're cheating because (a) they'd rather keep their money, and (b) there are no consequences.

It's always tempting to apply familiar answers to foreign problems, but when you do that, you run the risk of failing to see really important parts of the problem, such as the fact that in many cases, the crippling Greek taxes are being demanded by foreign nations as the price of debt. To be clear, in this case, the illegitimacy of what the government is spending money on in many cases right now is the debt itself, as can be seen by the no vote.

It's not just "Greeks, amirite? Man those guys hate paying taxes!"
posted by corb at 3:14 PM on July 7, 2015 [1 favorite]


That would make sense if the rampant tax evasion didn't predate the current situation.
posted by Justinian at 3:15 PM on July 7, 2015 [3 favorites]


Or if that caricature at the end remotely resembled an argument advanced by anyone in this thread.
posted by tonycpsu at 6:33 PM on July 7, 2015 [2 favorites]


Angela Merkel must act now for Greece, Germany and the world
The never-ending austerity that Europe is force-feeding the Greek people is simply not working. Now Greece has loudly said no more. As most of the world knew it would, the financial demands made by Europe have crushed the Greek economy, led to mass unemployment and a collapse of the banking system, and made the external debt crisis far worse, with the debt problem escalating to an unpayable 175% of GDP. The economy now lies broken, with tax receipts nosediving, output and employment depressed, and businesses starved of capital.

The humanitarian impact has been colossal: 40% of children now live in poverty, infant mortality is sky-rocketing and youth unemployment is close to 50%. Corruption, tax evasion and bad accounting by previous Greek governments helped create the debt problem. The Greeks have complied with much of Angela Merkel’s call for austerity – cut salaries, cut government spending, slashed pensions, privatised and deregulated, and raised taxes. But in recent years the series of so-called adjustment programmes inflicted on Greece and others has served only to make a great depression the like of which has been unseen in Europe since 1929-33. The medicine prescribed by the German finance ministry and Brussels has bled the patient, not cured the disease.

We urge Chancellor Merkel and the troika to consider a course correction to avoid further disaster and enable Greece to remain in the eurozone. The Greek government is being asked to put a gun to its head and pull the trigger. Sadly, the bullet will not only kill off Greece’s future in Europe. The collateral damage will kill the eurozone as a beacon of hope, democracy and prosperity, and could lead to far-reaching economic consequences across the world.

In the 1950s Europe was founded on the forgiveness of past debts, notably Germany’s, which generated a massive contribution to postwar economic growth and peace. Today we need to restructure and reduce Greek debt, give the economy breathing room to recover, and allow Greece to pay off a reduced burden of debt over a long period of time. Now is the time for a humane rethink of the punitive and failed programme of austerity of recent years and to agree to a major reduction of Greece’s debts in conjunction with much-needed reforms in Greece. To Chancellor Merkel our message is clear: we urge you to take this vital action of leadership for Greece and Germany, and also for the world. History will remember you for your actions this week. We expect and count on you to provide the bold and generous steps towards Greece that will serve Europe for generations to come.

Heiner Flassbeck Former state secretary, German federal ministry of finance
Professor Thomas Piketty Professor of economics, Paris School of Economics
Professor Jeffrey Sachs Professor of sustainable development, professor of health policy and management, and director of the Earth Institute at Columbia University
Professor Dani Rodrik Ford Foundation professor of international political economy, Harvard Kennedy School
Professor Simon Wren-Lewis Professor of economic policy, Blavatnik School of Government, University of Oxford
posted by bitteschoen at 8:22 PM on July 7, 2015 [3 favorites]


This seems like a marriage that's gone on too long. At this point, the animosity and mistrust are so ingrained that any agreement is going to be just another opportunity for mistrust and defiance. The ultimatum that things must be made right by Sunday, if at all, is not designed to win the hearts and minds of Grecian taxpayers - just the opposite, it's a kiss off. As a parent, I recognize this. If there's anyone, Saturday evening, willing to stand up in Athens and advocate for the concerns of the ECB, I would fear for their safety.
posted by newdaddy at 8:38 PM on July 7, 2015 [1 favorite]


Tyler Cowen, Marginal Revolution: Greece and Syriza lost the public relations battle
I take the progressive “clustering out on a limb” here as a sign that, for better or worse, progressivism as an ideology has reached and indeed gone beyond its high water mark. The progressives are siding with a corrupt, clientist state, which won’t cut its defense spending down to Nato norms, against some admittedly imperfect social democracies, thereby sustaining the meme of powerful aggressor vs. victim, Arnold Kling telephone.

Interfluidity has an interesting but quite wrong post on how to think about Greece. International relations simply could not be run on the principles he advocates, most of all in conjunction with democratic nation states.
via Fabius Maximus: We Are Greece
Summary: The Greek-eurozone tale is a common one, much like that of America’s inner cities. As usual, the Right begins its tightening with the weak and poorly behaved. People are told that they deserve their harsh fate. But it doesn’t end with them, as austerity is a medicine always requiring another dose.
leads me to Karl Whelan: Greece, The Euro, And Gunboat Diplomacy
With everyone talking about Greece being on the verge of exiting the euro after Monday’s summit meeting, it seems to be forgotten that the current crisis is not really about Greece’s currency arrangements at all. The Greek people are not demanding a return to the drachma and few within the country are arguing for the competitive benefits a currency devaluation would entail. And there are no formal rules that Greece is breaking that must lead to an exit from the euro because, legally, the euro is a fixed and irrevocable currency union.

This crisis is about more basic things: Debt and power.
The question is how did it come to this?
posted by the man of twists and turns at 10:06 PM on July 7, 2015 [1 favorite]


I'm no political theorist, but I know that a massive economic collapse, combined with a narrative of oppression from outsiders and the fuck-you Nationalism we're seeing here, means huge futures for Golden Dawn, whether it is still calling itself that when the next elections roll around or not.

Aside from the actual starving children caught in all of this, that's my biggest concern.
posted by Navelgazer at 10:10 PM on July 7, 2015


(Which is not to say I favored the Austerity measures, but I think "completely clean house and reform the government from the ground up to kill the bone-deep culture of corruption and malfeasance" would have been an even more impossible sell.)
posted by Navelgazer at 10:13 PM on July 7, 2015


Greece submits new bailout request

Finance minister Euclid Tsakalotos has asked for a three-year programme, from the bailout fund (the European Stability Mechanism). And in return, Greece would commit to:

“to a comprehensive set of reforms and measures to be implemented in the areas of fiscal sustainability, financial stability, and long-term economic growth.”

Importantly, Tsakalotos’s said that Greece is proposing to “immediately” implement measures, starting next week.

That would include “Tax reform related measures” and “Pension related measures” -- two of the “red lines” that proved so hard to tackle in recent months.

Tsakalotos also promises to flesh out these proposals on Thursday, with “a comprehensive and specific reform agenda” which can be assessed by the IMF, ECB and European Commission.

And there’s no ducking the debt relief question: Tsakalotos says:

“Greece welcomes an opportunity to explore potential measures to be taken so that its official sector related debt becomes both sustainable and viable over the long term.”

posted by Peter J. Prufrock at 6:06 AM on July 8, 2015


For some reason, the recent repeated, visible U.S. intervention (first the IMF debt sustainability document, then Obama phoning Tsipras, Merkel and Hollande yesterday, and now U.S. Treasury Secretary Jacob Lew explicitly echoing the IMF) makes me.... wary?
posted by progosk at 7:31 AM on July 8, 2015


Meanwhile in Athens, Syriza and friends are cracking down on those who disagree with the majority view, something that's making some people rather uneasy. Fun times.
posted by effbot at 11:09 AM on July 8, 2015 [1 favorite]


More detail on that here.

Would be interesting to know who's behind Mega, SKAI and Ant1, and to what extent they're obliged to keep a par conditio (as channels are here in Italy, too). Still, bad vibes...
posted by progosk at 11:37 AM on July 8, 2015


From what I've heard, every channel in Greece is agitating against SYRIZA. Naturally, since they're all owned by the oligarchs who SYRIZA is going to / in the process of targeting.

Basically, like having Fox News on every channel. "[T]elevision blaring out propaganda for [the IMF], every TV station and every newspaper, virtually, doing that," in the words of Paul Mason.

It must be crazy to live in a country whose media is so hostile to left ideas. I can only ima... wait a second...
posted by Noisy Pink Bubbles at 12:14 PM on July 8, 2015 [7 favorites]


Paul Mason? This guy? Yeah, he sure sounds like a neutral observer.
posted by effbot at 12:37 PM on July 8, 2015 [1 favorite]


From what I've heard, every channel in Greece is agitating against SYRIZA. Naturally, since they're all owned by the oligarchs who SYRIZA is going to / in the process of targeting.

Basically, like having Fox News on every channel. "[T]elevision blaring out propaganda for [the IMF], every TV station and every newspaper, virtually, doing that," in the words of Paul Mason.


Hey, remember when right-wing TV and radio stations in Venezuela participated in the US-backed coup attempt against Hugo Chavez? And remember how they whined about censorship and oppression when their violence-inciting asses lost their broadcasting licenses after the coup failed?

Give it a few more months...
posted by Pope Guilty at 12:58 PM on July 8, 2015 [2 favorites]


So, the Spectator - a right wing, conservative, British newspaper is a neutral observer?
posted by yertledaturtle at 1:08 PM on July 8, 2015 [1 favorite]


effbot, like I said, I've found Paul Mason's reporting to be trustworthy over the years. One tweet from him calling someone a name doesn't change that. Being a "neutral observer" and reporting false information are two different things.

In any event, you're linking to a newspaper that finds him trustworthy enough to run his articles. I trust that grants him some credibility in your eyes.

Also, I know that others have found that particular Twitter account obnoxious (enough to get that tweet of Mason's 500 favorites and 500 retweets).
posted by Noisy Pink Bubbles at 3:06 PM on July 8, 2015 [1 favorite]


So, the Spectator - a right wing, conservative, British newspaper is a neutral observer?

You mean he didn't tweet the tweets they linked to? Here's a direct link to Twitter. The account is verified. Here's the label he used for his detractors.

(but otoh clicking around in Mason's output led me The Fifth International's response to the Greek situation, which included a call for a socialist united states of Europe with unlimited access to Euro, so now I'm just sitting here chuckling for myself.)
posted by effbot at 4:28 PM on July 8, 2015


Keep in mind there is a large fascist contingent in Greece; a fascist party came in third in Greece's most recent parliamentary election.

By the way, there's a Fifth International?
posted by Noisy Pink Bubbles at 6:36 PM on July 8, 2015


Guess what side GD were on in the referendum - makes interpretation of the result even more complicated.
posted by Dr Dracator at 7:56 PM on July 8, 2015


I see from that letter that more bigwigs have joined Piketty in hitting Germany on their debt hypocrisy -- I wish more would.

We called in their debts in 1919,
And they've hardly bothered us since then!

posted by chortly at 9:57 PM on July 8, 2015 [1 favorite]


Would be interesting to know who's behind Mega, SKAI and Ant1

In a series of articles on corruption, cronyism and censorship in Greece's media landscape, starting here, Michael Nevradakis provides a thorough primer on the primary interests of all three of those channels.
posted by progosk at 12:12 AM on July 9, 2015 [1 favorite]


Keep in mind there is a large fascist contingent in Greece

Yeah, exactly. And while Syriza's friends in the government might not qualify as fascist, there's enough aggressive phobias there for anyone. That's the issue here -- wtf do you do if you're closer to the centre (i.e. just your average European), in an environment where both the hard left (currently in power) and the hard right are pushing a "either you're a proud Greek or you're pro-Europe" rhetoric and will call you traitor (or terrorist, or literally Hitler) and prosecute you if you express the wrong opinions.

By the way, there's a Fifth International?

Sure. Or at least a bunch of organizations that would like to see one enough that they use it in their name. Hardcore orthodox trotskyism (Mason used to be a member of the British branch, which is why I ended up on their site). From the look of it, they're really excited about having communists rule Greece together with nationalists, because communists (while being outraged over having non-communists rule Ukraine together with nationalists, because nationalists). I'll also add that the Swedish branch got one vote in the latest election (same as Ziltoid the Omniscient, but far beyond Zlatan).
posted by effbot at 2:39 AM on July 9, 2015


but far beyond Zlatan

Eh, I think I meant "far behind".
posted by effbot at 3:10 AM on July 9, 2015


To be fair, Ziltoid the Omniscient is some serious competition. I'd vote for him over nearly anyone if he (it?) were running.

Trotskysists already have their own international, the Fourth International (or rather, the many purported Fourth Internationals). I wonder why some decided they needed a new one.

wtf do you do if you're closer to the centre (i.e. just your average European), in an environment where both the hard left (currently in power) and the hard right are pushing a "either you're a proud Greek or you're pro-Europe" rhetoric and will call you traitor (or terrorist, or literally Hitler) and prosecute you if you express the wrong opinions.

If you're an "average European" you recognize that this isn't an average time, for one thing! There is that (false) Dante quote about "The hottest places in hell are reserved for those who in times of great moral crisis maintain their neutrality."

In any event, I think you're kind of jumping the gun on the whole Greece-as-oppressive-political-dystopia narrative. To quote the SMH article on the subject:

"It is alleged the reporters breached electoral law by not allowing fair and equal time to all sides of the debate. The public prosecutor said it was responding to "viewer complaints"."

That allegation has an extremely high likelihood of being true, as already discussed. It's not even clear that the principle behind it is a violation of freedom of the press (and indeed is an established norm in many countries, and indeed Greece has laws upholding it that are being invoked here). You can guess at the seriousness of the people being investigated when they throw out quotes like this (again from the SMH):

"Thank God we have pluralism in Greece. I think we are heading for new era of Stalinism."
posted by Noisy Pink Bubbles at 3:37 AM on July 9, 2015 [4 favorites]


A Pain in Athens - "Of the roughly 230 billion euro disbursed to Greece, it is estimated that only 27 billion went toward keeping the Greek state running. Indeed, by 2013 Greece was running a surplus and did not need such financing."
posted by smoke at 4:29 AM on July 9, 2015


Yet another article that doesn't mention the 2012 debt restructuring (well, he does mention a percentage but not the interesting one) and doesn't mention what Greece did with all the money they'd borrowed in the first place (hint: huge chunks of it went into government spending). We've seen hundreds of these articles already; it's part of the myth at this point.

(The bit where he seems to argue that they didn't need the bailout because they made a surplus the year after the bailout had provided them with the largest restructuring in history is pretty funny, though.)

For an entirely different way to crunch the numbers, see How Greece's Bank Bailout Benefited Greeks.
posted by effbot at 5:30 AM on July 9, 2015 [2 favorites]


♫ We called in their debts in 1919,
And they've hardly bothered us since then! ♫


It's worth noting that what happened post-WWI was hardly a reasonable or just imposition of debt - it was highly punitory and vengeance driven. John Maynard Keynes, in his excellent 'The Economic Consequences of the Peace'.(It's a dense read, but well worth it.)
posted by corb at 11:59 AM on July 9, 2015


Wow, some interesting developments...

(18:29) Greece may get bailout and humanitarian aid
International observers have been telling us today that the package is likely to be so punitive that humanitarian aid cannot be ruled out. [...] Syriza MPs have been telling our Helena Smith that the big no received in the referendum on Sunday was a “confidence vote” in Tsipras who like no other prime minister before now has the popular support to enforce such punitive measures.

(20:15) Athens accepts harsh austerity in push for bailout
[...] Athens is understood to have put forward a package of reforms and public spending cuts worth €13bn (£9.3bn) to secure a third bailout from creditors that could raise $50bn and allow it to stay inside the currency union.

A cabinet meeting signed off the reform package after ministers agreed that the dire state of the economy and the debilitating closure of the country’s banks meant it had no option but to agree to almost all the creditors terms. [...]


Earlier in the day Merkel stated that debt relief is still off the table, and while Schäuble agreed with the IMF assessment that Greek debt is unsustainable he claimed that a haircut would violate EU rules (I'm paraphrasing from a paraphrase, so if someone understands his statements better please correct me). So, I guess Germany is getting what they want? From what I understand France had an important role in shaping the Greek proposal.
posted by Peter J. Prufrock at 2:29 PM on July 9, 2015


It's worth noting that what happened post-WWI was hardly a reasonable or just imposition of debt - it was highly punitory and vengeance driven.

That is indeed what I was referring to, yes. No imposition of a debt that can never be repaid is ever reasonable or just. Kaiser, Nazi, or spendthrift -- once it's clear they can never pay it back, it's mere vengeance to enforce a downward spiral of punitive payback.
posted by chortly at 2:49 PM on July 9, 2015 [4 favorites]


Greek proposals leaked here. From the Guardian summary it sounds like it's pretty much the proposals the were on the table before the referendum, and could be trouble for Syrizia to get through parliament.
posted by MattWPBS at 4:55 PM on July 9, 2015


Given how similar the latest Greek proposal is to the last creditor's offer, the charitable reading (linked by PJP above), from Syriza insiders, sort of makes sense:

the big no received in the referendum on Sunday was a “confidence vote” in Tsipras, who like no other prime minister before now has the popular support to enforce such punitive measures

especially if it can be coupled with an official call for debt relief on the other side - albeit so far only from EC president Donald Tusk (who's consistently been serving as quite the Juncker-counterweight).
posted by progosk at 12:35 AM on July 10, 2015


That's a very charitable reading of the referendum. The question was "do you support the proposals?", and the new proposal put forward by Syriza is worse by some readings (suggestions I've seen are about €13bn compared to €9bn). Going to be interesting to see how the Greek parliament vote plays out, and how the next elections go - Syriza have now had to actually put forward the proposals for austerity, rather than agreeing with the Troika's proposals.
posted by MattWPBS at 2:19 AM on July 10, 2015


And now there's questions in German politics about exactly why Syriza are putting forward a programme that the Greek public rejected.

Michael Fuchs, deputy parliamentary floor leader of Merkel’s Christian Democrats, was quick to raise concerns. Fuchs warned: “We have to be very careful because honestly, because I have a little bit of a problem to trust it because what is the difference between Sunday and today? On Sunday the Greek people voted against these measurements."
posted by MattWPBS at 2:36 AM on July 10, 2015


International observers have been telling us today that the package is likely to be so punitive that humanitarian aid cannot be ruled out.

Which part, exactly, is punitive?

I agree that it is unreasonable to insist on payback of debts that cannot be reasonable paid back. But even that can hardly be said to be "punitive". "Unreasonable" perhaps, or "naive", but "punitive"?

Also, the debt reduction is something that was simply not on the table. The discussions up to the end of June related to second aid program, and more specifically, whether Greek met the conditions to receive the already granted 7.5 bil. EUR (it did not), and wheter that program can be extended. What's on the table now is emergency assistance that can be granted in order to stabilize the Euro. It's about giving money to Greece. Forgiving debt is a different process and the parties at the table opposite Greece don't have the mandate to cut those debts. That will be a different process. Of course, Greece's debt should have been cut (yet again) long ago, but let's not confuse things here. Besides, Lagarde, the French PM and others have already hinted that a haircut is inevitable. So it will eventually come after everyone has been taken on board, but don't fall for the propaganda that tells you it is something that Merkel, Lagarde and Hollande can simply decide now among themselves.
posted by sour cream at 4:09 AM on July 10, 2015 [6 favorites]


SYRIZA was elected on an anti-austerity platform following years of pro-austerity government, they just had a overwhelming public vote rejecting austerity so they... turn around and negotiate an austerity deal when push comes to shove with the troika?

This volte-face is both perplexing and disappointing. I don't know how SYRIZA is going to spin this as a victory; it looks like a complete capitulation, and an illogical one at that.
posted by Noisy Pink Bubbles at 8:11 AM on July 10, 2015 [1 favorite]


I don't know how SYRIZA is going to spin this as a victory; it looks like a complete capitulation, and an illogical one at that.

I don't think there are many people in Greece (much less the rest of the EU) who could tell you the difference between the positions of Greece and the lender countries in the days before that public vote, that's how close they were together. So this wasn't so much a vote rejecting austerity as rather a confidence vote in Tsipras. Now that he has that confidence vote in his back, he can demand more from the Greek people, i.e. ask them for concessions that might have led to rioting prior to the referendum.

Secondly, he's about to get a deal for another three years. Prior to the vote, there was only an extension of the second aid program on the table, which could only have lasted a couple of months. After that, new negotiations would have been necessary for the next aid program, which might have entailed new demands from the lender countries. Looks like he might kill two birds with one stone. Or possibly three, if you count the increased possibility of a haircut.
posted by sour cream at 8:58 AM on July 10, 2015 [2 favorites]


"This volte-face is both perplexing and disappointing. I don't know how SYRIZA is going to spin this as a victory; it looks like a complete capitulation, and an illogical one at that."

I've been trying to figure it out. But you really have to start from the solid understanding that while the greek voters very much hate austerity, they also very much don't want to leave the euro. And, more than anything, they don't want the current economic situation to go into a full-blown collapse.

I feel like I've been repeating this until I've been blue in the face, but with the exception of some angry voters and MPs here and there (both in Greece and elsewhere in Europe, especially Germany) almost no one wants Greece to leave the euro. There's tremendous pressure to avoid this. So no one should be surprised that a deal is being reached, even one that is very unfriendly to one side's position.

But I think it's one of three scenarios.

The first is how much of Europe sees it, and it's that Tsipras and Syriza is just incompetent and erratic. I don't think that's the case; this perception is the result of an intense propaganda campaign by the creditors that includes many things taken for established fact that are actually false. Even so, I do think that it's entirely possible that Tsipras miscalculated the European response to a "no" result.

The second is in accordance with what I wrote earlier this week -- that Tsipras going into the referendum was getting signals from various directions that in the event of a "no" result, there would be a push from different directions on the troika to compromise. Maybe on debt reduction (I'm not going to deal with sour cream's comment now, but it's misleading in an opposite-but-parallel way that "there's no mechanism for kicking Greece out of the euro" is misleading -- if there's a will, there's a way, even if its indirect), maybe on pensions and the VAT, whatever. But what actually happened is that while there have been powerful voices insisting that debt reduction is necessary, there's been a very strong resistance by the Germans and Juncker and others -- that group has taken a very hard line. Perhaps much stronger than anticipated. Perhaps more likely is that Tsipras expected the ECB to relent, the banks would reopen, and Greece and Tsipras would have more time to use the "no" result to take their own hardline position and wait for the more moderate voices in Europe to get the troika to make some of the desired concessions. But that didn't happen and Greece is facing immediate and severe economic pressure and, in this context, it's the hardliners on the troika side who have the most leverage.

The third is that Tsipras wasn't really getting any signals that the troika would compromise, but just assumed that they would given the line in the sand that a "no" result would be on Greece's side, and perhaps he and others overestimated the panic and subsequent political pressure that a possible grexit would put on the hardliners in the rest of Europe. But while there's substantial pressure to avoid a grexit, there's much less panic than many anticipated and Greece, with the banks remaining closed, has had very little leverage.

Again, the greek people have pretty much put Syriza into an impossible situation. The only real leverage Greece has against its creditors is to default, and default would mean that Greece would have to leave the euro and there'd be, in the short term anyway, much worse economic conditions as a result. But the greek people really don't want to leave the euro. They don't like austerity, and they don't like the offered deal, but they don't want to leave the euro and they certainly don't want higher unemployment and a deeper depression. To give the people what they want, Syriza has to be anti-austerity but pro-euro. But that's a losing negotiating position.

I don't know what I'd have done in Tsipras's place. He couldn't accept the framing that a "no" was a vote to leave the euro, because the voters don't want that. But it's arguable that being honest with the greek public might have helped -- if they understood that, ultimately, Greece's only leverage against the creditors is to genuinely threaten to leave the euro, and that maybe that would be better for Greece in the long run, anyway, then Syriza could have negotiated from that position -- less Greek austerity and thus less Greek misery, or Greece would be forced to leave the euro in its own defense. As I've written, while there's a minority in Europe that would be fine with that outcome, I think a majority is very uncomfortable with this, both for political reasons (creating uncertainty about the European project) and economic reasons. There's good reasons to believe that the troika would have capitulated, with lots of grumbling, because I think in this last week you can see some evidence that if they had to, they would. But they don't have to, because the pain that Greece is suffering is more than its people can bear.

As I wrote a while back, extending current conditions for weeks into the future by taking the hardline that the "no" result implies might have forced the troika to end up compromising, but it arguably would have created political chaos in Greece, as well. Syriza would likely have fallen (though it may yet with this capitulation) and the overall outcome might have been worse for Greece. I think that both the troika and Syriza understand quite well that current conditions are coercing Syriza to capitulate.
posted by Ivan Fyodorovich at 9:17 AM on July 10, 2015 [8 favorites]


From the Absurd to the Tragic
The sense of the absurd is not just a product of this unexpected reversal. It stems above all from the fact that all of this is unfolding before our eyes as if nothing has happened, as if the referendum were something like a collective hallucination that suddenly ends, leaving us to continue freely what we were doing before.
...
A simple conclusion emerges from all this: with the moves it has made in the last week, the government has achieved nothing other than a full return to previous entrapment, from a much more unfavorable position, under the pressure of even more relentless economic asphyxiation. It has managed to squander the powerful injection of political capital from the referendum in record time, following at all points the line of those who had opposed it and who have every reason to feel vindicated, despite being trounced at the ballot box.
posted by Noisy Pink Bubbles at 9:25 AM on July 10, 2015 [1 favorite]


here's some more relevant tweets and RTs from edward harrison who's apparently in athens: on the ELA (the gun to greece's head) here's more from martin sandbu: When the ECB thinks like a private bank - "The euro's guardian falls short of its public mission"
In extraordinarily outspoken remarks for a central banker, Christian Noyer, president of the Banque de France, warned that the European Central Bank will end liquidity provision to Greek banks if there is no deal between Athens and its creditors by Sunday - and in the same breath warned that "riots" and "chaos" could ensue. If so, the ECB has to shoulder a large part of the blame...

If the ECB measures risk the way a private bank does, it is doing something wrong. Liquidity risk is by definition not something a central bank - the ultimate provider of liquidity at will - should worry about. As for credit and market risk, what is the greatest hit that might afflict Greek banks' loan book? The continuing depression of the Greek economy and its exit from the euro. But the biggest cause of either is the strangling of the banking system by the central bank itself.

It is perverse for the ECB to violate its treaty objectives with reference to a risk its own actions are making much, much worse. It is, in effect, dealing with risk not as a public institution of prime importance, but as a private bank, and an arch-conservative one at that. If the euro really does split, this will have been the main, and entirely avoidable, reason.
and on the current debate...
So what did the referendum achieve? Two things perhaps, one symbolic, one substantive. The symbol: a brief respite in the humiliation, expressed through a million-voiced version of what the Germans call a "Stinkefinger". The substance: a modicum of debt relief in the form of at least an extension, on better terms, of debt falling due in the next three years if Athens obtains what it asks for. That's far from satisfactory, and probably less than what the IMF deems necessary. But it is more than the brief refinancing that extending the second programme, which expired at the end of June, would have achieved. Something that can be presented as meaningful debt relief is necessary and sufficient for Tsipras to sign a deal.

Second, everything is now driven by the desperation to lift the capital controls. The European Central Bank has unjustifiably determined that the Greek banking system may only be allowed to breathe if the government signs on the dotted line with its creditors. But capital controls are not only negative. While the inability to make transfers out of the country (eg to pay for imports) is catastrophic, the restrictions on taking out cash have benefits. So long as there are no limits to making electronic transactions inside Greece, cash constraints must be forcing the cash-based informal economy into the open. Note that the government had already banned cash for transactions above certain amounts for precisely this reason. A generalised move to electronic transactions and debit cards could do wonders for tax collection. So even after a deal, Greece should continue to limit cash. How about asking Sweden for advice? The Scandinavian country, as perhaps the first, reached "peak cash" (the start of a secular fall in the circulation of cash) a decade ago. It's a good job for George Papandreou: he studied in Sweden and speaks the language fluently.
backing up for a bit, olivier blanchard aims to deflect criticism from the IMF - "The main critiques, as I see them, fall under the following four categories"
  1. The 2010 program only served to raise debt and demanded excessive fiscal adjustment.
  2. The financing to Greece was used to repay foreign banks.
  3. Growth-killing structural reforms, together with fiscal austerity, have led to an economic depression.
  4. Creditors have learned nothing and keep repeating the same mistakes.

  5. [...]
and misses according to brad delong: "of the 7%-points by which Greek growth fell below IMF estimates in 2010-2011, 5%-points of that were due to the fiscal consolidation that the IMF had forecast would be imposed on Greece. Consider that the IMF had already expected the Greek economy under baseline to shrink by 4%-points, and for fiscal consolidation to shrink the Greek economy by 3%-points, and we have 4/5 of the damage to the Greek economy--relative to a counterfactual forecast under some zero-spending-austerity baseline was due to austerity. I find this hard to square with the very-sharp Olivier Blanchard's contribution of today..."

how do you square it? daniel davies and henry farrell suggest it's never really been about the debt per se and that it makes more sense as a means for EU technocrats to exercise political control over greece, but then that just brings us back to the debate...

anyway, delong notices another tweet: "RT @FukuyamaFrancis: Schäuble finally admits 'debt sustainability is not feasible without a haircut'. Why did this take so long?"

also btw...
-Greece Is Merkel's Failure Too
-How Germany Used This One Weird Trick To Cut Its Debt
-Piketty's argument about Greece's debt has three massive holes in it
-Let’s talk about… the 1953 London Agreement on German External Debts
posted by kliuless at 10:50 AM on July 10, 2015 [9 favorites]


Yeah, the ECB's adjustment of the ELA is the key factor in this. I think everything has hinged on it. I think it's a stain on the ECB that will haunt it -- and European politics -- for a long time.
posted by Ivan Fyodorovich at 1:10 PM on July 10, 2015 [1 favorite]


The Left Platform of SYRIZA responds:
Nevertheless, even now the government can and must respond to the blackmail of the “institutions” by posing the following alternative: either a program without any further austerity, providing liquidity, and leading to debt cancellation, or exit from the euro and default on the repayment of an unjust and unsustainable debt.
posted by Noisy Pink Bubbles at 1:12 PM on July 10, 2015


Don't count Yanis among the optimists for this weekend:

This weekend brings the climax of the talks as Euclid Tsakalotos, my successor, strives, again, to put the horse before the cart – to convince a hostile Eurogroup that debt restructuring is a prerequisite of success for reforming Greece, not an ex-post reward for it. Why is this so hard to get across? I see three reasons.
[...]

It is the third which seems to me more pertinent and, indeed, more interesting.

The euro is a hybrid of a fixed exchange-rate regime, like the 1980s ERM, or the 1930s gold standard, and a state currency. The former relies on the fear of expulsion to hold together, while state money involves mechanisms for recycling surpluses between member states (for instance, a federal budget, common bonds). The eurozone falls between these stools – it is more than an exchange-rate regime and less than a state.

And there’s the rub. After the crisis of 2008/9, Europe didn’t know how to respond. Should it prepare the ground for at least one expulsion (that is, Grexit) to strengthen discipline? Or move to a federation? So far it has done neither, its existentialist angst forever rising. Schäuble is convinced that as things stand, he needs a Grexit to clear the air, one way or another. Suddenly, a permanently unsustainable Greek public debt, without which the risk of Grexit would fade, has acquired a new usefulness for Schauble.

What do I mean by that? Based on months of negotiation, my conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone.

posted by progosk at 2:24 PM on July 10, 2015


I think that's interesting as all get out, but I think the caustic influence of the IMF (cf Argentina) cannot be discounted.
posted by From Bklyn at 3:05 PM on July 10, 2015




Here is, perhaps, the corollary to Yanis' suspicions:

Hans-Peter Friedrich, a leading member of the Christian Social Union [...] said the Greek crisis was being used to weaken the fiscal rules in Europe, and he believed the only reason that the French president, François Hollande, had backed the latest reform proposals was that: “The French socialists want to weaken the fiscal rules now, because they realise that they’re also not capable of implementing necessary reforms.”
posted by progosk at 2:31 AM on July 11, 2015 [1 favorite]




The latest seem to confirm Varoufakis' suspicion even more.
And this is how the Guardian liveblog announced the news of a "temporary Grexit" apparently being suggested (original bold and italics):
Germany’s Frankfurter Allgemeine Sonntagszeitung newspaper is reporting that the German finance ministry has proposed two options for Greece - including a temporary ‘timeout’ from the eurozone!

Under the first course, Greece would improve its existing proposals, and also transfer some €50bn of property assets to sell off to pay debts (not clear which assets they have in mind. Islands? The Parthenon perhaps?)
Just to give you an idea of how insane it's all becoming, reporters themselves find it hard to believe.

By the way, there are comments to that article on the FAZ from German CDU supporters praising Schäuble.

Anyone finding it puzzling that Syriza are putting forward a programme that the Greek public rejected/doing a volte-face etc. - I just want to say this, as an ordinary European citizen watching this unfold: don't you understand, despite any referendum or semblance of democratic structures still in place, Greece is not a country free to set its own policy?

Actually, you understand by now no country in the Eurozone is actually a democracy anymore? Because there's no point reading all sorts of articles and debates if you don't acknowledge that basic fact to start with.

That's been the inevitable consequence of this monetary union without a political union. (And the irony is, if they do use this argument to push for a political union, it'd be the most undemocratic development of all by now...)
posted by bitteschoen at 11:13 AM on July 11, 2015 [7 favorites]


Just to give you an idea of how insane it's all becoming, reporters themselves find it hard to believe.

Media is reporting the existence of an offer has been denied by the government - it seems this is an internal German finance ministry paper, and has never been on the negotiating table.
posted by Dr Dracator at 11:58 AM on July 11, 2015


Oh a lot of things already happened that have never been on the negotiating table...
Here's the paper - tweeted by Sven Gielgold, a German member of the Green Party in the European Parliament, he says he cannot name the whistleblower but guarantees the paper is authentic (and calls it "Merkel & Schäuble's paper").

Here's a piece on Forbes by Frances Coppola, who writes for the Financial Times too and is a good source to follow on Twitter, key points:
But it’s not just debt relief that the hardliners want to reject. It is the whole proposal. The fatal flaw in the Franco-Grecian plan is that there is no agreed benchmark for a “good enough” proposal. So hardliners who really want Grexit can refuse to accept not only this proposal but any other on the grounds of inadequacy. Nothing the Greek government proposes is ever going to be good enough for those who are determined to see Greece leave the Eurozone. Unless clear criteria can be established for acceptance of the Greek proposals, the hardliners can simply drive Greece out of the Euro through a process of attrition. [...]
The acknowledged leader of the “Greece Out” faction is Germany’s influential Finance Minister, Wolfgang Schaueble. He makes no secret of his preference for Greece to leave the Euro. Indeed he has wanted Greece out since 2011. For Herr Schaueble, Grexit is the only solution.

And it looks as if he intends to make sure it happens. Prior to the Eurogroup meeting, Herr Schaueble made the following points (my paraphrase):

- Greece’s new proposal is nowhere near good enough for a third bailout

- Even if we reach agreement on actions, we don’t trust the Greeks to implement them

- Decision about Greece’s future must be made this weekend

This adds up to “I will discuss, but don’t expect me to change my position”. The only decision Herr Schaueble wants to see this weekend is a decision for Greece to leave the Euro.

This was even before the leaked document, so, it's not a secret.
posted by bitteschoen at 1:42 PM on July 11, 2015 [1 favorite]


Guardian are saying the Finns aren't going to support a bailout - euro sceptic party threatening to leave coalition and bring down the government if they do. It's not Germany that could kill this - it's the poorer countries or vulnerable governments.
posted by MattWPBS at 1:48 PM on July 11, 2015 [1 favorite]


Oh it is Germany calling the shots here, no one is even pretending it isn't so anymore. That's the good thing about horrible crisis moments: the true nature of people and countries and policies and monetary unions comes out.
It's not just Finland now, the hard line seems to have more supporters - Estonia, Lithuania, Netherlands, Slovakia, Slovenia (according to Finnish media).

It's like a horror version of the Eurovision. France and Italy have veto power.... douze points to Greece?
posted by bitteschoen at 2:31 PM on July 11, 2015 [4 favorites]


And tomorrow, apparently, we will see Italy telling Germany "ora basta!"

We're truly into the surreal, by now...
posted by progosk at 2:45 PM on July 11, 2015 [1 favorite]


DETERMINED to lay the foundations of an ever-closer union among the peoples of
Europe,
RESOLVED to ensure the economic and social progress of their countries by common
action to eliminate the barriers which divide Europe,
AFFIRMING as the essential objective of their efforts the constant improvement of the
living and working conditions of their peoples,
RECOGNISING that the removal of existing obstacles calls for concerted action in
order to guarantee steady expansion, balanced trade and fair competition,
ANXIOUS to strengthen the unity of their economies and to ensure their harmonious
development by reducing the differences existing between the various regions and the
backwardness of the less favoured regions,
DESIRING to contribute, by means of a common commercial policy, to the progressive
abolition of restrictions on international trade,
INTENDING to confirm the solidarity which binds Europe and the overseas countries
and desiring to ensure the development of their prosperity, in accordance with the
principles of the Charter of the United Nations,
RESOLVED by thus pooling their resources to preserve and strengthen peace and
liberty, and calling upon the other peoples of Europe who share their ideal to join in
their efforts,
HAVE DECIDED to create a European Economic Community


...
posted by ersatz at 12:34 AM on July 12, 2015 [3 favorites]


.
posted by destrius at 6:28 AM on July 12, 2015


Guardian has a quote from Renzi, but it looks, somewhat ominously, as though the article it's from (the Grauniad liveblog says it's from Il Messaggero, but their link now goes to Il Sole 24 Ore, which has no such direct quote...) has been pulled:

“Now common sense must prevail and an agreement must be reached. Italy does not want Greece to exit the euro and to Germany I say: enough is enough.

Now that Tsipras has made proposals in line with the European demands, we must absolutely sign a deal. Humiliating a European partner after Greece has given up on just about everything is unthinkable.”


If it does turn out that he's OK to be seen to have said this, though I might be uncharitable here, you wonder who's put him up to it. (Of course, now it's apparently being disappeared, we're back to the more typical usual...)

Meantime, tempers seem to be fraying, and it's looking like a bitterer pill will work collective magic once again.
posted by progosk at 6:39 AM on July 12, 2015


A bit of History showing how Greece got to this point. Author has an agenda but there is a bit of interesting backstory
posted by adamvasco at 7:21 AM on July 12, 2015 [1 favorite]


Looks like the 'temporary Grexit' idea floated yesterday is now in the official eurogroup documents, basically as the default outcome if no agreement is reached.
posted by Happy Dave at 9:01 AM on July 12, 2015


The leaked proposal also suggests Greece hands over €50bn of “valuable Greek assets” over to eurozone authorities to be sold off over time!

That would kick in if Greece cannot deliver “a significantly speeded up” privatisation programme.

It would be a remarkable loss of sovereignty, even for a country used to being overseen by officials from the IMF, ECB and EU for most of the last five years.
.
El Pais says Greeks have given in to most of the demands except for privatization fund in #Luxembourg.
.
posted by bitteschoen at 10:54 AM on July 12, 2015


The leaked proposal also suggests Greece hands over €50bn of “valuable Greek assets” over to eurozone authorities to be sold off over time!

Ahh, the eternal goal of austerity rears its head again.
posted by Pope Guilty at 11:09 AM on July 12, 2015 [14 favorites]




Ahh, the eternal goal of austerity rears its head again.

Fun game while reading: count & compare mentions of 'protestant work ethic vs. lazy Mediterraneans' analysis (i.e. thrifty, housewife, industrious, welfare state, gov't overspending) with mentions of privatization of Greek state assets like the Port of Piraeus.

Take a shot for each over.
posted by the man of twists and turns at 1:39 PM on July 12, 2015


Attention, this is not from some anti-austerity radical left/radical right blogger, this is Paul Krugman in the New York Times:
Suppose you consider Tsipras an incompetent twerp. Suppose you dearly want to see Syriza out of power. Suppose, even, that you welcome the prospect of pushing those annoying Greeks out of the euro.

Even if all of that is true, this Eurogroup list of demands is madness. The trending hashtag ThisIsACoup is exactly right. This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is, presumably, meant to be an offer Greece can’t accept; but even so, it’s a grotesque betrayal of everything the European project was supposed to stand for.

Can anything pull Europe back from the brink? Word is that Mario Draghi is trying to reintroduce some sanity, that Hollande is finally showing a bit of the pushback against German morality-play economics that he so signally failed to supply in the past. But much of the damage has already been done. Who will ever trust Germany’s good intentions after this?
At this stage, Britain might as well save themselves the trouble and expense, and just scrap the plan for a referendum on joining the EU next year (if by next year there's still a EU to join anyway)?

And, Merkel might as well prepare to hand over the "Queen of Europe" title to Marine Le Pen.
posted by bitteschoen at 2:21 PM on July 12, 2015 [3 favorites]




At this stage, Britain might as well save themselves the trouble and expense, and just scrap the plan for a referendum on joining the EU next year (if by next year there's still a EU to join anyway)?

Britain joined the EU (then called EEC) in 1973.
posted by effbot at 2:34 PM on July 12, 2015


effbot: eh I know, I obviously meant the proposed referendum they're discussing now, in our present day, to decide whether to stay in the EU or not... (sorry for my bad wording, should have used "on leaving" instead of "on joining").
posted by bitteschoen at 2:46 PM on July 12, 2015


#ThisIsACoup.
posted by progosk at 3:07 PM on July 12, 2015 [3 favorites]


Also: Merkel's arriving comment this afternoon was that the problem lay in a lack of trust (in the Greeks). After seeing the positions she has taken tonight, this perspective has surely been completely reversed: after such unprecedented moves, how is Germany to be trusted?
posted by progosk at 3:36 PM on July 12, 2015 [2 favorites]


@FoxBusiness: "JUST IN: IMF asks that Greek PM Tsipras resign."
posted by Golden Eternity at 3:48 PM on July 12, 2015


Demanding that he resign after he proposes accepting the concessions they demanded? The IMF is really off its game.
posted by Pope Guilty at 4:34 PM on July 12, 2015


Timothy Geithner reveals Schauble’s plan to kick Greece out of the euro and ‘terrify’ the rest of Europe
In his new book ‘Stress Test’ just released in the US, Timothy Geithner has revealed that in 2012 German Finance Minister Wolfgang Schaeuble had presented him with a plan to kick Greece out of the eurozone. This, he said, would appease German voters and terrify Europe
posted by Golden Eternity at 4:35 PM on July 12, 2015


Guardian now saying that temporary Grexit suggestion is being dropped.

@FoxBusiness: "JUST IN: IMF asks that Greek PM Tsipras resign."

They're now backpedaling on this, saying IMF have denied it. Fox claiming that IMF would still be happy for him to go.
posted by Pink Frost at 5:08 PM on July 12, 2015


Tsipras plans to expel SYRIZA members (most notably Left Platform members) that did not support him in the previous parliamentary vote in preparation for a new vote approving whatever comes out of these negotiations. Yet another rightward move.
posted by Noisy Pink Bubbles at 7:05 PM on July 12, 2015 [1 favorite]


Greece: We'll give you everything you want even though it will destroy us, please?
Germany: KILL ALL YOUR FIRST BORN. THEN WE WILL TALK.
posted by T.D. Strange at 9:02 PM on July 12, 2015 [8 favorites]


“Agreement”— Charles Michel (@CharlesMichel) July 13, 2015
“Eurozone 'agreement' on Greece debt,” BBC, 13 July 2015
posted by ob1quixote at 12:03 AM on July 13, 2015


Greece: We'll give you everything you want even though it will destroy us, please?
Germany: KILL ALL YOUR FIRST BORN. THEN WE WILL TALK.


See? it did work though! It's a great* tactic, escalating crazier and crazier demands, "mental waterboarding", so that at least SOME of those crazy demands will have to get accepted.

Like, the €50 bn asset transfer, still going ahead, except it won't go to the German-owned development fund in Luxembourg as originally planned, but will stay in Athens. Not a small difference sure, Tsipras is already claiming this as a victory. It still means Greece will have to privatise assets for €50bn.

*great as in, awful and unworthy and demeaning and despicable and destroying every hopeful and benign (naive) notion of the European Union we all grew up with, but it has been effective!

By the way, next time you stumble on yet another bit of advice on how to switch off from the news and detox your mind and think happy thoughts instead, keep in mind that when you read the recaps of what happened overnight during what is probably the longest summit ever held, you will still get most of the facts that emerged but you will not get the same palpable sense of absurdity and incredulity and shock that you would have gotten by following the liveblogs - the reporters, the economists, the insiders in Brussels, even the most experienced ones, you could sense they were just as shocked as any of us ignorant commoners. And you will not get the sense of the spin being spinned as it happens. Compulsively following live news updates in moments like this is even more useful than reading the commentary and analysis after the facts, if you want to get a closer perspective.

So, if you want to catch up, before reading the summaries go check the liveblogs first - in English, again, the Guardian was probably the most comprehensive. (It was being quoted also by liveblogs in other languages).
posted by bitteschoen at 1:11 AM on July 13, 2015 [7 favorites]


Isn't Tsipras going to get eaten alive back in Greece? This looks to my untutored eye like a palpably worse deal than what the Greeks voted No to last week.

And if it fails in the Greek Parliament, are we back to this point again on Thursday? Or what?
posted by Happy Dave at 1:17 AM on July 13, 2015


Isn't Tsipras going to get eaten alive back in Greece?

Perhaps that's what the Eurogroup wants; Greek parliament unable to reach consensus, Tripras resigns, snap elections get called, and some friendly centre-right party takes control.

Given what just happened though I think the Golden Dawn would probably win any election. Europe just proved that it doesn't give a damn about the Greek people and what they want.
posted by destrius at 1:26 AM on July 13, 2015 [2 favorites]


Easy to see why Varoufakis quit now. Presumably Syriza falls apart soon and the ultra-right takes power in the chaos - and they just happen to be guys the EU can do real business with, of course.
posted by colie at 1:28 AM on July 13, 2015 [1 favorite]


This looks to my untutored eye like a palpably worse deal than what the Greeks voted No to last week.

The deal last week was for an extension of the second aid program, which would have lasted a couple of months and involved about 7.5 bil. EUR (last tranche) + X.
By contrast, what's on the table now is a third aid program over 85 bil. EUR (but who knows? a couple of days ago, the number was 54 bio. EUR so this figure keeps rising every day...) - that's about 8000 EUR per person in Greece and rising.

Considering that the amount in question to be paid by the lender countries is suddenly 10 times larger than a few days ago, I think it is quite reasonable that the lender countries want some assurance that Greece is actually serious about getting its economy back on track - you know, things like actually collecting taxes, especially from wealthy people, creating a real estate register that makes it possible to collect taxes from wealthy people, etc. etc. Things that were promised by Greece 5 years ago and for some reason never delivered.

And to all those who think that the lender countries should just shut up and pay: The reason why they are wavering is because of their constituencies back home. They were elected (democtratically) to represent their constituency's interests. So it is quite understandable that they are reluctant to hand over yet another 85 bio. EUR without any serious commitments and guarantees - even though that is what they seem to be doing right now. Or does democracy only count when the result is to your liking and anything else should be discounted as populist and ignored?
posted by sour cream at 1:35 AM on July 13, 2015 [5 favorites]


actually collecting taxes, especially from wealthy people

Taxes don't get properly collected from seriously wealthy people anywhere, ever.

They were elected (democtratically) to represent their constituency's interests.


They represent the interests of ruling elites and international capital. Anything else is pure theatre for the benefit of a paid-for media, e.g. "Greeks are lazy and live beyond their means."
posted by colie at 1:52 AM on July 13, 2015 [2 favorites]


One positive for Greece: there is, at least, some provision for debt relief via longer maturities and a longer grace period. That has the effect of reducing Greece's real debt, hopefully it will be by a substantial amount.
posted by Pink Frost at 1:54 AM on July 13, 2015


Perhaps that's what the Eurogroup wants; Greek parliament unable to reach consensus, Tripras resigns, snap elections get called, and some friendly centre-right party takes control.

That's what the Friday vote was about - the opposition has pledged support ensuring the government won't collapse outright, but will probably have to be restructured. Dissenting SYRIZA MPs are in a tough spot now, realistically they have to either support the deal or leave the party - estimates put them at about 40 out of 149, so it's going to be a significant loss - it remains to be seen if it will be survivable.
posted by Dr Dracator at 2:22 AM on July 13, 2015


Taxes don't get properly collected from seriously wealthy people anywhere, ever.

I don't think that is actually true, and the situation in Greece seems to be far worse than any other place in the EU. For example, shipowners in Greece go generally tax-free - it's in their goddamn constitution! Does seem like a good place to start...

They represent the interests of ruling elites and international capital.

I won't get into whether that is true or not, but they're definitely afraid of facing the voters back home. You seem to be writing from some place outside of Europe.
posted by sour cream at 3:03 AM on July 13, 2015 [1 favorite]


It still means Greece will have to privatise assets for €50bn

My understanding is that this includes assets that were already agreed to be privatized in earlier negotiations. Whether there are new ones or not is I think subject to further negotiations.
posted by the cydonian at 4:16 AM on July 13, 2015 [1 favorite]


If only there were a Greek word for a victory that is in fact a defeat & a German word for pleasure derived from the misfortune of others.
posted by Rustic Etruscan at 4:29 AM on July 13, 2015 [5 favorites]


Varoufakis unplugged (from before the agreekment, but not by much)
posted by chavenet at 4:49 AM on July 13, 2015 [2 favorites]




You seem to be writing from some place outside of Europe.

that's an odd way to spell "the political discourse I will accept"
posted by Rustic Etruscan at 5:07 AM on July 13, 2015 [4 favorites]


That's an amazing, candid interview with Varoufakis that chavenet posted. Highly recommended.

The arrogance and intransigence of the Germans (especially the finance minister) seems to know no bounds. Some good pull quotes:
So at that point I had to get up and say “Well perhaps we should simply not hold elections anymore for indebted countries”, and there was no answer.
...
So what we have is a non-existent group that has the greatest power to determine the lives of Europeans. It’s not answerable to anyone, given it doesn’t exist in law; no minutes are kept; and it’s confidential. So no citizen ever knows what is said within. … These are decisions of almost life and death, and no member has to answer to anybody.
posted by Noisy Pink Bubbles at 5:11 AM on July 13, 2015 [8 favorites]


My prediction is that Tsipras now has headroom to default within the Euro currency, depending on when money is released to the Greek banks. If he continues some capital controls after the banks reopen and talks a good game to the public (it is un-Greek to withdraw your money now, it will ruin us all!) he may be able to avoid a run on the banks. If the banks have enough capital to stay in business, there is no reason for a government with a primary surplus not to default immediately.
A number of years with poor access to global debt markets is no big deal if you don't need to borrow because you can run a surplus. If the public feel the banks will meet their withdrawals there need be no bank run. If he wanted to use a hammer he could state that the government would guarantee all bank deposits over X euro by activating a new land tax should it be necessary. Immediately land owners interests would then be aligned with those trying to stop a run on the banks, effectively halting it, IMO. Why withdraw money from the bank if you are confronted with possibly having to pay a land tax to make yourself good?
And the country gets out from under the absurd debt burden.
After a few years of testiness and harsh language both SYRZIA and the incumbents in Germany and elsewhere will be replaced and a European rapproachment can occur.
For the Greek people it is a continuation of what has now become business as usual, but there is light at the end of the tunnel as their government's debt is extinguished. For the Troika, it is galling, but their ability to punish Greece is limited as any attempt to eject them from actually using the Euro as currency is pointless and probably unenforceable. There will be some anger and fury stopping things like agricultural subsidies and other centralised outflows to Greece, but eventually cooler heads will agree that what is done is done, and Greece will gradually regain it's standing as a full member of the EU.
Considering the alternatives of an unsustainable debt burden, or defaulting and reissuing Drachmas, defaulting but keeping the Euro, and arguing all the way that Greece is still a valid member of the EU for things like free trade and migration is very attractive.
posted by bystander at 5:20 AM on July 13, 2015


Wow just wow
From the New Statesman Varoufakis interview (Thanks Chavenet)
YV: The complete lack of any democratic scruples, on behalf of the supposed defenders of Europe’s democracy. The quite clear understanding on the other side that we are on the same page analytically – of course it will never come out at present. [And yet] To have very powerful figures look at you in the eye and say “You’re right in what you’re saying, but we’re going to crunch you anyway.”
posted by adamvasco at 5:50 AM on July 13, 2015 [1 favorite]


To have very powerful figures look at you in the eye and say “You’re right in what you’re saying, but we’re going to crunch you anyway.”

I doubt that these words were ever uttered to Varoufakis.
posted by sour cream at 5:57 AM on July 13, 2015 [1 favorite]


@Colie They represent the interests of ruling elites and international capital. Anything else is pure theatre for the benefit of a paid-for media, e.g. "Greeks are lazy and live beyond their means."

Explain to me exactly how Syrizia is the true voice of democracy, but every other government in the Eurozone is a just representing elites and international capital. Explain to me how the other government aren't actually representing their own population's interests.

That Varoufakis interview speaks volumes about how trust of the Greek government got annihilated in negotiations. He effectively stood up and said that any agreement should effectively only be valid until there's a change of government in a country, was making plans around unilaterally cutting the value of the liquidity loans from the ECB, and issuing Euros on Greece's own initiative.
posted by MattWPBS at 7:05 AM on July 13, 2015 [4 favorites]


To have very powerful figures look at you in the eye and say “You’re right in what you’re saying, but we’re going to crunch you anyway.”

I doubt that these words were ever uttered to Varoufakis.
posted by sour cream at 5:57 AM on July 13
[1 favorite +] [!]


I agree, they would have said "crush". "We're going to crunch you just sounds silly and as he makes clear these are not silly people he was dealing with.

I came away much more favorably impressed with him than before. His anecdote about the ECB telling them not to do anything (to manage the crisis before talks got under way) and then later jumping down their throats because they'd done nothing was pretty damn juicy. And clearly indicative that the fix was in. Unsurprisingly.
posted by From Bklyn at 7:08 AM on July 13, 2015 [2 favorites]


If he wanted to use a hammer he could state that the government would guarantee all bank deposits over X euro by activating a new land tax should it be necessary.

You are wrongly assuming that land owners actually have money to tax, and those that have would keep it in the bank just waiting to be seized. Also the scheme becomes self-defeating if banks own any significant real estate.
posted by Dr Dracator at 7:15 AM on July 13, 2015


I am concerned that this is going to lead to long term political instability in Greece and the larger sphere. This is how fascists are made.
posted by Karaage at 7:16 AM on July 13, 2015


This is how fascists are made.

Ask Germany.
posted by T.D. Strange at 9:09 AM on July 13, 2015


And the drums of nationalism get louder and louder: Greece wants Germany to repay €279bn it was forced to loan the Nazi authorities during WWII.
posted by metaquarry at 9:12 AM on July 13, 2015


metaquarry - though interesting, that's a story from back in April.
posted by progosk at 9:16 AM on July 13, 2015 [1 favorite]


Ack, that will remind me to check datelines more closely. In my defense, this sort of story seems to be getting more play on Twitter the past couple days.
posted by metaquarry at 9:21 AM on July 13, 2015


This is how fascists are made.

It's good to be wary of this possibility, but there is at least one big difference between the classical cases of fascism (Germany, Italy) and what is happening in Greece today. In both of those scenarios, there was a large left-wing / Communist movement that had a serious chance of taking power and was, at times, actively agitating towards the purpose of doing so. I'm talking street battles, strikes shutting down factories, a sense that a socialist revolution was actually possible, etc. The fascists promulgated a narrative that was convincing to many at the time that the Communists were to blame for the turmoil in the country (which was certainly not the complete story, of course) and that the strong fascist hand was required to restore peace and order.

In Greece, on the other hand, there has been no (quasi-) attempted revolution such that the counterrevolution can emerge to combat it. The Greeks know where the blame lies for the current crisis: on the Europeans (Germans, specifically) and the austerity regime and not the relatively accommodating "left" (if it can even be called that anymore) that SYRIZA represents.

Maybe this will change if a left-wing government leads Greece down the path of a Grexit and needs to consolidate power to drag the country in that direction, but for now I don't think fascism is an impending possibility.
posted by Noisy Pink Bubbles at 9:25 AM on July 13, 2015


@metaquarry - and that's how good at negotiating the Syrizia government has been. Need to convince Germany to lend you money? Bring up WWII.
posted by MattWPBS at 10:40 AM on July 13, 2015


Slovakian finance minister: "#Greece compromise we reached this morning is tough for Athens becasue it's the results of their "Greek Spring" #eurozone"
posted by junco at 10:43 AM on July 13, 2015


Fascinating behind-the-scenes Yanis V interview on Australian Late Night Live with Phillip Adams.
posted by progosk at 10:46 AM on July 13, 2015 [1 favorite]


It feels like the new deal terms is an exercise of cutting off the nose to spite the face.

It's obvious now that the referendum significantly weakened Greece's bargaining position given that they weren't willing to entertain a Grexit and now the Eurozone leaders are back for blood and it's hard not to think they're trying to smash up Syriza in the process. Going into the weekend I was hopeful that they would accept the Greek proposal which was essentially a rehash of the pre-referendum deal, but I never expected them to take it to revenge levels with the revised draft.

It strikes me odd that the people behind the deal aren't thinking about the long term consequences for the Union itself - if you cared about that goal, it would behoove you to ensure the your partner can succceed in the long run, not try to get blood from a stone because you feel confident that the "worst case scenario" of a grexit wouldn't affect you much.
posted by Karaage at 11:21 AM on July 13, 2015 [2 favorites]


the people behind the deal aren't thinking about the long term consequences for the Union itself

If Yanis V is to be believed - and honestly, I cannot muster a single reason why he wouldn't be - they very much are. (He is publishing an article in Thursday's Die Zeit in which he will outline Schäuble's project.) Germany is very definitely thinking about the Union - only not the kind of Union that was originally the plan.
posted by progosk at 11:40 AM on July 13, 2015 [1 favorite]


-To have very powerful figures look at you in the eye and say “You’re right in what you’re saying, but we’re going to crunch you anyway.”

I doubt that these words were ever uttered to Varoufakis.


The way I read it, it sounds obvious to me he's using those words himself, to describe the attitude, the kind of response he got (when he talked economics to those only thinking about political strategies), that's the context he's referring to at least in this interview.

It's clear to me he's not stating anyone came right out and said those precise words to his face. (And to me "crunch" sounds just about right, what's silly about it?).
posted by bitteschoen at 2:00 PM on July 13, 2015 [2 favorites]


• And to all those who think that the lender countries should just shut up and pay: The reason why they are wavering is because of their constituencies back home. They were elected (democtratically) to represent their constituency's interests. So it is quite understandable that they are reluctant to hand over yet another 85 bio. EUR without any serious commitments and guarantees - even though that is what they seem to be doing right now. Or does democracy only count when the result is to your liking and anything else should be discounted as populist and ignored?

• Explain to me exactly how Syrizia is the true voice of democracy, but every other government in the Eurozone is a just representing elites and international capital. Explain to me how the other government aren't actually representing their own population's interests.


These may be just rhetorical questions, but for those who are genuinely wondering, the standard democratic argument is that if country A's democratic government opts to apply policy X to itself, and country B's democratic government opts to instead enforce policy Y on country A, the fact that B is a democratically elected government does not make the imposition of policy Y on A democratic. Pretty much the fundamental idea of democracy is self-rule, with the proviso that a larger democratic organization (eg, a federal government vs a state) can sometimes overrule that, provided that the federal government has been democratically elected, including fair representation from the voters in the sub-state. But perhaps you already understood this, since the ideas of fairness underlying it are sufficiently obvious to be considered "self-evident" by many, and were just asking rhetorically.

So perhaps to beat a dead horse: the EU economic system is not remotely democratic, in the sense that the policies it is currently pursuing are not being decided by a representative parliament of all EU citizens (although that parliament does somewhat exist). Germany (country B) is imposing its desires -- most especially, its political desires for austerity -- on Greece (country A). The fact that Germany's desires are (arguably) democratically supported has nothing to do with whether the imposition of those policies on another country is democratic. So the fact that Germany might "understandably" want to do what it is doing because it is accurately representing its own constituencies' interests is irrelevant.
posted by chortly at 2:00 PM on July 13, 2015 [6 favorites]


Paul mason's take on democracy

But the real problem is not the politicians. It is the eurozone’s inability to contain the democratic wishes of 19 electorates. When the Finnish government threatened to collapse the talks, it was only expressing the wishes of the 38% of voters who backed the nationalist rightwingers of Finns Party. Likewise, when Schäuble sprang his temporary Grexit plan, he was expressing the demand of 52% of German voters, who want Greece to leave.
posted by Karaage at 2:26 PM on July 13, 2015 [1 favorite]


"Germany (country B) is imposing its desires -- most especially, its political desires for austerity -- on Greece (country A)."

The predictable response to this is that these impositions are a requirement for loans to Greece and Greece isn't being forced to borrow this money.

Which would be a much more defensible argument if Greece had its own currency. But the reality of the euro is that not only is Greece held in a straightjacket by the euro that means that they don't have a reasonable alternative to borrowing this money, it's also been proven by the ECB's actions that the liquidity function of a central bank in the eurozone is superseded by considerations that further pressure Greece to borrow this money. So the claim that this is completely voluntary, in the sense that it would be were this to have been, say, Iceland asking for this financing and aid, is false.

And this is the fundamental political problem of a currency union without a fiscal union. The economic problems with this arrangement have been much discussed and are very apparent. But we're seeing the ugly truth that this arrangement is deeply politically problematic because a currency union implies a number of monetary decisions that are very political, not merely economic (if there is such a thing), and so those institutions and policy will be, especially when the system is stressed, proven to be agents of the dominant European powers. The end result is an anti-democratic imposition of political values upon a disenfranchised weak member of the euro.

Political credibility is important for these kinds of institutions. And for such institutions, while it's important to be fair, it's even more important to be perceived as being fair. What's astonishing to me is that Germany and others are so ignorant of the importance of this kind of credibility that they not only eschew any real attempt at fairness, they make no attempt to even be seen as being fair. They could have taken Greece's surrender Friday and quietly worked from that foundation, but instead they took a punitive pound of flesh -- ostentatiously -- as well. I don't think there can be any doubt this was intended to be an object lesson, a show of force, a warning; but precisely the degree to which it succeeds in this respect is the degree to which it undermines the political credibility and confidence in the European project as it now exists. It was a penny wise, pound foolish decision and it will haunt Europe for a good long while.
posted by Ivan Fyodorovich at 3:28 PM on July 13, 2015 [12 favorites]


The Krugman article ("Killing the European Project") has some good comments on it. Lots of international people commenting, including people from Greece, Germany and Portugal.

Ryan, Madison 1 day ago
The thing that scares me about this is there is in Greece today a political movement that will gladly reject membership in the Eurozone, reissue the Drachma and welcome the hate and vitriol of the Troika and the technocrats. It is called Golden Dawn, and a cursory review of European history will show you that the unthinkable becomes quickly commonplace when desperation rules the day. That Germany of all nations fails to recognize this is horrifying.


(emphasis mine)
posted by triggerfinger at 3:40 PM on July 13, 2015 [2 favorites]


There's much of a "European" project left, rather than a "German Imperial Project".
posted by T.D. Strange at 4:57 PM on July 13, 2015


But we're seeing the ugly truth that this arrangement is deeply politically problematic because a currency union implies a number of monetary decisions that are very political, not merely economic (if there is such a thing)

Yes, exactly.

But, again... guess which genius solution is being suggested to that conundrum? Let's turn the currency union into a full political union, now! Ta-da! Magic! United States of Europe for the win!

Here you go, from one of the strongest supporters of the idea Guy Verhofstadt:
If we are to safeguard the euro, the eurozone must no longer be held hostage by nationalists and populists on left or right, whether Finland’s far-right Finns party, or Greece’s far-left Syriza. The reality is the system we have created left Europe paralysed. If the European Central Bank had not been there to provide emergency support to the Greek banking system, Greece would have had to leave the euro weeks ago, with catastrophic consequences for all of us.

A currency union, with 19 different national vetoes, is simply unworkable. The byzantine eurozone architecture we have created is incomplete. As long as this remains the case we will continue to pay a high price. A currency union with no monetary union and political union behind it is doomed to failure.

If Europe is to exit this crisis, the eurozone must act now to implement radical reform that will deliver a genuine political and economic union, to ensure this kind of crisis is never repeated. This means we must go further and do it faster. It means a sharing of sovereignty among the EU countries that have the euro as their currency. It means a common debt management system and a European treasury. European leaders know what needs to be done, but as of yet have lacked the courage to make the case domestically for the reforms that are needed.
You can totally see that happening after last Sunday, right? Magic!
posted by bitteschoen at 6:35 PM on July 13, 2015


As another example of the "democratic" processes at work (which Noisy Pink Bubbles partially quoted above), here is a pretty revealing anecdote from the Varoufakis interview for those who didn't read the whole thing:
HL: What is the greatest problem with the general way the Eurogroup functions?

YV: [To exemplify…] There was a moment when the President of the Eurogroup decided to move against us and effectively shut us out, and made it known that Greece was essentially on its way out of the Eurozone. … There is a convention that communiqués must be unanimous, and the President can’t just convene a meeting of the Eurozone and exclude a member state. And he said, “Oh I’m sure I can do that.” So I asked for a legal opinion. It created a bit of a kerfuffle. For about 5-10 minutes the meeting stopped, clerks, officials were talking to one another, on their phone, and eventually some official, some legal expert addressed me, and said the following words, that “Well, the Eurogroup does not exist in law, there is no treaty which has convened this group.”

So what we have is a non-existent group that has the greatest power to determine the lives of Europeans. It’s not answerable to anyone, given it doesn’t exist in law; no minutes are kept; and it’s confidential. So no citizen ever knows what is said within. … These are decisions of almost life and death, and no member has to answer to anybody.
posted by chortly at 6:43 PM on July 13, 2015 [2 favorites]


What makes anyone think, if there was a democratic fiscal union as well as a currency one, that the result would be much different? There are a hell of a lot more people in Germany than in Greece.
posted by Kadin2048 at 7:17 PM on July 13, 2015 [1 favorite]


Well, an actually democratic fiscal union would proportionally reflect the will of the member citizens, not just the member states. In Germany, the SPD, Left, and Green parties amount to about 45% of the vote; in France, the Socialist and other left parties have well over 50% of the vote; in Spain, Podemos and the center-left PSOE are together polling at nearly 50%, well above the right and center right parties in Spain; and in Italy, the center-left Democratic Party and the euroskeptic Five Star Movement are together at around 56%. So depending on how opinion works out in the rest of the member countries, yes, an actually democratic fiscal union could quite plausibly support policies very different from the center-right "austerity" preferred by the current leadership of Germany.

One might certainly disagree with this analysis and think that many of the center-left parties are effectively pro-austerity, but based on the basic opinion measures above, I don't think it's unreasonable to believe that an actually democratic eurozone parliament would reach very different results from the Merkel-dominated coterie. Especially when many of these negotiations would have to take place in a more transparent and open environment, where the sorts of backroom bullying that Varoufakis reports would be considerably more difficult.
posted by chortly at 9:03 PM on July 13, 2015 [2 favorites]


selected links:
Omnivore: Just What Makes A Good European?
Ian Welsh: Where Greece Should Go From Here - " They will be better off leaving the Euro. If they do so, they should simply repudiate all debts. Yes, all of them. Once they leave the Euro, Europe and the neoliberal order will go all out to crush them. It does not matter what they do, they will be target number one."
Tim Worstall, Forbes: Whatever Is Happening To Greece, It's Simply Not Neoliberalism - " The phrase you’re actually looking for to describe monetary and fiscal policy within the eurozone is “ordomonetarism”. These are the people still stuck on the rigidities of the gold standard: there’s nothing neo- let alone -liberal about any of them. "
Mark Weisbrot, Rebecca Ray, Juan A. Montecino and Sara Kozameh, CEPR: The Argentine Success Story and It's Implications
Paul Krugman, New York Times: Argentine Lessons for Greece - "Of course, it’s easy to think of reasons why Grexit might not stabilize the situation as quickly as peso devaluation did. But you can’t use Argentina as a reason to fear Grexit at this point, given that once again the financial panic has already happened." & Austerity and the Greek Depression & Debt Deflation in Greece
JP Koning:There won't be a drachma-induced recovery
Nick Rowe,WCI: Euro MOA+MOE plus Drachma MOE - "But in order to get this point, you have to understand the essentially monetary nature of recessions. They aren't caused by real interest rates being wrong, or real exchange rates being wrong, or real wages being wrong. Those are all just symptoms, or side effects."
Michael Brendan Dougherty, The Week:Why American conservatives should root for Greece's crazy socialists
Ulrike Guerot, Eurozine:Europe as a Republic

Stefanie Walter, WaPo: What were the Greeks thinking? Here’s a poll taken just before the referendum.
Nate Silver,538: The Polls Were Bad In Greece. The Conventional Wisdom Was Worse
posted by the man of twists and turns at 9:11 PM on July 13, 2015 [5 favorites]


that if country A's democratic government opts to apply policy X to itself, and country B's democratic government opts to instead enforce policy Y on country A


Can a democracy ever make a long-term, truly binding contract? I don't mean that flippantly at all -- it's a deep question. Can the voters of today override the will of the voters of yesterday? If not, then how can democracies make reasonable long term decisions?
posted by miyabo at 9:32 PM on July 13, 2015 [1 favorite]


Eh, everything made by people is negotiable and malleable, always and forever, irrespective of political organization. The advantage of democratic systems is that they are open and transparent, and that's the source of their legitimacy.

It would be wrong to expect our descendants to be bound by the agreements we make today, without some means of updating them, just as we chafe at some of the agreements our forbears have entered, and have relied on our democratic processes to change and improve them.
posted by notyou at 10:46 PM on July 13, 2015 [1 favorite]


From the refreshingly rich Europe as a republic (linked by tmotat above):

[...] the idea of a United States of Europe no longer has any political currency. Indeed, this raises the question of what is to be done in this quasi-Hegelian moment, in which a system is exhausted, but at the same time lacks the power to reform itself, frozen as it is in a populist state of shock.

[We now have] a political system in which we separated the state and the market following the 1992 Maastricht Treaty, a system in which decisions over the currency and the economy are made at a European level but those regarding taxation and social policies are for the most part left to national governments. This cannot work.

The words of Italian philosopher Antonio Gramsci are fitting here: "The times in which the old cannot yet die and the new cannot yet emerge are the times of monsters".

posted by progosk at 12:25 AM on July 14, 2015 [5 favorites]




Nice ad hominem, that, frimble, despite the fact that Piper should have the chops to actually address the issues...
posted by progosk at 1:35 AM on July 14, 2015 [1 favorite]


Luckily, Germany does still have a pluralist press: from yesterday's FAZ: A coup against Germany as we knew it:

No one in Moscow treated Adenauer, no one in Warsaw treated Brandt the way we are currently treating the Greeks.

This not only does massive damage to the billion-Euro project in construction for the last seven decades, the European Union. It is not just bitter irony for a union that only recently received the Nobel Peace prize. It's not just the morning's waft of napalm after burning a bunch of ideals to an ash-heap. This past night in Brussels will soon cost the Greeks immensely, either way. Bankruptcy, or capitulation and protectorate, that is what we're offering the Greeks, and to the rest of the continent no kneeling Brandt, but instead a spike-helmeted Merkel.

posted by progosk at 2:37 AM on July 14, 2015 [1 favorite]


Yeah, likewise in Spiegel: Wolfgang Schäuble's diplomacy is a return to former European power structures, in which stronger nations impose their will on their neighbours.

The concluding question that Münchau asks is, "Shouldn't the SPD be putting up some kind of opposition to this?" And while they should, per their stated beliefs, and while they have the power, as a part of the Grand Coalition, to take a stand, I find myself nonetheless muttering the classic leftist question, "Wer hat uns verraten?"
posted by frimble at 3:04 AM on July 14, 2015


in Italy, the center-left Democratic Party and the euroskeptic Five Star Movement are together at around 56%

See, but they are not "together", they couldn't be possibly further apart politically when it comes to the EU and austerity. Same thing in France, with Hollande vs Le Pen. We've gone beyond "euroskepticism" here, they're calling for an exit from the Euro.

Regardless, we now have proof that even if the Five Star movement had formed a government all by itself, and even if Italians had more courage than the Greeks (and we're already in fantasy territory there), they would have been forced to do what Syriza did, anyway. Same thing would happen if Podemos went to power in Spain. Everyone clearly got the message by now, no?

One might certainly disagree with this analysis and think that many of the center-left parties are effectively pro-austerity

Center left or center right or center anything, which party has *not* effectively been pro-austerity once in government? What alternative did they have?

You had the most anti-austerity left-wing government in all of Europe in Greece and look what happened.

How could those measures be suddenly up for discussion in a super-empowered "democratic eurozone parliament" (if there was such a thing, by magic, tomorrow)?

I'm not trying to be polemical, I'm trying to understand the reasoning there, because I honestly don't get it, today. I don't see how pushing for some kind of harder-faster political union now, at this stage, with all these divisions and inequalities of power (and even assuming that was feasible at all) is supposed to be the better, more democratic solution to... those divisions and inequalities of power. How?

(And I'm asking this, with a huge sense of sadness and sorrow, as someone who's always been pro-EU and for a stronger union, before. I've never been against the idea in theory, before. But with the current situation I can't help feeling it sounds like wishful thinking at best).
posted by bitteschoen at 3:11 AM on July 14, 2015 [2 favorites]


You had the most anti-austerity left-wing government in all of Europe in Greece and look what happened.

This, apparently, was the problem that had to be solved.
posted by chavenet at 4:24 AM on July 14, 2015 [8 favorites]




On the Euro Summit’s Statement on Greece: First thoughts by Yanis Varoufakis

The Euro Summit statement of yesterday morning reads like a document committing to paper Greece’s Terms of Surrender. It is meant as a statement confirming that Greece acquiesces to becoming a vassal of the Eurogroup.

posted by chavenet at 6:10 AM on July 14, 2015


Economist Nicholas Kaldor, in 1971, on proposals for a European economic and monetary union being discussed at the time:

"It is a dangerous error to believe that monetary and economic union can precede a political union or that it will act (in the words of the Werner report) “as a leaven for the evolvement of a political union which in the long run it will in any case be unable to do without”. For if the creation of a monetary union and Community control over national budgets generates pressures which lead to a breakdown of the whole system it will prevent the development of a political union, not promote it."

posted by progosk at 7:04 AM on July 14, 2015 [4 favorites]


Cognitive dissonance continues, as the IMF once again belies the EU heads' extend & pretend.
posted by progosk at 9:14 AM on July 14, 2015


In case you missed it, treat yourself to a rousing read with Ian Welsh's Where Greece Should Go From Here (that tmotat linked above).
posted by progosk at 9:30 AM on July 14, 2015 [1 favorite]


Club Orlov - Financial Nonsense Overload
As most of you probably know, Greece is saddled with more debt than it can possibly hope to ever repay. Documents recently released by the International Monetary Fund conceded this point. A lot of this bad debt was incurred in order to pay back German and French banks for previous bad debt. The debt was bad to begin with, because it was made based on very faulty projections of Greece's potential for economic growth. The lenders behaved irresponsibly in offering the loans in the first place, and they deserve to lose their money.
posted by adamvasco at 10:00 AM on July 14, 2015 [4 favorites]


Center left or center right or center anything, which party has *not* effectively been pro-austerity once in government? What alternative did they have?

You had the most anti-austerity left-wing government in all of Europe in Greece and look what happened.

How could those measures be suddenly up for discussion in a super-empowered "democratic eurozone parliament" (if there was such a thing, by magic, tomorrow)?

I'm not trying to be polemical, I'm trying to understand the reasoning there, because I honestly don't get it, today.


It should be obvious that speculation about what a EU-wide representative parliament with power over major economic decisions is, perforce, speculative. The question I was responding too -- raised by multiple people here -- was whether this decision was "democratic", and if not, whether there could be a more democratic way of doing things. To answer affirmatively to the latter question -- or indeed to entertain it at all -- is to be speculative. No one is "pushing" for a political union, or even advocating one; the question is merely whether, had such a thing come to pass, what sorts of decisions would be made now. And that matters not because we care about hypothetical alternate universes, but because when asking if something is fair, democratic, or just, one inevitably thinks about the more fair, democratic, or just alternatives -- which almost by definition, don't exist. I really don't understand what is so hard about this mode of thought for some people.

The purpose of the exercise in estimating the popularity of the left and center-left parties in Europe is not to imagine that we have some weird SF parliament where those parties were suddenly teleported in and asked to decide Greece. The purpose is to do our best to assess actual citizen opinion on these issues. Austerity is essentially a right and center-right project -- cutting taxes and pensions, privatizing businesses, restricting unions, etc -- one that has been adopted by some center-left parties out of political necessity, but is not (I argue) something that emerges naturally or eagerly from their ideology. The party numbers across Europe suggest that there are enough people to the left of austerity that, had they had a fair say in making policy, that policy would likely have been much to the left of the fairly far-right austerity current being enforced by Merkel and her 42% party.

Again -- why do such questions matter? Not because anyone believes in magic or advocates an actual such government, but because to judge from many previous comments here, the question of whether what is being done to Greece is "democratic" matters to many, many people in terms of judging the justice or injustice of it. And unlike many other normative questions, judging the "democraticness" of something requires measuring actual popular opinion, speculating about institutions, and estimating counter-factual outcomes.

My own take is that what is happening right now is a fairly idiosyncratic outcome of current Germany party politics plus a profoundly secretive and undemocratic decision-making process that was explicitly designed as an end-run around (economically dangerous, in their view) democratic populism, as documented by Varoufakis and many others. It would not taking something much more democratic to produce a fairly different outcome, let alone postulating a fully representative EU parliament calling the shots. But that's just my take. My original point was just responding to the (perhaps rhetorical) questions above, asking whether things could be more democratic. They most certainly could, and the outcomes would probably (but who knows!) be much different.
posted by chortly at 11:14 AM on July 14, 2015


Found this 2012 Guardian article via the comments on the very good Ian Welsh piece linked earlier:

Robert Mundell, evil genius of the euro: For the architect of the euro, taking macroeconomics away from elected politicians and forcing deregulation were part of the plan
:
"It's very hard to fire workers in Europe," he complained. His answer: the euro.

The euro would really do its work when crises hit, Mundell explained. Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession.

"It puts monetary policy out of the reach of politicians," he said. "[And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business."

He cited labor laws, environmental regulations and, of course, taxes. All would be flushed away by the euro. Democracy would not be allowed to interfere with the marketplace – or the plumbing.
posted by junco at 11:26 AM on July 14, 2015 [15 favorites]


dani rodrik on european democracy:
When the Greeks voted “no,” they reaffirmed their democracy; but, more than that, they asserted the priority of their democracy over those in other eurozone countries. In other words, they asserted their national sovereignty – their right as a nation to determine their own economic, social, and political path. If the Greek referendum is a victory for anything, it is a victory for national sovereignty.

That is what makes it so ominous for Europe. The European Union, and even more so the eurozone, was constructed on the expectation that the exercise of national sovereignty would fade away over time. This was rarely made explicit; sovereignty, after all, is popular. But as economic unification narrowed each country’s room for maneuver, it was hoped, national action would be exercised less frequently. The Greek referendum has put perhaps the final nail in the coffin of that idea.

It need not have been this way. Europe’s political elite could have framed the Greek financial crisis as a tale of economic interdependence – you cannot have bad borrowers, after all, without careless lenders – instead of a morality tale pitting frugal, hard-working Germans against profligate, carefree Greeks. Doing so might have facilitated the sharing of the burden between debtors and creditors and prevented the emergence of the us-versus-them attitude that poisoned the relationship between Greece and the institutions of the eurozone.

More fundamentally, economic integration could have been accompanied by the expansion of a European political space. Compensating for reduced national autonomy by creating room for democratic action at the European level really would have been a victory for democracy.

It is too late to debate whether the culprit was the unwillingness of the European public to embark on the path toward political union or the timidity of its national politicians to exercise leadership. The consequence is that in today’s Europe, democracy can be reaffirmed only by asserting national sovereignty. And that is what the Greek electorate has done.

The referendum is deeply important, but mostly as an act of political symbolism. What remains to be seen is whether the Greek public also has the stomach for the economic actions – in particular, an exit from the eurozone and the introduction of a national currency – that real sovereignty would entail.
martin sandbu's recap
This is a good moment both for looking forward and back. Going forward, plenty of hurdles remain. The Greek parliament will have to pass a bundle of laws in days before the eurogroup will start formal negotiations for a new loan programme. Those negotiations could still stall, or fail. And some sort of bridge financing has yet to be arranged in the interim. So we could quite possibly be back to another stand-off soon. And that means the ECB's policy remains key.

On July 20, Greece is due to repay a bond worth €3.5bn which it cannot refinance except with official loans. The ECB, which bought the bond in the markets in 2010, has made clear it will let the Greek banking system atrophy if it finds Athens in default. It is the cap on liquidity to Greek banks that has forced Tsipras and his party to their knees. So in the next few weeks and months, everything depends on whether the threat to kill the banking system remains in place. Most likely, the formally independent ECB will follow the political signals from governments, and loosen its fist if politicians look like they'll reach an agreement. More improbably - but potentially more importantly - Frankfurt may be challenged in court. A small Greek company has lodged a suit with the Court of Justice of the European Union. The full argument is available here. (Free Lunch has already examined similar arguments why the ECB is acting in breach of the Treaty.) This will be exciting to follow.

As for looking back, it is a good time to remember how we ended up in this situation. In honour of Yanis Varoufakis, the game theorist temporarily turned finance minister, we can do it by "backward induction", also known as reasoning backward from the end. Greece needs to do what its creditors say because its only alternative - unilateral default on eurozone partners - will make the ECB force it out of the euro by killing its banks. The reason why Athens ended up with eurozone partners as creditors in the first place is that they all agreed Greece's sovereign debt (to what were then all private creditors) could not be tolerated. The resistance was particularly fierce in the ECB, Paris and Washington, as a thriller-like historical account of the 2010 "rescue" by Paul Blustein makes clear.

This was always misguided. History proves that sovereign restructurings work well - two of the best academics on the topic recently concluded a study of 45 crisis episodes as follows: "The economic landscape after a final debt reduction is characterised by higher income levels and growth, lower debt servicing burdens and lower government debt."

So why didn't everyone just let Greece default in 2010, offering perhaps some loans to cover deficits (only one-tenth of the actual loans were used for this purpose), and let the chips fall where they may? Partly for selfish reasons - some of those chips concerned other eurozone country banks. But the main motivation was fear. The Greek sovereign debt crisis came to a head 18 months after the bankruptcy of Lehman Brothers. The ensuing seizure of global financial markets had scared the living daylights out of policymakers. Struck by Lehman Syndrome, they proceeded to act as if every debtor, no matter how small and non-systemic, was too big to fail. That included Greece in May 2010, and it included bust Irish banks six months later.

Lehman Syndrome was not policy wisdom but a decision making disorder. Just understanding a little of what Lehman actually did is enough to see why neither a peripheral European sovereign nor an Irish bank could topple the financial system the way Lehman could. Lehman was a big player in the tri-party repo market and therefore was indeed a key hub in global financial markets. (Whereas Athens was no hub at all but a final destination for loans financing excessive consumption; and Anglo Irish Bank was a final destination for loans thrown into overvalued Irish housebuilding.) Never heard of the tri-party repo market? Not to worry: the New York Fed's economics blog recently published posts on the origins of the market and how it turned into a cauldron of bubbling systemic risk. In brief: Lehman's bankruptcy at a stroke undermined the expectations of the most important market through which banks channel cash between one another.

This is technical stuff, but of huge political importance. Proper economic research finds that, unlike with Lehman, there was no reason to fear much contagion from a Greek default in 2010. The ill-fated choice to treat Athens as if it were Lehman is at the root of everything that has later gone wrong in the eurozone. The price is being paid for it now - but it would be fairer if those who shared in the mistake also share in the cost.
or as wolfgang münchau says: "By forcing Alexis Tsipras into a humiliating defeat, Greece's creditors have... destroyed the eurozone as we know it and demolished the idea of a monetary union as a step towards a democratic political union... ask yourself this simple question: do you really think that an economic reform programme, for which a government has no political mandate, which has been explicitly rejected in a referendum, that has been forced through by sheer political blackmail, can conceivably work? The implications for the rest of the eurozone are at least as troubling. We will soon be asking ourselves whether this new eurozone, in which the strong push around the weak, can be sustainable. Previously, the strongest argument against any forecasts of break-up has been the strong political commitment of all its members... It is not only Greece where the euro is not optimal."

or matthew yglesias: "The Greece issue highlights continued severe structural problems with the construction of the Eurozone. Anglo-Keynesians tend to focus on the lack of fiscal transfers, but the real issue is a lack of legitimate decision-making. There is too much inter-governmentalism, opacity, and reliance on ECB discretion rather than accountable decisionmakers. To work, more authority needs to be in the hands of the Commission and the parliament, with the Commission responsible to parliament. But with the UK & Sweden disconnected from the Euro, this raises a version of the West Lothian Question as well as normal resistance. In short, Europe's political architecture still needs some serious work and there isn't a totally obvious path forward."

also btw...
-Groptimism
-Saving Greece, Saving Europe
-Greece and the EU: a macro and micro mess up
-IMF signals it could walk away from Greek bailout deal
-OJ Blanchard defends the IMFs interactions with Greece
-Greece needs debt relief far beyond EU plans - Secret IMF report
posted by kliuless at 9:45 PM on July 14, 2015 [12 favorites]


Just as an aside, and something bitteschoen mentioned upthread: watching this epos unfold in real-time is pretty strong medicine. For a European, it's utterly compelling, what with all the news outlet live-blogs, and live-streaming broadcasts from Brussels and Athens (last night Tsipras and Varoufakis streamed head-to-head), and with the wealth of in-depth collateral materials that are added in here. Given the momentousness of the issues at hand, it feels like having a front seat, and often even a behind the scenes peek, at actual politics at work at history in the making.

And yet. The Grauniad quotes the West Wing this morning: "There are two things in the world you never want to let people see how you make ‘em - laws and sausages." As this horror version of Eurovision keeps adding episodes, I half expect cortex to move this thread to FanFare.

What we're seeing is a pretty grim spectacle, and as it transfixes us, I wonder whether we're really better off, watching. There's much to be learned - but how to combat the creeping feeling that perhaps we won't ever have much of a chance to put it to any real use?
posted by progosk at 12:44 AM on July 15, 2015 [1 favorite]


What we're seeing is a pretty grim spectacle, and as it transfixes us, I wonder whether we're really better off, watching.

Much better to be able to see what goes into the sausages than to let some "enlightened" sausagemakers decide on their own behind closed doors what the ingredients should be.

(The sausage quote is most often attributed to Otto von Bismarck, but as his wikiquote entry notes, that's disputed.)
posted by chavenet at 3:58 AM on July 15, 2015


It's that the lineup of characters smacks of expert casting, ripe for fanfic, and the scenes yield endless turns of phrase and pull quotes, all of this against the rich cultural backdrop that is Greek history and literature.
The temptation to take it in, as we can via the continuous feed, as something almost scripted, and thus somehow unreal... I don't know. Maybe I just need to take a break, and have a closer look at & think about the reality drama slowly/inevitably unfolding in this other Southern European economy that I call home.
posted by progosk at 4:22 AM on July 15, 2015


Varoufakis annotates last weekends deal.

Nothing really new, although he does manage to get off a few zingers.
posted by notyou at 9:47 AM on July 15, 2015 [1 favorite]


Greek parliament is debating what is arguably the most significant decision it has faced in recent history, and Alexis Tsipras has chosen to weigh on the vote by - being absent from it. Who is writing the stage directions for this thing?
posted by progosk at 2:06 PM on July 15, 2015


No, it's just being reported that Tsipras is going to speak after all - possibly a tactical move.
posted by Dr Dracator at 2:28 PM on July 15, 2015


possibly a tactical move

Yes, that's actually what I meant.
posted by progosk at 2:36 PM on July 15, 2015


Looks like the Greek parliament has voted to accept the new, harsher austerity measures, after the voters rejected the earlier austerity plan.
posted by rustcrumb at 4:16 PM on July 15, 2015




Some comic relief: Our precious German Euros.

Also, in German, but google-translated still understandable - from the sort-of German equivalent of The Onion: Colony of German South-Eastern Europe adopts new laws at the behest of Berlin (and 9 out of 10 Germans find austerity absolutely necessary, as long as they are not affected themselves)

Not satire but interesting, in how it also applies to the media especially in the already mentioned "anglosphere" and how the mood turned during the mega-marathon-summit last weekend:
At first, only a few dipped their toes in the water; then others, hesitantly, followed their lead, all the time looking at each other for reassurance. As austerity-ravaged Greece was placed under what Yanis Varoufakis terms a “postmodern occupation”, its sovereignty overturned and compelled to implement more of the policies that have achieved nothing but economic ruin, Britain’s left is turning against the European Union, and fast.
Until recently you'd only hear the strongest anti-eu sentiment from populists and nationalists like Le Pen, so it was kind of taboo to tread those waters for anyone wanting to be taken seriously, nevermind big famous economists or columnists in the Financial Times, but last weekend was a watershed moment for this too. As confirmed by the progression of links in this thread really.
posted by bitteschoen at 4:54 PM on July 15, 2015 [6 favorites]


I share the disillusion of other Europeans and staunch supporters of the ideals of the European project in this thread. It may be that we have seen the death of European integration, as a result of a strategic error (believing that monetary union would create its preconditions, banking and fiscal union, post facto) but maybe even more, as a consequence of the capture of European institutions by a neoliberal/ordoliberal faction.

Regarding the Owen Jones piece posted immediately above, as a European settled in the UK, I am compelled to point out that the constraints from the EU on this country go in the opposite direction to the core continental countries, i.e. have been shoring up human rights and worker protections, and not just preventing discrimination on the basis of nationality (paradoxically, as an EU migrant I am occasionally subject to a more civilised regime than UK nationals themselves, eg for family regroupment). There is no pragmatic case for left-Brexitism as long as the stranglehold of the hard right on English politics remains.
posted by ormon nekas at 5:54 PM on July 15, 2015 [1 favorite]


Not necessarily the death of 'integration', but certainly of the illusion of sovereignty. European integration will come to the rest of the continent under the boot heel of German finance, rather than German tanks.
posted by T.D. Strange at 7:27 PM on July 15, 2015 [1 favorite]


For anyone still following, I thought I might as well share some juicy bits from two interesting interviews in the Italian press today - one is an interview with James K. Gal­braith, economist and friend/advisor/co-author of pieces with Varoufakis, in "il manifesto" (far-left but universally respected across the political spectrum and by other media - some quick background here for those curious enough) :
- What alternatives did the Greek government have?
Inside the Eurozone, none. The only alternative was an exit from the euro.

- Tsi­pras defended his decision claiming that a unilateral exist from the Eurozone would have had even more serious consequences on the country.
It's a decision that's up to him, and I understand why he may think like that. But I think he is ill-informed.

- So you think at this stage an exit from the Euro would be the best choice for Greece?
It's obvious that an exit would have significant costs. But if I was a member of the Greek Parliament, I would be on the side of Varoufakis and I would also be voting "no" to this agreement.

- As advisor and close friend of Varou­fa­kis you followed negotiations very closely. Do you think a different strategy from Greece could have determined a better outcome?
At some stage during negotiations it became evident that the troika had no intention to negotiate and would not accept anything other than a reproposal of the old memorandum. Greece definitely underestimated who they were dealing with. Take Schäu­ble: right after Syriza's victory, he claimed that «elections make no difference». Many at the time thought he was joking. And instead, he maintained that line until the end. In those conditions, the only thing Greece could do was to force the opponent to come out in the open, unmasking him. And it succeeded at that.

- Do you think the Greek government was naive in trying until the end to reach a «honourable compromise», when it was evident the counterpart had no intention of compromising, and went so far as to threaten Grexit?
No, I don't think so. The Greek government did the only thing they could do, seen as they had no other cards to play: presenting their arguments in the most clear and logical manner possible, hoping that reason and common sense would have some effect on their counterpart. I think that this strategy has had a huge impact on European public opinion. Unfortunately it had no influence on the power relations within of Europe. It was not a naive strategy, it was a strategy dictated by the imbalance of the forces in the field.

- Do you think Greece should have played the «Gre­xit» card from the start?
We can't assume this would have strengthened the negotiating position of Syriza. First, it would have meant betraying the electoral mandate of Syriza. Secondly, you have to keep in mind that it was clear from the start that a part of the German establishment was in favour of Gre­xit. So there is no reason to think that explicitely threatening an exit from the Euro would have improved Syriza's position or forced Europeans to relent.


The point is that what Syriza did was a test: see if a strategy based on logical arguments, on reason and facts - aimed at demonstrating the obvious failure of the economic policies pursued so far - could prevail within the Eurozone, in light of the political and ideological positions of other partners. This is what Tsi­pras tried to do, with the only tools at his disposal: common sense and reason. But those weapons had no effect. This must lead us to reflect deeply on what Europe has become.
And this, even more interesting, is an interview in the mainstream/centrist/pro-establishment Corriere della Sera, with Otmar Issing, former chief economist and member of the executive board of the European Central Bank - what I found very interesting is to spot the similar lines of reasoning here, with what Galbraith is saying above, despite the obviously opposite political positions and backgrounds:
- Many think that Athens' exit from the Euro would have been a better choice.
«I was and I am of the opinion that it should have been done much earlier
. The money should have been used not to rescue banks but to directly support the people. With concrete aid and concrete reforms, from the land register to rebuilding a fiscal system. A lot of money has been lost. And more will be lost: everyone knows the Greek debt is not sustainable. That is the money that all Europeans, including countries that are poorer than Greece, have lost».

- So the debt should be cut?
«That at most could be the last act of an intervention: if you cut debt at the start, Greece will start producing it again. In any case, the Eurozone rules prevent a debt cut: it would be funding between member states, prohibited by treaties. Also, most importantly, after a default on debt, the ECB could no longer do refinancing operations with Greek banks».

- Is that the reason you are still in favour of Grexit?
«Yes, I am on the side of Wolfgang Schäuble. If Greece exited the Euro, we would do a debt conference and the question would be solved. Athens could be helped anyway. What worries me and angers me is that Europe managed to do the opposite of what it wanted: it soured relations between countries, just look what’s happening between Germany and Greece».

- Would it have been easier for Athens to exit?
«Who knows. The current Greek government offers no future perspective to the country. They propose solutions that have already failed elsewhere. I fear they would not be able to handle any change in monetary regime».

- Some say the only way forward for Europe is a political union, at this point.
«It seems clear to me that now there is no chance of creating a political union.
It would require changing the European treaties, facing many referendums, some countries like Germany would need to revise their constitution. But in Europe everyone is skeptical: in how many referendums would the no win? It seems to me like a strange idea. It would increase conflicts between countries, even more than today when we’re only dealing with a monetary union».

- Do you think the Euro was a bad idea?
«To answer that, one would need to know what would have happened if it had not been introduced. In the Nineties, the devaluations of the Italian lira were threatening the existence of the European single market. Of course, if this crisis goes on like this, I might be forced to admit that was a bad idea».
It’s comforting, isn’t it? When things have gone so badly and it’s become so undeniable that even someone from the ECB is almost saying “maybe the euro was a bad idea”.
It makes you want to emigrate outside the eurozone before things get any worse really...
posted by bitteschoen at 2:31 AM on July 16, 2015 [10 favorites]


Germany’s Destructive Anger by Jacob Soll in the NYT.

But when the German economists spoke at the final session, a completely different tone took over the room. Within the economic theories and numbers came a moral message: The Germans were honest dupes and the Greeks corrupt, unreliable and incompetent. Both parties were reduced to caricatures of themselves. We’ve heard this story throughout the negotiations, but in that room, it was clear how much resentment shapes the views of German economists.
posted by chavenet at 4:11 AM on July 16, 2015 [2 favorites]


Thanks to all for continuing to post great stuff here. Sometimes I want to pop in and mention something from the Guardian live blog (like yesterday's 'no' vote from Varoufakis, and today Schäuble still talking about Grexit, and now Draghi's comments...) but I imagine anyone still tuned in here also watches or at least skims the blog already. I also really appreciate the perspective of some of the Europeans here, like bitteschoen and ormon nekas.
posted by Peter J. Prufrock at 7:02 AM on July 16, 2015 [1 favorite]


Yes, my thanks also for the continuing updates. I have little to say myself but I really enjoy these contributions.
posted by i_am_joe's_spleen at 3:05 PM on July 16, 2015


Preaching to the choir, perhaps, but: Jürgen Habermas: Merkel 'gambling away' Germany's reputation over Greece.
posted by progosk at 3:40 PM on July 16, 2015 [3 favorites]


Der Spiegel a couple of weeks back How Merkel Failed Greece and Europe.
Angela Merkel relishes her reputation as queen of Europe. But she hasn't learned how to use her power, instead allowing a bad situation to heat up to the boiling point. Her inability to take unpopular stances badly exacerbated the Greek crisis.
posted by adamvasco at 4:16 PM on July 16, 2015




Because banksters and the 0.01% that they represent control every national or supranational institution that could conceivable hold them accountable.

Greece in the EU is playing the same role as minority home owners lying on mortgage documents played in the US during the 2008 crisis. As if either concocted the whole scheme that left banksters unjustly enriched and themselves holding the bag from whole clothe.
posted by T.D. Strange at 9:35 PM on July 16, 2015 [1 favorite]




Here's a contrarian take: Germany, Not Greece, Should Exit the Euro (Ashoka Mody at BloombergView). It's unjustifiably optimistic ("The disruption from a German exit would be minor.") and neglects to mention the potential response from France, but at least it's something new to think about while we continue to observe this slow-motion wreck.

By the way, if anyone still following hasn't yet read the Jacobin piece that the man of twists and turns linked above, give it a skim. A ton of interesting behind-the-scenes stuff on the Greek side. I'd love to see something similar from the German side.
posted by Peter J. Prufrock at 7:38 AM on July 17, 2015 [4 favorites]


I'd love to see something similar from the German side.

So would I. Merkel is a ruthlessly pragmatic politician and her moves here - that I assume are not necessarily what she would choose to do (though I could be wrong). Myself I find the harshness of the German response hard to understand, and weirdly emotional.
Though the video linked above, hilarious, does give some insight
posted by From Bklyn at 10:09 AM on July 17, 2015


This article has a bit on the German media landscape and why they're so angry:
But they live in an information bubble which spawns a further echo chamber of public commentary, so the mental world they live in is simply different from the one outside their borders. (I don’t know first-hand, but there may be a similar bubble enveloping the Netherlands, Finland and a few other countries.) Inside this bubble there is a steady stream of “news” whose common denominator is that slippery, corrupt Greeks are scheming to take advantage of Germans’ hard-earned wealth. This is something that every German now “knows”, part of the conventional wisdom that forms the bedrock for political analysis.

To really understand how this works you would have to be there. It’s not a matter of one or two biased news reports, but a steady stream of news, every day, in little snippets and major headlines, that reinforce the underlying message.

...If I’m sympathetic to the average German, it’s because, as an American, I’ve lived through the same thing. Replace “Greece” with “Saddam”, Iran, “the terrorists”, and so on, and you have plenty of information bubbles of our own. Remember the runup to the war in Iraq? Americans knew lots of things about Iraq’s connections to Al-Qaeda and its imminent threat to US security that made an invasion seem like a plausible solution. The fact that this looked like a collective mass hallucination from abroad had no effect on us.
posted by TheophileEscargot at 11:53 AM on July 17, 2015 [7 favorites]


more srw @interfluidity...
I love Germany. And Greece. And especially Finland. - "If you are taking sides in a conflict framed as nation versus nation, you have already taken the wrong side."
You can usually find evidence in support of lots of different narratives. Hypotheses of human affairs are not in general mutually exclusive. Many different stories can in some sense be true. Among those in-some-sense-true narratives, we should choose to emphasize those whose application will lead to better social outcomes over other potentially defensible narratives. That’s why I frequently argue that we should emphasize the role of creditors rather than debtors when lending arrangements go bad. I am not making a claim about God’s view of the subject. Perhaps Hell is a debtors’ prison, and there is truly no greater evil than failing to repay a loan. Perhaps Hell is full of creditors who failed to fit through the eye of a needle. These questions are, I think, beyond the sort of knowledge that should inform policy. What is clear is that unserviceable debt arrangements, when they accumulate, are enormously costly in human and economic terms, and so we need norms and institutions to regulate credit extension. My view, which I think almost anyone with a passing familiarity with the human species would have to concede, is that people under financial stress make decisions with a view to a shorter-term time horizon and with less capacity to be fastidious than people who have already financed their own immediate term. That is why I argue that we should emphasize norms that hold creditors accountable more than norms that hold debtors accountable. Creditors as a class are capable of regulating the initiation of debt arrangements at lower cost and with greater effectiveness that debtors are. If we want societies that yield good outcomes, then, we should impose a heavy regulatory burden on creditors, and we must choose moral narratives consistent with that.

Perhaps the very worst moral narratives in all of human history are those that allocate blame on the basis of tribal, ethnic, or national groups. There is just never, ever, any sufficient reason to go there in my view. It is perfectly reasonable to hold leaders and governments accountable, as well as the institutional embodiments of interest groups. This is not because leaders individually are worse people than members of the public who may agree with their decisions. I carry no water for fairy tales about the inherent virtue of ordinary folk. The reason we hold people and institutions that act consequentially within the political sphere accountable is because those entities are points of leverage on whom relatively humane forms of accountability — career impairment and financial loss, shame or loss of reputation, in extremis imprisonment — may powerfully regulate the behavior of the polity. To impose accountability at the level of “the people” is the logic of Dresden, barely fit even for warfare, to be avoided at all costs. (I hope in this context the World War II analogy will not further inflame national passions.) “Collective punishment” — regulating the behavior of a polity or nation by imposing consequences on all of its members — is inefficient in terms of human suffering provoked. It is also risks being much worse than counterproductive unless it lives down to the Machiavelli’s dictum that “If an injury has to be done to a man it should be so severe that his vengeance need not be feared.”

Civilized people do not blame nations, even when publics of those nations are holding mass rallies in the street supporting bad actions. Civilized people hold leaders and institutions to account for the conditions under which their constituents’ passions got that way, if the passions are misplaced. This is not to assert, as a positive claim, that political leaders and elite institutions “control” the will of their populations. Like most causal arrows, this one runs both ways. As with creditors and debtors, where we impose the accountability is a function of which choice leads to better outcomes... do not blame “France” or “Germany” or “Greece”, do not blame the “United States” or “Iran” or “North Korea”, tribes and nations cannot be held to account, only institutions and leaders can be.

[...]

The credit crisis that has writhed and recrudesced into a Greece crisis never needed to become a conflict between nations. I believe Europe’s current crop of leaders must be held to account for having made it that, and I repeat my admonition. Shame. I hope (against the odds perhaps) that a less narrow and compromised set of leaders replaces the current generation, that Eurofinance is reformed much more deeply than it has been, and that as passions fade the European project can resume. I even hope that the Euro survives, although I think the economic case against it is powerful and correct. Fixing the Euro is possible. It just requires institutional innovation that at the moment seems unthinkable. But, in the recent cliché, the unthinkable has an odd habit of becoming inevitable in politics. There is still room to hope.
also btw...
-The new European Union
-Europe Owns This Disaster
-Lessons from the Greek Crisis
-Professor Blanchard Writes a Greek Tragedy
posted by kliuless at 2:22 PM on July 17, 2015 [8 favorites]


The Jacobin piece also introduces an interesting, apparently nodal character to the lineup: Yannis Dragasakis.

Some more context to Dr. Schäuble's canon here.
posted by progosk at 1:40 AM on July 18, 2015 [2 favorites]


Via one of kliuless' fine links above, more in-depth Greek behind-the-scenes (up to just before the referendum) in this Mediapart interview with an unnamed Syriza insider: 'We underestimated their power': Greek government insider lifts the lid on five months of 'humiliation' and 'blackmail'.
posted by progosk at 6:22 AM on July 18, 2015


Politico has James K Galbraiths latest reasoned gloom: Death spiral ahead.

They also have an interesting series by British writer David Patrikarakos that I'm a bit ambivalent about, under the heading Road Trip: a number of first-hand accounts in recent days from various areas in Greece:
- In the heart of the No camp - A letter from Exarchia, where everyone hates austerity, Germany and the EU.
- The mystic referendum - Greece voted with its heart, not its head.
- With the Nai-sayers - Greece's European Yes voters reel after referendum.
- The land of vendetta - Crete, a proud and lovely island, full of hate for Germany.

Though the idea is appreciable, somehow Patrikarakos' romancing tone (as seen elsewhere) seems informed by an unspoken agenda, like a subtler revisitation of the kind of personal take that Paul Theroux aired in 1996 - choice morsels of which Politico has also just postcarded.
posted by progosk at 3:49 AM on July 19, 2015 [2 favorites]




The euro is a disaster even for the countries that do everything right
Now, it's true that Finland and the Netherlands have had their fair share of economic problems, but those should have been manageable. Neither country is a basket case, and both have done what they were supposed to do. In other words, they've followed the rules, and the results have still been a catastrophe.
posted by PenDevil at 12:33 AM on July 20, 2015




And they say Germans have no sense of humor!
posted by Dr Dracator at 9:39 AM on July 20, 2015


How Can Greece Take Charge?

If there’s one message that Greece should take away from its recent confrontation with the euro zone, it’s that it will never get the help it really needs. Assuming that the deal goes through, Greece should be able to reopen the banks and keep the economy from total collapse. But, with that economy having shrunk by a quarter in five years and an unemployment rate over twenty-five per cent, it needs real stimulus spending and a much looser monetary policy. Neither is on offer.
posted by chavenet at 11:09 AM on July 20, 2015




In the news today: pessimism - Greece to fall deeper into recession this year - vs. optimism - Eurozone debt crisis: why the Greece deal will work.
posted by progosk at 10:53 AM on July 23, 2015


Yanis Varoufakis: The Global Minotaur: America, Europe and the Future of the Global Economy

Yanis starts talking at 2:16. I was impressed. He is far more articulate than Obama or Merkel. I finished watching and immediately ordered a copy of his book. He is speaking in Zagreb, Croatia on May 15, 2013 (Croatia joined the EU on July 1, 2013). His questioner is Hall Müller of Croatia. TL won't watch: Paul Volcker and Henry Kissinger cooked all this shit up in the early 1970's.
posted by bukvich at 11:06 AM on July 23, 2015 [2 favorites]


The Greek Debacle by Perry Anderson
posted by Noisy Pink Bubbles at 12:42 PM on July 23, 2015 [1 favorite]


As a treat for anyone still following this thread, I will note that Harper's is (for the moment) allowing one free article per month; you could spend your one* article on a recent piece by James K. Galbraith though there isn't very much new there. On the other hand, you could spend it on a February 2014 roundtable discussion on How Germany Reconquered Europe: The euro and its discontents (with James K. Galbraith, Ulrike Guérot, John H. Gray, Christiana Lemke, and Emmanuel Todd), a bit misleadingly titled in my opinion but nevertheless a highly entertaining piece.

My favorite part is how metronomically pessimistic the Frenchman, Emmanuel Todd, is throughout ("[...] In France nobody believes in Europe. We may be too paralyzed to get out of the euro, but as for believing in Europe? Again, I’m not accusing Germany. I entirely agree that the French elite are responsible for the mess"). They even briefly raise the possibility of Germany's leaving the euro:
Galbraith: [...] The second possibility, which is marginally easier but not very attractive, would be for the Germans to exit while the euro stays for the south. Then the debts would still be denominated in euros, which would depreciate, and that would make it much easier to ticket, and you could perhaps have a Mediterranean euro zone, headquartered in Paris.

Todd: No, no, no. No, no, no.

Galbraith: I’m just saying, that’s the second possibility. I think the chances of that happening are vanishingly small.
Not surprisingly, it's only the Germans on the panel (Ulrike Guérot and Christiana Lemke) who seem to believe in the European project. Curiously, Guérot brushes aside the Greek question ("I think we should move away from Greece, because it’s not the critical issue for the future of the euro zone. The critical thing for me is still Franco-German synergy. The key to the euro’s future is in Paris’s hands. If the Franco-German engine breaks down, then I think the euro is dead [...]"). Anyway, enjoy.

* Obtaining more than one free article per month is trivial and will be left as an exercise for the reader.
posted by Peter J. Prufrock at 6:08 PM on July 25, 2015 [3 favorites]


Well if there is anyone still following, might as well share a couple more reads, from the point of view of people perceptions and relations, between the Greeks and Germans in either country, Germans in Greece and Greeks in Germany (obviously most of the former belonging to the tourist category, most of the latter to the expat/immigrant category).

This one as a sort of wider-perspective counterpoint to the previously linked piece about Crete being "full of hate" for Germany (should have been more aptly titled "who’d have thought, some people here still have a gripe with Germany because of the nazis – don’t try this in Britain"), Tourists in Greece: 'Don't tell the cook we're German' – Relations between Greek and German politicians may be tense amid the economic crisis, but empathy is easy to find on the streets of both countries
…despite the wider political drama, Germans continue to place their towels on Greek sun-loungers in droves. The number of German holidaymakers in Greece last year was already at an all-time high. According to the German Travel Association, as well as the country’s biggest tour operator, Tui, the levels in 2015 are even bigger – especially in Crete. “Compared to last year we have a plus,” says Tui’s Kuzey Esener. “The trend is going upwards, demand is going up.”

Some are, however, coming with trepidation.…[but] Greek antipathy is against Germany’s politicians, not its people.

Even for Giorgos Tzanakis, a Cretan who proudly recalls the island’s resistance against the Germans in the second world war, the anger isn’t personal. “We remember the war,” says Tzanakis, a driver who ferries tourists around the island. “They destroyed Crete then, and now they want to destroy our economy. But the Greek people don’t hate another country’s people. It’s not their fault.”

Ioanna Papadopoulos, a German resident with a German mother and a Greek father, is uniquely placed to comment on the reception Germans receive in Crete. “The Germans sometimes make jokes [about her dual nationality],” she says, making her way through the grounds of the palace of Knossos. “But there’s been nothing here.”

Nevertheless, some German tourists have taken it upon themselves to apologise to the Greeks for their government’s lack of solidarity. When waiters at Cafe Bar Mezzo in eastern Crete came to clear the table of some Germans recently, they found more than just tips. At the bottom of the receipt, the visitors had written: “Sorry for our government!”

For some Germans, a visit to Greece has helped create more empathy for the Greek struggle. Sipping on a bottle of Mythos beer, Bayer says: “In Germany we only look at the TV, and we don’t know the people – we only see the screen.” His wife, Ute, a nurse, picks up the baton: “Some Germans think the Greeks only go to the taverna. But here we look at how they look – and they work hard.”
In the second part of the article there’s also a series of views and commentary from Greeks living in Germany.

A couple more of those from BBC news – How do Greeks in Germany feel amid the debt crisis? and from the Deutsche Welle – Whose side are we on? The financial crisis and Greeks in Germany (also a video talking to some of the Greeks in Germany affected by Euro crisis). You may notice a slightly different approach there in the reporting.

That the political resentment has not translated into actual animosity or hostility between ordinary people also corresponds to my own and friends experience and observations, both here in Germany and in Greece. And it’s not just business or self-interest, I think people are simply capable of making distinctions and personal interaction has a way of breaking down a lot of barriers and prejudices anyway.

I’ve also seen more articles recently in local German press about Greeks in Germany and German perceptions of the Greeks, interviews with people, I’m glad to see more of that angle because there has been such a flood of analysis and commentary and we risk losing sight of the actual human beings involved.
posted by bitteschoen at 1:14 PM on July 26, 2015 [6 favorites]


Also of interest, from the European blog of the London School of Economics and Political Sciences: German public opinion is caught between scapegoating Greeks and love-bombing them
What do German citizens think of their government’s handling of the Greek debt crisis? Imke Henkel writes that the German media has helped to perpetuate a view of the crisis which pits ‘lazy southerners’ against hard-working northern European taxpayers. However she also notes that this interpretation has generated a backlash from many Germans who are keen to emphasise the value of Europe as an ideal.

...
Myths are not just created by telling untruths, but also by omitting parts of the truth. Yes, the Greek government lied about their accounts when applying to be accepted into the Eurozone. And they were helped by Goldman Sachs in doing so. But when Greece was welcomed into the euro there were ample warnings that the country did not quite meet the required criteria, as there were similar doubts about Italy. In both cases it was a political decision to ignore the warning voices.

When on 22 November 2004 Eurostat, the European Office for Statistics, sent a report to all EU-Finance-Ministers stating that the Greek government misrepresented their financial situation, measures were imposed to make the Greeks give a more truthful account of their balance sheet. But Germany and France in particular were reluctant to punish Greece, as they should have according to EU rules, because both the German and the French governments had by then broken the Maastricht criteria themselves, allowing their deficits to rise well beyond the prescribed three per cent of GDP. Therefore the claim that devious, cheating Greeks duped their way into the euro distorts the truth: the EU was complicit in the fraud.

The allegation that hard working German taxpayers had to cough up for work shy Greeks, however, is outright false. The real picture is far more nuanced.
Successive studies have shown that the German government benefitted to the tune of billions from lower borrowing costs, when Germany – in marked contrast to the troubled Southern states – became a safe haven for investors into the euro.

...
Unfortunately it was and is not just the lurid German tabloid newspaper that have repeated the false stereotype of hardworking Germans paying for lazy Greeks. The far more highbrow Frankfurter Allgemeine Zeitung follows the same dichotomy of virtuous Northerners and dissolute Southerners. ...

Polls show that the stereotyping in the German media has had an effect on the German public. When Bild asked its readers earlier this month to vote on whether they would grant more support for Greece, an overwhelming 88 per cent said no. More serious pollsters like YouGov find that Germans tend to be notably more decisive in their views against Greece remaining a member of the Eurozone than other nations. Over recent months a clear majority of Germans preferred Grexit, whereas the French, Swedes and Danes had much less pronounced views. One poll by the financial blog Smava interestingly found that two thirds of their audience were against giving any more money to Greece, when at the same time over 50 per cent were convinced that the Greek crisis would have no detrimental effect whatsoever either on their own life or the German economy in general. A recent poll for ARD Deutschlandtrend paints a similar picture: that we Germans are sitting pretty, thank you very much.

This is of course the background against which German politicians decide how to act. Arguably it was the regional elections in North Rhine Westphalia, one of the largest German Länder, in the spring of 2010, that prevented an early solution. Chancellor Angela Merkel, anxious not to go against the public mood, hesitated to agree to the necessary funds which could have stopped the crisis from spreading. Her party lost anyway, albeit narrowly, and so did the EU. The hardline finance minister Wolfgang Schäuble, who more and more openly favours a Grexit, has reached his best personal rating among Germans ever: At the start of this month a poll found an approval of 70 per cent for Mr Schäuble’s work.

There is, however, a backlash. When in February Bild asked their readers to have their photograph taken holding up a copy of the tabloid that stated in big letters on its front page: “No further billions for the greedy Greeks”, an outraged outcry among many Germans followed. The German press regulator told Bild off for discriminating against the Greeks. More recently a satirical video* that furnished a conversation between two self-righteous Germans entirely with quotes from Bild, Frankfurter Allgemeine Zeitung und Der Spiegel, went viral. [*this is the video: "Our precious German Euros", already linked in a previous comment] At the beginning of this month, just ahead of the referendum, the weekly newspaper Die Zeit printed on its front page a bilingual plea in German and Greek, begging Greeks to “please, stay with us”. The well-meaning Germans rise to speak again.

These are the romantic Germans, who dream of Europe as an ideal. As Sascha Lobo, a columnist for Spiegel Online and commentator on all things digital put it after the third bailout package had been agreed: He feels “pain”, because his “Europe sentiment” has been destroyed. The notion of Europe, Lobo argues, has transformed from a mutual idea into a mutual money problem. He quotes the preamble for the Treaties of the European Union which spoke of the “cultural, religious and humanistic European inheritance”. If this European idea fell apart, Lobo fears, a drama of unimaginable magnitude would ensue.
posted by bitteschoen at 1:27 PM on July 26, 2015 [7 favorites]


Varoufakis reveals cloak and dagger 'Plan B' for Greece, awaits treason charges:
...a five-man team under his control had been working for months on a contingency plan to create euro liquidity if the European Central Bank cut off emergency funding to the Greek financial system...

Mr Varoufakis recruited a technology specialist from Columbia University to help handle the logistics. Faced with a wall of obstacles, the expert broke into the software systems of the tax office - then under the control of the EU-IMF 'Troika' - in order to obtain the reserve accounts and file numbers of every taxpayer. "We decided to hack into my ministry’s own software programme," he said.

The goal of the computer hacking was to enable the finance ministry to make digital transfers at "the touch of a button". The payments would be 'IOUs' based on an experiment by California after the Lehman crisis.

A parallel banking system of this kind would allow the government to create euro liquidity and circumvent what Syriza called "financial strangulation" by the ECB.

"This was very well developed. Very soon we could have extended it, using apps on smartphones, and it could become a functioning parallel system. Of course this would be euro denominated but at the drop of a hat it could be converted to a new drachma,” he said.

Mr Varoufakis claimed the cloak and dagger methods were necessary since the Troika had taken charge of the public revenue office within the finance ministry. "It’s like the Inland Revenue in the UK being controlled by Brussels. I am sure as you are hearing these words your hair is standing on end”
posted by TheophileEscargot at 10:43 PM on July 26, 2015 [8 favorites]


The Varoufakis Tapes (the recording that's the basis for that Telegraph article linked to by TheophileEscargot above)
posted by chavenet at 4:03 AM on July 27, 2015




Why Greece’s Lenders Need to Suffer
The original sin of the Greek crisis did not happen in Athens. It happened on those computer terminals, in Frankfurt and London and Shanghai and New York. Yes, the Greeks took the money. But if I offered you €7 billion at 5.3 percent interest, you would probably take the money, too. I would be the one who looked nuts. And if I didn’t even own that money — if I was just watching over it for someone else, as most large investors do — I might even go to jail.
posted by the man of twists and turns at 1:35 PM on July 29, 2015 [3 favorites]


The New Yorker: Greece's Ex-Finance Minister Tells All - "Ian Parker on Yanis Varoufakis' high-stakes negotiations with European leaders in the days leading up to the July, 2015, referendum."
Varoufakis told me that he’d had “a very pleasant and quite surprising” ten-minute conversation with President Barack Obama, at a Greek Independence Day celebration in the East Room of the White House. “The setting was appalling,” he said. “All these people were pushing in to talk to him and hug him.” John Stamos, the actor, was at Varoufakis’s right shoulder. “But we probably had a more serious conversation than I would have had in the Oval Office.”

Obama, Varoufakis said, had told him that he didn’t envy him. (In fact, many politicians surely do envy circumstances where there’s so little to lose, professionally, by acting on long-held beliefs in exactly the way demanded of them by a clear-voiced electorate.) Varoufakis told Obama that things were tough: “You inherited a mess when you came to office, but at least you had your central bank behind you. We inherited a mess and we have a central bank”—the European Central Bank—“trying to choke us.”

According to Varoufakis, Obama replied, “Don’t underestimate how tough it was for me,” adding that bailing out Wall Street was “contrary to my politics” and “political poison.” He urged Varoufakis to “swallow bitter stuff.” (The White House declined to comment about the conversation.)

[...]

Obama showed more solidarity than Varoufakis was expecting. “I know—austerity sucks,” Obama said. (“He used those words. Very un-Presidential.”) According to Varoufakis, the President was referring less to austerity’s unpleasantness than to its ineffectiveness. Obama meant that austerity “doesn’t work—it creates misery, and it’s self-perpetuating, and it’s self-defeating.”
posted by kliuless at 11:33 AM on July 30, 2015 [3 favorites]


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