The Greek drama continues

[ddstory.livejournal.com]

New Greek leader poised to unveil cabinet - FT

Wow, these guys are fast, aren't they? They needed less than a couple of days to get ready with their new cabinet. And what a cabinet it'll be! The neo-commies plus the far-right. Now the door to "re-negotiating" with the creditors of the despicable Troika is open. Hooray. Tsipras has promised to rid Greece of the debt burden, and save it from the crippling austerity measures, and kick the financial supervisors out of the country - while in the meantime ensuring new financial aid from those same stupid gullible Europeans that they'll be flipping the bird to. The latter he calls "solidarity". Because Greece only seems to have rights, not obligations. At least that's what the majority of the Greek voters seem to have been convinced of.

I don't know if there's a better word to characterize all this, but "insolence".

One thing is for sure: the future talks between the new Greek rulers and the EU will be quite "interesting" from here on. The game of poker has started already, Germany hinting that they wouldn't mind kicking Greece out of the Eurozone at this point. Germany is surely in a much better position this time around, which is why the financial ministers in Brussels are demonstrating remarkable calmness for the time being. They've said they remain "cautiously optimistic", and prefer to wait to see what demands the Greeks will come up with, this time. The IMF has clearly stated that there'll be no more bail-outs, and scratching off of debt. The ECB's position is pretty much the same. Similar signals have come from the European Commission, and the German government (whom the Greeks blame for all their woes, btw, not without Godwinning the shit out of the whole situation).

That said, Greece's 175% debt-to-GDP ratio is not even its main problem. Because they're not making any payments on that, anyway. What's more, the interest on that debt was slashed several times, reaching 2.4% at some point, which is way below, say, what the Germans are being granted. But Greece also has debts to the IMF and the US, the latter still refraining from reacting to the constant threats of non-payment.

The problem is elsewhere. Seems like Tsipras wants to get everything without giving anything. During his election campaign, he was sprinkling the electorate with generous promises. He promised lots of things, including stuff that was outright utopian. He promised a generous welfare program that'd eliminate the austerity measures of his predecessors, and a new debt elimination, and full national independence, and further fuding from Europe. He promised that Greece would remain in the Eurozone. Even if much of that we call mere election rhetoric, the rest of it remains as realistic as it could possibly be.

So far, the EU promises to work constructively with the new government. In reality though, the financial ministers of the Union will have to quickly bring the Greek dreams of new hand-outs back to earth. And most importantly, nobody in Brussels should fall for the charisma of Tsipras the "nice guy". He's a political functionary with an agenda first and foremost. He has never worked in public office, but that doesn't mean he didn't become famous for his ladder-climbing skills among the leftist parties. He's the sort of politician who can't be trusted for a minute, because he'd sacrifice whatever passes for "principles" in his booklet for the sake of gaining more power. The latest decision to side with parties from the exact opposite end of the political spectrum, is yet another confirmation of this.

He just doesn't seem to give a pigeon's dropping about the racist, anti-immigration policies that his new buddies from the party of Independent Greeks are planning to "contribute" with to the future of a continent that's already feeling the heat under its butt in that regard. The threat of such a cancer to Europe's financial stability is not to be underestimated.

Still, before we go all paranoid, I should point out that many commentators expect economic common sense and readiness for compromise to return to Greece very soon, once the enthusiasm has waned and reality hits back. But is that hope an illusion? Everything shows that Tsipras is a skillful poker player, who's prepared to go to whatever lengths are necessary, and use the credit of trust he has been delegated by his constituents to the full. So I'm guessing the EU will have to get used to the thought that one sunny day they might have to shut the door to the Greeks after all, rather than continuing to pour money into a broken bucket that cannot and will not repair itself.

Things haven't reached that point yet, granted. First we'll have to wait and see if Greece is doing anything remotely resembling an effort to meet the newly extended deadlines for deferred debt payment, which have also been associated with regular inspections of the country's economic progress. The Greek government is yet to receive 7 billion euros from the joint EU/IMF aid fund, but it'll have to show some political will for reform first. Only then we'll know what to expect next.

Comments

[peamasii.livejournal.com]

It's going to be an epic fail for Greece. I don't see how the voters' cheer for "dignity" is going to save them from this situation the country has been digging itself into. This dude Tsipras is promising tax cuts and bigger salaries in a country that fails to tax 25%+ of its GDP! Not to mention that in spite of the debt spiral of death, Greece still enjoys a higher standard of living than its neighbours in the Balkans and perhaps higher than any country in Eastern Europe. They're basically acting like they have the economy of Austria while their public debt has ballooned further than the direst forecasts made not so long ago. The troika is going to call his bluff faster than you can say "kalimera".

[htpcl.livejournal.com]

Stuff usually has to be paid for - but don't tell that to the Greeks, lest you wanna eat a few Molotovs.

[sandwichwarrior.livejournal.com]

Jim Bennett had some interesting observations in regards to this over at Instapundit.

TL/DR is that Mr. Tsirpas' rhetoric makes a lot more sense if you consider the notion that hes planning to take Greece out of the euro. Take an end run at getting forgiveness on the debts (unlikely) and then switch currencies. If the Greeks do go that route they'll want to give as little advance warning as possible so as to prevent bank runs and capital flight.

[abomvubuso.livejournal.com]

I'm curious what Tsipras thinks will happen to the drachma when he gets Greece out of the euro. But what he really really thinks will happen - not the version for the mics and cams, but the off-the-record version.

[mikeyxw.livejournal.com]

Well, it is failed states month, so it's nice that Mr. Tsipras was able to form a cabinet so quickly in an attempt to fail before the 31st. At best, he will be able to stretch the payments of Greece's debt out so he can burden his great-grandchildren rather than just his grandchildren, but he's taking huge risk in trying to do this.

[ddstory.livejournal.com]

Mr Tsipras has done his thing rather timely for the monthly topic, no? :)

[htpcl.livejournal.com]

Maybe in time they'll come flocking at our border to pick our vegetables for us and get paid yellow coins for it, the way our folks have been doing across the border, often sold as slaves (http://en.protothema.gr/they-sold-a-young-bulgarian-to-greeks-like-a-slave/) there.

We promise to treat them more gently than they treated us.

[underlankers.livejournal.com]

I still expect the Greeks to Kansas City Shuffle their way out of the EU thinking they've got a means to loot Brussels as they will. Because they're not the kind of political elite to manage to do this kind of audacity right, not when they're not already holding all the cards and the other people don't have much get up and go to counter what they do have.

[peamasii.livejournal.com]

They've already looted Brussels over the last 20 years, if anything we're only discussing as to what can/should/will the EU do about it (nothing, being my guess that we're now as spineless at enforcing measures as we were in the first place to offer them such extravagant credit facilities). In the old days Germany would have declared war on the Balkans, lose the war and then build an even bigger empire with US aid. Now they're scrambling to find another mediterranean vacation destination with all-inclusive packages.

[mahnmut.livejournal.com]

Pre-election rhetoric is one thing; real-life policy after getting elected is quite another. I expect Tsipras to be just like the other former Greek leaders, once he finds his ass sitting on the prime-minister chair.

[ddstory.livejournal.com]

Most reasonable comment thus far.

[mikeyxw.livejournal.com]

I'd actually disagree for two reasons. First, the cabinet that was created is only there to try to restructure the terms of Greece's bailout. I don't expect they're going to accept minor tweaks. As the only thing that Greece has to leverage with is to default on their debt, I expect this is going to come up quickly.

Second, it doesn't look like the troika is expecting any other outcome. There is likely no way Greece was ever going to pay debts in the range of 200% of their GDP regardless of who was running the place, the folks who arranged Greece's second bailout pretty much said as much. My theory is that a Grexit was the expected outcome and Greece's current government is going to present an opportunity for the other governments involved to say they've done everything they could when they present the bill for a Grexit to their taxpayers.

[airiefairie.livejournal.com]

I have been hearing some parallels between Greece and Iceland.

Well, the two situations are very different. One is a case of a bunch of bankers luring a number of people into risky investment, and the whole thing blowing up and taking the bank system along with it. The other is a case of systematic system abuse, a significant portion of the economy existing and moving further into the grey sector, and continuous defrauding of the European supervisory institutions in order to sustain the whole scheme as long as possible. In the former case, the solution has been to hold the bankers responsible; in the latter, the whole Greek people is involved in the scheme, and has failed to raise a voice of reason while it was reaping all the benefits from that scheme, and now being in denial about their own responsibility for dealing with the consequences. Respectively, it would require an involvement of the entire Greek people to get out of this predicament. Sadly, I am not seeing them moving into that direction for the time being.

[airiefairie.livejournal.com]

It is not so much the bad choices that is the problem, it is the continuous escaping from responsibility for those choices.

Corruption is everywhere in Greek society. Has been there for decades, and ever increasingly so. It has become the norm, and is perceived as something standard. The grey economy is omnipresent there. You cannot do anything without paying a bribe. You are expected to pay a bribe. Defrauding the EU fund system has become prevalent. Farmers applying for EU agricultural funds then go ahead and use the money to buy houses and cars - the stories are numerous. I'm sure our Balkan denizens could confirm this in more detail.

Greece had been aided by by Goldman Sachs to conceal the fact that they were not answering the EU requirements for fiscal discipline in order to keep the EU money flowing. And now when it is pay time, they protest against the responsibility to have to pay the money back.

I could say a lot more, and I wish I had the time for it, because the topic is very complex, and includes many facets. Like the position of women in Greek society, many of them not having worked a single day in their life, and citing that as some kind of cultural trait of their society. A substantial part of the Greek work force has essentially resigned from the labour market, but has been using the welfare system that the rest, along with the continuous flow of EU funds, have somehow sustained until now. The story is very specific and very complex, and very sad. This is not just about some populists conning a number of people into believing that they can magically provide a bright future for them without possessing the means to realistically achieve that. It looks more like a case of mass delusion, where a substantial portion of a society want to believe that everything will be fine, if they just refuse to play by the rules and pay the bill.

There is a reason that this is specifically happening to Greece and not to some other random country in the EU, and the reason goes much, much deeper than the mere political squabbling or point-scoring in Brussels, Berlin, or Rome.

[luvdovz.livejournal.com]

The mainstream, German/UK-responsibility view, has only seemed to deliver economic stagnation eurozone-wide, and the more they get to dictate what happens, the more stagnation and deflation seems to follow

Not in Estonia, apparently (http://talk-politics.livejournal.com/1917306.html).

[htpcl.livejournal.com]

It's not the ECB and EC who brought this trouble to Greece. Greece brought it upon itself. And only Greece can fix it - if it rolls up the sleeves and starts repairing their own house. That's the entire point here.

[underlankers.livejournal.com]

So basically defaulting on debt is OK for an affluent island country to do but evil when poor Balkan states do it?

[airiefairie.livejournal.com]

See first paragraph of my above comment (http://talk-politics.livejournal.com/1949012.html?thread=148861780#t148861780).

There are similarities and there are differences.

For starters, Greece is not planning to default. At least that is not their purpose. They want a bail-out. They want money being continuously poured into their economy without having moved a finger to close the holes in it.

Conversely, Iceland already has the structure in place that is necessary for not letting this happen again - while what the EU is expecting of Greece to yet start building that structure (essentially the "do some reform in order to get money" rationale). You are noticing the nuance here, right?

But the main difference is the way the issue of accountability has been handled. Iceland has prosecuted those directly responsible for the fallout. Greece has done nothing of the sort. If that is not an indication of who is taking their own situation seriously, I do not know what is.

I am not saying that what Iceland did is fair to the British and Dutch investors. I would be against it if I were in their place. At least Iceland was honest about it, as opposed to beating around the bush and deluding themselves about the true scope of the problem, the way Greece seems to be doing, as is visible by the fact that they have now resorting to electing outright populists to sort this out for them.

[nairiporter.livejournal.com]

Seems to me like someone doesn't quite feel like paying the bill here...

[ddstory.livejournal.com]

Wow, gee, I go away for a couple of hours and I'm flooded.

Really didn't expect a post about Other Countries That Don't Matter(TM) to spur such an extensive discussion.

You people make me a proud Erapean*! ;-)

* and I ain't even a EU citizen, go figure...

[mikeyxw.livejournal.com]

We're always eager to talk about bad news coming from Europe. :P

[johnny9fingers.livejournal.com]

The word about here is that the Tiergarten doesn't want Greece to leave the Euro and set a precedent to Spain, Portugal, and Italy. Whether a realistic possibility or not being by the bye.

[johnny9fingers.livejournal.com]

...http://www.bbc.co.uk/news/world-europe-31072139 (http://www.bbc.co.uk/news/world-europe-31072139)

[johnny9fingers.livejournal.com]

And an update. Mark Carney, governor of the Bank of England, has weighed in on the matter:

http://www.bbc.co.uk/news/business-31030425 (http://www.bbc.co.uk/news/business-31030425)