What now, Tsipras?

[abomvubuso.livejournal.com]

The payment schedule on the Greek sovereign debt looks pretty full as of now. First, Greece will have to pay 200 million euro back to the IMF, come May 1. And then in June, there are a bunch of new payments to the IMF worth a total of 2.5 billion. Those are installments that Greece received from the IMF as part of the earlier aid package.

Christine Lagarde, the IMF chairlady has made it clear that she'll insist that the payments be made on time. For the last three decades, the IMF has never given a single day of deferment to their debtors. There hasn't been a single case of a developing country requesting such, respectively. Greece would be the first if they dare do that. But even so, the IMF doesn't look likely to grant the request. In other words, there'll be no exceptions - because they've got strict rules, and they don't see a reason to make a compromise with them.

The ECB is also amping up the pressure. Mario Draghi, the ECB chairman is already using terms like, "a rule-based institution" to characterise that institution. However, if past experience is any guide, the rules could often be interpreted in many ways. Many critics believe the ECB doesn't have a mandate to buy state bonds en masse. This of course didn't prevent Draghi from flooding the financial markets with 60+ bn euro.

As per their own rules, the ECB didn't have the right to accept the Greek state bonds as compensation, since Greece's fiscal ratings had already reached the bottom. There was a time when this rule could be bypassed through exceptions that could be hastily voted and approved. But after Tsipras came into office, the ECB decided to backtrack on their initial decision, and cut Greece's way to the important financial markets.

The ECB now explains they don't expect the Greek reform program to be successful. Since the Greek banks were cut off from direct access to ECB's fresh money, they've become completely dependent on the Emergency Liquidity Assistance funds of the Greek Central Bank. These loans are not only far more expensive, they first have to explicitly be approved by the ECB. In result, the latter is holding these banks on a short leash, and occasionally raising the ceiling of the loans in the meantime - but to a much lesser extent compared to the time of the previous Greek governments.

Last month the ECB came up with instructions that were designed to limit the amounts that the Greek banks could spend for buying bonds from the Greek state. This way the pressure on Athens was increased immensely. It's currently much more beneficial for the Greeks to look for loans at the capital markets. After the meeting between the Greek financial minister Yanis Varoufakis and the IMF chairlady Christine Lagarde (last week), the profitability of the Greek three-year bonds reached a record 27%, the highest rate since the time of the partial remittal of the Greek debt in 2012.

This is why the Greeks are now insisting on faster payment of the already promised bailout worth 7.2 bn euro. However, the creditors are holding the money because they don't consider the reformist efforts of Tsipras' government to be sufficient. In February, the Eurogroup decided to extend the aid program until June. The decision was declared a success, but it failed to bring any clarity on the issue. In turn, the Greeks interpreted it as a "new framework" for negotiations, as Tispras himself told Angela Merkel. The rest of Europe is only imagining to be seeing in all that a confirmation of Greece's commitment to keep the austerity course of Tsipras' predecessor.

The trouble is that the new Greek government came to power exactly on promises to reject that policy. The reason Tsipras was elected is because he vowed to end the reforms imposed by the Eurogroup, which the majority of Greek voters evidently consider to be antisocial and economically counter-productive. Given the depleted national treasury, Lagarde has called for all participants in the negotiations to hurry up. Because this isn't a case that could be solved in the last minute with some kind of political decision. Now the financial ministers are the main players, particularly those from the Eurogroup, and the respective institutions that they've authorised.

Last week Tsipras expressed tremendous optimism that by the end of the month an agreement would be reached, despite some points of contention about the labour market, the pension reform, on taxation and privatisation. On Friday, the ministers of finance of the Euro zone will again convene in Riga. The German minister of finance Schaeuble has hastened to cool the enthusiasm a bit, saying that nothing particularly new is expected to happen in Latvia.

So the pressure on the Greek government to submit to the requirements of the creditors for cuts and reform, is building up by the day. Alexis Tsipras is the first Greek politician to ever skip the Bible during his inauguration ceremony, for being atheist. But that didn't stop him from seeking even the aid of the immensely influential Greek Orthodox Church. Its primate, Archbishop Ieronimos II has proposed that the church, which has a multi-billion wealth at its disposal both in terms of treasury and real estate, to help in finding new financial sources for the treasury - not without some strings attached, of course.

Comments

[policraticus.livejournal.com]

Honestly? I part of me wants the Greeks to just flip the whole world the bird and say, "The money? What money? Ohhhh, that money. Well, here's the thing. We spent it. Mostly on Ouzo and blow, but also on some quality Russian poontang. BOOM! You just got suckered! BOOYAH! Party on Mykonos!! Whaddaya think was going to happen, Bitches? We'd suddenly become Dutch?? We're fucking GREEK! It's not like you didn't know you were letting the national equivalent of a stripper have your Titanium card. So, fuck off, stupid. We're not paying back shit. We have a whole pile of dry rocks here called the Parthenon, or whatever, you can feel free to squeeze them for all the blood you can get out of them. Or, you can suck it. Either way, we're out!" ::Drops mic::

Not that it should happen, but I think if it did it would teach us all a valuable lesson about responsible lending. Cause I don't think any lessons from the last, I don't know, forever, has sunk in yet.

Part 1

[telemann.livejournal.com]

Paul Krugman has been visiting Athens and writing about his experiences there. And wrote a report about it that ran in yesterday's New York Times (Greece on the brink (http://www.nytimes.com/2015/04/20/opinion/paul-krugman-greece-on-the-brink.html)). He thinks the austerity "hawks" are being unnecessarily hard asses, never mind the general sense on the street in Greece is rather depressing and concerning.

“Don’t you think they want us to fail?” That’s the question I kept hearing during a brief but intense visit to Athens. My answer was that there is no “they” — that Greece does not, in fact, face a solid bloc of implacable creditors who would rather see default and exit from the euro than let a leftist government succeed, that there’s more good will on the other side of the table than many Greeks suppose.

But you can understand why Greeks see things that way. And I came away from the visit fearing that Greece and Europe may suffer a terrible accident, an unnecessary rupture that will cast long shadows over the future. The story so far: At the end of 2009 Greece faced a crisis driven by two factors: High debt, and inflated costs and prices that left the country uncompetitive. Europe responded with loans that kept the cash flowing, but only on condition that Greece pursue extremely painful policies. These included spending cuts and tax hikes that, if imposed on the United States, would amount to $3 trillion a year. There were also wage cuts on a scale that’s hard to fathom, with average wages down 25 percent from their peak.

These immense sacrifices were supposed to produce recovery. Instead, the destruction of purchasing power deepened the slump, creating Great Depression-level suffering and a huge humanitarian crisis. On Saturday I visited a shelter for the homeless, and was told heartbreaking tales of a health care system in collapse: patients turned away from hospitals because they couldn’t pay the 5 euro entrance fee, sent away without needed medicine because cash-starved clinics had run out, and more. It has been an endless nightmare, yet Greece’s political establishment, determined to stay within Europe and fearing the consequences of default and exit from the euro, stayed with the program year after year. Finally, the Greek public could take no more. As creditors demanded yet more austerity — on a scale that might well have pushed the economy down by another 8 percent and driven unemployment to 30 percent — the nation voted in Syriza, a genuinely left-wing (as opposed to center-left) coalition, which has vowed to change the nation’s course. Can Greek exit from the euro be avoided?

Yes, it can. The irony of Syriza’s victory is that it came just at the point when a workable compromise should be possible. The key point is that exiting the euro would be extremely costly and disruptive in Greece, and would pose huge political and financial risks for the rest of Europe. It’s therefore something to be avoided if there’s a halfway decent alternative. And there is, or should be.

By late 2014 Greece had managed to eke out a small “primary” budget surplus, with tax receipts exceeding spending, excluding interest payments. That’s all that creditors can reasonably demand, since you can’t keep squeezing blood from a stone. Meanwhile, all those wage cuts have made Greece competitive on world markets — or would make it competitive if some stability can be restored. The shape of a deal is therefore clear: basically, a standstill on further austerity, with Greece agreeing to make significant but not ever-growing payments to its creditors. Such a deal would set the stage for economic recovery, perhaps slow at the start, but finally offering some hope.

part 2

[telemann.livejournal.com]

But right now that deal doesn’t seem to be coming together. Maybe it’s true, as the creditors say, that the new Greek government is hard to deal with. But what do you expect when parties that have no previous experience in governing take over from a discredited establishment? More important, the creditors are demanding things — big cuts in pensions and public employment — that a newly elected government of the left simply can’t agree to, as opposed to reforms like an improvement in tax enforcement that it can. And the Greeks, as I suggested, are all too ready to see these demands as part of an effort either to bring down their government or to make their country into an example of what will happen to other debtor countries if they balk at harsh austerity. To make things even worse, political uncertainty is hurting tax receipts, probably causing that hard-earned primary surplus to evaporate. The sensible thing, surely, is to show some patience on that front: if and when a deal is reached, uncertainty will subside and the budget should improve again.

And the latest rounds of demands on Greece are rather bogus, according to Ryan Cooper (The Week), "Structural reform" is one of the main sticking points for a new agreement, although Mr Cooper suggests the IMF is really not working what structural reform should be. And Mr. Cooper also notes

Let's set aside for the moment the fact that the IMF's record in promoting growth with structural adjustment loans is "not good (http://isiarticles.com/bundles/Article/pre/pdf/17459.pdf)," as well as the fact that just about all money given to Greece will be immediately turned into debt payments as part of a sneaky, ongoing bailout of French and German banks (http://www.macropolis.gr/?i=portal.en.the-agora.2080).



As Yiannis Mouzakis explains the statistics, "The breakdown of how the programme funding was allocated clearly illustrates the crisis management strategy Greece’s lenders opted for. Eurozone leaders, with the reluctant agreement of the IMF, made a conscious decision to use almost two thirds of their “taxpayers' money” (as they like to refer to it) to service the debt which they refused even to reprofile at the beginning of the crisis, when it was essential and could have given Greece a chance of recovery. To protect the integrity of the eurozone, the strategy has left Greece with a massive pile of debt and a quarter of the economy gone, still unable to stand on its own feet.If the intention of eurozone leaders and institutions was indeed to keep their “boots on Greece's neck” due to the failings of its political class, as the ex-US Treasury Secretary Tim Geithner claimed in his book, they have achieved their goal. Now they need to be open about their own crisis management decisions and answer the uncomfortable question: Where did all the money go?"

[underlankers.livejournal.com]

I still don't see why defaulting on debts is only bad when Greeks do it, or why the arguments against an extortionist, indeed criminal, system suddenly stop applying in this case. I suppose all that rhetoric against the economic hit men and the power of the greedy evil capitalists takes a sharp nosedive when implementing it in practice puts a crimp in First World lifestyles subsidized by the European Union, even for radicals.

[htpcl.livejournal.com]

Which other defaults within the EU that got a free pass do you have in mind?

[underlankers.livejournal.com]

Oh, I'm still not seeing why Icelanders were heroes for defaulting on *their* debt but Greeks are lazy oafish Hellenes for wanting that same approach to debt. Either defaulting on debt is an irresponsible threat to the capitalist system or it isn't. People can't have this both ways. And if Greeks are lazy oafs incapable of counting to 21 without masturbating, then so are people in Iceland who got themselves into a pretty fix and cheated their way out of it.

[mahnmut.livejournal.com]

All diatribes aside, bottom-line is this. After you have lunch, you have to pay for it. You don't just walk out of the restaurant, and then accuse the restaurant owner for being a criminal or Nazi for wanting their money for the food they served you.

[telemann.livejournal.com]

No, but then the restaurant owner doesn't get to cut a limb off for not paying for the meal either.

[underlankers.livejournal.com]

So why didn't that apply to Iceland?

If Europeans want to be consistent, then they need to pick and choose their 'heroes' carefully. And so do people who said "Yay, Iceland screwed the banks!" when they realize that GREECE screwing the banks might affect THEM. So sorry, bub, either it's heroic to default on your debts and sticking it to the man or it's irresponsible hucksterism. Can't be both. Pick one.

[peamasii.livejournal.com]

Why would a country want to continue to service debt that can't ever be paid off? And even more so, have to make new debt arragements to be able to service old debt? Something doesn't make sense here. At first sight I agree the fault rests with the borrower who now can't pay it back. But now I'm beginning to doubt that the intention behind the imposed austerity is honest. Is Greece being kept in a position where they cannot default / grexit and for what purpose? It can't possibly be because "Germany needs all export markets" because in these conditions Greece is irrelevant as a buyer of German goods. The profitability of Greek bonds also can't be a target since no one possibly believes that the Greece will stabilize permanently with continued inflows of borrowed funds. The only possible outcome is as seen previously with Iceland, Argentina and such: the "sponsor" eventually gives up and life goes on. In the meantime there's also the absurd exaggeration of the "hardships" Greece has had to endure. FFS, it's a nation with $22k / capita GDP? Compare that with Moldova's $2k? or Ukraine $3k? How is it such an affront to Greek identity that they should make do with a meager 10 times as much production as much poorer European countries. If they were smarter they would just default. If they were even smarter they would cut losses now, re-issue national currency and offer to pay back loans in drachma to the extent that they can do so safely. What would the troika do, send NATO in to bomb them? Take their islands away?

[htpcl.livejournal.com]

Question is, why would a country want to stockpile a debt that can't ever be paid off. Oh wait, because it knows it's got good chances that the debt would be written off at some point.

And thus, everyone gets indebted. And a culture of indefinite indebtedness emerges.

[mahnmut.livejournal.com]

That thing about the islands sounds good. Now where do I buy an island or two?

[telemann.livejournal.com]

http://athens.craigslist.gr/

[peristaltor.livejournal.com]

This is amazing, but hardly unexpected, and exactly why I've maintained my silence until now.

The Greek situation is, and let me underline this for everyone, exactly what the German situation was after The Great War. I'm not Godwinning here, just pointing out that if Greece is expected to hew to these Troika-forced austerity measures, history dictates that the likely result will be the rise of a world-destabilizing despot out to punish those that punished them just like it did with Hitler. (Rather than re-hash what I've said elsewhere, just read (http://liberal.livejournal.com/3363384.html) what I've said elsewhere.)

Money is not a "thing." It is credit created by banks through the act of lending. It can be tied to a physical thing, but in the end this physical tie is tenuous at best and manipulated at worst, so the tie is secondary.

The Troika as it is called has historically worked to obfuscate this basic tenet of money. I won't wade into conspiratorial waters here, which would be pointless at best. The conspiracy behind the Why in no way detracts from the reality of the Yep, Obfuscatory history.

When credit is called in by a creditor, there is a reason. It is NOT simply "because someone has to pay the piper for the last dance" or some folk wisdom bullshit that evidently proves more efficacious at obfuscation than more elaborate obfuscation.

What's amazing is the level of denial evidently foisted upon otherwise well-informed individuals about the very nature of money. While I was here in TP and posting, did anybody read these posts?!?

Ganging up on oslo will do nothing to erase from history the reality that folks here are ignoring the points he is raising. For one very minor example, saying (http://talk-politics.livejournal.com/1973102.html?thread=149353838#t149353838) "Greece has refused to play by the rules of the community it has decided to join" is simply wrong; if a country cannot pay its obligations in a new economic reality it cannot be expected to pay them. This was true post-WWI; it remains true today. Making them pay is directly akin to the Roman Empire looting the gold from the countries it invaded because it could.

As to alternatives (http://talk-politics.livejournal.com/1973102.html?thread=149354606#t149354606), there are some. How about the German Sparkassan Banks? Greece could borrow at 0% (because that's what real banks do) just like Germany (http://ellenbrown.com/2015/02/10/why-public-banks-outperform-private-banks-unfair-competition-or-a-better-mousetrap/) does today. You don't hear that Germany is doing every day what it expects Greece to avoid doing, do you? Not in the press controlled by banking-supported advertising dollars (at least here in the States).

If Greece succumbs to these austerity measures, this kind of fiscal waterboarding (as Finance Minister Varoufakis once put it (http://www.telegraph.co.uk/finance/economics/11369851/Yanis-Varoufakis-Greeces-future-finance-minister-is-no-extremist.html), expect the next despot for the history books. Just don't expect me to wander once again into this viper's den of sniping and bitter personal attacks that pass for "modification" anytime soon.

[ddstory.livejournal.com]

Greece's situation might be similar to post-war Germany, which is amazing, given the fact that there hasn't been a major world war now.

Money isn't a thing, yes, but if you really want to get to the bottom of all this, you'll have to ask yourself, why exactly Greece? Why not, say Finland? Why isn't this happening to the tiny Czech Republic? Why the Greeks? What is it about Greece that has put it into this predicament? I see you're fond of history, why not investigate a bit further back into Greece's financial practices for the last couple of decades, and seek for the specific reasons for this result there?

And while we're about history, you didn't comment on Greece calling the Germans "Nazi", and demanding WW2 reparations. I'd be interested to hear your thoughts on that, too.

More than one person expressing disagreement with one other person is not "ganging up". Mind you, I'm not sure how exactly responding to being addressed first, constitutes "ganging up". And neither does the fact that several people do not share another one person's opinions make them part of a "viper den" (quite an untypically rude generalization, btw).

By the way, what personal attacks are you talking about? Would branding Merkel "Hitler" fall into that category as well? Because the way Greece (the state, not just "some people" within it) has reacted to this situation is anything BUT mature - devolving all this into personal attacks on Germany or one or more of its leaders, is anything BUT a constructive approach to the situation, and helps nobody.

[htpcl.livejournal.com]

A while ago, a report (http://www.bloomberg.com/news/articles/2012-03-06/goldman-secret-greece-loan-shows-two-sinners-as-client-unravels) came out on how Goldman Sachs helped Greece set up a secret loan swap deal in 2001 that helped the country hide its debt levels in order to meet requirements to join the EU. The deal has been called a "very sexy story between two sinners" by former head of Greece's Public Debt Management Agency, Christoforos Sardelis, because of the intentions of the two parties involved: Greece was trying to cover up its high debt levels and Goldman Sachs was trying to make a profit. In reality, Greece never even remotely approached the levels of debt that were required for a country to become (and remain) a EU member state - the real debt level was way higher.

This of course is just the top of the iceberg. People at both sides of the Rhodope Mountains know from first-hand experience of hundreds of stories of Greek farmers having been granted significant EU subsidies and using the money to buy houses, cars and yachts, or to run hotels - essentially for anything but what the money had actually been intended for. Despite all the yelling that we hear from those quarters right now, the data speaks for itself. And multiple anecdata do make data.

(frozen) (no subject)

[luzribeiro.livejournal.com]

If being "ganged on" is what I think it is, namely the exact opposite of being ignored, then I guess in these circumstances that's a good thing. Otherwise I really don't get the complaint.

[peristaltor.livejournal.com]

More than one person expressing disagreement with one other person is not "ganging up".

Of course not. Then again, when people who know each other well—especially in real life—all move against anyone who questions a point raised by one of their circle of friends, one outside this circle of conviviality is drawn to the English word "gang" whether it is deserved or not.

The key to understanding whether or not this is happening should be to note how long the respondents in the common circle take before responding. Those in first might be accused of not, for example, following links and trying to understand another's argument.

Another key might be to look at, say, a comm and note who writes most of the OPs, then going back, again say, a year or two, and noting how the OP count shifts. And taking extra care to see how people outside that circle I mentioned are treated when they make their own comments. And perhaps seeing if the OP count of outsiders falls or rises as the (for lack of a better term) Rudeness Scale of Comments rises or falls.

Just sayin.'

[htpcl.livejournal.com]

I'm sorry to find you disappointed from the fact that not everyone's opinions match everyone else's.

-- from one of the so-called vipers.

[luvdovz.livejournal.com]

There's another alternative. Greece leaves the Eurozone, refuses to pay anything (just like my country Iceland did - because you know, as has been argued here, it's not the people who are responsible for what their leaders are doing, it's just the doing of a bunch of elitists without the knowing or approval of the people, right?), then goes into temporary isolation, and recovers gradually on its own. Then proudly emerges as a fully independent ans fiscally sovereign country, away from the clutches of the greedy banksters in Brussels. What are your thoughts on that option? (Hope I'm not being too much of a viper for personally attacking approaching you with such an on-topic inquiry; and may you forgive me for the ignorance radiating through my question - it could be explained with the fact that I must've missed some of those awesomely informative posts of yours).

[mikeyxw.livejournal.com]

This seems incredibly odd. Greece is in a tough spot because they borrowed and spent like drunken sailors... drunken Greek sailors. Germany is able to borrow at very low rates because they are responsible and those doing the lending can be sure they will get their money back with no haircuts. Saying that the solution is to give Greece German-like rates on their loans to rectify the results of two decades of flaunting the rules of the Eurozone should make anyone with a Euro to lend want to stick it under a mattress instead.

[luzribeiro.livejournal.com]

I'm not sure if this was intended as a re-flounce, an edifying admonishment to the unworthy ignoramuses, a subtle self-advertisement, conspiratorial venting, or what you may have believed to be genuine criticism. Either way, I must say it's not in the same league with most of the incredibly great posts that I've seen you previously writing.