The Eurozone Crisis Thread

the concept that syriza have ever had a plan for anything beyond scweaming and scweaming until the facts change seems to me to have come from nowhere at all.

to pretend it wasn't always going to end like this seems to me to have necessitated a serious amount of self-delusion

to attempt to balance blame equally or even close to equally between international creditors and this bunch of feckless clowns seems to me to be leftist experimental economics fanboy whatiffery of the worst sort.

it's speculative to say that syriza drove this exactly as they always intended to- public self-immolation as protest statement writ large- but imo its equally hard to argue that their chosen course throughout was going to lead them anywhere else.

sucks to be greece, sad for the lot of them alright. vote better next time, shit matters.

Which begs the question where do you think they'd be if they had voted for someone else?

The position of the Greek left, and as far as it looks, the majority of Greeks is that the national debt could not realistically be serviced under any of the suggested schemes - a position apparently backed up by the IMF's own reports. Their objective has always been to get debt relief or debt restructuring and to ensure that any measures implemented to service the interest didn't disproportionately affect pensioners who have already been targeted during the last three years of austerity.

I'm not sure what a "good" result under another government would look like.

Deems you left the phrase 'sixth-form' out of your rant, I'm very disappointed.

the Syriza government's negotiating tactics have hardly been perfect, but then they are being crucified by the Troika, the German government and various other powerful international actors. I fail to see how a more right-wing government could have done any better for Greece- in fact such a government would have swallowed the disgraceful austerity measures that have been thrust upon them with far less of an attempt at negotiation in the interests of ordinary Greeks.

Don't think they are grasping at straws at all. And they aren't down-and-out. This is a long game, even if they lose the elections their support has held up well, they have been straight with people and they haven't buckled. Even now they have 'accepted' a lot of it but the referendum is going ahead. They've played their hand really well.

Its actually been a p/good week - the IMF have been dented by the loss of money. No one will look good but its all about degrees.

Spain and then France are coming up (and Sinn Fein too ;-)). And in Greece it could be decades before they pay any of these debts back - so this isn't sustainable.

Feels like its just the beginning.

fpd u and u know very well why

:-)

"what would you do if you were greece?" is a fun question to ask ppl ime/a good way of eliciting latent cluelessness

greece is the word lol

It's worth remembering with all the comparisons to Ireland that there are some crucial differences between the two. Irish GDP per capita is about 200% of Greece's and debt as a percentage of GDP has always been much lower. Ireland's was something like 115% during the 2012 crisis - Greece's is currently 177%.

Also worth bearing in mind that Ireland has not paid back any of the debt - it's just servicing the interest. The proportion of debt to GDP rose in 2013 and 2014, iirrc, and the actual cash amount is projected to increase slowly over the next five years. It's only going to decrease as a % of GDP to manageable levels because the economy is supposedly going to grow fairly quickly as well. Syriza's argument is that an overly harsh programme of cuts is going to stifle the economy and prevent that kind of growth happening in Greece.

http://blogs.channel4.com/paul-mason-blog/greece-ireland-economics/3805

varoufakis is enjoying himself too much throughout

oh I don't know

Tsipras always tells his guys in the dressing room, just go out and enjoy yourselves

Interesting update from the IMF:

http://www.theguardian.com/business/2015/jul/02/imf-greece-needs-extra-50bn-euros

Nothing is viable without long-term debt restructuring and immediate debt relief, which is more or less what Syriza is after.

astonishing, really

they've just done the EU/ECB

xp leftist experimental economics fanboy whatiffery of the worst sort imo

reported by the Guardian tbf

Is the Guardian better than it used to be?

Imagine being one of the poor saps in the room when Angela Merkel read that statement.

(Trying not to mention Bruno Ganz in "Downfall" here)

Given what Lagarde was saying earlier this week this isn't going to be without a number of big Greek concessions, a number of which are going to be anathema to Syriza, but then again it is the IMF.

would love to have seen schauble's face

More from the IMF report, too hard to report so I am going to click in The Guardian instead: http://www.imf.org/external/pubs/cat/longres.aspx?sk=43044

too hard to read, ugh.

there was a good summary on FT Alphaville. some synthesis:
- it shifts part of the blame to prev. and current Greek government (no ambition to hit primary surplus targets, no commitment to privatization or reforms). market interest rates were low, so if program had been implemented we would be in a pretty good shape.
- it offered a politically feasible (well, up until last Friday) solution, namely doubling of maturities (would have been very easy to accomplish) and adding a sizable 3rd bailout, without imposing haircuts.
- no more "systemic exception" for Greece
- time to stop talking about debt/GDP ratios, since loans are on very sweet ("extraordinarily concessional") terms
- haircuts phrased in very careful way: needed *if* primary surplus of ~3% of GDP not hit, but not needed if it gets to 3-4% over medium term. this is dangerous territory: aiming for low surpluses = not requiring future governments to impose any austerity measures = "moral hazard". aiming for high surpluses is probably delusional?
anyway, the numbers are probably pretty worthless since last week? how many billions would be needed to recapitalize the banks, clear arrears etc.?

"moral hazard" lol

http://www.interfluidity.com/v2/5965.html?utm_source=dlvr.it&utm_medium=twitter

http://www.nytimes.com/2015/06/30/world/europe/greeces-troubles-attract-little-sympathy-from-poorer-neighbors.html

Good news then that they'll soon be poorer than Bulgarians, well done Europe! Trebles all round!

Speaking in Brussels last week before the start of a European Union summit meeting, Prime Minister Boiko Borisov of Bulgaria complained that he was fed up with so much time being spent on Greece’s need for bailout funds to pay its bills when other countries had so many problems of their own.

Problems like having Boiko Borisov as Prime Minister perhaps?

"Soviet-imposed penury" is an interesting interpretation of the Baltic states' financial worries.

The Latvian government was struggling to avert a financial meltdown today as ministers convened emergency talks with Scandinavian banks to discuss a bold and controversial plan to slash mortgage-holders' liabilities to lenders.

The scheme could mean billions in losses for the big Swedish banks most exposed by the small Baltic state's financial and economic crisis.

Valdis Dombrovskis, the embattled Latvian prime minister, said he was confident he could get his proposal through the parliament in Riga, but was still examining the legal implications of the scheme. But the powerful Latvian central bank delivered an unusually blunt attack on the prime minister, saying that his budget and bank policies were feeding a fresh "wave of distrust" towards the small and highly vulnerable state.

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Banking sources in Riga warned that the radical proposal on mortgages, which could see borrowers repaying only a fraction of their loan, would backfire, deterring foreign investment, bringing already low bank lending to a complete standstill and wrecking international confidence in Latvia.

Dombrovskis said the foreign banks, which hold controlling stakes over 90% of the Latvian banking sector, shared the blame for the crisis and would also have to share the costs. "Some balance has to be found between the interests of borrowers and the interests of lenders," the prime minister told the Guardian. "The real incomes of people are diminishing and it is getting more difficult to repay loans."

From 2009. Wonder what happened to that Dombrovskis guy...

http://i.imgur.com/mA8xYBk.png

^ Soviet-imposed penury in action.

early returns have it at 60:40 no

Pretty decisive.

didn't expect that tbh

decisive > indecisive no matter which way it went imo

http://www.ekathimerini.com/198826/article/ekathimerini/news/declaration-of-professors-of-economics-at-greek-universities-on-the-referendum

Better luck next time, guys.

i don't know what to make of all this. the referendum was a hypothetical counterfactual: if this offer were still on the table, would you have liked for us to vote for it? like.. what? now the answer is "no," well what does that mean? it's a mandate to not accept a deal that they didn't accept that is no longer on offer. tsipras is counting on them getting offered a better deal with these results, varoufakis promised one within 24 hours if the result was "no" (although he conveniently claimed to have been misquoted after the results were in.) maybe that will happen, but if so it would be marginally better, nothing radically different. does "no" mean "yes to a marginally better deal"?

even experts seem to be saying "no one knows what's going on, the next few days will be an insane shit show, hopefully everything snaps into place"

i'm not sure the narrative of rejecting austerity some ppl who are currently rejoicing are pushing is apt. there will likely be brutal austerity now... from the link mordy posted above

Short-run consequences: Bank closures, cut in the value of deposits, sharp decline in tourism, shortages of basic consumer goods and raw materials, black market, hyperinflation, firm bankruptcies and a big rise in unemployment, rapid fall in real wages and the real value of pensions, deep recession and serious problems in the functioning of public health care and defense, social unrest.

Medium-term consequences: international isolation of the country, no access to international capital markets for several years, low growth and anemic investment, high unemployment combined with high inflation rates, suspension of the flow of EU structural funds, significant decline in the standard of living, poor provision of basic public goods and services.

as irresistible as a narrative of the people against the banks may be, what are the pros will be to offset these cons, all of which have severe human costs? anyone needs to answer that before celebrating

The victory celebrations are like "yay, we just voted against paying off our debt and there will be no consequences!" - ok, I don't think foreclosing the Parthenon is on the table, but still

paul mccartney / big bankers who got 90% of the IMF's greek bailout money ~

I remember making a very conscious choice: “OK, we’re getting really famous now, you’ve got to decide, whether or not to go for it.” For some reason Marilyn Monroe came into my mind. Like: this could be horrible. It was actually after a trip to Greece. We weren’t famous in Greece, and I’d hung out with the hotel band and was chatting to them: “I’m in a band, too, you know? We’re called The Beatles.” And I got a glazed look from them. I thought, “This is OK, if the fame gets too much we can always come to Greece.” Then, of course, the next year it was like, “Oh, no, you’re famous in Greece, too. Oh, God.” And I remember thinking, “Do you want to do this or don’t you?” And it was, “I like it too much to stop.”

http://www.esquire.co.uk/culture/music/8511/paul-mccartney-interview/

tsipras is counting on them getting offered a better deal with these results... maybe that will happen, but if so it would be marginally better, nothing radically different.

Well, he was counting on them getting offered a better deal with a simple 'No' majority but the margin is 20% (and seems to be rising) so I imagine he'll be looking for something more than marginally better.

i guess we'll find out

When Iceland voted against paying what they owed, they came out of it really well. Yeah, this is going to be fucking tough on the Greeks, but at leat it will be tough on their own terms. Short term and middle term will be rough, but the bullshit provisions french and german banks kept getting in these deals would have kept the suffering eternity-termed. So yay Greece!

greece != iceland

the referendum was a hypothetical counterfactual: if this offer were still on the table, would you have liked for us to vote for it?

This is about strengthening his government's position in the country more than it's about strengthening the government's hand in the negotiations.

The central bank and IMF were no doubt curious to see if the greeks would repudiate their government, which would have strengthened their own hand in dealing with that government, but with the greeks backing tsipras it either solidifies the stalemate and leads to default and grexit, or the bankers must make concessions to break the stalemate. Either way, tsipras stays in power now and has political cover for the national consequences of the outcome - whatever it is.

And whatever happens, it must happen pretty quickly. I hope the greek parliament is primed for quickly passing the kind of currency controls needed under grexit.

The risk is that German public / political opinion has become too entrenched for any substantially better offer to happen. Leading politicians across Europe, but particularly Germany, are framing this as a rejection of an offer of help and suggesting there can't be any way back to negotiations. There's a chance that the risk inherent in having Greece leave with popular momentum behind it might be too great for the wider European project to bear but the deals on the table were never about finding workable, pragmatic solutions. That political culture isn't going to change overnight because the Greek public wants it to.

otm

French resolve is wobbling though? If not, I expect it to.