The Eurozone Crisis Thread

The risk is that German public / political opinion has become too entrenched for any substantially better offer to happen.

the fact that this is now a decisive factor is one of the increasingly evident straining points in the architecture of the eu. fiscal union is at the avant garde of further EU integration, and at the moment, as it is threatened, there just doesn't seem to be the imagination to try to find a solution that isn't a retreat. if greece leaves I don't see how it could reenter, it jeopardizes the whole nature of serious political union. but it still seems incredible to imagine them leaving. if there are still followers of jean monnet in the eu, you would hope they would copy his methods and seize the crisis as the moment to open the discussion on reform. otherwise this is treated as an isolated problem when it clearly isn't.

"if greece leaves I don't see how it could reenter, it jeopardizes the whole nature of serious political union"

yeah I don't see this. the political union is to make sure that Germany and France don't declare war on each other anymore, and to a lesser but still important extent, on their immediate neighbors. *fiscal* union is there to serve that political end.

the political union is to make sure that Germany and France don't declare war on each other anymore

europe is so weird

Old habits are hard to break

An unnamed but apparently "senior and influential" German politician was quoted in The Times as saying that the CDU and CSU had privately agreed to veto any deal proposed while Syriza was still in office in the event of a no vote.

The risk of 'contagion' seems pretty high to me. If Greece goes, i could see Portugal, Spain and maybe Italy following over the next few years unless there is some kind of miraculous upturn in the global economy. Already in Italy, the 2nd, 3rd and 4th biggest parties have been actively cheering on a 'no' vote. Podemos seems to have been emboldened by it as well. The Greek exit from the Euro will either have to be soft enough for other countries to be able to leave the currency without compromising their membership of the EU or so appalling that everyone is scared back into line.

Tusk has called an emergency meeting for Tuesday.

the political union is to make sure that Germany and France don't declare war on each other anymore, and to a lesser but still important extent, on their immediate neighbors.

there has always been a much more ambitious vision of european integration than this, otherwise we'd have stopped at the coal&steel community (& nato)

this is crazy

https://pbs.twimg.com/media/CJLm3xMWEAACqif.jpg

do you want more of whatever that is or less of it

(xp) Yeah, for the economically illiterate (me) could you explain what that means... also I see Ireland1 on that graph but where how are Ireland2 doing?

between the hellenic republic ("greece", to the obtuse imperialists), spain, italy, and portugal, perhaps there is political will for a southern european union. a confederacy, if you will

This is a guess, but I think the graph shows how much of a country's theoretical gdp-growth would become a surplus? So a country like Greece is already amazingly austere compared to rest of Europe, but since it's in an IMF-mandated gdp recession, they get nothing out of it.

Is that close to correct?

silby: less

primary surplus is just gov revenue minus gov expenditure expressed as a % of gdp. "cyclically adjusted" means you adjust for the business cycle, basically saying "what would the primary surplus be if the economy were at full employment?" (which is pretty non-trivial and that's why smart people at the IMF compute tables like that--btw IMF research economists & bankers are m/l independent, that's why you've seen all these headlines saying "new IMF research show austerity doesn't work" but fruitless negotiations) so in 2014 the greek government raised 5% of "potential" gdp in taxes that it didn't spend. here's a picture with both

http://www.ispionline.it/FOTO/grecia_fig1.png

the cyclically adjusted thing sounds like a weird trick but it's necessary bc otherwise countries in recessions would have low govt revenue simply because their output is (temporarily) low, even though it would even out over the business cycle

so greece is the most fiscally conservative country in europe lol

There are a lot of people on social media hailing this as a "victory for democracy" while conveniently not thinking about what would happen if the German public held a referendum on the issue tomorrow.

"When Iceland voted against paying what they owed, they came out of it really well"

my God

sv otm about the two ways this will go, and there's far more govts in power with a serious vested interest in terrifying the voters with the Greek example before the next round of elections. can only see this being a massacre, and a quick one. no vote only makes it an easier sell to the mass european electorate that the Greeks were complicit at every stage tbh.

There are a lot of people on social media hailing this as a "victory for democracy" while conveniently not thinking about what would happen if the German public held a referendum on the issue tomorrow.

― Matt DC, Sunday, July 5, 2015 6:47 PM (5 minutes ago) Bookmark Flag Post Permalink

yup. that's why monetary unions are... awkward. lots of really basic bad analysis going around on both sides, it's crazy how many people there are on both sides who see this purely as a moral good vs evil thing (lazy greeks getting what they deserve on the right/righteous democrats sticking it to evil banks on the left)

If Germany held a referendum tomorroe they would have to admit they are working in their own interests, instead of out of economic logic and nescessity. Which would be a plus for democracy as well.

Greece has chosen, and they've chosen suffering. But they were suffering already, and with no end in sight.

how to make a drachma out of a crisis

Dying on yr knees or, errrrr, not on yr knees, on yr feet I suppose.

I'm all for countrywide 'fuck you' gestures at the stage where hope has long since gone, Sparta is gonna be a p apt comparison tbf

But I guess my response would be pretty differintly if the imf way hadn't alreay tried and failed. And if greece wasn't already the most austere country in Europe. Etc.

does this mean the Greeks return to worshiping the gods of Olympus

lots of american expertise itt

doesn't seem so democratic now

But I guess my response would be pretty differintly if the imf way hadn't alreay tried and failed.

I think Greece's would be too. The EU / IMF only seems to have one setting - the answer is austerity. If that fails, the answer is more austerity. If that fails the answer is more austerity, etc. Which might be excusable from a technocratic perspective if it wasn't trashing the Greek economy and reducing the country's long-term ability to pay its debts, in addition to its short-term ability to provide food, shelter and medical care.

Probably sensible for Varoufakis to step aside if Germany is flat-out refusing to consider any proposals he makes.

putting that backwards a bit, no?

Probably sensible for Germany to refuse to consider any proposals Varoufakis makes if he is no longer finance minister?

The FTMIB seems to have been worst hit this morning but the markets / Euro haven't plummeted so far.

well this referendum wasn't hugely relevant in a lot of ways tbf

The no-austerity posture would be more credible if Tspiras wasn't so reluctant to tackle the fiscal elephant in the room, namely the largely tax-exempt crazy-rich shipowners

fighting a war on two fronts is always a bad idea

I guess that's whay they won't consider cutting their insanely high military budget either

Lol doesn't like a quarter of their arms spending go straight to Germany?

I don't know how much they can practically do. Tonnage tax is one thing that could be addressed but the internationalisation of both shipping and Greek money more generally makes going after people with a wealth tax hard. Most extreme wealth, as far as i can tell, isn't tied to land value - which can be taxed fairly easily, it's complex assets that can be moved off to Cyprus, Malta, etc. Most "Greek" shipping companies aren't registered in Greece - the fleets are tied to a P.O box in Liberia, etc.

The wealth tax that was introduced, Enfia, disproportionately hit low and middle-income families who had a bit of farming land left to them, and so on.

Aside from the practical elements, there's an underlying danger that efforts to really crack down on the relatively wealthy could have unintended political consequences. The far-right isn't getting its money from thin air and "fighting a war on two fronts" might not be far from the truth.

yeah, telling SYRIZA they should be taxing shipping magnates more is a bit 'don't piss on me and tell me it's raining'. Like as if the EU and all other institutions of global economic governance weren't ferociously committed to making transnational capital flows as smooth and easy as possible.

anyway, stoked 4 the thinkpieces

Didn't the counter-offer from Syriza involve more taxes on the rich to offset austerity a bit, and wasn't that shot down by the trojka?

Yes, there was an understanding that taxes would be raised to some extent and, probably more crucially, enforcement would be better.

I'm not sure if the Troika gave a breakdown of why it was rejected but most of the commentary has been that enforcing higher taxes would lead to more capital flight and revenue targets via taxation were too ambitious to be realistic, so the only reliable way to pay the interest would be through a raid on pensions and vasts amounts of privatisation (selling Pireaus, etc). I've seen quite a few pieces that have argued taxes should be lowered to encourage more people to pay them, which is optimistic.

I had nice Greek food for lunch in Berlin today fwiw

enjoy it while you still can!

RIP

there'll still be Bulgarian feta

translated interview w/ piketty:
https://medium.com/@gavinschalliol/thomas-piketty-germany-has-never-repaid-7b5e7add6fff

oh shit i just noticed he took down the translation. bummer - original here:
http://www.zeit.de/2015/26/thomas-piketty-schulden-griechenland/komplettansicht

Piketty: When I hear the Germans now say that they maintain a very moral dealing with debt and firmly believe that debts must be repaid, then I think: That's a big joke! Germany is the country that has never paid its debts.

They won't like that... from a Frenchman.

yeah was gonna post that but then the translation disappeared

It seems laughable that European countries coudl ever work together on anything other than techno music

So basically we need a techno "We Are the World."

But not in German.