Garbatellamike

OK thanks will try that

Edit: worked a treat!

Garbatellamike

Now I have read it I agree with you completely, it is entirely sensible.

The IMF is mainly concerned with global issues whilst the EZ is entirely focused on saving the "European Neo-Liberal Project" at any cost. There is inevitably tension between their 2 perspectives even if Syriza is their shared adversary at the moment. PS neither of them actually give a stuff about Greece per say.

Now if we can get some sense in the negotiations then some debt relief will be a logical thing to do in the medium term i.e during BAILOUT 3.0 not now.

Giving Syriza money without conditions to ease liquidity whilst they return to the policies that got the Greek economy into the mess it is in will not motivate the Not-Troika to agree to debt relief. Similarly I share your view that just to go back to simple austerity of the past will not cut the mustard and will make things worse for the people of Greece. Deep reform is needed not posturing.

For me the question Syriza has to answer is this: Why would you give debt relief to someone whose intent is then to use that relief to borrow more money and spend it in the same way that created the bankcruptcy in the first place????

Methinks any debt relief will be inextricably linked to verifiable structural reforms and that is why in my view Syriza are going to have to comromise first to get debt relief. Why oh why did they not implement the agreement they signed on 20 Feb and then use the next 4 months respite to come up with a longer term plan. The time wasting and game playing has only exacerbated the problem.

The long and short of it is that removing Varoufakis from the negotiations and finally starting to discuss some structural reform is a small step in the right direction but much more remains to be done. They are moving slowly in the right direction but definitely need to stay away from blazing saddles negotiating of the recent past as it is demonstratably counter productive.

Syriza have a difficult task of balancing what they promised to win the election with what is achievable and sensible - no easy task for them for sure.

It seems to me the mood of the Greek populace is that they will understand if Syriza has to renege on some of their election promises to remain in the EZ but the people seem to want to stay in the EZ by a 2:1 majority and therefore a deal should be acheivable.

I think the biggest error Syriza could make would be to try and drive a division between the EZ and the IMF as they they tried and failed to do between the periphery and the North, and indeed between the rest of the EZ and Germany. Such an attempt would inevitably end up in creating the same unity as it did with the EZ FMs.

Difficult times for Syriza but they are the principle architects of that difficulty.

InVinoVeritas

Among the latest proposals by Athens:-

A special tax on the 500 richest families
An increase to the surtax on those earning over €30K per month
An increase in the luxury goods tax
A tax on cruise ships visiting the Greek Islands
Obligation to use a credit card for all purchases over €70

Yes, that'll do nicely - mmm, I don't think so.

InVinoVeritas

Oh, and Greece is threatening to block the EU-Canada trade deal if their national feta cheese is not better protected against that nasty Canadian imitation.

Garbatellamike

And the latest Greek "structural reform" is to rehire 13 000 civil servants and to abolish both civil service annual performance reviews and promotion on merit.....

Complete and utter lunacy!

I now understand when Eric said Greece is a front runner on structural reform he was using the words structural reform in a context with which I was completely unfamiliar (i.e. it is Greekspeak for doing something incredible stupid).

InVinoVeritas

And Greece has now announced an 18% tax for tourists on both hotel and restaurant bills. Do they not realise that tourists' spend is entirely discretionary and they may just stop visiting Greece? It is also diametrically opposite to the view that Greece needs to devalue in order to get back to the level of tourism they enjoyed in the drachma days?

This article gives an interesting insight into what might drive the Greek psyche and why they do what they do:-

Greece Saunters Across the Autobahn - Bloomberg View

Red Eric

Where did you get this from Vino? It looks to me as though that 18% might be made up of a proposed new standard VAT rate of 15% + a 3% additional surcharge specifically on luxury hotel stays in touris resorts and in top grade bars / nightclubs / restaurants during the tourist season.

That doesn't seem outrageous to me and it's also entirely consistent with Troika demands for VAT increases.

By the way, I'm not sure Greece has "announced" this measure since they're under an obligation not to do anything unilaterally and to wait for the entire package to be approved before implementing any of it - but I did read within the last couple of days that it was one of several (some on your list in your previous post) which has been agreed between the two sides and which have presumably been leaked.

InVinoVeritas

Hi Eric, it is here:-

Greece set to hit holidaymakers with 18% tax on hotels and restaurants | Daily Mail Online

There is some breaking news about a document being distributed by Varoufakis concerning overhauls and growth estimates but which does not correspond at all to what has been discussed with the EC. Baffling.

PS Here is the story:-

http://www.wsj.com/articles/document...als-1431088354

Garbatellamike

not baffling just Varoufakis pretending he is still relevant and peddling his econmic theories in splendid isolation

Red Eric

That's a very misleading headline, given that what is being discussed is an increase in the existing rate. The article itself fails to mention that the whole VAT system is being revised and that it is not only tourists who will be affected by the changes, which (deliberately) gives the impression that demands are being made of tourists rather than residents.

Let's be fair to Greece's government on this one though. Everybody has been urging them to get on with it, make structural reforms etc etc nonstop. VAT reform has been one of the sticky points which they were reluctant to meddle with but which the troika has continually insisted needs to be done. Now that they appear, after weeks and weeks of negotiations, to have ceded (again), the response from some quarters is indignation.

InVinoVeritas

Yes, you are right Eric that it is a general increase in VAT. It is the Confederation of Greek Tourism who are complaining about this and saying it unfairly hits the islands (who previously enjoyed a 30% reduction on all VAT rates) and consequently may reduce the number of tourists (which is the only sector showing any growth and accounting for €13.5 billion of revenue).

Red Eric

You're always going to get that kind of reaction to such changes but only time will tell whether it really will damage the industry. Have visitor numbers to Florence dropped since the introduction of their tourist tax of 3.50€ per person per night?

The Greek government have resisted increasing VAT on the islands for a good long time now. They've been accused, as a result, of dragging their heels. Perhaps The Mail would be better directing its ire against the Troika, who are instrumental in this, rather than the Greek government.

InVinoVeritas

It was in several other papers too so it sounds to me like the story was "placed" by the Confederation of Greek Tourism to try and pressure the government.

Garbatellamike

I think Eric is right, we finally have an attempt at some real structural reform from this Greek government - it should be encouraged.

InVinoVeritas

If it's just putting up the rate of VAT that hardly amounts to a structural reform. In fact it's difficult to see what structural reforms the new negotiating team has proposed - there does not seem to be any real change other than putting words in the other sides' mouth and trying to play the lenders against each other. The next 2 weeks look awfully difficult.