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Road to a Grecian turn?

Road to a Grecian turn?

Old Feb 20th 2015, 8:54 pm
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Default Re: Road to a Grecian turn?

Well finally some sensible compromising by both sides - they may have just kicked the can down the road for 4 months but at least meltdown has been averted or postponed.

Not sure how it will play within Greece but probably the best compromise that could be achieved in the circumstances.

* Greek authorities have expressed their strong commitment to a broader and deeper structural reform process.

* Greek authorities reiterate their unequivocal commitment to honour fin obligations to all creditors fully and timely.

* Greek authorities commit to ensure appropriate primary fiscal surpluses.

* Greek authorities commit to refrain from any rollback of measures and unilateral moves, as well as reforms that would negatively impact fiscal targets, economic recovery or financial stability.

“Only approval of the conclusion of the review of the extended arrangement by the institutions in turn will allow for any disbursement of the outstanding tranche of the current EFSF programme and the transfer of the 2014 SMP profits. Both are again subject to approval by the Eurogroup”, read the statement. Here the full statement

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Old Feb 20th 2015, 9:07 pm
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Default Re: Road to a Grecian turn?

Eric,

some interesting insights here particularly into perception of Varoufakis:
Euro zone officials said Greece's track record and the combative behaviour of its new leaders had undermined their confidence in whether Athens would deliver what it agrees to in talks with the other countries sharing the euro.
That drove ministers to make Greece hand over custody of nearly 11 billion euros in aid earmarked for stabilising its banks to the euro zone's rescue fund.
"We wanted to make sure that the ... money for Greek bank recapitalisation is for that purpose, not for recapitalisation of the government," Dijsselbloem said.
Some pointed comments were directed at Varoufakis, an outspoken Marxist economist and blogger, and his casual style. "Even hardliners like us have to give the benefit of the doubt to a communist in a Burberry scarf," an official of one hawkish European country joked.

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Old Feb 21st 2015, 8:14 am
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Default Re: Road to a Grecian turn?

OK, so despite the fine words from some quarters, it's back to austerity, meaning practically zero chance of taking the foot off the brake that's hampering economic recovery. 18 against 1 is a tall order but when Spain and Portugal have new governments later in the year, the Greeks will have some allies in the Eurogroup - maybe they can rustle up a couple more between them.

The Greek representatives may have been "taught a lesson" in diplomacy. It's obvious that their approach wasn't too popular in some circles but do you honestly believe they would have got a better deal if they'd been less forthright? They are completely at odds with their counterparts so I reckon not.

Interesting point in that last post about custody of the bank recapitalisation money - that of course was another bit of sleight-of-hand indulged in on the bailout countries. Here's a wodge of cash to shore up your private banks - we'll add it to the "public debt" column. Nice.

Some pointed comments were directed at Varoufakis, an outspoken Marxist economist and blogger, and his casual style. "Even hardliners like us have to give the benefit of the doubt to a communist in a Burberry scarf," an official of one hawkish European country joked.
Far too much is being made of his supposed politics (there won't be all that much room for Marxism in Greece for the foreseeable future) and his wardrobe. I can't see what the latter has to do with his ability to do the job. He's obviously being watched closely by some admirers elsewhere, though. I was watching Portugal's fortnightly parliamentary debate yesterday - the female president of the parliament, a representive of the rightwing PSD, was wearing what appeared to be a decidedly informal leather biker's jacket with a big fur collar. I think the heating's been turned off in parliament as part of the austerity measures.

I don't know whether these comments were particularly widely reported but on Wednesday evening Jean-Claude Juncker accused Europe of having "sinned against the dignity" of Greece, Portugal and Ireland and admitted that the Troika "lacks democratic legitimacy". Small comfort to Greece (or anyone else) now, of course.

I'll make a small prediction - Mario Draghi, who's been conspicuously silent over the past 3 weeks, will shortly make some statement about austerity not being the solution.

Then we can all go back to austerity as usual.
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Old Feb 21st 2015, 11:03 am
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Default Re: Road to a Grecian turn?

Originally Posted by Red Eric View Post

Then we can all go back to austerity as usual.
...only further aggravating an already tenuous political sentiment across much of the Eurozone. Syriza is only the first of the extreme parties. Podemos in Spain has similar aspirations. Political extremism is growing in France and other member states, too.

Note that I again point out that whilst I don't agree with their political ideologies, I do understand their sentiments. People are hungry. The troika should have spent their energies on economic growth rather than austerity. But it's too late for that now.

From a macro view, Syriza's success or failure are rather irrelevant - either way, it will only serve to increase popularity for the extreme left or right across the Eurozone. And that's far more troubling than the economic consequences IMO.

Here's an interesting viewpoint related to that. Political Landslides Shake Europe

Also, this one is old, but it testifies that EU dissent is nothing new: The New Sick Man of Europe: the European Union

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Old Feb 21st 2015, 4:22 pm
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Default Re: Road to a Grecian turn?

Originally Posted by Red Eric View Post
do you honestly believe they would have got a better deal if they'd been less forthright?
Yes of course they would. Forthright is too generous a term for their inept approach though

They managed to get an agreed position against them from leftist, centre-leftist, centerist, centre rightist, rightest-centre leftist coalitions with only the far right being in agreement with them (and this for completely the wrong reasons). A stunning level of incompetence to achieve such coherence across the political spectrum - if they had adopted a less insane approach from day one, much more would have been achieved.

Draghi is a rare man - a sensible political economist with market credibility - I agree with your point on him. We need more Draghi's and less incompent bufoons like Varoufakis, Monti, Padoan, Cable and Balls if we are going to make any economic progress.
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Old Feb 21st 2015, 6:09 pm
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Default Re: Road to a Grecian turn?

Originally Posted by Garbatellamike View Post
They managed to get an agreed position against them from leftist, centre-leftist, centerist, centre rightist, rightest-centre leftist coalitions with only the far right being in agreement with them (and this for completely the wrong reasons). A stunning level of incompetence to achieve such coherence across the political spectrum - if they had adopted a less insane approach from day one, much more would have been achieved.
Despite the apparent rainbow of political colours this list suggests, when it comes to the Eurogroup they act in herdlike fashion - right behind the rightwing orthodoxy led by Germany. None more so than the other bailed out countries' representatives.

The last 2 Greek administrations, despite a less energetic approach, got nothing - or nothing other than being told to toe the line. At least the Greeks have seen their representatives offer an alternative. And however small it is, a chink has been opened (ie they get the chance to manage their own austerity to a certain extent).

What will be truly insane (as well as inhumane) is if the Eurogroup refuses to sanction the urgently required addressing of the ongoing humanitarian crisis by the new government, which will be in the package of measures that need ratifying by the Eurogroup on Monday.

If that happens, it will show they are really determined to finish Syriza, whose position would become untenable in Greece and would represent an overt interference with democracy - but I wouldn't rule out that possibility at the moment.
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Old Feb 21st 2015, 8:19 pm
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Default Re: Road to a Grecian turn?

Originally Posted by Red Eric View Post
If that happens, it will show they are really determined to finish Syriza, whose position would become untenable in Greece and would represent an overt interference with democracy - but I wouldn't rule out that possibility at the moment.
They are not determined o finish Syriza. The problem is Syrzia promised things that they can't deliver to win an election.
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Old Feb 21st 2015, 11:47 pm
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Default Re: Road to a Grecian turn?

Just to add my penny worth it seems that Syriza has achieved something, which I thought was pretty unlikely, which is to create a general agreement in Europe on economic policy. The fact that this consensus is the exact opposite of what Syriza intended is the Greek tragedy.

How it plays out now depends on how seriously the Greek people believed Tsipras's promises - if they thought it was just a shot to nothing then they will not be too disappointed with the outcome but will have to deal with having a politically inept government. If they actually believed the pre-election bullshit then they either have to cope with a future exiled from Europe or punish Syriza in new elections. If there is a real split within the electorate, in that case, hello Russia.
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Old Feb 22nd 2015, 6:51 am
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Default Re: Road to a Grecian turn?

Originally Posted by InVinoVeritas View Post
How it plays out now depends on how seriously the Greek people believed Tsipras's promises - if they thought it was just a shot to nothing then they will not be too disappointed with the outcome but will have to deal with having a politically inept government.
The general mood in Athens is reported to be very upbeat - which must make a nice change after the past few years. I doubt the election manifesto was taken over-literally to the point where anyone believed it would all be achieved within 1 month of the elections. I expect the most pressing things as far as the general population is concerned are tackling tax evasion and getting aid to the needy.

Good luck to them. Those in the Eurogroup who call themselves socialists, including the current President of the group, ought to be ashamed of themselves for never once objecting to the forcing of conditions on Greece that have led to its current crisis.

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Old Feb 22nd 2015, 7:43 am
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Default Re: Road to a Grecian turn?

Originally Posted by Red Eric View Post
Those in the Eurogroup who call themselves socialists, including the current President of the group, ought to be ashamed of themselves for never once objecting to the forcing of conditions on Greece that have led to its current crisis.
That's the bit I don't really get in your posts Red Eric. How can the EU be blamed for the post-bailout crisis - surely there was a crisis that required the bailout in the first place or did that crisis magically disappear?
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Old Feb 22nd 2015, 8:17 am
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Default Re: Road to a Grecian turn?

Originally Posted by InVinoVeritas View Post
That's the bit I don't really get in your posts Red Eric. How can the EU be blamed for the post-bailout crisis - surely there was a crisis that required the bailout in the first place or did that crisis magically disappear?
Sure - Greece had big problems, should never have joined / been allowed to join the Euro etc etc.

However, there were many other problems for Greece and the other bailed out countries, some of which have to do with EU and ECB policy, which has always massively favoured the rather different economies of the north. Furthermore, looking at the evolution of the debt load on the debtor countries, there is a clear and very marked increase that occurs in 2008 and beyond, which shows how magnified the effects of the financial crisis were on those nations as the effects of private sector debt / businesses going bust etc were transferred to the state which had the increased welfare burden, along with the cost of bailing out national banks which found themselves in strife.

So not ALL just a case of overborrowing by profligate states or failure to deal with corruption and tax evasion.

As has been pointed out on this thread several times, the money that was provided for the so-called bailouts actually went to preventing (private) foreign banks sustaining losses and shoring up (private) national banks but - and here is where the EU / ECB / Eurogroup and IMF should all hang their heads in shame - the punitive conditions imposed on nation states in order to extract that money, with interest, caused mass emigration, mass unemployment, mass poverty etc and even if they didn't know beforehand that it would, it certainly didn't take long for it to become apparent.

A humanitarian crisis in the heart of Europe on a scale that hasn't been seen since the 1930s in the name of repaying a debt which is widely acknowledged to be unpayable is a disgrace. How long must it continue?
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Old Feb 22nd 2015, 11:00 am
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Default Re: Road to a Grecian turn?

Originally Posted by InVinoVeritas View Post
That's the bit I don't really get in your posts Red Eric. How can the EU be blamed for the post-bailout crisis - surely there was a crisis that required the bailout in the first place or did that crisis magically disappear?
Yep would have been even worse without the bailout for sure. Going back down that road is not going to go well hence the "rainbow coalition" that Varoufakis managed to push together so effectively.

Will be interested to see what is on the list of measures submitted by Greece and whether they will take a more realistic and practical approach.
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Old Feb 24th 2015, 8:56 am
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Default Re: Road to a Grecian turn?

The text of the Greek actions proposed so that they can get the bailout extended is at the following link:

TEXT-Greek finance minister's letter to the Eurogroup

I have not had a chance to look at it yet but thought you guys might find it interesting.

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Old Feb 24th 2015, 1:58 pm
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Default Re: Road to a Grecian turn?

Good news methinks, it seems like the "organization formerly known as the Troika" is content to approve the Greek list of actions that secure the bailout extension of 4 months.

Greece and the "not-Troika" now have 4 months to negotiate and build the trust that has been so badly damaged in the last couple of weeks to find a medium term resolution to Greek financial and economic problems.

I hope the Eurogroup don't just relapse into mindless austerity and that Syrzia does not try to repeat the mindless borrow and spend mistakes of some of their predecessors.

We live in interesting times!
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Old Feb 25th 2015, 8:02 am
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Default Re: Road to a Grecian turn?

Despite the glee in certain quarters about troika supervision, the way it is being handled is now rather different. Instead of elected representatives being forced to receive orders from a delegation sent by the lenders, they are now negotiating at a more appropriate level. And instead of being told what to do / choose from a pick list, the new government are suggesting their own reforms.

They haven't been given much leeway - so no great change on the mindless austerity front - and what has been ceded appears to have been given very grudgingly.

At the heart of this, of course, is the absolute conviction on the part of the Eurogroup that the approach taken over the last few years is the only one which will yield results (which are always on the way but never actually arrive). Their major fear is that if something else were tried and worked better, they would be shown to have been in the wrong. This refusal to relax the grip on Greece also has a great deal to do with the forthcoming elections in other countries.

However, there's some interesting stuff in their proposals - good on them for getting the document submitted in the ridiculously short timescale and I hope they manage to get as much of it under way as possible.
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