Germany warns Greeks it won't be blackmailed in election

Firefox11

Subcomandante Marcos wrote: »

An OK deal? How can it be considered to be OK when one of the Troika members (the most qualified troika members at that) said themselves that Greece couldn't continue on the path is was on and debt forgiveness was essential?

ok. I will rephrase that. No deal was good, but it was better than what they are left with now. The greek government thought thought they could blackmail the eurozone with a grexit to get a debt writedown. They were wrong.

Joshua J

Firefox11 wrote: »

The Greek People were sold a pup by their own government with their populist bluff and unrealistic promises. (sounds familiar from some quarters in this country).

They had a ok deal but thought they could pull a fast one on their eurozone partners and now they have left the greek people with a considerably worse punitive deal. Elections in greece not far away now id say.

The wealthy of Greece when all's said and done, barring a few exceptions, will still be wealthy. The poor will end up poorer as is always the way. Politics and democracy are a farce.

KomradeBishop

Ah, pity - was hoping for an answer to my previous question. Would have illustrated well just how political, non-independent and harmful to democracy the ECB is (everything a central back should not be).

KomradeBishop

Firefox11 wrote: »

ok. I will rephrase that. No deal was good, but it was better than what they are left with now. The greek government thought thought they could blackmail the eurozone with a grexit to get a debt writedown. They were wrong.

The Greeks were offered 'destruction tomorrow' vs 'slow destruction over a number of years' - they are the ones being blackmailed.

I mean really - they just got hammered with a modern-day version of the Versailles Treaty, and people think they, the Greeks, are the ones doing the blackmailing?

KingBrian2

Your able to divvy up the € members into the 7 Creditor Nations of Germany, France, Netherlands, Belgium, Finland, Slovakia & Austria with the Debtor Nations of Greece, Italy, Spain, Portugal, Ireland, Croatia, Slovenia, Cyprus, Malta, Luxembourg, Estonia & Latvia 12 in all. So Alexis is in good company with regards his colleagues across Europe.

marienbad

A Tyrant Named Miltiades! wrote: »

Reminds me of this... from the FT last Monday

I remember it well , I knew a guy and his dad worked in Ranks in Limerick and he spent all his time been driven around the city to all big Shops , Roches Stores , Boyds, Todds collected all their surplus cash and giving them a cheque and the money was used to pay the hundreds of Ranks workers on the Friday - worked a treat .

Massimo Cassagrande

Yawn. Are they rioting yet? Any pics?

BoJack Horseman

Massimo Cassagrande wrote: »

Are they rioting yet?

Its one of their top 10 industries

BoJack Horseman

KomradeBishop wrote: »

The Greeks were offered 'destruction tomorrow' vs 'slow destruction over a number of years' - they are the ones being blackmailed.

They are getting an €83bn investment into their economy

As an advocate of 'growth via debt', you should be overjoyed.

KomradeBishop

BoJack Horseman wrote: »

They are getting an €83bn investment into their economy

As an advocate of 'growth via debt', you should be overjoyed.

Where does it say anywhere that the full €83bn is going into their actual economy?

They are mandated to be running a surplus - that's taking money out of their economy.

BoJack Horseman

BoJack Horseman wrote: »

They are getting an €83bn investment into their economy

As an advocate of 'growth via debt', you should be overjoyed.

Using up to 90% of bailout funds to finance further debt hardly counts as a stimulus though, does it?

http://www.macropolis.gr/?i=portal.en.the-agora.2080

The brutal belt tightening meant that only just over 15 billion euros of troika loans were used for state operations. Combined with some other government financing needs (mostly relating to repayments of arrears that accumulated in the first two years of the crisis) the combined allocation to the Greek state’s operating needs was just 11 percent of the total funding, at circa 27 billion euros.

Kalman

Cap in hand he goes [Tsipras,] to the EU Leaders and he can't even be bothered to wear a tie, huh!

His friend , 'Varoufakis' [ex Finance Minister] went for a meeting with the suits, wearing a leather jacket !

Hachiko

Kermit.de.frog wrote: »

Also it seems they are not that bothered anymore if Greece falls out of the euro.

http://www.irishtimes.com/business/economy/germany-will-not-be-blackmailed-into-renegotiating-greek-rescue-1.2055194

The Greeks want to elect a party opposed to the whole bailout on the 25th. But there will be no renegotiation and Germany is not in the mood to tolerate blackmail from a people and it's government it believes over decades was feckless in how it ran it's affairs. And there will be no more money for them.

I hope the left parties do win in Greece later in the month so other PIIGS like Ireland can see the consequences of electing people with no real ideas or alternatives.

The 25th of January could be the start of the disintegration of the eurozone. And once one is forced out the market targets the next weakest link until they are kicked out because no one will believe they can stay.

Germany are mugs, the Greek currency may as well be the deutschmark now, and they wont see a penny of it back, all 50 billion. And that's just the recent bail out.

Hachiko

Kalman wrote: »

Cap in hand he goes [Tsipras,] to the EU Leaders and he can't even be bothered to wear a tie, huh!

His friend , 'Varoufakis' [ex Finance Minister] went for a meeting with the suits, wearing a leather jacket !

Probably after coming from a Ferrari dealer using the new bail out cash to buy a new car.

Uncle Ben

Kalman wrote: »

Cap in hand he goes [Tsipras,] to the EU Leaders and he can't even be bothered to wear a tie, huh!

His friend , 'Varoufakis' [ex Finance Minister] went for a meeting with the suits, wearing a leather jacket !

There's enough gangsters wearing suits in the EU / ECB as it is. Juncker and Schaeuble for starters.

Kalman

Uncle Ben wrote: »

There's enough gangsters wearing suits in the EU / ECB as it is. Juncker and Schaeuble for starters.

Maybe, but they are not begging.

KingBrian2

Back to bread and butter issues of restoring the banks to working condition. Growing the economy will help ease the austerity measures required. The shipping magnates are going to have to contribute to keep the economy going. 4th largest fleet in the world a commodity Europe can ill afford to lose and these guys mean business. They have to become stakeholders in Greek society making paying taxes a voluntary exorcise of citizen responsibility and diligence.

Grandeeod

Kalman wrote: »

Cap in hand he goes [Tsipras,] to the EU Leaders and he can't even be bothered to wear a tie, huh!

His friend , 'Varoufakis' [ex Finance Minister] went for a meeting with the suits, wearing a leather jacket !

What's the problem with that? This shirt and tie bull**** is....well...just bull****.

BoatMad

KomradeBishop wrote: »

The Greeks were offered 'destruction tomorrow' vs 'slow destruction over a number of years' - they are the ones being blackmailed.

I mean really - they just got hammered with a modern-day version of the Versailles Treaty, and people think they, the Greeks, are the ones doing the blackmailing?

The concept of a debt write down in an internal fiat currency is a somewhat amusing nonsense of a concept though.

KomradeBishop

BoatMad wrote: »

The concept of a debt write down in an internal fiat currency is a somewhat amusing nonsense of a concept though.

Indeed - running a currency in the 21st century, like we were still in the 19th century.

Kalman

Grandeeod wrote: »

What's the problem with that? This shirt and tie bull**** is....well...just bull****.

I disagree ! However, each to their own. I would most never turn up for a job interview without one.

I have always taking pride in my appearance in front of any potential employer>>I'm a great believer in that> 'first impressions count.
It has not done me any harm!

It was drilled into me at a young age.

"Bull," you say? >> Lewis Hamilton with all his millions , was last week turned away from Wimbledon without one:)

BoatMad

KomradeBishop wrote: »

Indeed - running a currency in the 21st century, like we were still in the 19th century.

The issue of course is the Germans want the euro to be effectively a gold standard for all in the Ex except themselves of course when it suits them.

BoatMad

KomradeBishop wrote: »

Ah, pity - was hoping for an answer to my previous question. Would have illustrated well just how political, non-independent and harmful to democracy the ECB is (everything a central back should not be).

The ecb is forbidden by charter to act to bailout countries. It extends ela specifically to provide temporary liquidity to ez banks. That ela is provided on the backs of specific asset the banks advance to secure the ela. This is typically gov bonds. Greeces banks have exhausted such bonds. Hence the ecb cannot extend any more ela unless guaranteed by somebody. In fact the ecb is already acting beyond its remit in supporting the Greek banks.

KomradeBishop

Great article by Ambrose Evans-Pritchard, which explains well how the European Monetary Union has castrated nearly all Left-leaning parties in Europe - how the supposed 'sanctity' of the EMU, makes it above criticism to these parties, co-opting them into adopting right-wing economic policies - and how the events with Greece have finally broken this spell:
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/11742624/EMU-brutality-in-Greece-has-destroyed-the-trust-of-Europes-Left.html

In reality, there are hardly any economically Left-leaning parties left in Europe. The economic policies they all support, through the EU/EMU, are all inherently right-wing.

So, even though the economic contagion within Greece is contained, the political contagion within Europe has already happened, and will bring down the Euro over time - unless big steps are made towards a federal EU (pretty much impossible politically).

Good section on the ECB and how it was never the independent central bank it was supposed to be, but instead acts as an undemocratic political enforcer (everything a central bank should not be):

Mr Tilford said the Left in Italy, Spain and France have for years been clinging to the illusion that Germany would eventually agree to relax austerity and accept a different kind of EMU.

"This has been totally discredited by the events of last weekend. Everybody can see graphically and brutally where the limits lie. If you can't abide by euro rules, you will be quarantined and evicted," he said.

Let us not forget that the European Central Bank brought about the final collapse by freezing emergency liquidity to the Greek banks, forcing Syriza to shut the lenders' doors, impose capital controls and halt imports.

This violates the principle of the EU banking union, supposed to separate the fate of private banks from the travails of the sovereign state. It was a political decision - dressed up with technical flammery - and was arguably illegal. It is very hard to reconcile with the ECB's treaty duty to uphold financial stability.

Also:

It is, in any case, a double-edged strategy. Costas Lapavitsas, a Syriza MP, said the salient message of the past five months is that no radical government can pursue sovereign policies as long as it is at the mercy of a central bank able to switch off liquidity at any time. "It is now perfectly clear that the only way out of this is to break free of monetary union,” he said.

All Souls economist Kevin O'Rourke says the next Left-wing party that rises to challenge the EMU will not be as "feckless" as Mr Tsipras, and will not bargain from a position of such abject weakness.

"The lesson that they will draw from this debacle is: negotiating with Germany is a waste of time; be willing to act unilaterally, be willing to default unilaterally, have a plan for achieving a primary surplus if you haven’t already achieved it, have a hard default and euro exit option in your back pocket, and be willing to use it at the first sign of hassle from the ECB," he said.

KomradeBishop

BoatMad wrote: »

The ecb is forbidden by charter to act to bailout countries. It extends ela specifically to provide temporary liquidity to ez banks. That ela is provided on the backs of specific asset the banks advance to secure the ela. This is typically gov bonds. Greeces banks have exhausted such bonds. Hence the ecb cannot extend any more ela unless guaranteed by somebody. In fact the ecb is already acting beyond its remit in supporting the Greek banks.

The ECB would not be bailing out any countries by providing ELA funds, it would only be acting in its role as lender of last resort - which is exactly what central banks are meant to do.

The idea that the ECB is beyond its remit, isn't really well founded - if they were the Germans would have prosecuted them by now I'd say - the decision to cut off the ELA was entirely political; Greece haven't even defaulted officially yet, they are only in arrears.

KingBrian2

KomradeBishop wrote: »

The ECB would not be bailing out any countries by providing ELA funds, it would only be acting in its role as lender of last resort - which is exactly what central banks are meant to do.

The idea that the ECB is beyond its remit, isn't really well founded - if they were the Germans would have prosecuted them by now I'd say - the decision to cut off the ELA was entirely political; Greece haven't even defaulted officially yet, they are only in arrears.

No but they did default on IMF payments, only thanks to the ECB massaging the figures the Greeks get off on that one. This catastrophe is a delayed response to earlier defaults. International Lenders were willing to give the previous gvt the benefit of the doubt.

BoatMad

KomradeBishop wrote: »

The ECB would not be bailing out any countries by providing ELA funds, it would only be acting in its role as lender of last resort - which is exactly what central banks are meant to do.

The idea that the ECB is beyond its remit, isn't really well founded - if they were the Germans would have prosecuted them by now I'd say - the decision to cut off the ELA was entirely political; Greece haven't even defaulted officially yet, they are only in arrears.

The ecb is specifically forbidden to act as a lender of last resort. It merely advanced temporary liquidity. The ela is not intended to finance or refinance banks or to restore their capital adequacy ratios.

Greece getting a bailout will allow for bank refinancing and hence you will see ela being extended.
If anything the ecb has not been acting politically that's partly the problem.

Dunford

Kalman wrote: »

Maybe, but they are not begging.

no....theyre thieving

BoatMad

KingBrian2 wrote: »

No but they did default on IMF payments, only thanks to the ECB massaging the figures the Greeks get off on that one. This catastrophe is a delayed response to earlier defaults. International Lenders were willing to give the previous gvt the benefit of the doubt.

The Greeks defaulting on essentially internally generated debt is somewhat ridiculous , the capital markets would only trigger default clauses if private debt was defaulted on. Since Greek debt is all funny euro internal debt, it's default is purely technical and of little consequence

SaveOurLyric

KomradeBishop wrote: »

In reality, there are hardly any economically Left-leaning parties left in Europe. The economic policies they all support, through the EU/EMU, are all inherently right-wing.

This is true, but I wouldnt credit EMU entirely for the lack of any significant leftish politics left in Europe. Europe has simply evolved politically and economically beyond needing 'left'. It has outgrown it, have developed beyong having any need for it. Leftwing politics served its purpose for a time, but is now redundant in this part of the world.

BoatMad

KingBrian2 wrote: »

No but they did default on IMF payments, only thanks to the ECB massaging the figures the Greeks get off on that one. This catastrophe is a delayed response to earlier defaults. International Lenders were willing to give the previous gvt the benefit of the doubt.

KomradeBishop wrote: »

Great article by Ambrose Evans-Pritchard, which explains well how the European Monetary Union has castrated nearly all Left-leaning parties in Europe - how the supposed 'sanctity' of the EMU, makes it above criticism to these parties, co-opting them into adopting right-wing economic policies - and how the events with Greece have finally broken this spell:
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/11742624/EMU-brutality-in-Greece-has-destroyed-the-trust-of-Europes-Left.html

In reality, there are hardly any economically Left-leaning parties left in Europe. The economic policies they all support, through the EU/EMU, are all inherently right-wing.

So, even though the economic contagion within Greece is contained, the political contagion within Europe has already happened, and will bring down the Euro over time - unless big steps are made towards a federal EU (pretty much impossible politically).

Good section on the ECB and how it was never the independent central bank it was supposed to be, but instead acts as an undemocratic political enforcer (everything a central bank should not be):


Also:

All that is being expressed here is the fallacy that a working monetary union can occur without fiscal Union.

The Germans will either have to accept this in time or the euro will die and take the EU project with it.

Massimo Cassagrande

BoatMad wrote: »

All that is being expressed here is the fallacy that a working monetary union can occur without fiscal Union.

The Germans will either have to accept this in time or the euro will die and take the EU project with it.

Or the Greeks will stfu, start towing the line and paying what they owe. Which is what will happen. They'll start imposing proper taxes, start knocking dumb expenditure on the head, cut back the croneyism and start making proper repayments. They have sfa choice, they had their rope, and now it's run out. They'll start towing the line and the dance will go on. Rebels without a clue. The big money will prevail, it always does.

KingBrian2

BoatMad wrote: »

The Greeks defaulting on essentially internally generated debt is somewhat ridiculous , the capital markets would only trigger default clauses if private debt was defaulted on. Since Greek debt is all funny euro internal debt, it's default is purely technical and of little consequence

According to you what is the difference bwtween internal debt and the other type of debt which is so important it must be repaid. Feel free to use links to explain. Though i would rather in your own words if you could. Thanking you in advance.

BoatMad

Massimo Cassagrande wrote: »

Or the Greeks will stfu, start towing the line and paying what they owe. Which is what will happen. They'll start imposing proper taxes, start knocking dumb expenditure on the head, cut back the croneyism and start making proper repayments. They have sfa choice, they had their rope, and now it's run out. They'll start towing the line and the dance will go on. Rebels without a clue. The big money will prevail, it always does.

Unfortunately the problems of Greece will be repeated in other EZ countries. Greece is just a spectacular version of it.

By demanding that countries , some of which inherently can never compete with Germany, maintain fiscal rectitude, means that countries that fail to compete have to cut wages and spending in perhaps a downward spiral. This then destroys living standards. It pertually locks regions into being " poorer " and excepting lower living standard.

Take for example letrim , it cannot sustain its public expenditure based on its tax intake. It benefits from fiscal transfers from the greater Dublin region. This is to ensure several things. , (a) that letrim citizens can purchase goods and services from the greater Dublin area, social cohesion and the creation of a common market.

Until Greece and others are regarded as letrim , the euro will ultimately fail
Taken simply. The cost of maintaining a large " wealthy " common euro market area , where its residents can buy BMWs etc will be that Germany transfers part of that accumulated wealth back out to the " regions "

BoatMad

KingBrian2 wrote: »

According to you what is the difference bwtween internal debt and the other type of debt which is so important it must be repaid. Feel free to use links to explain. Though i would rather in your own words if you could. Thanking you in advance.

If Greece wants to access private capital markets ( or its banks ) then the " sanctity " of not defaulting on private debt must be preserved.

Internal institutional debt is essentially fiat currency being generated ( read printed) to pay back notional euro debt

In a fiat currency and monetary union, the idea that you can default internally is contrived nonsense. It's an attempt to impose a kind of gold standard on debtor countries as if somehow the amount of available euros is limited.

KingBrian2

BoatMad wrote: »

If Greece wants to access private capital markets ( or its banks ) then the " sanctity " of not defaulting on private debt must be preserved.

Internal institutional debt is essentially fiat currency being generated ( read printed) to pay back notional euro debt

In a fiat currency and monetary union, the idea that you can default internally is contrived nonsense. It's an attempt to impose a kind of gold standard on debtor countries as if somehow the amount of available euros is limited.

Repaying foreign creditors is less important than having viable domestic banks. These are the companies that pay wages and implements the day to day financial activities of a country. A Nation can survive cut off from the markets all be it badly but allowing banks to be empty is haemorrhaging cash at an extraordinary rate. The gvt would be issuing IOU's with nothing backing them up.

BoatMad

KingBrian2 wrote: »

Repaying foreign creditors is less important than having viable domestic banks. These are the companies that pay wages and implements the day to day financial activities of a country. A Nation can survive cut off from the markets all be it badly but allowing banks to be empty is haemorrhaging cash at an extraordinary rate. The gvt would be issuing IOU's with nothing backing them up.

You clearly don't understand how a fist currency works and how it retains value.

In the Euro. Greece has no currency it can control ( for good or bad ) a viable banking system in the euro is inextricably linked to the state of the sovereign. It shouldn't be this way , but the faults of the euro creation make it so.

Governments can " survive " cut off from the markets ,but in way Zimbabwe is "surviving " otherwise they need a credible external source of funds

KingBrian2

BoatMad wrote: »

You clearly don't understand how a fist currency works and how it retains value.

In the Euro. Greece has no currency it can control ( for good or bad ) a viable banking system in the euro is inextricably linked to the state of the sovereign. It shouldn't be this way , but the faults of the euro creation make it so.

Governments can " survive " cut off from the markets ,but in way Zimbabwe is "surviving " otherwise they need a credible external source of funds

Ah but you forget the Euro is managed at the ECB which is composed of all the members just like the Federal Reserve. No one country wields absolute power over the € but many countries are inadequate and why is that. They broke the rules joining. Had the € been made up of countries that broadly speaking abided by the criteria than the Zone would be a lot better. Don't blame the inconsistencies of the fiscal policy on the €. Each country needs different treatments to sort through the many problems inflicted upon them. For Greece structural developments are desperately needed.

BoatMad

KingBrian2 wrote: »

Ah but you forget the Euro is managed at the ECB which is composed of all the members just like the Federal Reserve. No one country wields absolute power over the € but many countries are inadequate and why is that. They broke the rules joining. Had the € been made up of countries that broadly speaking abided by the criteria than the Zone would be a lot better. Don't blame the inconsistencies of the fiscal policy on the €. Each country needs different treatments to sort through the many problems inflicted upon them. For Greece structural developments are desperately needed.

Indeed I agree with you , but a currency union without fiscal Union is doomed because regions ( former EZ countries ) cannot be equally competitive. You will always have winners and losers You cannot just start kicking losers out of the club. Ultimately everyone gets kicked out.

France is at present flagrantly breaking the stability pact. I see no reaction !!!

This issue is nothing to do with " rules" nor do I blame the euro per se. I blame its creation process and the issues baked into that creation. ( mainly by Germany )

BoatMad

BoatMad wrote: »

Internal institutional debt is essentially fiat currency being generated ( read printed) to pay back notional euro debt

No it isn't. The funding tranches that are extended to Greece very much do exist, and they come from capital markets. When the EFSF-ESM raise money on capital markets, it's no different to a healthy sovereign raising money on capital markets.

The investors are mostly private sector pension funds, sovereign wealth funds, asset managers, and insurance companies, just like when Agence France Trésor sells French OATs, (government bonds) or when Germany's Finance Agency sells German Bunds.

The EFSF-ESM is essentially a Treasury, not a printing press.

The money it raises is no different to the money raised by any other Treasury.

BoatMad

A Tyrant Named Miltiades! wrote: »

No it isn't. The funding tranches that are extended to Greece very much do exist, and they come from capital markets. When the EFSF-ESM raise money on capital markets, it's no different to a healthy sovereign raising money on capital markets.

The investors are mostly private sector pension funds, sovereign wealth funds, asset managers, and insurance companies, just like when Agence France Trésor sells French OATs, (government bonds) or when Germany's Finance Agency sells German Bunds.

The EFSF-ESM is essentially a Treasury, not a printing press.

The money it raises is no different to the money raised by any other Treasury.

Oh please look at broad money creation processes. Govs raise money by selling bonds which are used by banks to increase their capital adaquacy ratios which then allows them to create money out of nothing ( aka printing ecb money )

Govs don't borrow other people's money , why in gods name would they , they have a license to print it.

A gov selling bonds is expanding the money supply , when it redeems it , it shrinks the money supply.
Esm is funded by constituent EU nations. The EZ gov essentially via the money creation process , print money to fund it . ( in a roundabout way ?

Or perhaps you still think banks just lend depositors money out. !!!

Subcomandante Marcos

BoatMad wrote: »

Oh please look at broad money creation processes. Govs raise money by selling bonds which are used by banks to increase their capital adaquacy ratios which then allows them to create money out of nothing ( aka printing ecb money )

Your idea of money creation is about 25 years out of date... You do realise that, right?

BoatMad

Subcomandante Marcos wrote: »

Your idea of money creation is about 25 years out of date... You do realise that, right?

It's basically the way it works today. Nothing has essentially changed since the collapse of the Breton woods agreement

BoatMad

A Tyrant Named Miltiades! wrote: »

No it isn't. The funding tranches that are extended to Greece very much do exist, and they come from capital markets. When the EFSF-ESM raise money on capital markets, it's no different to a healthy sovereign raising money on capital markets.

The investors are mostly private sector pension funds, sovereign wealth funds, asset managers, and insurance companies, just like when Agence France Trésor sells French OATs, (government bonds) or when Germany's Finance Agency sells German Bunds.

The EFSF-ESM is essentially a Treasury, not a printing press.

The money it raises is no different to the money raised by any other Treasury.

Ps. The ESM is almost completely funded by constituent EZ countries and also the ESM has the power to issue euro bonds ( aka print
Money )

BoatMad

BoatMad wrote: »

Ps. The ESM is almost completely funded by constituent EZ countries and also the ESM has the power to issue euro bonds ( aka print
Money )

I suspect you have managed to get your hands on the Bank of England's McLeay paper on money creation, and have badly misunderstood its application to the ESM and ECB.

You also misunderstand the nature of the ESM, evidently.

The ESM is not completely funded by constituent countries. Its operations are funded mostly by asset managers in financial institutions. The ultimate borrower, Greece, is more akin to a household, since it does not control the money supply, nor does its agent, the ESM. That supply is controlled by the banks.

To say that sovereign states do not truly owe money to other people demonstrates a remarkable confusion on your part.

Subcomandante Marcos

BoatMad wrote: »

It's basically the way it works today. Nothing has essentially changed since the collapse of the Breton woods agreement

Actually, the understanding of how money is created has massively changed. But sure you hold on to the past.

BoatMad

A Tyrant Named Miltiades! wrote: »

I suspect you have managed to get your hands on the Bank of England's McLeay paper on money creation, and have badly misunderstood its application to the ESM and ECB.

You also misunderstand the nature of the ESM, evidently.

The ESM is not completely funded by constituent countries. Its operations are funded mostly by asset managers in financial institutions. The ultimate borrower, Greece, is more akin to a household, since it does not control the money supply, nor does its agent, the ESM. That supply is controlled by the banks.

To say that sovereign states do not truly owe money to other people demonstrates a remarkable confusion on your part.

Sheesh I refer you to https://en.m.wikipedia.org/wiki/European_Stability_Mechanism

BoatMad

Subcomandante Marcos wrote: »

Actually, the understanding of how money is created has massively changed. But sure you hold on to the past.

I am conversant with the current theories in regards to pricing of reserves being the main controlling aspect. And the workings of QE.

However these are merely updated theories explaining the same basic base and broad money creation and supply that have existed since the collapse Bretton woods

BoatMad

BoatMad wrote: »

Sheesh I refer you to https://en.m.wikipedia.org/wiki/European_Stability_Mechanism

What an odd reply. I explain that the ESM is mostly funded by private financial institutions, and you reply with a link to... the ESM wiki page?

I take it you have been wrongly assuming that Eurozone governments or their central banks have been creating all, or most, of the ESM's lending reserves?

Because that's incorrect.

KomradeBishop

BoatMad wrote: »

The ecb is specifically forbidden to act as a lender of last resort. It merely advanced temporary liquidity. The ela is not intended to finance or refinance banks or to restore their capital adequacy ratios.

Greece getting a bailout will allow for bank refinancing and hence you will see ela being extended.
If anything the ecb has not been acting politically that's partly the problem.

There is nothing really stopping the ECB providing that financing right now - you claim they are restricted by the rules you describe earlier, yet you also say they are arguably in breach of such rules - so it is debatable how much the rules you cite are applicable.

The ECB already said they would restore financing if a deal looked likely, so it is clear that there is a lot of wriggle room in how they choose to interpret the law - making it a much more political decision, in deciding how they apply the rules.

When it comes to interpretation of the ECB rules, usually it's a case of "where there's a will..." - by taking a "them's the rules" approach to this, you're absolving the ECB of their pharisaic and highly political choices.


I mean, the ECB almost completely shut down much of Greece's economy and international trade at a critical time politically, putting huge pressure on Greece politically...saying "them's the rules" when the ECB had more than enough wriggle room to keep on allowing ELA at the time, paints a naive and system-justifying picture, when the ECB was really acting as a political enforcer.