Greece Debt Crisis - Après Oxi

Permabear

Permabear wrote: »

This post had been deleted.

But a large function of those loans was to prevent sovereign contagion to prevent German and French banking crises in the core. Furthermore, they are financial transactions... that is to say, the Eurozone creditors stand to make a profit on the Greek loan facility and on ELA in the ECB's case. At the same time, creditor countries are allowed to exclude the loans from their government debt (similar accounting handiwork to the infamous Goldman Sachs' derivatives transaction, as it happens).

So, to recap: The Eurozone partners benefited from the bailout through their own financial system's Greek exposure, and by containment of the sovereign crisis, and through profits earned on the Greek loan facility.

That doesn't amount to a burden. The only burden they've had to overcome is Merkel & Schauble's anguish in interacting with people who disagree with their worldview.

molloyjh

Hang on now a second, exactly how are the creditors making money off this?

molloyjh

molloyjh wrote: »

Hang on now a second, exactly how are the creditors making money off this?

Through the benefit derived by the Eurozone financial system via bank exposure to Greece, which has saved them possible banking recapitalisations, and through the profits earned on the Greek loan facility.

Permabear

This post has been deleted.

K-9

A Tyrant Named Miltiades! wrote: »

Lets establish some basic points.

Any 'moral responsibility' for a catastrophe must first look to its causes, not in its policy responses.

For example, if I knock you off your bike on my way to work, I can hardly claim to be exempt because I loaned you the healthcare bill.

We need to look to the origins of the crisis, and why it happened in the first place. The origin being offered by the likes of Permabear, that everything was the Greeks' fault, does not quite square with the role of the European institutions as supra-national invigilators of European fiscal prudence.

But again the Greeks lied in their economic statistics to get into the Euro in the first place and also by the looks of it, to try and pretend debt figures were lower than they were. Remember most of this initial debt went to finance fiscal deficits, not banks.

Its very hard to find a good analogy as they are simplistic, but the alcoholic going to the same bar over and over is another one. Its the alcoholic that has to live with the long term consequences of his drinking, not the landlord.

marmurr1916

Ewald Nowotny, a member of the ECB's Governing Council, which will take the decision on whether or not to increase ELA to Greek banks, says that there is little prospect of that happening unless there is an agreement on Sunday rather than simply continued negotiations:

Yannis Koutsomitis ‏@YanniKouts 1h1 hour ago

#ECB's Nowotny: Sunday's political talks have to produce a very strong signal; negotiations alone not enough for continued ECB support ~RTRS

marmurr1916

The IMF's World Economic Outlook (July 2015 Update) has been published.

Some extracts about Greece:

More recently, the bank holiday in Greece and subsequent referendum, along with increased uncertainty about the prospects for and nature of any future support
from the international community, have led to sharply higher spreads on Greek sovereign bonds, especially at short maturities.

...

The economic recovery in the euro area seems broadly on track, with a generally robust recovery in domestic demand and inflation beginning to increase. Growth projections have been revised upward for many euro area economies, but in Greece, unfolding developments are likely to take a much heavier toll on activity relative to earlier expectations.

...

Developments in Greece have, so far, not resulted in any significant contagion.

http://www.imf.org/external/pubs/ft/weo/2015/update/02/pdf/0715.pdf

marmurr1916

Prior to the referendum, approximately €8 - €9 billion of 'fiscal measures' (in spending cuts and tax rises) were being negotiated.

The current Greek government's decision to hold a pointless referendum has cost Greece at least €4 billion over the next 18 months.

Yannis Koutsomitis ‏@YanniKouts 9 mins9 minutes ago

#Greece reforms proposal foresees €13bn of fiscal measures and €50bn of requested loan ~source #ESM

Greece's significantly poorer neighbour, Bulgaria, has pledged aid to Greece:

Stavros Kallinos ‏@StavrosKallinos 7 hrs7 hours ago

*BULGARIAN PREMIER BORISSOV PLEDGES AID TO GREECE

#dignity

Permabear

Permabear wrote: »

This post had been deleted.

Lets say I knock a well-known drunk off his bike, injuring him seriously. He was drunk, but at the same time, I wasn't paying adequate attention. A judge decides that I have, for the sake of argument, 20% liability for the accident.

Would it then be fair of my to offer to "compensate" this drunk by lending him the hospital, rehabilitation & legal fees, which I will earn a profit on? Bear in mind there is no opportunity cost to me, since I will be lending him the money via an SPV.

That's a ridiculous version of accepting partial liability, isn't it?

I knock the chap off his bike, accept partial liability, and I make a profit? Really?

K-9 wrote: »

But again the Greeks lied in their economic statistics to get into the Euro in the first place

Well that's not quite true; the Greeks' creative accounting in the EMU reference period was only banned later, with retroactive effect. At the time the Greeks hid their deficit, they were doing it within Eurostat rules.

It's a bit like if the Irish Government were found in breach of the fiscal rules by some future legislation which changed how semi-state companies debts were treated in the national accounts, and then having to revise our deficit up to 5%. That's essentially what happened the Greeks.

It happened them again in 2009 when their deficit was bloated by Eurostat;s insistence of a reclassification of debt by the inclusion on the government accounts of 18 billion euro of eighteen semi/public utilities.

Before anyone again claims I'm denying Greek fraud existed at all, of course, in between accession and the 2009 crisis, there was also some fraud going on. I don't deny that.

Its very hard to find a good analogy as they are simplistic, but the alcoholic going to the same bar over and over is another one. Its the alcoholic that has to live with the long term consequences of his drinking, not the landlord.

But the relationship between Greece and the European institutions is not that of a publican and his customer. In Greece's case, the European Council and the Commission had a supranational role in Greek governance.

It's probably rather a strained analogy, but the case of Greece is more similar to an employee being fed alcohol in the workplace by his manager, or at least consuming alcohol with the manager's sanction. Then the employee screws up, the whole firm goes tits-up, and the manager says "but it wasn't me, I deserve no blame at all"

Permabear

This post has been deleted.

KingBrian2

Deleted User wrote: »

Very interesting developments.



I absolutely hate the interior politics of this situation. There's a chance that both 'sides' (within Greece) are still trying to play a game against each without considering the ramifications of a failure. The side show has to stop.

Greece is trying to solicit sympathy from Moscow and Washington in order for external help at the negotiating table. The decision of the IMF to back up Tspiras was decisive in winning the argument that Greek's debt was unsustainable even with austerity. This was papered all over the media, and assisted the No side a great deal with the undecided.

The pressure is now going to be on the Eurogroup with Russia holding a cashbook to temp Greece on one side and Lagarde promising to vouch for a reformed Greece working happily to restore national pride on the other. Two juggernaut nations hoping to shape European opinion. Thankfully Eurogoup members have remained solidly together on the same side.

K-9

Analogies get confusing!

But as permabear pointed out, Greece has already had 2 renegotiations of the initial package, so I don't think you can argue that Europe hasn't tried to help. Maybe you don't agree with more loans, but that's an ideological objection, not a practical one.

Even now it looks like debt reduction or interest rates will be cut, that's if the Greek government can finally come up with credible proposals and solutions. Nobody wants to be back here in a years time going over the exact same stuff.

The problem is 5 months in, we are still at the posturing stage, any other Government would be working away on achieving the agreed targets by now.

The thing is the IMF/EU plans aren't even that sacrosanct as can be seen in Ireland. The IMF still goes on about Welfare reform and opening up the professional classes, but as long as targets are achieved all they really can do is wag fingers.

Permabear

Permabear wrote: »

This post had been deleted.

Well I certainly wouldn't be expecting my money back, nor would I threaten to force him to leave the family.

These are very strained analogies. We act irrationally around family members because we love them, and one drunk person cannot seriously represent an entire society, many of whom have led their lives responsibly and have done nothing wrong.

Lets take a break from the analogies, the situation isn't so complicated as to demand them anyway.

If you accept partial responsibility for a disaster, burden sharing is a logical outcome.

Profit and domestic financial stability do not qualify as burdens.

I am not asking for sackcloth and ashes. Neither Syriza or the IMF or anyone else asking for a debt deal is asking for a hard write-off. This can be made almost painless for everyone.

Partial responsibility => partial burden sharing.

I asked you previously and you didn't answer, what is the split of burden sharing you'd agree is fair?

marmurr1916

A Tyrant Named Miltiades! wrote: »

In Greece's case, the European Council and the Commission had a supranational role in Greek governance.

So you keep saying. Please point out the clause(s) in the EU treaties which therefore make the wider EU legally liable for part of Greece's debts.

I'm looking here for a strictly legal answer, not a moral case, but a case founded on EU law rather than opinion.

K-9

K-9 wrote: »

Analogies get confusing!

But as permabear pointed out, Greece has already had 2 renegotiations of the initial package, so I don't think you can argue that Europe hasn't tried to help. Maybe you don't agree with more loans, but that's an ideological objection, not a practical one.

It's an economic one. The debt is sustainable or it is not. The economy cannot grow when taxes are increasing on business activity, and supply-side policies are stripping away demand, which in Greece prevents growth, and further demolishes any scope for investment.

If I can be accused of bearing any ideological axe, it's that pro-cyclical economic policies are best avoided.

Also, two renegotiations? Einstein's definition of insanity comes to mind.

Deleted User wrote: »

Partial responsibility => partial burden sharing.

I asked you previously and you didn't answer, what is the split of burden sharing you'd agree is fair?

I did answer it, perhaps you didn't read it.

I think the Syriza proposal on long-dated zero-coupon bonds is a good idea, but extending the maturity on official Greek debt and cancelling the interest rate on the Greek loan facility above the cost is also a fair proposal. It doesn't cost the creditors anything, but it cancels their profit.

Meanwhile, Greece still has to pay everything, just with longer maturities.

If you want me to pick a random figure out of thin air, like 20:80, I think you're misunderstanding the solution. The proposals would be only slightly uncomfortable for the European partners, the biggest upset might be to their egos, not their coffers. Greece would have a reduced burden but still be forced to implements structural reforms favouring business investment and employment.

K-9

Plenty of families end up cutting contact with Dads, Mums etc. because they can no longer put up with the behaviour, especially if there seems to be little sign of the alcoholic or gambler reforming.

They don't do it lightly either, just years and years of false promises and let downs, despite getting plenty of outside help.

marmurr1916

The view from Latvia and Lithuania. Essential reading:

Half a continent away from Athens, Milda is unimpressed. Watching reports of the Greek predicament on the news, the Latvian pensioner has little sympathy for her counterparts 1,800 miles to the south.

“Can’t they get by on €120 a week?” she asks, referring to the latest cash limits on pensioners introduced in Greece. “Life’s less expensive down there. It’s warmer, they don’t have to pay for heating or winter boots, and fruit and vegetables must be cheaper.

“Anyway, if they borrowed all that money, they should pay it back, that’s the way I see it.”

Europe’s great Greek crisis is often cast as the downtrodden Hellenic heroes versus the ubermasters of austerity in Berlin. In reality, however, it is smaller nations that have faced crisis themselves, swallowed the austerity medicine and lived to tell the tale who are most hostile to another bailout for Athens.

From central European minnows such as Slovakia to Baltic eurozone republics such as Latvia and Lithuania, hard-pressed pensioners and workers earning barely €500 a month are at a loss as to why Greece should qualify for more largesse.

Milda’s monthly pension is €293 a month , well under half the current level in Greece. When Latvia went through a similar debt crisis in 2009, it imposed swingeing budget cuts and tax increases worth about 15% of GDP over three years. Output fell by a quarter and unemployment soared to more than 20%. The population fell as people left in droves.

These measures were hugely controversial at the time, and many people thought they would lead to catastrophe. The US economist Paul Krugman predicted at the end of 2008: “Latvia is the new Argentina.”

By the second half of 2010, however, the economy had started to grow again, and from 2011 to 2013 Latvia was among the fastest growing countries in the EU. Despite the fact that the currency was not devalued, exports are now at record highs, some 60% above where they were before the crisis.

So in Latvia there is a widespread view: “If we did it, why can’t the Greeks?” The country’s finance minister, Jānis Reirs, said recently that “the Latvian people don’t understand the Greek people”. Milda exemplifies that.

In next-door Lithuania, politicians are also struggle to tell their electorate why a country that tightened its belt should now pay for one that will not. Lithuania’s president, Dalia Grybauskaitė, has been one of the most outspoken opponents at EU summits of doling out more cash to Greece.

The average monthly pension in Lithuania is €242.10 before tax, compared with €700 in Greece. The average wage in Lithuania is €699.80 before tax and €543.60 after, again way below the Greek average.

Average unemployment benefits come in at about €175. Such figures illustrate why the Lithuanian people have little sympathy for the Greeks.

Rimantas Šadžius, the Lithuanian finance minister, said further support for Greece “would not be a popular decision” in the Baltic state. “We wouldn not receive an enthusiastic support, especially if we ask for the public opinion,” he said.

“We express solidarity even if financial aid is needed by a wealthier or more economically developed eurozone country,” he said. “We agree to take part in the aid’s mechanisms, since financial stability in the eurozone is a common benefit we should all preserve.

“However, we strictly emphasise that solidarity cannot be a one-way relationship. I mean that the country willing to receive our help must be ready to comply with its obligations, fully and in time.

“Greece is at a crossroads. One path, to be honest, leads to an economical abyss. The other one is much more complicated, but it does present a possibility to solve the current economical problems while remaining in the eurozone. With the eurozone’s assistance, of course,” Šadžius said.

Some Lithuanian politicians worry that the current crisis might send Greece into Russia’s sphere of influence , but Šadžius said such concerns were premature.

“Theoretically, one can discuss such questions, though it’s more of a topic for political scientists. So far, at least in the discussions of the ministers of finance, Greece hasn’t played this card once,” he said.

No country is homogenous, and there are people in the Baltic states who feel Greece’s pain. Ignatas Goštautas, a young middle-class man, said that although Greek wages and benefits were way above Lithuanian levels, recent cuts in Greece had taken their toll.

“We should contribute somewhat, in solidarity, but the Greeks shouldn’t be so arrogant about it,” Goštautas said. “They suffered cuts from a higher level, and these cuts had to be painful. It’s hard to help someone when you’re not in a good situation yourself, but some solidarity should be maintained by the EU.”

Valentinas Mazuronis, an MEP and head of the Labour party, one of the members of the current coalition, said Lithuania should not give any money to Greece.

“It is time to say ‘stop’. Not a single penny to Greece until reforms are actually launched,” he said. Further aid should only be granted if Greece takes real measures instead of “another hocus-pocus”.

http://www.theguardian.com/world/2015/jul/09/poorer-than-greece-the-eu-countries-that-reject-a-new-athens-bailout

K-9

A Tyrant Named Miltiades! wrote: »

Also, two renegotiations? Einstein's definition of insanity comes to mind.

Yep, I'd share that cynicism but, things were starting to look up for Greece economically last year, tourism was up for example.

Now tourism and banking is decimated again. Maybe some insanity lies with Syriza as well.

KingBrian2

K-9 wrote: »

Yep, I'd share that cynicism but, things were starting to look up for Greece economically last year, tourism was up for example.

Now tourism and banking is decimated again. Maybe some insanity lies with Syriza as well.

People will go to Greece regardless of the gvt it is if they suddenly see the signs of poverty that will turn people off. The islands have been getting off easily up to now. Taxation has failed to penetrate the oligarchs out there. They talk of tax harmonisation for all of Europe but those islands are fine to pay only enough to hire politicians to obstruct reasonable debate in the Greek Parliament.

Inquitus

I am truly astounded, what has has gone on here, if this deal is done, Syriza has accepted a deal which is certainly worse than the one on offer last week, and worse than the one the Greeks voted down in the referendum.

What was their thought process the past fortnight, or even the last 6 months? I can only conclude they thought the EU would blink first in a game of chicken and now on the realisation that this is never going to be the case have had to take whatever is on offer.

Anyone got a better idea?

marmurr1916

Game Theory Over:

The Greek government capitulated on Thursday to demands from its creditors for severe austerity measures in return for a modest debt write-off, raising hopes that a rescue deal could be signed at an emergency meeting of EU leaders on Sunday.

Athens is understood to have put forward a package of reforms and public spending cuts worth €13bn (£9.3bn) to secure a third bailout from creditors that could raise $50bn and allow it to stay inside the currency union.

A cabinet meeting signed off the reform package after ministers agreed that the dire state of the economy and the debilitating closure of the country’s banks meant it had no option but to agree to almost all the creditors terms.

Parliament is expected to endorse the package after a frantic few days of negotiation that followed a landmark referendum last Sunday in which Greek voters backed the radical leftist Syriza government’s call for debt relief.

Syriza, which is in coalition with the rightwing populist Independent party, is expected to meet huge opposition from within its own ranks and from trade unions and youth groups that viewed the referendum as a vote against any austerity.

Panagiotis Lafazanis, the energy minister and influential hard-leftist, who on Wednesday welcomed a deal for a new €2bn gas pipeline from Russia, has ruled out a new tough austerity package.

Lafazanis represents around 70 Syriza MPs who have previously taken a hard line against further austerity measures and could yet wreck any top-level agreement.

Emphasising the likelihood of further strife in Greece next week even should a deal be concluded, Brussels officials talked privately of plans to fly in humanitarian aid such as food parcels and medicines to major cities.

The urgency of Greek efforts to prevent an exit from the euro came after Brussels set a midnight Thursday deadline for Greece to produce a package of measures in line with previous demands.

With the support of officials from the French finance ministry, Greek negotiators are believed to have accepted the need for VAT rises and rules blocking early retirement as the price of a deal.

Several EU leaders said the troika of creditors – the European commission, the International Monetary Fund and the European Central Bank - must also make concessions to secure Greece’s future inside the eurozone.

Donald Tusk, who chairs the EU summits, said European officials would make an effort to address Greece’s key request for a debt write-off.

“The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors. Only then will we have a win-win situation,” Tusk said.

Tusk, a former prime minister of Poland, aligned himself with France and Italy in seeking a way through the political maze that has defeated all previous efforts to find a breakthrough.

Sources close to Greece’s chief negotiator and finance minister, Euclid Tsakalotos, said he had finalised and submitted a plan of reforms for a third bailout to give creditors time to review it ahead of a summit of EU members on Sunday.

On Thursday, the German finance minister, Wolfgang Schäuble said the possibility of some kind of debt relief would be discussed over coming days, although he cautioned it may not provide much help.

“The room for manoeuvre through debt reprofiling or restructuring is very small,” he said.

Greece has long argued its debt is too high to be paid back and that the country requires some form of debt relief. The IMF agrees, but key European states such as Germany have resisted the idea.

Making Greece’s debt more sustainable would likely involve lowering the interest rates and extending the repayment dates on its bailout loans. Germany and many other European countries rule out an outright debt cut, arguing it would be illegal under European treaties.

The developments on Thursday boosted market confidence that a compromise will be found. The Stoxx 50 index of top European shares was up 2.4% in late afternoon trading.

Prime Minister Alexis Tsipras met with finance ministry officials ahead of the cabinet meeting on Thursday afternoon which finalised his country’s plan, a day after his government requested a new three-year aid programme from Europe’s bailout fund and promised to immediately enact reforms.

The last-minute negotiations come as Greece’s financial system teeters on the brink of collapse. It has imposed restrictions on banking transactions since 29 June, limiting cash withdrawals to €60 per day to staunch a bank run. Banks and the stock market have been shut for just as long.

The closures, which have been extended until Monday, have led to daily lines at cash machines and have hammered businesses. Payments abroad have been banned without special permission.

Greece’s financial institutions have been kept afloat so far by emergency liquidity assistance from the ECB. But the central bank has not increased the amount in days, giving the lenders a stranglehold despite capital controls.

German ECB governing council member Jens Weidmann argued Greek banks should not get more emergency credit from the central bank unless a bailout deal is struck.
He said it was up to eurozone governments and Greek leaders themselves to rescue Greece.

The central bank “has no mandate to safeguard the solvency of banks and governments,” he said in a speech.

The ECB capped emergency credit to Greek banks amid doubt over whether the country will win further rescue loans from other countries. The banks closed and limited cash withdrawals because they had no other way to replace deposits.

Weidmann said he welcomed the fact that central bank credit “is no longer being used to finance capital flight caused by the Greek government”.

http://www.theguardian.com/business/2015/jul/09/greece-debt-crisis-athens-accepts-harsh-austerity-as-bailout-deal-nears

swampgas

Inquitus wrote: »

I am truly astounded, what has has gone on here, if this deal is done, Syriza has accepted a deal which is certainly worse than the one on offer last week, and worse than the one the Greeks voted down in the referendum.

What was their thought process the past fortnight, or even the last 6 months? I can only conclude they thought the EU would blink first in a game of chicken and now on the realisation that this is never going to be the case have had to take whatever is on offer.

Anyone got a better idea?

Tsipras is, finally, staring into the abyss. It has stopped being a high stakes game where he might have emerged as a hero, now he's faced with the very real prospect of leading his country to destruction.

Guy VerHofstadt pretty much laid it on the line for him - what does he want to be remembered for?

It's a pity he waited this long to figure out just what a dangerous game he was playing.

KingBrian2

Inquitus wrote: »

I am truly astounded, what has has gone on here, if this deal is done, Syriza has accepted a deal which is certainly worse than the one on offer last week, and worse than the one the Greeks voted down in the referendum.

What was their thought process the past fortnight, or even the last 6 months? I can only conclude they thought the EU would blink first in a game of chicken and now on the realisation that this is never going to be the case have had to take whatever is on offer.

Anyone got a better idea?

Your observations have been noted. This was about exorcizing a politically charged campaign in order to weaken the Eurogroup and have them relent to Greek abdication of personal responsibility.

I was willingly to sympathise with the Greeks over the dodgy banking practises and restoring health back to the nation. This is another matter, not wanting to work out a deal that would benefit depositors.

marmurr1916

There are no words for this level of delusion:

The irony has not been lost on anyone - even though governing MPs are making light of it - that after the Greeks’ resounding rejection of further biting austerity at the weekend, prime minister Alexis Tsipras has with lightning speed now agreed to put his name to the most punitive austerity package any government has been asked to implement during the five years of economic crisis in Greece.

http://www.theguardian.com/business/live/2015/jul/09/greek-crisis-reform-plan-grexit-tsipras-draghi-live

Syriza MPs have been telling our Helena Smith that the big no received in the referendum was a "confidence vote" in Tsipras who like no other prime minister before now has the popular support to enforce punitive measures.

https://twitter.com/OmairaGill/status/619216532057550848

Expenditure cuts were never going to disappear, so nobody can be surprised that Syriza has agreed to those.

The referendum was on a deal which excluded debt relief. There are reports that relief has now been agreed.

The question is how much debt relief is agreed, what kind of debt relief is agreed, and whether there is any plan for capital investment in Greece.

A Tyrant Named Miltiades!

A Tyrant Named Miltiades! wrote: »

Expenditure cuts were never going to disappear, so nobody can be surprised that Syriza has agreed to those.

The referendum was on a deal which excluded debt relief. There are reports that relief has now been agreed.

The question is how much debt relief is agreed, what kind of debt relief is agreed, and whether there is any plan for capital investment in Greece.

Where?

There are reforms being discussed in Greece at the moment, how can they agree debt relief with themselves?

marmurr1916

Deleted User wrote: »

Where?

There are reforms being discussed in Greece at the moment, how can they agree debt relief with themselves?

If any government can give itself self-relief, this one can.

Deleted User

Deleted User wrote: »

Where?

There are reforms being discussed in Greece at the moment, how can they agree debt relief with themselves?

You don't genuinely think Syriza have accepted 13 billion euro in cuts without having been given some assurance on debt relief?

People who are now open to Greek debt relief
-The IMF
-Wolfgang Schauble
-President of the European Council
-The US Treasury Sec

People who are not open to Greek debt relief
-Angry Eastern European politicians
-Some Boards.ie users

Nothing about what I think has anything to do with what you posted first. Nor what I questioned you about.

I asked where the reports were that relief had been agreed are?

Thanks

Inquitus

A Tyrant Named Miltiades! wrote: »

Expenditure cuts were never going to disappear, so nobody can be surprised that Syriza has agreed to those.

The referendum was on a deal which excluded debt relief. There are reports that relief has now been agreed.

The question is how much debt relief is agreed, what kind of debt relief is agreed, and whether there is any plan for capital investment in Greece.

If any debt relief is agreed it will be immaterial in the grand scheme of Greek debt, and will certainly be more than swallowed up by the increased austerity. It may allow Syriza to trumpet it as a success to the domestic audience but all that will be clear to the european spectator is that they signed up for a deal worse than the one they rejected.

Inquitus

A Tyrant Named Miltiades! wrote: »

You don't genuinely think Syriza have accepted 13 billion euro in cuts without having been given some assurance on debt relief?

People who are now open to Greek debt relief
-The IMF
-Wolfgang Schauble
-President of the European Council
-The US Treasury Sec

People who are not open to Greek debt relief
-Angry Eastern European politicians
-Some Boards.ie users

lol you don't think Merkel and Schauble have accepted dept relief in any material fashion, a small meatless bone thrown to Syriza at best.

marmurr1916

A Tyrant Named Miltiades! wrote: »

Expenditure cuts were never going to disappear, so nobody can be surprised that Syriza has agreed to those.

The pre-referendum deal included €8 billion worth of tax increases and spending cuts.

This one proposes €13 billion worth of tax increases and spending cuts.

The OXI to austerity seems to have turned into a NAI to even more austerity - at least by the Greek government.

A Tyrant Named Miltiades! wrote: »

The referendum was on a deal which excluded debt relief. There are reports that relief has now been agreed.

Agreed by whom? Have you been reading Schaueble's comments today? In summary he said: no cuts to the nominal amount of the debt, very limited scope for any debt reprofiling, i.e. very limited scope for increasing maturities or cutting interest rates.

marmurr1916

marmurr1916 wrote: »

In summary he said: no cuts to the nominal amount of the debt, very limited scope for any debt reprofiling, i.e. very limited scope for increasing maturities or cutting interest rates.

1. Nobody asked for a cut on the nominal debt, the Syriza proposal presumes the nominal value of the principal will remain intact

2. It's important for Schauble to save face here

3. The amount of rescheduling can be reassessed later, as all European crisis programmes have been. Establishing the principle in the first step, although we have no idea how much debt relief will arise in the first instance. Maybe Germany has learned its lesson.

marmurr1916

A Tyrant Named Miltiades! wrote: »

You don't genuinely think Syriza have accepted 13 billion euro in cuts without having been given some assurance on debt relief?

A Tyrant Named Miltiades! wrote: »

People who are now open to Greek debt relief
-The IMF

Won't be involved in the proposed third bailout, doesn't have any vote, won't be putting up any money - not relevant.

A Tyrant Named Miltiades! wrote: »

-President of the European Council
-The US Treasury Sec

Won't be involved in the proposed third bailout - don't have any votes, won't be putting up any money - not relevant.

A Tyrant Named Miltiades! wrote: »

Wolfgang Schauble

Would 'love' to give Greece a haircut on its debts but, boo hoo, the EU rules don't permit it:

Woah! Back in Frankfurt, Wolfgang Schäuble has said the IMF is correct that Greece needs a haircut make its debt sustainable; but alas this isn’t possible under European rules.

FxMacro @fxmacro

- GERMANY'S SCHAEUBLE SAYS CANNOT BE A HAIRCUT BECAUSE IT WOULD INFRINGE SYSTEM OF EUROPEAN UNION so they are out

Schäuble also played down the significance of ‘reprofiling’ Greece’s debt mountain (eg, by extending maturities)

World First @World_First

*SCHAEUBLE: LEEWAY FOR GREEK DEBT REPROFILING VERY SMALL

A Tyrant Named Miltiades! wrote: »

People who are not open to Greek debt relief
-Angry Eastern European politicians

Several of whose parliaments must vote to accept or reject the deal.

A Tyrant Named Miltiades! wrote: »

Some Boards.ie users

I am Wolfgang Schauble.

marmurr1916

marmurr1916 wrote: »

Would 'love' to give Greece a haircut on its debts but, boo hoo, the EU rules don't permit it:

You're thinking of a hard write-down, i.e. obliteration of part of the debt.

The IMF isn't asking for that; Syriza isn't asking for that; nobody here has promoted that idea.

In fact, I can see this thread has already become quite charged as pro-Syriza posters and anti-debt-relief posters are about to start a "you lost!" slagging match. With that, I take my leave ... gute nacht darlings

A Tyrant Named Miltiades!

A Tyrant Named Miltiades! wrote: »

You're thinking of a hard write-down, i.e. obliteration of part of the debt.

The IMF isn't asking for that; Syriza isn't asking for that; nobody here has promoted that idea.

In fact, I can see this thread has already become quite charged as pro-Syriza posters and anti-debt-relief posters are about to start a "you lost!" slagging match. With that, I take my leave ... gute nacht darlings

Could you leave the reference to the source where you got this from first?

A Tyrant Named Miltiades! wrote:

There are reports that relief has now been agreed.

marmurr1916

A Tyrant Named Miltiades! wrote: »

1. Nobody asked for a cut on the nominal debt

Apart from Syriza which proposed a write-off of 'the greater part of public debt's nominal value so that it becomes sustainable' (i.e. more than 50%) during the Greek general election campaign:

We demand immediate parliamentary elections and a strong negotiation mandate with the goal to:

Write-off the greater part of public debt’s nominal value so that it becomes sustainable in the context of a «European Debt Conference». It happened for Germany in 1953. It can also happen for the South of Europe and Greece.

That's the first point in Syriza's Thessaloniki Programme, the manifesto on which it fought the January general election campaign.

http://www.syriza.gr/article/id/59907/SYRIZA---THE-THESSALONIKI-PROGRAMME.html

I appreciate that you're a supporter of Syriza's efforts but please let's not pretend that their manifesto goals have even remotely been delivered on.

A Tyrant Named Miltiades! wrote: »

the Syriza proposal presumes the nominal value of the principal will remain intact.

Which is a complete reversal of their manifesto stance - see above.

And it's not just a minor change of emphasis. It's a complete capitulation, the nominal value of which is over €160 billion (total Greek public debt: €320 billion, so a "Write-off the greater part of public debt’s nominal value" would be worth over €160 billion).

The previous Greek government managed to get a nominal reduction in Greek debt of €110 billion.

Syriza have got €0 nominal reduction in Greece's debt and have failed to even ask for the €160 billion+ debt write-off.

A Tyrant Named Miltiades! wrote: »

2. It's important for Schauble to save face here

It's important for Tsipras to save face here given that he has failed to get a "Write-off the greater part of public debt’s nominal value" which would have been worth over €160 billion.

A Tyrant Named Miltiades! wrote: »

3. The amount of rescheduling can be reassessed later, as all European crisis programmes have been. Establishing the principle in the first step, although we have no idea how much debt relief will arise in the first instance. Maybe Germany has learned its lesson.

I have to admire your brass neck at posting this.

Debt relief of any significance is not happening. Hopefully Greece has learned its lesson.

marmurr1916

A Tyrant Named Miltiades! wrote: »

You're thinking of a hard write-down, i.e. obliteration of part of the debt.

The IMF isn't asking for that; Syriza isn't asking for that; nobody here has promoted that idea.

In fact, I can see this thread has already become quite charged as pro-Syriza posters and anti-debt-relief posters are about to start a "you lost!" slagging match. With that, I take my leave ... gute nacht darlings

Syriza did set a "Write-off the greater part of public debt’s nominal value so that it becomes sustainable" as its primary goal in its January 2015 general election manifesto:

SYRIZA
THE THESSALONIKI PROGRAMME



THE CONTEXT OF NEGOTIATION



We demand immediate parliamentary elections and a strong negotiation mandate with the goal to:

Write-off the greater part of public debt’s nominal value so that it becomes sustainable in the context of a «European Debt Conference». It happened for Germany in 1953. It can also happen for the South of Europe and Greece.

http://www.syriza.gr/article/id/59907/SYRIZA---THE-THESSALONIKI-PROGRAMME.html#.VZ7bsPk63IU

Denials that Syriza didn't want a write-off of in the nominal value of Greece's public debts are set to become one of the few growth areas in the Greek economy over the weekend! :P

Jaggo

I have a couple of questions for anyone is knowledgeable about these things:

From previous links earlier in the thread I read that after the 2 bailouts the Net Present Value of the Greek debt in Feb 2015 was c. 18% of GDP. Why has the debt become so unsustainable now, has this changed or is it just that Greece can't support this low level of borrowing?

GDP in Greece pre crisis was €250 billion, but that included c 10% deficit spending which would have inflated the economy - then add in that fact that the deficit money would had a Multiplier effect (presumably greater than 1 as Greece is a closer economy) adding c. another 25 billion. Does this mean the 'Natural' level of the economy was €200 billion. About the same as it is now.

Is this the normal level of the Greek economy? Is this the best the Greek people can look forward too?

frankbrett

marmurr1916 wrote: »

Syriza did set a "Write-off the greater part of public debt’s nominal value so that it becomes sustainable" as its primary goal in its January 2015 general election manifesto:



http://www.syriza.gr/article/id/59907/SYRIZA---THE-THESSALONIKI-PROGRAMME.html#.VZ7bsPk63IU

Denials that Syriza didn't want a write-off of in the nominal value of Greece's public debts are set to become one of the few growth areas in the Greek economy over the weekend! :P

Just last week, pre referendum, Tsprias was looking for a 30% reduction in debt.

http://rt.com/business/271528-tsipras-greece-debt-cut/

KingBrian2

During the bailout talks that we endured the opponents of said deal with the ECB was that we were being made an example of. It was more a case of us learning the hard way what Greece is now subjecting itself to. Ireland is a lesson that financial stupidity will cause economic harm by responding with financial acumen economic trouble can be corrected.

Grandpa Hassan

marmurr1916 wrote: »

Several of whose parliaments must vote to accept or reject the deal.

Do you actually believe that an individual country's own parliament is going to stand in the way of a deal? As if suddenly the EU is going to become a model of democracy? If the key players want a deal, the rest will be engineered to happen. You are not going to get a couple of pissed off of Eastern European governments putting the brakes on

Bob24

Grandpa Hassan wrote: »

You are not going to get a couple of pissed off of Eastern European governments putting the brakes on

What about the Bundestag?

Grandpa Hassan

Bob24 wrote: »

What about the Bundestag?

They might moan but they will roll in behind whatever final deal is on the table. To think otherwise is naive. Members of national parliaments have no real say in this. They'll just shout a lot

K-9

A Tyrant Named Miltiades! wrote: »

You don't genuinely think Syriza have accepted 13 billion euro in cuts without having been given some assurance on debt relief?

People who are now open to Greek debt relief
-The IMF
-Wolfgang Schauble
-President of the European Council
-The US Treasury Sec

People who are not open to Greek debt relief
-Angry Eastern European politicians
-Some Boards.ie users

We seem to be talking debt restructuring, not write downs.

I suppose it will be spun as a Greek victory, I didn't think you'd be the Boards.ie Syriza spokesperson!:-)

We'll see over the coming days what they get. We could well have the perverse and ironic situation of Syriza and some Boards.ie posters hailing a Greek deal, the same as Kenny got, as a victory for Greece, Syriza and the left all over Europe!

K-9

frankbrett wrote: »

Just last week, pre referendum, Tsprias was looking for a 30% reduction in debt.

http://rt.com/business/271528-tsipras-greece-debt-cut/

Obligatory its RT comment!

I was sure there was talk of write downs during the referendum.

I'm readibg 1984 atm so maybe the Orwellian comment previously is actually true and all that stuff has been deleted by now!

Happyman42

The 'victory' (there was never going to be one as such) for the left is the fact that this has shown to anybody with an eye in there heads what the faults and deficiencies in the EU and it's institutions are.
Kicking the problem of debt down the road never was and never will be a soution and if this deal is done then that is all that has been achieved sadly. We will just wait until the next crisis, just as likely to be in Greece as anywhere else.

Happyman42

Happyman42 wrote: »

The 'victory' (there was never going to be one as such) for the left is the fact that this has shown to anybody with an eye in there heads what the faults and deficiencies in the EU and it's institutions are.
Kicking the problem of debt down the road never was and never will be a soution and if this deal is done then that is all that has been achieved sadly. We will just wait until the next crisis, just as likely to be in Greece as anywhere else.

One of the most pyrrhic victories of all time in that case.

Jawgap

[Deleted User] wrote: »

One of the most pyrrhic victories of all time in that case.

Indeed. The 'deal' assuming they get it, isn't much of an improvement if any on what they were offered.

I think they overplayed their hand - a strategy that would've crucified the EU 3 years ago, was obsolete once the EU bodies had time to plan and develop contingencies for a Greek exit.

The almost indifferent response of the markets - they dipped instead of collapsed - pretty much showed what bargaining power Tsipras had.