I assume that wasn't the situation on the other bailouts? Why not?The money is tightly controlled by the EU and is contingent on Greece fixing its structural problems on schedule. I believe his point was that assuming these structural problems are fixed, it still does little good (for Greece) if the spending saved is immediately sucked out of the Greek economy into interest-only payments, because that leaves no wealth to grow the economy and dooms Greece to making interest-only payments forever, until they revolt. If instead that extra wealth is allowed to stay in the Greek economy for a few years AND if the Greek government can resist seizing it and plowing it right back into the public sector, then Greece's private sector will be generating more wealth, making them able to pay back more and convincing the Greeks that the pain of living within their means is worth it.
The money is tightly controlled by the EU and is contingent on Greece fixing its structural problems on schedule. I believe his point was that assuming these structural problems are fixed, it still does little good (for Greece) if the spending saved is immediately sucked out of the Greek economy into interest-only payments, because that leaves no wealth to grow the economy and dooms Greece to making interest-only payments forever, until they revolt. If instead that extra wealth is allowed to stay in the Greek economy for a few years AND if the Greek government can resist seizing it and plowing it right back into the public sector, then Greece's private sector will be generating more wealth, making them able to pay back more and convincing the Greeks that the pain of living within their means is worth it.
Hopefully.Yes pretty much this, the reforms taken today will address most (not all) bad decisions taken the last 20-30 years. There will be protests from various segments within the economy but we as a nation should look at the future not the present and keep pushing for the right reforms.
When people realize the right reforms are taken, they will follow, just as it is today.
We know we didnt voted for those austerity measures but we also know that those measures PLUS other reforms AND financial help from abroad will help to grow the economy and in the long run this will benefit everyone, in and outside the Country.
TARP is too small in comparison to what a write down of the PIIGS debt would be in comparison. Or do you think you can fiat money without bringing inflation forever?
German bankers couldn't care less about Greece. In fact, I think they would be quite happy with a Grexit. It is the German taxpayers on the hook now.
Greece's problem isn't debt. It's a very inefficient economy, without any globalycompetitive sectors, a byzantine judicial system, disfunctional state bureaucracy, unskilled workforce, over-regulated labor market and way too generous pension system. Do you think Greek economy would blossom after a debt write down when they have that kind of structural problems?
It was to a degree, but a combination of cooking the books, Greece electing a socialist government that rolled back some cuts and reforms, and the Greek courts stopped a lot of it after the money had been paid out. For instance, the Greeks made cuts to pensions, money was released, then the Greek court overturned those cuts. Other targets were made by subterfuge, merely delaying some spending to show a surplus on paper for a particular milestone so that they looked better than they actually were.I assume that wasn't the situation on the other bailouts? Why not?
Yep. It's always interesting to see what the Greeks do, but especially now.it's going to be interesting to see what Greece does in the next 6 months.
Sounds like the EU/IMF are a lot more trusting that me.It was to a degree, but a combination of cooking the books, Greece electing a socialist government that rolled back some cuts and reforms, and the Greek courts stopped a lot of it after the money had been paid out. For instance, the Greeks made cuts to pensions, money was released, then the Greek court overturned those cuts. Other targets were made by subterfuge, merely delaying some spending to show a surplus on paper for a particular milestone so that they looked better than they actually were.
Hopefully.
Within the context of this deal I can actually understand that little tantrum. Even if Greece could have gotten more loans, getting them without some breathing room to grow would have been pointless, just eternal interest-only payments, so voting no showed the rest of Europe that Greeks were ready to crash and burn. Conventional wisdom is that Tsipras badly miscalculated and had to eat everything he refused a month earlier. But just maybe he's crazy like a fox, recognized what he absolutely had to have, and decided what it would take to convince the rest of Europe that not only he but also the Greek people were willing to be booted out if the EZ (which would effectively have mean permanent default on all existing Greek loans) to get what he had to have. It's possible to lose 95% of what one wants and still get what one absolutely must have. Maybe this was in his little secret socialist heart when he walked out on talks in June.
If true, all of the stuff you say about the Greek economy was also true & well known before bankers *knowingly* created debt that Greeks couldn't possibly service. If Greeks can't pay, then why does anybody other than the bankers have to pay?
A huge part of the difficulty here is that there is zero trust remaining for the Greeks and it's difficult to craft an agreement that honestly allows the EU to control the money without its decision being arbitrary from Greece's point of view.Sounds like the EU/IMF are a lot more trusting that me.
Screw me once, shame on you.
Screw me twice, shame on me.
Screw me 3 times, out of the EU?
Nope. Even in late June Tsipras was rejecting all the austerity measures he embraced here. This wasn't wasted time, it was time that was necessary for the EU to convince Tsipras there was no more money, for Tsipras to convince the Greek people and parliament there was no more money, and for Tsipras and the Greek people to convince the EU that the Greeks would rather crash and burn than continue more deeply into austerity reforms without some breathing room to recover, some portion of any surplus plowed back into Greece's economy rather than immediately whisked away for debt servicing. I seriously doubt any of those three pieces could have fallen into place any earlier, much less all three, and all three are necessary to make this work.Sounds like Europe prefers to extend and pretend, and is willing to pay $30B per year for the privilege. If they agreed to do that in January, they could have struck a deal long ago and avoided shutting down Greek banks, and probably for less money.
Thanks for the info. It's good to know that other nations' politics are as convoluted and screwed up as our own.I havent voted for Tsipras in the national elections in January but i can tell you what he has accomplished with the referendum internally.
He accomplished to unite all Greek party's (except the far left Communist party and the far right Nationalists) to agree for those reforms under a common threat, the Grexit.
We wouldn't have a aGreeKment last night if the Greek Parliament wouldn't vote yes for those measures. And that was accomplished with the NO vote in the referendum. So at the end, it seems to me the referendum was more about an internal pressure for every political party to agree on those measures and the reforms needed to be taken (especially for the privatizations and pensions).
It also made the Greek people more acceptable of those reforms and austerity measures by giving them hope for a better more prosperous future.
Greece will be unable to meet the demands. You will see this mess pop back up again.
You merely parrot bankers' propaganda, accept their deflections of Greece being the bad guys rather than themselves. Now that they've created enough believers in that, they can successfully transfer actual payment onto their own taxpayers so of course they're forcing Grexit. Their own taxpayers are obviously more reliable than the Greeks & they actually have money. Now that Germans have Greeks to blame they'll buy right into it.
If true, all of the stuff you say about the Greek economy was also true & well known before bankers *knowingly* created debt that Greeks couldn't possibly service. If Greeks can't pay, then why does anybody other than the bankers have to pay?
At this point, it really isn't about survival for the banks but about profit for the execs & the principals, also about intimidating the other victims of this enormous scam.
It's what happens when bankers dictate policy to the people rather than the other way around.
I still can't get over the fact that Tsipras rejected an EU proposal, called for a referendum, and ultimately took a shittier deal. If he has any integrity at all he should resign for being a completely feckless leader.
Personally, I'm not convinced this deal is really going to do anything besides prolong Greek suffering. I suppose it really depends on whether or not the troika will give them debt relief, but that outcome seems unlikely.
Even in late June Tsipras was rejecting all the austerity measures he embraced here. This wasn't wasted time, it was time that was necessary for the EU to convince Tsipras there was no more money, for Tsipras to convince the Greek people and parliament there was no more money, and for Tsipras and the Greek people to convince the EU that the Greeks would rather crash and burn than continue more deeply into austerity reforms without some breathing room to recover, some portion of any surplus plowed back into Greece's economy rather than immediately whisked away for debt servicing. I seriously doubt any of those three pieces could have fallen into place any earlier, much less all three, and all three are necessary to make this work.
To help support growth and job creation in Greece (in the next 3-5 years) the Commission will work closely with the Greek authorities to mobilise up to EUR 35bn (under various EU programmes) to fund investment and economic activity, including in SMEs.
Lots of smart countries that didn't get on that rag.Looks like the big winner from this mess is Poland, having dodged the bullet of joining Euro.
Prime Minister Alexis Tsipras returned to face a mutiny within his coalition after he surrendered to European demands for action to qualify for up to 86 billion euros ($95 billion) of aid Greece needs to stay in the euro.
With two factions in his government already saying they wont support the deal, Tsipras met with his closest aides as he tries to stop the revolt from spreading before a vote in parliament on Wednesday. Creditors demands include an overhaul of sales tax, a broadening of the tax base and a clampdown on pension costs.
Tsipras will have to change his administration and clear out hardliners and radicals from his party, as well as rely on opposition support to pass the necessary measures, said Eurasia Group analysts Mujtaba Rahman and Federico Santi. But it is a tough call to determine how Tsipras will go about doing this.
Attention is shifting to the parliamentary hurdles before Greece can even begin negotiations with creditors to access a third international bailout in five years. The euro fell as the scale of the challenge sank in and the European Central Bank held off from expanding its aid for the countrys lenders.
I like Denniger's idea:
Dear Troika Members;
I am in receipt of the Troika's demands as set forth in your presser today and am prepared to respond on behalf of the Greek Government and people.
Let us begin with the basics. No government is accountable for the crimes of previous administrations. This is an international truism; Germany, for example, has never paid Greece for the economic and property damage done to our nation during WWII by Nazi Germany; that government was of course removed from office. While it would be nice to see those funds, which under inflation would exceed our gross indebtedness, we recognize that we cannot hold the current German government accountable for the sins of a previous German administration.
Similarly, the Troika and remainder of the EU cannot hold the current Greek government accountable for the unlawful acts of the previous administration -- an administration that, I remind you, was fired by the people of Greece. That said firing came peacefully through ballots rather than bullets is immaterial.
The debt which you seek to collect was, in the main, unlawfully contracted. Many international banks conspired together with the previous administrations to unlawfully present a false view of the nation's finances. Further unlawful and fraudulent acts occurred thereafter, including during the bailout a few years ago when Merkel herself, it has been revealed, knew she was negotiating a loan that could not be repaid under any reasonable commercial terms.
Fraud vitiates all contracts and this is no exception. As such the debt you seek to collect is, under both Greek and International law, invalid, never mind that the present administration cannot be compelled to honor it even were it to have not been fraudulently contracted.
We therefore present the following:
While we are obligated to honor none of the outstanding debt as a gesture of good will we will honor one fourth of the approximately 330 billion owed on a renegotiated basis, or 82.5 billion. These old bonds shall be tendered to our Treasury in exchange for new Greek bonds with a 10 year maturity at 17 basis points over the current yield of German Bunds, or a 1% rate of interest. We shall pay said interest in the amount of 825 million euros due annually in fourths on a quarterly schedule, with the first payment to be made on September 30th and then quarterly thereafter, as is standard in the international community. We further reserve the right, but do not have the obligation, to prepay and extinguish up to 1/10th of this remaining indebtedness (8.25 billion) at any time during each of the next 10 years.
With the rest of the alleged debt certificates we will hold a ceremonial bonfire on the steps of Parliament tomorrow morning at 08:00.
We understand that this will lead the Euro zone and others to decide not to lend us money in the future, quite possibly for a long time or perhaps forever. We are perfectly ok with this, as no government can borrow on a sustainable basis anyway and that is a large part of the fraud that you, and the previous administrations of Greece, conspired in. Such claims of "sustainability" are per-se frauds as they violate the laws of mathematics.
We are not leaving either the EU or the Euro, however as we fully intend to take full advantage of the EU economic zone advantages, including visa-free travel between EU nations and tariff-free trade.
With regard to our banks I am instructing them to demand the return of their collateral from the ELA program at the ECB beginning tomorrow morning. The ECB has applied a 45% haircut to said instruments, which we find outrageous -- provided said banks have not been lying about their asset values. We intend to find out immediately whether this is the case, and the means to do so is to sell each instrument into the market as necessary in order to fund whatever withdrawals bank customers wish to process and pay the ECB for each returned instrument in good funds. I will note that since most of the remaining 82.5 billion in our debt that we are honoring is in fact at the ECB (effectively all of it) should the ECB fail to return said instruments promptly as requested we reserve the right to set aside said Greek debt in exchange on a face-value par basis, tendering the replacement 1% instruments to the banks in question. Since this collateral is deemed good under EU rules we are also thus authorized to issue however many Euros are denominated against them as required to fund said withdrawals. I'm sure the ECB will not want us to do this since that would permanently transfer the credit risk of these instruments to the ECB and as a result I'm also certain that the ECB will promptly return said instruments to the banks. Please be prepared to process their instructions beginning tomorrow morning.
I trust that our banks have not falsely declared their asset values but this is a matter for them to sort out through sales into the market in order to fund withdrawals by their customers, should they choose to so-withdraw their funds. If our banks have fraudulently inflated their asset values that will become immediately apparent and the banks involved will go out of business. The ECB has, for many years, had a regulatory responsibility to oversee the solvency of all banks in the ECB system and prohibit them from continued operation were they insolvent. If the ECB and EU have shirked said duty we will expect the EU and ECB to fully fund any deposit insurance required up to 100,000 for each depositor should our banks be found to have lied. We will, of course indict and prosecute any such banker as fraud is a serious matter and in addition we will extradite (at the completion of their sentence, if any) such persons should any state in the EU or the EU itself wish to pursue criminal fraud charges against them as well. Should the ECB refuse to honor its obligations under the common EU deposit insurance system we again reserve the right to offset on a euro-for-euro basis every penny that is not promptly paid to said depositors.
Since we will not be availing ourselves of any further borrowing from the EU or ECB nor do we have any need for ELA assistance as our banks are allegedly possessing enough assets to back their deposits we reject any and all interference in the domestic budgetary and operational affairs of our sovereign nation. This, however, does come with the caveat that since we will not be borrowing any money from your fine folks in either Brussels or Berlin we will obviously not be running a budget deficit on a grossed-up cash basis.
The necessary political debate as to the desired size of our government and the taxation to fund it is an internal Greek matter and none of your damn business, but I assure you that I have
set that debate forward as the foremost duty of our Parliament at this time and expect it to be resolved within the next few weeks. Any attempt to interfere in this process by EU, ECB, or any of its members states will be treated as attempted subversion of the Greek government by force or fraud, which I will remind you is a serious crime in any nation.
Should you find this proposal unsatisfactory we will burn all of the bonds that are allegedly due and, should the ECB refuse to return our banks' collateral we will exercise a right of offset against newly-issued treasuries on the above terms directly to said banks to be posted for the issuance of Euros here in this nation, as such a refusal would be theft by conversion and theft is unacceptable among free nations. In addition we will be forced to issue criminal indictments against Herr Juncker, Herr Draghi, Fraud Merkel and a whole string of other individuals, including former government officials here, for theft by conversion and fraud against the Greek people. Again, I'm certain that the ECB would not like to accept the credit risk in those tendered instruments nor does the EU and ECB wish to become embroiled in the difficulties that would ensue from the unpleasant but necessary action in issuing and prosecuting criminal indictments and as such I'm sure you will find this proposal to be satisfactory in all respects.
Through this process we will be lifting the banking holiday and all capital controls upon your agreement or, if we are forced to exercise the "put" of those assets upon the ECB and take the above specified actions, at the close of business tomorrow.
Sincerely,
Alexis Tsipras