Syriza to get majority in Greece.

[Guest sibon]

So, Tsipras' new finance boy turned up in Brussels today, after convening all 19 Finance Ministers of the EZ to hear Greece's last-ditch proposal.

 

Can you guess what happened? :hihi:

 

Let this FT extract tell you:

(my Tweet link in the above, Schaubler's face is priceless).

 

It's pretty clear to me now that either Tsipras miscalculated (again ) and wanted to lose that referendum, or Syriza is hell bent on Grexiting come what may but doesn't want to be seen as carrying the can (so wants the EU to kick Greece out, rather than self-exiting).

 

There is a third possibility. The Greeks just don't intend to play ball at all.

 

See it from their side. Another five years of austerity will reduce the entire nation to grinding poverty. Why not take the pain all in one go and start again? Exit the Euro, the EU and default totally on their debts.

 

Whether the EU will allow that end game to come to pass is another matter. They have an awful lot riding on this, far more than the Greeks in some ways.

[truman]

There is a third possibility. The Greeks just don't intend to play ball at all.

 

See it from their side. Another five years of austerity will reduce the entire nation to grinding poverty. Why not take the pain all in one go and start again? Exit the Euro, the EU and default totally on their debts.

 

Whether the EU will allow that end game to come to pass is another matter. They have an awful lot riding on this, far more than the Greeks in some ways.

 

If the Greeks exit the Euro and the EU then I suspect it will just be the start of the pain...who will lend to them ? Or do you reckon that they will be able to pay their own way? How will it be better than 5 years of austerity?Genuine questions..

[L00b]

There is a third possibility. The Greeks just don't intend to play ball at all.

That's not a third possibility, it's the second (they want to Grexit).

See it from their side.

That's rather difficult, considering the reasons for their predicaments (which are undisputed by the Greeks themselves) and their democratic choices of late (thx for da money, now **** off we no pay you no more).

 

I don't lack empathy (or at least, I don't think I do - e.g. I'm certainly not opposed to EU humanitarian relief post-Grexit at all), but I am highly-principled (perhaps a bit too much by British standards): what you borrow willingly, you pay back; and if you can't afford (to buy or pay back), you go without.

Another five years of austerity will reduce the entire nation to grinding poverty.

Getting a little bit fed up of repeating myself, but hey-ho: Greece was showing a surplus just before Syriza got in in January 2015. The austerity policies were just starting to pay off, there was little scope if any for requiring any new bailout by end 2014.

 

There was plenty of scope to improve things even further and with far less pain, because that improvement and surplus was on the back of getting the hard part done with -the budgetary cuts-, with most of the (supposedly-, logically-, on paper-) easy part -the tax collecting- still left to implement. You'd have thought a hard left party like Syriza would relish nothing more than to set about that easy part, collecting taxes And once the tax collection was going reasonably well, they could have started to ease gradually on the cuts, and accessorily buy still more votes on the cheap.

Why not take the pain all in one go and start again? Exit the Euro, the EU and default totally on their debts.

What, and go through 10 to 20 years of pain instead of 5? I suppose that makes sense...under what passes for Syriza's logic.

 

You do realise that Greece has no hard currency reserves left, and no natural resources whatsoever, right? I mean, other than its coastline for tourism (...and even that's slowly going, what with Med boat people arriving on Greek islands at a rate of knots every day - and which an EU exit isn't exactly going to help remedy).

 

All its exports consist in locally processing and reprocessing imports (crude oil, foodstuffs): how do you pay for import "stuff" with a new and valueless currency at constant risk of rocket-propelled devaluation? You can't. Ooops.

Whether the EU will allow that end game to come to pass is another matter. They have an awful lot riding on this, far more than the Greeks in some ways.

They have indeed, in Portugal, Italy and Spain (with France not that far behind these three), which is exactly why the Greeks will be the sacrificial lamb. Thankfully for the EU/ECB, a willing one, by the look of their democratic choices. Edited July 7, 2015 by L00b

[Guest sibon]

I still think that you have this the wrong way round. Either solution is terrible for the Greek people. Grexit and default will be terrible for the creditors.

 

The stakes are high. Do you really expect all of Greece's creditors to walk away empty handed? I can't see that happening, can you?

 

So, just maybe, the balance of power isn't in the obvious place.

[L00b]

I still think that you have this the wrong way round. Either solution is terrible for the Greek people. Grexit and default will be terrible for the creditors.

 

The stakes are high. Do you really expect all of Greece's creditors to walk away empty handed? I can't see that happening, can you?

 

So, just maybe, the balance of power isn't in the obvious place.

I understand your argument sibon, I really do.

 

But yes, I really expect all of Greece's creditors to walk away 'empty-handed' (they won't really, you know: guess what the EU is going to posit as the very first condition of the negotiated agreement with an exiting Greece under Article 50 TEU )

 

Because these days, there's barely any private sector creditors left owing, the vast majority of the debt is institutional and much easier to swallow by the EU/ECB at least impact on financial markets.

 

One in the hand is better than two in the bush, and with Syriza/Tsipras at the helm for years to come with Greek popular support, plus the moral hazard risk insofar as PT, ES and IT are concerned, that bush looks to investors (the EZ and ECB) like something oversized out of the Little Shop of Horrors.

 

Time will tell, and there isn't much of it left to wait until we find out.

[geared]

If the Greeks exit the Euro and the EU then I suspect it will just be the start of the pain...who will lend to them ? Or do you reckon that they will be able to pay their own way? How will it be better than 5 years of austerity?Genuine questions..

 

There's been rumours, or reports, or whatever that the Greeks will only default on their debts to EU governments, and the ESM.

 

If they maintain and repay their debts to private individuals, banks and institutions then they can gain access to the international bond market within a few years, which is pretty quick.

[drummonds]

I understand your argument sibon, I really do.

 

But yes, I really expect all of Greece's creditors to walk away 'empty-handed' (they won't really, you know: guess what the EU is going to posit as the very first condition of the negotiated agreement with an exiting Greece under Article 50 TEU )

 

Because these days, there's barely any private sector creditors left owing, the vast majority of the debt is institutional and much easier to swallow by the EU/ECB at least impact on financial markets.

 

One in the hand is better than two in the bush, and with Syriza/Tsipras at the helm for years to come with Greek popular support, plus the moral hazard risk insofar as PT, ES and IT are concerned, that bush looks to investors (the EZ and ECB) like something oversized out of the Little Shop of Horrors.

 

Time will tell, and there isn't much of it left to wait until we find out.

 

acording tothe reports the ecb have been demanding ever more colateral to secure loans so i expect that a default would not mean no return but perhaps an aerport or motorway. i read that is the guardian.

[L00b]

acording to the reports the ecb have been demanding ever more colateral to secure loans so i expect that a default would not mean no return but perhaps an aerport or motorway. i read that is the guardian.

Nope. As I explained yesterday, 'more collateral' to the ECB means a haircut on private deposits (meaning the Greek Gvt effectively grabs a portion of people's savings above a set threshold, rumoured to be €8k, as the said collateral). The very thing which Tsipras promised, on Greek national TV last Friday, would not happen.

 

Draghi has form: Cyprus went through this, Ireland very nearly did. They're both doing reasonably well these days. But then, they set about actually implementing the policies required to get their financial houses in order. And, unlike Greece, the scale of the crisis in these two countries was a direct result of their over-exposure to the 2008 global financial crisis, not magic € money tree-financed public services and endemic tax evasion.

Edited July 7, 2015 by L00b

[Jeffrey Shaw]

Another point: all EU/ECB/IMF money is, in reality, taxation receipts collected forcibly by national governments. OK, not so much by the Greek one which seems not to believe in collecting tax due.

 

So do taxpayers see funding Greece as a proper use of what used to be their money?

[geared]

I'm sure your average taxpayer wouldn't agree with many ways the EU w̶a̶s̶t̶e̶s̶ spends taxpayer money.