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 Kilkrazy wrote:
Everyone is puzzled by this.

The revised plan is almost the same as the previous plan that was rejected in the referendum.

All that the government has achieved is to delay everything and make their economic position even worse. They also will have pissed off everyone from the Germans to their own electorate. Oh, and lose their finance minister.

I wonder if Greece just kept on trying to use the referendum to bluff at the table. Meanwhile the rest of the EU was ready to call the bluff. From the local news in Germany it seems like the official position each day was moving closer to "we will help Greece, but it will be in the form of humanitarian missions when they go broke this weekend to keep the population from starving and to fly in medications." Now it seems like Greece is ready to fold after holding out until the very end.

From my understanding they didn't just fold. The austerity measures proposed by Greece seem to outright be harsher than the deal proposed by the EU.

Puzzling? It's beyond bizarre.
I genuinely feel bad for the average Greek staring directly into the gaping maw of unrelenting debt repayments.
I've been there, it's not pretty. Debt is such a debilitating state if allowed to go beyond control. But everyone needs to master their own finances, personally or nationally. It's the only way out.

 Vaktathi wrote:

PhantomViper wrote:
What use was the referendum when what Tsipras is proposing now is almost an exact copy of what you guys voted against this past weekend?

If one wants to be optimistic? It was a gamble for better terms that didn't pay off. If one wants to be a cynic? He can say he's listening to the will of the people and coming back with a "softer" counter-proposal even if it's largely identical. Probably a combination of both, maybe some other things.

It's just continuing what his government has been doing during the crisis. They have been begging for money abroad but talking tough at home. IIRC the previous bailout was presented as a major victory at home even if the government basically just accepted everything they were told to do. How and why escapes me - in a country dependent on tourism one would expect most of the people know some language(s) besides their own which would allow them to check out foreign news.

To be fair, if the new Financial minister knows what he's doing it's going to help. The previous one was massively distrusted by almost everyone in the EU. Also, new guy was born in Rotterdam, so that's a thing.

 Vaktathi wrote:

PhantomViper wrote:
Ok, I'm completely dumbstruck by this so maybe Shieldwolf could explain it.

What use was the referendum when what Tsipras is proposing now is almost an exact copy of what you guys voted against this past weekend?

How can he make a campaign for people to vote against the proposals and then in the very next week submit almost the exact same ones?

If one wants to be optimistic? It was a gamble for better terms that didn't pay off. If one wants to be a cynic? He can say he's listening to the will of the people and coming back with a "softer" counter-proposal even if it's largely identical. Probably a combination of both, maybe some other things.

Unfortunately, where Varoufakis was largely a hard driving realist coming at things from the approach of "this is what Greece can realistically do and not do", Tsipras himself really comes off as the naive amateur that really comes off as "well this is how we feel we're entitled to be treated" and has had an unfortunate wakeup call in that the other EU nations aren't buying that line.

That's my guess also. The bet on the shaking of the stock markets. It happened but instead of a 15-20% it was something like 2,5%. That's not the Earthquake they thought the referendum would bring.
Being a first time Left government they also have to deal with what the last government commented "this is going to be a brief left parenthesis" (i.e. they would simply come and go).
Them failing/resigning/declaring new elections would simply prove the previous government correct (which is even worse for them!)...

The way I see it now they have 2 choices:

1.They start hunting down those who always evade taxes (ship owners, Orthodox church, gas/oil suppliers etc)
2. Beat the hell out of the rest of us.

If they go for option n.1, this means a hard fight and I'll be happy to support them.
If they go for option n.2, this means they are the same incapable/idle/chicken/sold out f*cks as the ones before them. Maybe even worse, since they are supposed to be "left".

Time shall tell... :-/

A key rule of financial dealings is to go for the people with the money, because you won't get any from people who don't have any.

Therefore it would make sense to chase harder the tax evaders.

 Talizvar wrote:
This topic has become something of a hobby for me so the dialogue back and forth is appreciated (get that out of the way first).

I've been enjoying it to.

Spending cuts and effect on GDP really boils down to "that depends".
Cutting civil service jobs and cutting retirement packages removes spending from the public so I would expect some downturn.
Firming up how taxes are applied, collected and enforced (the full package) should have been a priority for government "income" but raised taxes seemed to target those who were "doing the right thing" and not addressing the tax dodgers.
Minimizing civil spending I guess privatization was figured to be an easy button to push where you remove government run businesses and their lack of efficiencies from the equation.
Applying a "charge per use" of some kind may have been a serious consideration due to the losing battle of tax avoidance.

Well, if you cut spending and raise taxes you impact GDP, there's no 'that depends' about that. Exactly how much is subjective and situational, but there will certainly be an impact. And Greece's austerity has had an extreme impact on GDP, and one that was unexpected by the planners in Europe, because they'd forgotten that basic economic rule.

You make a good point on tax increases hitting the people who were already doing the right thing, and not the tax dodgers. The problem there is that such reform takes time, it can often be a decade before avoidance measures are effective.

If I HAD to assign blame it really boils down to systems failing.
Greece determined they were able to float enough debt they were willing to get to this point.

Oh for sure, Greece's debt was an issue. They failed to pay it down through their period of growth, and instead let it grow in relation to their booming economy, and that was a huge mistake repeated by multiple governments. But once that's happened, well then everyone with something at stake in the issue (which is all of the Eurozone) is part of the solution. And the solution decided upon was horrifically stupid.

The driver of what collapsed Greek GDP is their main income is tourism and their spending outstripped what the market could provide.

It was certainly a large factor. But once you have a major economic sector collapsing, then slashing spending and raising taxes is going to turn a problem in to a disaster.

It was already pretty much determined by the IMF as early as 2010 the debt was unsustainable even then.

Yeah, I said that in the other Greece thread. People freaked the feth out

Still trying to find what contributes the most to their GDP to see if any of this would have been "predictable", as best I could find their GDP is composed like this:
agriculture: 3.5%
industry: 16%
services: 80.5%

The make up of the economy doesn't really matter, it's really just about the basic economic formula; Gross Domestic Product = Consumption + Net Investment + Net Government Spending + Exports - Imports.

Now, when you've got a exports in serious decline (falling tourism), and there's little hope of increased in investment, then dropping net government spending is going to have a signficant additional impact on GST. This is even more true when you have monetary policy available to offset the impact, because you're stuck on the single currency.


Automatically Appended Next Post:

 Talizvar wrote:
I think the "realist" stance is the only type that would gain traction and international support.
Many EU members I think are still in denial that Greece can pay things off if they tighten their belt enough: it is too late.
It is a matter of Greece being able to follow "reasonable" restructuring of income and liabilities and piecing together what they can pay, they truly need to adhere to "reform".
Proposed measures here: http://www.amna.gr/english/articleview.php?id=10546

That's a good summary of the issue.


Automatically Appended Next Post:

 r_squared wrote:
I've been there, it's not pretty. Debt is such a debilitating state if allowed to go beyond control. But everyone needs to master their own finances, personally or nationally. It's the only way out.

Actually debt relief is very common. On both a personal and national level.

Hell, Germany had it's own debt relief in the 1950s, and it was essential to getting it's economy up and firing again.

Looks like they reached an agreement

http://www.bbc.com/news/world-europe-33503955

While this looks to be a good thing for everyone in the long run, I certainly wouldn't want to be a Greek for the next few years.

Well, it seems to be an agreement to put in some interim funding to prevent Greece going down the lavatory pan in the next couple of weeks while they try to negotiate a third bailout in detail. Also, whatever deal is agreed then has to pass through Greek Parliament.

The comments by Newsnight eonomics editor are very trenchant. He feels everyone has ballsed it up to a greater or lesser degree and ultimately the Greek people are the losers.

I wouldn't want to be a Greek for the next few decades :S.

Germany got its way with Greece really. France was more in favour of writing off some of the debt but that wasn't in Germany's interest.

Seeing a lot of the hash tag #thisisacoup going round the internet at the moment. Which it is, sort of.

The Greek people conclusively decided something, and then the government was forced to go against it, and they had their finance minister removed by the EU.

This will be remembered when the UK referendum comes around

 Vaktathi wrote:
Looks like they reached an agreement

http://www.bbc.com/news/world-europe-33503955

While this looks to be a good thing for everyone in the long run, I certainly wouldn't want to be a Greek for the next few years.

As one political commentator on my Twitter feed put it this morning 'The can has been kicked a bit further down the road.'

Another mentions 'Modest reforms on table. I suspect we'll be back here in six weeks.'

So I don't envisage this as being a complete solution. Plus as KK says, it has to pass through the Greek Parliament who may choose not to ratify any agreement especially in light of the recent referendum which on the face of it, seems to suggest the Greek public don't want a deal with Europe even more so if it comes with conditions that Tsipiras has caved in to.

The attempted asset strip is mind bogglingly poor politics. That's the worst fears of every vulnerable debtor nation confirmed- all we really want is your assets, give them to us, or else!

A sad day for Europe. No one comes out of this looking good.

 Da Boss wrote:
The attempted asset strip is mind bogglingly poor politics. That's the worst fears of every vulnerable debtor nation confirmed- all we really want is your assets, give them to us, or else!

A sad day for Europe. No one comes out of this looking good.

I would agree, however the alternative very potentially could have been worse, particularly as apparently the Greek government had done zero planning and preparation for reverting to the Drachma.

Trouble is no ones suffering as badly as Greece, I don't see how what they're now doing is better than what came before.

 Vaktathi wrote:

 Da Boss wrote:
The attempted asset strip is mind bogglingly poor politics. That's the worst fears of every vulnerable debtor nation confirmed- all we really want is your assets, give them to us, or else!

A sad day for Europe. No one comes out of this looking good.

I would agree, however the alternative very potentially could have been worse, particularly as apparently the Greek government had done zero planning and preparation for reverting to the Drachma.

I completely agree that the Greek Government has shown itself to be unreliable, untrustworthy and incapable of doing the right thing. In fact, the last three greek governments have been like this.

But I don't see how that justifies what is blatantly an asset strip by Germany. The original plan was to have the assets placed in a german public bank chaired by Schauble and stationed in Luxembourg. Not dodgey at all given Luxembourg's track record. Even if it was all innocent, it still LOOKS terrible, and feeds the narrative of the evil heartless creditors only protecting their super rich. It's terrible politics. Can only put it down to sleep deprivation.

Greece has been looking terrible for the last few years, but Germany did not cover herself in glory last night, sadly.

The Germans are not as keen on the Euro as some other people anyway. If the choices are between the Greeks keeping all the Germans' money and staying in the Euro, or the Greeks getting out of the Euro and the Germans getting none of their money back, I can see how a lot of Germans might be happy to settle for option 2. Quite a lot of Germans would welcome the Euro collapsing and the return of the Deutschmark

Perhaps Germany ought to buy Greece. The whole of the Greek economy is only 1.5% of European GDP. It would be a bit of a stretch but given Germany has the biggest currency reserves in the world it probably is doable. The thing is, what would they do with Greece afterwards?

Maybe that's their plan

The economy is back in recession and tourism has sharply declined after all this drama. Their economy shrank 25% in 5 years. Wait another 5 years and you get if for half price.

I hear New South Germany is lovely this time of year

 KiloFiX wrote:
I don't understand why they had a referendum vote anyway.

People are sheep.

Economists should figure out what to do and just do it.

But I guess Politicians were CYA by having a vote and then they can say the people voted for it. Course, it's not exactly going the right way now.

Wait you act like economists have a clue.

I think that is a significant misrepresentation of the public mood in Germany, KK. I would say the Germans are sick of being insulted, compared to Nazis, whined at and generally made to be the bad guy in this discussion, while Greece avoids making needed reforms and shirks responsibility for it's role in the crisis.


I think there is too little discussion of the role of bankers generally in the crisis and financial "services" in particular. Merkel's Financial Transaction Tax was initially supposed to pay for this but was shot down by Britain (and Ireland, but we hardly had much say).

She is looking over her shoulder for the next round of elections in Germany next year, and does not want to be seen to be fiscally irresponsible with Greece. At the same time I think she (and especially Schauble) went too far.

But I have never encountered a single German who was not pro-Euro. Their Euroskeptics make up a tiny proportion of the total national vote.

The phrase throwing good money after bad comes to mind, Greece seems to be a money pit into which I can't see the debt will ever be paid off. It remains to be seen if Greece will abide by agreements given a referendum rejected further austerity measures.

Scary stuff, looks like you all see it the same as I do: just a means of drawing it out further so Germany can fill the coffers a bit further before Greece gets its needed write-downs or they pretend to walk away from the loans. I wish France could have forced things a bit more, this really is serious self-interest at play here so another upset as we catch up to the can down the road and see ourselves here again.

Commenting on this "summary" of the agreement here: http://www.bbc.com/news/world-europe-33504487
- Basically boost multiple revenue streams: VAT, privatization of government assets to be sold off...
- ... to go into a trust fund managed by Greece (uh-oh), half for Greek bank capitalization (smart move, makes sense), other half toward the debt "mountain". How do you eat an elephant? One bite at a time... in this case for years.
- ECB and Eurozone finance ministers will "tightly monitor Greek compliance to bailout conditions", ha! good luck with that. You need feet on the ground there imbedded since their internal monitoring is sketchy at best how on earth can you monitor outside looking in?
http://www.reuters.com/article/2015/07/13/us-eurozone-greece-idUSKBN0P40EO20150713

Cannot find the details but it appears some unpalatable "oversight" is going to happen in Greece, can't wait to see how those are carried out.
Looks like the bailout will be "doled out" as various key laws are passed in Greece, smart move and the only reasonable course to "force" change.
It is rather sad since it does show some measure of sovereignty is lost, I am tempted to think it is a good thing at this time.

"The Greek leader had to drop his opposition to a full role for the International Monetary Fund in the next bailout, which Merkel had insisted on to win parliamentary backing in Berlin."
I think if Greece has stuff to hide I too would be "afraid" of the IMF: they are a smart bunch from what I read and are realists plus they dig into the details by the look of their audits. They keep those folks there, not much will slide for long.

The hard enforcement is before Greece, less maneuvering room at their end which I can't help feeling is a good thing.
Maybe they can prevent them from hitting the easily taxed people (corp. employed and retired folk) and spread the pain a bit before they revolt.

The plan IS doable and the "severe austerity" was mainly on a limited group and not all people.
As mentioned earlier these reforms take around 10 years, they need to fit them in 6 months or so... I hope they have good civil service folks.

 Da Boss wrote:

 Vaktathi wrote:

 Da Boss wrote:
The attempted asset strip is mind bogglingly poor politics. That's the worst fears of every vulnerable debtor nation confirmed- all we really want is your assets, give them to us, or else!

A sad day for Europe. No one comes out of this looking good.

I would agree, however the alternative very potentially could have been worse, particularly as apparently the Greek government had done zero planning and preparation for reverting to the Drachma.

I completely agree that the Greek Government has shown itself to be unreliable, untrustworthy and incapable of doing the right thing. In fact, the last three greek governments have been like this.

But I don't see how that justifies what is blatantly an asset strip by Germany. The original plan was to have the assets placed in a german public bank chaired by Schauble and stationed in Luxembourg. Not dodgey at all given Luxembourg's track record. Even if it was all innocent, it still LOOKS terrible, and feeds the narrative of the evil heartless creditors only protecting their super rich. It's terrible politics. Can only put it down to sleep deprivation.

Greece has been looking terrible for the last few years, but Germany did not cover herself in glory last night, sadly.

I think Germany has every right to want their money back. Sure, it sucks for the Greeks, but you can't borrow money beyond your means to pay and expect to get let off without paying. And you can't expect Germany to just take the loss on the chin. And it would set a poor example to other borrowers if the debt just got forgiven and more money was sent their way. That would make it no longer borrowing but just free money for any spending you want to use it on.

The only thing you are leaving out of that narrative is that it is nationalised private debt- this debt comes primarily from a private banking crash, and I have yet to see a good moral argument as to why it should be the responsibility of European taxpayers to clean that mess up. They weren't so keen on sharing the profits when they were there, but sharing the losses seems A-OK. That is what erodes legitimacy from the entire discussion.

Its because if the private banks were to collapse it would cause very real problems for the German populace. Which makes it a government interest.

Besides, I thought Europeans loved government intervention in the private sector

 Da Boss wrote:
The only thing you are leaving out of that narrative is that it is nationalised private debt- this debt comes primarily from a private banking crash, and I have yet to see a good moral argument as to why it should be the responsibility of European taxpayers to clean that mess up. They weren't so keen on sharing the profits when they were there, but sharing the losses seems A-OK. That is what erodes legitimacy from the entire discussion.

Question; Do you like having an economy? If yes, them sometimes you have to suck up the idea that the government might spend mountains of tax dollar saving the economy from a bunch of idiots with get rich schemes whose actions screw everyone else.

It's not the bail out that should be the focus of controversy. It's the implementation, or lack there of, of new policy to prevent another one if the future.

Dijsselbloem is staying, good.

Don't be patronizing, I'm not a fool.

It's not just the lack of regulations to prevent this sort of catastrophe again, it's every step of the damn thing from start to finish. From the decision to protect senior bondholders from their bad decisions to the decision to target austerity at the most vulnerable rather than the most wealthy, all of these decisions stacking on top of each other for the last few years have got us to where we are now.

I also reject your "TINA" narrative that says we _must_ accept these debts or the economy is screwed.

The narrative of "Debtor Nations Irresponsible, Creditor Nations Responsible" is a half truth that needs to be defeated.

I do truly fear that European integration will fail, with serious consequences for us all.

The latest BBC news says Greek government has agreed to a new bailout package which is tougher than the one rejected last week, and their parliament has to pass it by Wednesday or the banks will close from running out of money.

Still digging around, this is a bit dry but a report in June on Greek debt sustainability by the IMF here:
http://www.imf.org/external/pubs/ft/scr/2015/cr15165.pdf

Like this quote here:
"Experience has shown that there is deep-seated political resistance to privatization in Greece. Against this background, it is critical for a realistic and robust DSA to assume reduced privatization revenues, which will derive from small annual concession payments, occasional extraordinary dividends, and gradual real estate sales – totaling about €500 million per year. Privatization should still be pursued, principally to improve governance and the investment climate rather than for fiscal reasons. To the extent that privatization receipts exceed the levels assumed in the DSA, any excess should be used to pay down debt, which would bolster debt sustainability and investor confidence."

Recommendation:
"It is unlikely that Greece will be able to close its financing gaps from the markets on
terms consistent with debt sustainability. The central issue is that public debt cannot migrate back
onto the balance sheet of the private sector at rates consistent with debt sustainability, until debt-to-
GDP is much lower with correspondingly lower risk premia (see Figure 4i). Therefore, it is imperative
for debt sustainability that the euro area member states provide additional resources of at least
€36 billion on highly concessional terms (AAA interest rates, long maturities, and grace period) to
fully cover the financing needs through end–2018, in the context of a third EU program (see also
paragraph 10)."

Basically looking at the end of the document they "forecast" how things will go if the measures are implemented and some lessons learned applied of how "successful" the privatization was going (not well, only targeted less politically volatile institutions).

It was rather "funny" how often they stated (my summary) "If they only followed the plan in 2012 they would have avoided this crisis completely an be well on the road to sustainability."

Now mentioning debt "haircuts" are looking more the tool as "AAA" low loan interest rates stretched out over 20 years are getting less effective.
There was a bright spot in all this: interest rates supposedly went down for them so had helped to some degree (so crisis now rather than the prior Christmas)

Hard to find reports from the other groups, the IMF ones have "meat" and it looks like they are covering all the scenarios.

Well, maybe with some structure things can go a little better.
What is outlined is worth doing but a crisis will hit again because Germany likes being a loan-shark.