Greek debt crisis [update: 3rd Bailout deal reached]

[Crown]

Do you purposefully try to misunderstand me? It's rather impressive. Let me repeat myself; "I'm sure it is in the bailout deal, I'm also just as sure the bailout deal is unworkable."

Even if it is unworkable then the percentage of stimuli would still not change. There is no way for people to ignore that fixed percentage. The only spanner here would be if the Greeks assets are worth less than what the Greeks claim they are.

What do you mean 'even if' it's unworkable? This deal is doomed to failure. They knew this before they offered it to Greece. Everyone knows this. This is an asset grab, pure and simple.

There is no 'choice' when it's made under duress. It was get fucked by us in side the Eurozone or - and this is the genius part - have a 'timeout' inside the Eurozone while you issue IOUs.

A choice far better than one offered to debtors around the world, and completely democratically legitimized too.

Pretty sure we just had a referendum saying ... NO to this, no?

No, I'm asking you to show how Greece can service the debt burden (which is going to increase to 200% of it's GDP) when it is at 2.6% interest rate that we have agreed. Go ahead, I've got time.

No, debt service is at 2.6% of GDP. That has been posted multiple times before.

Thanas. Sweetums. Honey pot. Boo. 'Debt service isn't at 2.6% of GDP'. The INTEREST on the €310bn (about to be €400bn) debt is 2.6%. I'm asking you to show how Greece can service such a debt burden. Please take your time, I'm patient.

Stop. Fucking. Bailing out a depressed economy. Move the God-damned ECB loans to the EFSF and restructure it. Obviously the exception being the IMF loans which need to be repaid.

Three guesses as to what will happen, genius.

The debt might actually get paid off, and the Greek economy might actually recover?

You're right, we shouldn't send naval patrols out to oh-I-don't-know save people from drowning or anything. Those rats that don't drown and make it to land, we'll let a police force which is used to dealing with problems like 'where's my car' and 'drunk tourists having sex on beach' deal with it. Stellar!

Ever heard of the coast guard or the EU force currently rescuing them? And in any case, one can easily set aside financing for that under a common EU mission as well.

Ever hear of them doing anything? Yeah me either. They're doing a stellar job, what with 10k illegal immigrants confirmed landing on Greek shores in the first quarter of 2015, tripling the figure from the same time last year. *clap* *clap* *clap*

He's also on record as saying Greece joining the Euro would be the biggest economic folly ever imagined, and being a whistle blower on the Goldman-Sachs credit swaps.

And on record for trashing the economy himself, stellar record.

It's not his economy. The events in Brussels on the weekend put paid to that illusion pretty abruptly.

Is this happening? Am I living in a parallel world where that was exactly the official policy of her Government on Sunday night when it was put in front of the Eurogroup without prior consultation which lead to French and Italian finance ministers protesting at it?

Those are different things. One is the Schauble plan: Allow Greece to leave if they desire in return for debt relief and humanitarian aid, or let them stay in in return for reforms. That is not "kick them out and make them suffer to create new Europe" as Geithner claims. I know it is hard for you but try and think, man. As it stands, Tsipras denies what Geithner claims to be the case.

No one believes that Thanas. The ridiculous 'time out' didn't come out of nowhere.

So what are you actually saying? I mean, you are talking about events that happened several years ago and Banks are no longer involved here.

I'm saying if you want to use hyperbole of "half a trillion Euros", you can't get pissy when it's pointed out that the first bailout went directly to the banks, the second went to pay off the stupid first bailout conditions which became untenable, and god knows how the third is going to make anything better.

By the way, we should all remind ourselves this 'crisis' started when Greece announced that it's debt to GDP ratio was 120% which lead to the Central/Norther European economies tut-tutting and wagging their finger at Greece ... GOOD JOB!

Yes, good job Greece, failing to do something as simple as going after tax cheats even when handed all the evidence and then crashing the primary surplus due to Varoufakis. Good job indeed.

None of it would have made a difference. At some point in time you will open a maths text book and understand how compound interest works.

[Crown]

You're like a whoopy cushion; so easy to make you squeal a funny noise. So when I accused you of being "the type of dumb cunt who would be blaming Cassandra for Troy's destruction and not Paris", you don't seek to disprove my contention that Varoufakis is Cassandra in our scenario, you just start blaming Varoufakis!

Too bad that Varoufakis and Tsipras did poison the relationships to the other EU members with their insane negotiation strategy.

It does change jack shit when you babble about Greek mythology, especially with such a retarded analogy. Varoufakis is no Cassandra, he is an arsonist. He first set the Greek-EU relationship on fire, then he complained about the heat.

Wait, he's Prometheus?

Hey dumbass, lets play a game; which EU finance minister has consistently said that extending the program without any kind of debt restructuring (which apparently you now admit is necessary?) is just going to lead to failure again?

Lets make something clear, I don't give a fuck if Varoufakis stood up in the middle of the Eurogroup, whipped his cock out and started dancing the Zorba. It does not change the fact that 1 + 1 = 2, and the Greek debt is unsustainable the way it is loaded right now.

It is sad for you that you don't understand how politics is working.

I understand exactly how it works. I understand that the 3rd largest Greek political party are Neo-Nazis. I understand that the Greek social fabric has been torn and rend asunder by a political and not a viable economical policy by the Eurogroup. I understand that after half a decade of the 'lazy Greek meme' the North European leaders can't suddenly do what is right for this situation because they've spent too much political capital in brainwashing their own sheeple into buying into the myth.

And yet, YOU blame the one person who is honest about this. Exactly fulfilling my accusation.

What you just wrote was that the poor delicate souls are now punishing Greece more than is necessary just because they didn't like Varoufakis, and alarming enough, you thought this was a GOOD point for your argument. Do you even proof read what you write, or do you just subject us all to your mental diarrhoea without filter?

Nobody is punishing Greece, you idiot. Greece has punished itself by electing Syriza in the first place.

In case you haven't noticed, Syriza took over a Greece with a mild GDP growth in 2014 and drove it into a deep recession.

All of this could have been avoided, it is an unnecessary suffering of the Greek population triggered by the insane actions of Syriza alone.

But of course, for simple minds it is much easier to blame the creditors for everything.

All of what could have been avoided? SYRIZA were told point blank you can't re-negotiate past agreements, agreements that are doomed to failure on day fucking one. You're fucking moron. The only difference would have been if they towed the Eurogroup line is that they would have got the 3rd unsustainable bailout to add to the other two unsustainable bailout debts with a pat on the back rather than a slap across the face.

[Tribble]

I've heard rumours that the EMU inspectors will be allowed to veto at least some legislation? Is that true?

Somewhat. Under the agreement, the legislation that is connected with it needs to be agreed to by the monitors. Other than that, Greece can do as they wish.

Well depending on how broadly the terms are written, that could potentially mean that pretty much any legislation that involves a budget or spending money must now be approved by the monitors.

[Crown]

I'm going to be so I'll reply to the rest (if it even matters) tomorrow, but that last bit; YET AGAIN you FAIL to even ACKNOWLEDGE that the wrong medicine was administered to the patient. Unbelievable.

Did Greece have a primary surplus before Tsipras and Varoufakis crashed it? Yes or no?

Yes*. Would this have changed any of the following; THE DEBT IS UNSUSTAINABLE? Yes or no?


*I'm agreeing to the primary surplus disappearing this year, not that Tsipras and Varoufakis are somehow solely to blame, just to be clear.

[Thanas]

Do you purposefully try to misunderstand me? It's rather impressive. Let me repeat myself; "I'm sure it is in the bailout deal, I'm also just as sure the bailout deal is unworkable."

Even if it is unworkable then the percentage of stimuli would still not change. There is no way for people to ignore that fixed percentage. The only spanner here would be if the Greeks assets are worth less than what the Greeks claim they are.

What do you mean 'even if' it's unworkable? This deal is doomed to failure. They knew this before they offered it to Greece. Everyone knows this. This is an asset grab, pure and simple.

You still don't get it, do you? It is a very bad asset grab because no matter what the money will go to Athens, on top of the bailout funds as well. If you claim this as an asset grab, please grab my asssets that way - giving me free money with no interest while only taking collateral worth half - and giving half that collateral back to me as well.

Pretty sure we just had a referendum saying ... NO to this, no?

According to the Greek constitution and Tsipras, the referendum is not and never was binding anway.

Thanas. Sweetums. Honey pot. Boo. 'Debt service isn't at 2.6% of GDP'. The INTEREST on the €310bn (about to be €400bn) debt is 2.6%. I'm asking you to show how Greece can service such a debt burden. Please take your time, I'm patient.

Crown. Baby. Analphabetic one.

Any level of debt is sustainable if it has a very low interest rate. Japan is a prime example: gross public debt is almost 250 % of GDP, while the average interest rate is 0.9 percent per year. Despite the very high Japanese public debt, there is no talk about its restructuring.

Loans from euro-area partners to Greece carry super-low interest rates and also have very long maturities. The lending rate from the European Financial Stability Facility (EFSF) is a mere 1 basis point over the average borrowing cost of the EFSF, which is around 0.2 percent per year currently. The average maturity of EFSF loans is over 30 years with the last loan expiring in 2054. Moreover, in 2012 the Eurogroup agreed on a deferral of interest payments of Greece on EFSF loans by 10 years, implying zero cash-flow interest cost on EFSF loans during this period. The interest rate charged on bilateral loans from euro-area partners is Euribor plus 50 basis points, which is currently about 0.56 % per year: another very low value (which could be lowered further, as we argued here). Bilateral loans have a long maturity too: they should be gradually repaid between 2020-2041.

One can say that yields will not remain so low forever and if ever growth and inflation will pick up in the euro area, interest rates will increase. Unfortunately, this is in the distant future and therefore the cash-flow gain for Greece from stopping interest payments to euro-area partners would be very low in the next few years.

In fact, according my calculations, one of the demands of Syriza leader Alexis Tsipras will be likely met this year, even without any change in bail-out terms: actual interest service costs of Greece will likely be below 2% of GDP in 2015. Table 1 shows the situation in 2014. Total interest expenditures of Greece amounted to 4.3 % of GDP. However, interest paid to the ECB and euro-area national central banks (NCBs) is returned to Greece (if Greece meets the conditions of the bail-out programme) and interest payments on EFSF loans are deferred. If we subtract these, interest payments were only 2.6% of GDP in 2014, well below the values of other periphery countries. Given that interest rates have fallen significantly from 2014, actual interest expenditures of Greece will be likely below 2% of GDP in 2015, if Greece will meet the conditions of the bail-out programme.

The debt might actually get paid off, and the Greek economy might actually recover?

If Greece finally gets their house in order, agrees to the programme, stops acting like children and then actually invests the money they get in their infrastructure and economy, then yes, debt relief or debt restructure might (and should) happen. But they have had five years to show they can reform and still not have managed to do what is the basic necessity of a modern state. The ball is in their court. They are the ones who have to prove that they can be taken seriously.

Ever hear of them doing anything? Yeah me either. They're doing a stellar job, what with 10k illegal immigrants confirmed landing on Greek shores in the first quarter of 2015, tripling the figure from the same time last year. *clap* *clap* *clap*

That is with the Navy, right? So why should something that obviously does not work get funded? They don't need that airforce, they don't need those heavy modern ships, they don't need the tanks, they don't need submarines. What they need is a better coast guard, which can be had at a much lower price and cost.

It's not his economy. The events in Brussels on the weekend put paid to that illusion pretty abruptly.

Bullshit. If it was not his economy, how could they else then reversed the reforms and lay-offs?

Is this happening? Am I living in a parallel world where that was exactly the official policy of her Government on Sunday night when it was put in front of the Eurogroup without prior consultation which lead to French and Italian finance ministers protesting at it?

Those are different things. One is the Schauble plan: Allow Greece to leave if they desire in return for debt relief and humanitarian aid, or let them stay in in return for reforms. That is not "kick them out and make them suffer to create new Europe" as Geithner claims. I know it is hard for you but try and think, man. As it stands, Tsipras denies what Geithner claims to be the case.

No one believes that Thanas. The ridiculous 'time out' didn't come out of nowhere.

Again, confusing Schauble plan (which is the time-out plan to allow Greece to rebuilt their economy outside the Euro) with whatever Geithner thinks he heard is not helpful or even correct. It is just a lie made up by people who get their jollies of Schäuble being the root cause of all evil, in short the same people who masturbate to this:

By the way, we should all remind ourselves this 'crisis' started when Greece announced that it's debt to GDP ratio was 120% which lead to the Central/Norther European economies tut-tutting and wagging their finger at Greece ... GOOD JOB!

Yes, good job Greece, failing to do something as simple as going after tax cheats even when handed all the evidence and then crashing the primary surplus due to Varoufakis. Good job indeed.

None of it would have made a difference.

Don't tell me you are that stupid to believe that appearing as people who are trying their best to reform and go after criminals, cleaning up the state etc. would not have made a pretty damn difference in Europe. Just look at what other Europeans have posted in here. Greece is seen around Europe as the country that refuses to reform and go after crooks, as the country that refuses to make an effort. That negative perception sure as hell ties the hand of European leaders and anybody who claims otherwise should take a long trip back to reality.

[Thanas]

I'm going to be so I'll reply to the rest (if it even matters) tomorrow, but that last bit; YET AGAIN you FAIL to even ACKNOWLEDGE that the wrong medicine was administered to the patient. Unbelievable.

Did Greece have a primary surplus before Tsipras and Varoufakis crashed it? Yes or no?

Yes*. Would this have changed any of the following; THE DEBT IS UNSUSTAINABLE? Yes or no?

Yes. Do note how the IMF only changed its outlook after the primary surplus had disappeared and said so itself in the analysis.

[aerius]

Japan is instantly dead as soon as their central bank's zero interest rate policy is forced to end and their rates go back to historical norms. Most of their debts are internally held as well unlike the rest of the world which allows them to hold a ZIRP program longer than everyone else. The fact that you're using Japan as an example of high "sustainable" debt loads and comparing it to EU countries shows that you're a fucking idiot.

[Vendetta]

Yes. Do note how the IMF only changed its outlook after the primary surplus had disappeared and said so itself in the analysis.

The IMF changed their opinion literally within the last 48 hours due to the capital controls and closure of the Greek banking system imposed by the ECB not doing the job of a real central bank and acting as lender of last resort to maintain banking liquidity. The events of the past week in Greece added twenty five billion euro to the IMF's most recent estimate of Greece's needs (made two weeks ago) to attain short term stability and absolutely require a debt writeoff for any form of sustainability to exist.

And no, that debt writeoff can't be "maybe at some point in the future", the debt writeoff has to happen up front or this will not work.

Really, your refusal to admit that your government is wrong about the measures needed to deal with this can only be regarded as wilful ignorance at this point.

[Edi]

Fine, let's do a little hypothetical: We write off 100% of Greek debt, recapitalize their banks so they have working finances again, so they can start with a clean slate. We'll also assume that for whatever reason the rest of Europe will not object to doing this despite the cost to them.

Then what? What's going to happen next? Will things improve and how? Or will everything else stay unaltered? Where do things go from there?

[Vendetta]

I mean if only there were an empirically tested set of actions a government could take to recover from a depressed economy...

Oh wait, there is it was published in 1936... Internal investment to stimulate economic growth, in the case of debt forgiveness (even if it's via the IMFs suggested 30 year maturity extension, meaning no repayments for 30 years) increasing internal investment by using the money which would have gone to serve that debt or run an unrealistic primary surplus plus whatever can be clawed back from tax evaders (nb: Syriza is the only government of Greece which has even tried to do this, but they've spent the majority of their five months in power putting up with retarded bullshit from the Eurozone rather than being able to actually govern...) to invest in the economy.

I mean this shouldn't even have to be a question "What do you do in a depressed economy" is already fucking answered, it's literally in the textbooks for economics, except in modern Europe the textbooks are written by people who regard evidence based economic practise the way southern US education boards regard evolution.

[Vympel]

EMU brutality has destroyed the trust of Europe's left

The EU establishment henceforth faces what it has always feared: a political war on two fronts at once.

It is long been fighting an expanding coaltion of free marketeers, parliamentary "souverainistes", anti-immigrant populists on the Right.

Its has now lost its remaining emotional hold on the Left after the scorched-earth treatment of Greece over the past five months - culminating in the vindictive decision to impose yet harsher terms on this crushed nation just days after its cri de coeur in a landslide referendum.

This has been coming for a long time. We Conservatives have watched in disbelief as one Socialist party after another immolates itself on the altar of monetary union, defending a project that favours the elites - a "bankers' ramp", as the old Left used to call it.

We have watched our friends on the Left apologise for 1930s policies. We have seen them defend a regime of pro-cyclical fiscal cuts imposed on the whole eurozone by a handful of "Ordoliberal" reactionaries in the German finance minstry.

To the extent that these gentlemen know what they are doing - and most Nobel economists would dispute that - they have certainly not risen to the challenge of pan-EMU leadership. As ex-official Philippe Legrain writes in Foreign Policy, Germany is proving to be a "calamitous hegemon".

By a twist of fate, the Left has let itself become the enforcer of an economic structure that has led to levels of unemployment once unthinkable for a post-war social democratic government with its own currency and sovereign instruments. It has somehow found ways to justify a youth jobless rate still running at 42pc in Italy, 49pc in Spain and 50pc in Greece, despite mass emigration.

It has acquiesced in the Long Slump of the past six years, deeper in aggregate than the span from 1929 to 1935.

It meekly endorsed the EU Fiscal Compact, knowing that it imposes a legal requirement on eurozone states to slash their public debt by 1.5pc of GDP in France, 2pc in Spain and 3.5pc in Italy and Portugal, every year for the next two decades - a formula for near permanent depression. It outlaws Keynesian economics, and indeed classical economics. It is a doomsday construct.

This is what they agreed to, and what they have reluctantly defended, because until now they dared not question the sanctity of EMU. And so the once mighty Dutch Labour Party has been reduced to a pitiful relic. Pasok has been obliterated in Greece.

The Spanish Socialist Workers' Party has lost its left-wing to the rebel Podemos movement, freshly victorious in Barcelona. France's Socialist leader, Francois Hollande, has been languishing at 24pc in the polls as the French working class defects to the Front National.

Yet events in Greece have finally broken the spell. "Progressives should be appalled by European Union’s ruination of Greece. It’s time to reclaim the Eurosceptic cause," writes Owen Jones in a remarkable piece in The Guardian. The new term "Lexit" is gaining currency.

The voices of Left are uneasy. Their instincts are to oppose everything that UKIP stands for. "At first, only a few dipped their toes in the water; then others, hesitantly, followed their lead, all the time looking at each other for reassurance," Mr Jones writes.

Yet the cruelty on display in Brussels and Berlin has trumped all. Mr Jones runs through the names.

“Everything good about the EU is in retreat; everything bad is on the rampage,” says George Monbiot. “How can the left support what is being done?” asks Suzanne Moore. The EU is being portrayed “with some truth, as a cruel, fanatical and stupid institution”, says Nick Cohen.

Variants of this debate are stirring across Europe. Luigi Zingales, an adviser to Italy's premier Matteo Renzi, has become a flaming eurosceptic. "This European project is dead forever. If Europe is nothing but a bad version of the IMF, what is left of the European integration project?" he wrote as Greece capitulated.

Whether or not the EMU creditor powers intended to bring down an elected Greek government, and whether or not it was a "coup" as the Twitterati allege, there is no doubt that Syriza was compelled by financial coercion to abandon its election promises. It must even repeal all "fiscal" laws passed since January.

Without wishing to rehearse 15 years of Greek controversy - by now a familiar subject - let me just say that the country's crisis is a collective responsibility of the creditors, the EMU elites, the Greek oligarchy and, ultimately, of a jejeune Alexis Tsipras.

The Troika bail-out in 2010 was intended to save the euro and European banks at a time when there were no defences against contagion. Greece was not saved. It was sacrificed. The roots of the "Greek Spring" can be traced to this original sin, further fed by the Troika overkill that followed.

The EMU creditors never acknowledged their own guilt. They never made an honest attempt to negotiate with Syriza, even on matters of common ground. They essentially demanded that the austerity terms of the prior Memorandum be enforced to the letter - regardless of whether they made any economic sense - hiding behind Pharisaical talk of rules.

Yanis Varoufakis, the ex-finance minister, said all along that they wanted "ritual subjugation", and that is how it looks to great numbers of people across Europe.

They forced through the infamous deal in the early hours of Sunday night without offering any clear debt relief, even though they already knew that the IMF thinks Greece needs a 30-year moratorium on debt payments and probably outright fiscal subsidies. Nothing is resolved.

"Greece has paid a huge price for the mistakes of others, yet it is being treated incredibly harshly," said Simon Tilford, from the Centre for European Reform.

"What I find worrying is that so few political figures in Germany seem troubled by the spectacle of Greece being humiliated in this way. The Germans have developed a fantasy narrative of the crisis. They have somehow turned everything around and think that they are the victims," he said.

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

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

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

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

We all know what the game was. Germany and its allies were determined to make an example of Syriza to discourage voters in any other country from daring to buck the system.

I doubt that this will work, even on its own narrow terms. Podemos remains defiant. It has accused the EU institutions and the Spanish government of committing an "act of terrorism" in violation of the Spanish Código Penal.

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

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

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

As for the conduct of Germany over the past week, what can one politely say? It is deemed poor taste to mention that the allied powers agreed to wipe out half of Germany's external liabilities at the London Debt Agreement in February 1953.

This act of statesmanship came less than eight years after the end of the Second World War, and the Nazi occupation of Greece, when the horrors were still fresh in everybody's mind. It is roughly equivalent to the lapse in time today since the Lehman crisis.

Debt relief came at some cost to Britain, the biggest pre-war creditor. It was agreed in the collective interest, on the basis of economic science, and deliberately framed as a "negotiation among equals" in order to clear away the fog of moral judgments. The result was the German Wirtschaftswunder and the glory years of post-War reconstruction.

Whatever you think of Greece's behaviour - and it hasn't hurt anybody - can we not at least have a miminum of common sense?

With the IMF making its position re: the need for debt relief plain, the Germans and their 'Pharasaical', 'fantasy narrative' is absolutely right.

[Simon_Jester]

Fine, let's do a little hypothetical: We write off 100% of Greek debt, recapitalize their banks so they have working finances again, so they can start with a clean slate. We'll also assume that for whatever reason the rest of Europe will not object to doing this despite the cost to them.

Then what? What's going to happen next? Will things improve and how? Or will everything else stay unaltered? Where do things go from there?

Well, I say, things would likely improve IF you don't loan them any more money (which no one with sense would do anyway until the Greeks re-establish their ability to pay). Even if the Greeks did elect fiscally irresponsible people it wouldn't matter if no one was willing to issue them un-repayable loans. So the Greeks would be forced to maintain a surplus or at least balance their government budget. Which would require them to repair their economy, crack down oncorruption, and in general do all the things that SHOULD have been done a decade ago and that the European creditors are now demanding be done overnight in the middle of a depression.

Either that or Greece would fall apart- but at least in that case it'd have only itself to blame and the odds of democracy actually working and putting a competent government in place would be better than if the problems are clearly being caused in large part by obstinate or greedy foreigners.

[BabelHuber]

Wait, he's Prometheus?

Yes, he stole the fire from ... ahem ... from ...

Hey dumbass, lets play a game; which EU finance minister has consistently said that extending the program without any kind of debt restructuring (which apparently you now admit is necessary?) is just going to lead to failure again?

Varoufakis badmouthed the finances of his own country from the beginning, this is correct.

But this is also one the most retarded things a finance minister can do at all! Doing so scares away investors and hence compounded Greeks' problems.

Perhaps Varoufakis even was so stupid he didn't even recognize this, maybe he thought as finance minister he can continue speaking like a university professor.

The fact that you don't see this is another proof of your simple-mindness.

I understand exactly how it works.

I understand that the 3rd largest Greek political party are Neo-Nazis.

Give us your money, or we will vote for Neo-Nazis!

I understand that the Greek social fabric has been torn and rend asunder by a political and not a viable economical policy by the Eurogroup. I understand that after half a decade of the 'lazy Greek meme' the North European leaders can't suddenly do what is right for this situation because they've spent too much political capital in brainwashing their own sheeple into buying into the myth.

You are bullshitting once again - you cannot cure a crisis which was created by overspending with overspending. People who say this clearly haven't understood how Keynes' theory works.

Greece could have done much more during the last 5 years, e.g. taking the offers from Germany and France to modernize their bureaucracy, at least trying to collect taxes etc. But they did not.

And still Greece was growing in 2014 and had a primary surplus. Achievements which were instantly reversed by Syriza.

Syriza set Greece on fire, not the EU!

And yet, YOU blame the one person who is honest about this. Exactly fulfilling my accusation.

Yes, if 'honesty' means setting your house on fire and then stating that it burns.

Also I find it funny that you seemingly believe honesty is a virtue for a finance minister whose country is in deep trouble. And then you claim to understand politics

All of what could have been avoided? SYRIZA were told point blank you can't re-negotiate past agreements, agreements that are doomed to failure on day fucking one. You're fucking moron. The only difference would have been if they towed the Eurogroup line is that they would have got the 3rd unsustainable bailout to add to the other two unsustainable bailout debts with a pat on the back rather than a slap across the face.

Have you even watched the news, fucktard?

Syriza fucking claimed that they don't feel bound to the bailout contracts because they were signed by the predecessor government!

Of course the answer of the EU was "no, these contracts are still valid". I don't know what morons like you are thinking, but this is exactly the answer any sane person would expect!

And this was exactly Syriza's mistake - you do not enter negotiations this way. You do not insult your partners, you do not say that you don't intend to keep valid contracts - except if you are an idiot beyond help.

Any sane politician would have went to the negotiations saying something like "the old bailout contracts have negative side-effects to our society, we fear that extremist elements could be profiting from this. Also, the targetetd primary surplus is too high in our opinion, we cannot stomach this".

Then people are listening. I don't understand why we even discuss this, it is simply too obvious.

[Simon_Jester]

Varoufakis badmouthed the finances of his own country from the beginning, this is correct.

But this is also one the most retarded things a finance minister can do at all! Doing so scares away investors and hence compounded Greeks' problems.

Perhaps Varoufakis even was so stupid he didn't even recognize this, maybe he thought as finance minister he can continue speaking like a university professor.

The Syriza government has been in power for, what, five or six months?

During that time, by far the most important job the Syriza government's finance minister has... would be handling the debt issue! Not attracting investment- because investment won't fix the Greek economy if further debt restructuring doesn't happen.

Pretending that Greece is in a realistic position to repay its debts, when that is not true, would be grossly irresponsible. Do you seriously think that Varoufakis was supposed to lie, or pretend that his country would be able to pay back money without debt restructuring, when he knew that was not true, and when his main job was to secure that debt restructuring?

The fact that you don't see this is another proof of your simple-mindness.

You're calling people stupid for not thinking that their finance minister should publicly speak what is, based on mathematical facts, the truth about his own country's finances.

Lying about your nation's financial situation to make it look like you're not heavily in debt didn't work very well for the French monarchy with Necker, and it works even worse today.

I understand that the 3rd largest Greek political party are Neo-Nazis.

Give us your money, or we will vote for Neo-Nazis!

You trivialize this, because the awkward truth is that the pro-Greek side on this thread isn't even asking for more money- he's actively opposed to more bailouts because more loans will not fix a problem caused by too many loans!

He's not even arguing that Greece needs foreign money to have long-term viability. He's arguing that Greece needs the interest payments to go away, because said interest payments are collapsing their economy no matter what else the Greeks do or don't do.

If you can't be bothered to comprehend what other people are saying, why even bother? You're like a chatbot of bad economics.

Greece could have done much more during the last 5 years, e.g. taking the offers from Germany and France to modernize their bureaucracy, at least trying to collect taxes etc. But they did not.

And still Greece was growing in 2014 and had a primary surplus. Achievements which were instantly reversed by Syriza.

Syriza set Greece on fire, not the EU!

Greece was already on fire. The economy was miserable, the people were unemployed, and the country was committed to spending an increasing amount of money on debts it realistically could not repay.

Syriza appears to have judged that further cuts to the mass of pension payments to the unemployed were NOT going to allow Greece to pay back its debts (if only because starving homeless people rioting in the streets tend to overthrow governments). So it decided to attack the root of the problem directly- the debt.

However, dealing with the efforts of the Eurogroup to extend more loans to Greece and dangle the prospect of debt forgiveness as a remote bait... takes up time. Syriza is in a poor position to reform its domestic economy while concentrating its efforts on solving the root cause of the current crisis- the overburden of foreign debt smothering the economy.

And yet, YOU blame the one person who is honest about this. Exactly fulfilling my accusation.

Yes, if 'honesty' means setting your house on fire and then stating that it burns.

Also I find it funny that you seemingly believe honesty is a virtue for a finance minister whose country is in deep trouble. And then you claim to understand politics

A finance minister who is caught lying loses his credibility, at which point everything he says is ignored. Any Greek finance minister who saw his job as "assert the economy is doing well" would be a laughingstock, the economic equivalent of Baghdad Bob

Greece has had enough liars in high office. Liars in high office are a big part of how they got into this mess, because they had a string of corrupt governments who claimed everything was fine while they were running up this huge debt.

Honesty may not always get the results you desire, but it beats being known as a worthless lying fool.

Syriza fucking claimed that they don't feel bound to the bailout contracts because they were signed by the predecessor government!

Of course the answer of the EU was "no, these contracts are still valid". I don't know what morons like you are thinking, but this is exactly the answer any sane person would expect!

And this was exactly Syriza's mistake - you do not enter negotiations this way. You do not insult your partners, you do not say that you don't intend to keep valid contracts - except if you are an idiot beyond help.

Any sane politician would have went to the negotiations saying something like "the old bailout contracts have negative side-effects to our society, we fear that extremist elements could be profiting from this. Also, the targetetd primary surplus is too high in our opinion, we cannot stomach this".

At which point the European creditors could say, just as they did say anyway, "obey the contracts or else." Various political figures in the creditor nations were saying this as soon as Syriza took power anyway, so that wouldn't change much.

As I mentioned earlier, unless we assume that the creditors are idiots, the only way their actions over the past few years make sense is if the real plan is to strip Greek assets while milking them for as many interest payments as possible before they inevitably default. That decision almost has to have been settled on before Syriza took power.

So Syriza had very little to lose by declaring, point-blank, that the existing system was a disaster for Greece and that they were prepared to repudiate it. Their only real hope, frankly, was that the bad situation in Greece would draw them enough international sympathy that the creditor governments would get popular pressure from the left saying "apply some debt forgiveness."

That didn't happen, at least not to the degree Syriza needed, so the strategy failed. But NO other strategy would have had meaningful success, given that realistically at this point, the creditor-nations' bargaining position is dominated by this hardline "squeeze out every last Euro right now" mindset.

When you're dealing with a predatory lender who has every intention of stripping your assets, there's not much point in pretending that said predator is negotiating with you in good faith.

[BabelHuber]

During that time, by far the most important job the Syriza government's finance minister has... would be handling the debt issue! Not attracting investment- because investment won't fix the Greek economy if further debt restructuring doesn't happen.

A finance minister who badmouthes his own country does a disservice to it. It's like a CEO badmouthing his own products (this is called the Rattner-effect).

And of course attracting investors helps to fix one's economy.

Pretending that Greece is in a realistic position to repay its debts, when that is not true, would be grossly irresponsible. Do you seriously think that Varoufakis was supposed to lie, or pretend that his country would be able to pay back money without debt restructuring, when he knew that was not true, and when his main job was to secure that debt restructuring?

He should have negotiated his problems behind closed doors with the other EU finance ministers of the Euro-zone first.

But instead he started with badmouthing his own country, insulting he EU-partners and stating that he doesn't intend to keep contracts signed by the predecessor government.

Thereby he alienated his partners, with the known effects.

A debt restructuring can only be at the end of an agreement, it cannot be the first thing you negotiate. That's another moronic thing he has done.

You're calling people stupid for not thinking that their finance minister should publicly speak what is, based on mathematical facts, the truth about his own country's finances.

Lying about your nation's financial situation to make it look like you're not heavily in debt didn't work very well for the French monarchy with Necker, and it works even worse today.

I call Crown stupid. But he started the name-calling, we don't need to behave this way.

Varoufakis should have simply said "Greece is in dire straits, but we are on our track to recovery. All the problems we currently have will be fixed together with our EU-partners. Investors are wellcome, their commitment to our country will give them huge profits in the long run"

This is not lying, and this would be the sane thing to say.

You trivialize this, because the awkward truth is that the pro-Greek side on this thread isn't even asking for more money- he's actively opposed to more bailouts because more loans will not fix a problem caused by too many loans!

Yeah, Syriza is not asking for more money, very funny. They rolled back some reforms immediately after being elected, e.g. they re-hired some officíals.

This they could not afford, so almost nobody believed them in the first place. Please don't be so naive to fall for Syriza's cheap propagande.

He's not even arguing that Greece needs foreign money to have long-term viability. He's arguing that Greece needs the interest payments to go away, because said interest payments are collapsing their economy no matter what else the Greeks do or don't do.

If you can't be bothered to comprehend what other people are saying, why even bother? You're like a chatbot of bad economics.

This has been discussed to death here - Thanas has pointed out time and time again that this was not even a real concern in the year 2015, because Greece doesn't have to pay much for interest rates at all. It would be a valid discussion in 2020 or 2035, though.

So please don't accuse me of being a chatbot while acting like one yourself.

Syriza appears to have judged that further cuts to the mass of pension payments to the unemployed were NOT going to allow Greece to pay back its debts (if only because starving homeless people rioting in the streets tend to overthrow governments). So it decided to attack the root of the problem directly- the debt.

Which was an insane strategy which alienated their partners. Discussing this first behind closed doors would have been the smart thing to do, not shouting from the top of their lungs.

However, dealing with the efforts of the Eurogroup to extend more loans to Greece and dangle the prospect of debt forgiveness as a remote bait... takes up time. Syriza is in a poor position to reform its domestic economy while concentrating its efforts on solving the root cause of the current crisis- the overburden of foreign debt smothering the economy.

See above. Interest rates currently don't play a role anyways, so no burden on teh economy here. It was simply stupid to act this way.

Greece has had enough liars in high office. Liars in high office are a big part of how they got into this mess, because they had a string of corrupt governments who claimed everything was fine while they were running up this huge debt.

Honesty may not always get the results you desire, but it beats being known as a worthless lying fool.

See above. It's not about lying, it's about badmouthing your own country when you are finance minister.

At which point the European creditors could say, just as they did say anyway, "obey the contracts or else." Various political figures in the creditor nations were saying this as soon as Syriza took power anyway, so that wouldn't change much.

Talking to your partners without alienating and insulting them first can literally change everything!

As I mentioned earlier, unless we assume that the creditors are idiots, the only way their actions over the past few years make sense is if the real plan is to strip Greek assets while milking them for as many interest payments as possible before they inevitably default. That decision almost has to have been settled on before Syriza took power.

Sorry, this is bullshit. We don't know what would have happened if Syriza acted in a rational way after they were elected. We only know that the way they did it worsened the whole situation.

So Syriza had very little to lose by declaring, point-blank, that the existing system was a disaster for Greece and that they were prepared to repudiate it. Their only real hope, frankly, was that the bad situation in Greece would draw them enough international sympathy that the creditor governments would get popular pressure from the left saying "apply some debt forgiveness."

They lost a growing economy and a primary surplus. Instead, they have a deep recession or even depression now. So claiming they had nothing to lose is wrong IMO.

That didn't happen, at least not to the degree Syriza needed, so the strategy failed. But NO other strategy would have had meaningful success, given that realistically at this point, the creditor-nations' bargaining position is dominated by this hardline "squeeze out every last Euro right now" mindset.

When you're dealing with a predatory lender who has every intention of stripping your assets, there's not much point in pretending that said predator is negotiating with you in good faith.

The lenders were never 'predatory' before Syriza worsened the economical situation of Greece, insultet them and badmouthed their own country.

Syriza could have made a much better deal if they had acted in a sane way. We can only be sure that having an insane negotiation strategy makes everything worse.

[Fingolfin_Noldor]

I find it funny people are insisting on more austerity as a solution when Schäuble, the biggest champion for austerity, has openly said that he does not believe the plan would work.

[Simon_Jester]

During that time, by far the most important job the Syriza government's finance minister has... would be handling the debt issue! Not attracting investment- because investment won't fix the Greek economy if further debt restructuring doesn't happen.

A finance minister who badmouthes his own country does a disservice to it. It's like a CEO badmouthing his own products (this is called the Rattner-effect).

And of course attracting investors helps to fix one's economy.

Saying "my country is full of corrupt idiots" is doing your country a disservice when you're a finance minister. Saying "my country is unable to repay its debts" is NOT- it's part of your job. One of the responsibilities of government officials is to provide the public and the international community with the information necessary to make sensible decisions. Pretending that nothing is wrong with your nation's finances when it's on the edge of bankruptcy will just make you look like a fool.

It will not "attract investors," any more than Baghdad Bob managed to "attract allies" for Iraq by pretending they were winning in 2003. All he did was make himself a global laughingstock, even for people who opposed the invasion in the first place.

Seriously, this idea that finance ministers are supposed to be meretricious liars telling everyone the situation is fine even while they urgently need debt relief is just... ridiculous. And totally at odds with the idea of basic functionality and openness in government.

Again, this did NOT work well for Necker, and nothing's changed in the past 225 years or so to make it a better strategy now than it was for Louis XVI

He should have negotiated his problems behind closed doors with the other EU finance ministers of the Euro-zone first.

But instead he started with badmouthing his own country, insulting he EU-partners and stating that he doesn't intend to keep contracts signed by the predecessor government.

Thereby he alienated his partners, with the known effects.

If the predecessor agreements were going to predictably lead to the collapse of Greece, and given that Syriza's entire platform was based on "clean slate no matter the cost," this was exactly the strategy one should expect him to pursue. Negotiations behind closed doors were doomed because the ONLY element in European politics that shows any sympathy for the Greek situation is public opinion on the left- which is not to say "European public opinion is pro-Greek," but rather "it's all they have."

Negotiating in secret with finance ministers who have already explicitly ruled out anything other than "comply with our demands and pay off your interest payments no matter what"

A debt restructuring can only be at the end of an agreement, it cannot be the first thing you negotiate. That's another moronic thing he has done.

This is not moronic if the lack of debt restructuring renders all other reforms meaningless.

It's like, if you're negotiating about a burning house, you PUT OUT THE FIRE first. You do not waste time talking about the furniture arrangement or the color of the curtains, while those things are on fire.

If one accepts the basic premise of an unrepayable Greek debt*, then it is a matter of basic common sense that the 'burning house' problem should be addressed first. The unrepayable debt is not an optional maybe-if-we're-nice element of the Greek problem, it's a mandatory item, and if it's not dealt with the Greeks might as well break off negotiations and declare bankruptcy sooner rather than later.

*(Crown and aerius have presented this and I am not convinced they've been refuted, especially since the IMF agrees with them).
_______________________________

You're calling people stupid for not thinking that their finance minister should publicly speak what is, based on mathematical facts, the truth about his own country's finances.

Lying about your nation's financial situation to make it look like you're not heavily in debt didn't work very well for the French monarchy with Necker, and it works even worse today.

I call Crown stupid. But he started the name-calling, we don't need to behave this way.

Varoufakis should have simply said "Greece is in dire straits, but we are on our track to recovery. All the problems we currently have will be fixed together with our EU-partners. Investors are wellcome, their commitment to our country will give them huge profits in the long run"

This is not lying, and this would be the sane thing to say.

What if Varoufakis (like the IMF) did not believe Greece was on the track to recovery, and was trying to secure popular support for measures that he thought were necessary to at least prevent his country from being trapped in debt slavery?

Pretending to be a happy little cog in a machine, when that machine is damaging or destroying your country, is not the act of a responsible minister.

You trivialize this, because the awkward truth is that the pro-Greek side on this thread isn't even asking for more money- he's actively opposed to more bailouts because more loans will not fix a problem caused by too many loans!

Yeah, Syriza is not asking for more money, very funny. They rolled back some reforms immediately after being elected, e.g. they re-hired some officíals.

This they could not afford, so almost nobody believed them in the first place. Please don't be so naive to fall for Syriza's cheap propagande.

You have failed the Turing Test.

Please note the underlined passage.

I will leave the matter at that, since I'm trying to learn NOT to argue with chatbots, and you just failed the Turing Test.

[BabelHuber]

You have failed the Turing Test.

Please note the underlined passage.

I will leave the matter at that, since I'm trying to learn NOT to argue with chatbots, and you just failed the Turing Test.

Oops - this is embarassing

Should teach me about posting when being in a hurry, sorry.

But we are miles apart anyways - you think the lenders are predatory, I think the Tsipras-administration is just incompetent and could have reached a much better deal months ago.

[Simon_Jester]

I think the Tsipras administration is at least partly incompetent, but NO deal that works on the same basic principles as the ones the European creditors have been offering would be 'good' or 'satisfactory,' because there's a fundamental structural problem with the way this is being approached.

Specifically, that the European creditors have very strong incentives NOT to allow further debt restructuring, and to manipulate the situation until it results in Greek assets being sold off to foreign interests so that Greece can make its debt payments. Even if we assume the original loans were not issued with predatory intent, even if Germany and other European nations took the debt upon themselves without predatory intent, it doesn't matter.

Greece's creditors now have no way to get a significant fraction of their money back except through asset-stripping and/or turning the Greek economy into a sort of mass workhouse to enable them to meet interest payments.

There's really no way around that in my opinion. And if I'm not wrong, that means that Syriza's "Fuck you, we're doing what's right for US, not for you" approach becomes very much understandable and even reasonable. Because even by being conciliatory and friendly and pretending in public that nothing was wrong, Syriza couldn't have gotten a fundamentally different deal; they'd still be getting handed a tiny short-term carrot in exchange for having to submit to a lot of beatings with a stick a few years down the road.

Where incompetence creeps in is that Tsipras and his government should have foreseen that the creditors would not back down. And that they would be backed into a corner. One where Tsipras would be forced to either play the "Grexit" or "default" card, or give up altogether.

Tsipras does not seem to have planned ahead for what would happen once he was backed into that corner, which was very stupid given that his entire campaign platform revolved around it.

[Starglider]

This has been coming for a long time. We Conservatives have watched in disbelief as one Socialist party after another immolates itself on the altar of monetary union, defending a project that favours the elites - a "bankers' ramp", as the old Left used to call it.

You have to admire the cunning, the elegance, the sheer genius of it. The universal ocialist imperatives are to create an infinitely expanding totalitarian state beurecracy, to deny, conceal and suppress any notion that the state may be weak or fallible, and to extract as many bribes and payoffs for themselves as possible. The great investment banks harnessed this yearning for pan-european socialist hegemony and arranged events to greatly enrich themselves (through loan interest, bailouts and coreographed volatility), then to hamstring and hopefully break the machinery of socialist integration on the rack of unsustainable debt and an engineered-to-fail currency zone. One that inherently makes the Germans (biggst European financial competitor) villains as they grind down periphery states to maintain their status in the euro.

On behalf of Manhattan and the City of London, you're welcome, Europe. We monkey-wrenched the EU jugganaught but it's ok, no thanks necessary, we got a nice fee for doing it.

Its has now lost its remaining emotional hold on the Left after the scorched-earth treatment of Greece over the past five months - culminating in the vindictive decision to impose yet harsher terms on this crushed nation just days after its cri de coeur in a landslide referendum.

Nope, the vast majority of socialists are still entranced by the idea of an enormous superstate that regulates every aspect of European life and is (for most) substantially more impenetrable and less democratic than their national governments. The fundamental socialist drive is to abase oneself before the most powerful violence-backed beurecracy around and then squirm into its workings to siphon off funds. Only the idealistic far left has the idea that the EU is too corrupted by capitalism to bother with, and they are unelectable. Fear will keep the local countries in line; fear of retaliation frpm the Troika and the notion that being a cog in the EU machine is better than being completely overshadowed by the global superpowers.

[Fingolfin_Noldor]

On behalf of Manhattan and the City of London, you're welcome, Europe. We monkey-wrenched the EU jugganaught but it's ok, no thanks necessary, we got a nice fee for doing it.

I'm not sure what gave you the impression, but the current leadership in Germany is pretty corporatist in nature, i.e. right wing.

[K. A. Pital]

In fact, the current leadership of Germany is pro-big business to an extent which was previously considered impossible, and people here routinely note how Germany becomes USA-lite.

[salm]

So, Schäuble just said that he might resign.

[Simon_Jester]

On what grounds?

[Sea Skimmer]

Because he doesn't think he can negotiate another bailout with the Greeks based on his own principles, because he thinks this whole process is doomed and against German interests. Merkel meanwhile has reason to want him to stay because he has his job as a reward to his supporters she needs for her own coalition government. If he resigned he'd be screwing her over as many of them might turn into opposition. Parliamentary democracy in action.