Ambrose Evans-Pritchard of the Telegraph has a bombshell new report on Greece. It’s even more devastating when you keep in mind that Evans-Pritchard has been a staunch Syriza supporter and has spoken regularly to government officials, including Yanis Varoufakis, who is a source for this story.
The subhead says it all:
Prime Minister Alexis Tsipras never expected to win Sunday’s referendum. He is now trapped and hurtling towards Grexit
The story explains, as we reported at the time, that Syriza had finally agreed to cross its red lines. It had offered a plan that would meet it draconian austerity targets of 1% primary surplus this year, rising to 3.5% in 2018. Greece offered what amounted to a pension cut of 0.4% of GDP by tightening up on early retirement and by increasing health care payments on retirees, which is a de facto pension cut, and committed to a total pension cut of 1.0% of GDP the following.
Rather than accept the Syriza offer and only ask for changes at the margin, they maintained that the numbers still did not work and pressed for the 1% pension cut immediately as well as an increase in VAT at hotels from its current effective level of 7% to 23%. They also refused to budge on wanting to impose labor market “reforms”.
Key sections of the Telegraph story:
Greek premier Alexis Tsipras never expected to win Sunday’s referendum on EMU bail-out terms, let alone to preside over a blazing national revolt against foreign control.
He called the snap vote with the expectation – and intention – of losing it. The plan was to put up a good fight, accept honourable defeat, and hand over the keys of the Maximos Mansion, leaving it to others to implement the June 25 “ultimatum” and suffer the opprobrium….
Mr Tsipras is now trapped by his success. “The referendum has its own dynamic. People will revolt if he comes back from Brussels with a shoddy compromise,” said Costas Lapavitsas, a Syriza MP.
“Tsipras doesn’t want to take the path of Grexit, but I think he realizes that this is now what lies straight ahead of him,” he said.
What should have been a celebration on Sunday night turned into a wake. Mr Tsipras was depressed, dissecting all the errors that Syriza has made since taking power in January, talking into the early hours…
Syriza has been in utter disarray for 36 hours. On Tuesday, the Greek side turned up for a make-or-break summit in Brussels with no plans at all, even though Germany and its allies warned them at the outset that this is their last chance to avert ejection.
The new finance minister, Euclid Tsakalotos, vaguely offered to come up with something by Wednesday, almost certainly a rejigged version of plans that the creditors have already rejected.
Events are now spinning out of control. The banks remain shut. The ECB has maintained its liquidity freeze, and through its inaction is asphyxiating the banking system.
Factories are shutting down across the country as stocks of raw materials run out and containers full of vitally-needed imports clog up Greek ports. Companies cannot pay their suppliers because external transfers are blocked. Private scrip currencies are starting to appear as firms retreat to semi-barter outside the banking system.
This picture is consistent with the puzzling development we flagged: that of Syriza forming a de facto coalition with all parties save Golden Dawn for the purpose of the negotiations. Why would Syriza, which won a decisive, incontrovertible victory, feel the need to ally with parties that had pumped for a “Yes” vote like To Potami and New Democracy?
Evans-Pritchard stresses that the Eurozone is in similar disarray: Leaders of the creditor nations had said before the vote that a “No” meant Greece was signing up for a Eurozone exit. Even though European Commission chief Jean-Claude Junkcer is urging European officials to put their egos aside, they too appear to have whipped up their voters and MPs to such a high level of hostility against Greece that it’s not clear that they could back down even if they want to (and mind you, I don’t think there are many that want to). Put it another way, when Juncker is the sanest guy in the room, you know it’s bad.
Evans-Pritchard says the French and the US are trying to throttle back the hardliners, and Italy is on board too. But any bailout would require approval of all 19 Eurozone members. We’ve said before that Merkel didn’t have the votes for an extension, although she might be able to muster them if Greece capitualtes. But that was before the referendum. The new theme in the German press has been that the Greek loans are a total loss and the Eurozone would be better off if Greece were gone. And with an ECB default date of July 20, in theory there is very little time to turn sentiment around. In practice. there is €10.9 billion held by the ECB that Greece has been seeking to have released; if a deal really were nigh, the ECB might be persuaded to apply or borrow against that amount to make the €3.5 billion payment due July 20. But that assumes a real desire to get a deal with Greece done, and right now, that sentiment hasn’t jelled. Again from Ambrose Evans-Pritchard:
Yet 15 of the 18 governments now sitting in judgment on Greece either back Germany’s uncompromising stand, or are leaning towards Grexit in one form or another. The Germans are already thinking beyond Grexit, discussing plans for humanitarian aide and balance of payments support for the drachma.
Mark Rutte, the Dutch premier, spoke for many in insisting that the eurozone must uphold discipline, whatever the financial consequences. “I am at the table here today to ensure that the integrity, the cohesion, the underlying principles of the single currency are protected. It is up to the Greek government to come up with far-reaching proposals. If they don’t do that, then I think it will be over quickly,” he said.
The article outlines a Grexit plan that was discussed at an emergency session a week prior. It would consist of seizing the Bank of Greece so that the government could get its hands on €17 billion of reserves, imposition of a haircut on €27 billion of Greek government bonds held by the ECB, issuing IOU to recapitalize the banks, and appealing to the European Court of Justice that Greece’s rights as a Eurozone member had been violated (particularly with respect to liquidity provision).
This is far too late to be planning for a Grexit, and this level of planning is well short of the sort of war-level mobilization of resources that needs to happen. Worse, by letting these plans be reported in the media, the Greek government loses any element of surprise. For instance, the ECB has now had over a week notice that the Bank of Greece might be “requisitioned”. Do you think they haven’t taken preparatory countermoves?
If the two sides are unable to pull out of their current trajectories, the end game looks to be a Grexit and a Greece not free but dependent on its creditors for key imports like food (Greece is not self sufficient in food), petroleum and pharmaceuticals. And this will do huge damage to the fabric of Europe, both in the cost of a downdraft of a Grexit and the creation of processes to allow for nations to depart, which ones big enough to do so and come out ahead or not suffer very much, like France and Italy, may eventually use themselves.
Update 8:20 PM: The Greek banks will not last beyond the weekend which basically means the Greek government has until Sunday to capitulate, um, come to a deal. From the Financial Times:
Mario Draghi, the European Central Bank president, briefed the summit on the situation for Greek banks, indicating that they could survive to the end of the week but not much longer. He also signalled that emergency central bank loans keeping the banks alive, which the ECB must approve, could not be extended beyond the weekend.
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I can only think of the Sleepwalkers…
Just waiting for an Archduke to get shot (if it hasn’t happened already).
When I picked my screen name in 2008, I didn’t realize how appropriate it would be…
it’s just a whole world waiting for a Tunisian fruit seller.
Reads like the kind of story you’d see at the supermarket checkout. Don’t believe it.
Varoufakis and Costas Lapavitsas are among the sources for the article, and AEP has been consistently and forcefully pro-Syriza. This article is effectively a huge climbdown from his previous position, based on his mistaken belief by being too close to Syriza sources that Greece had a strong hand and thus arguing that they would have to make concessions.
To be fair to AEP the Telegraph is collapsing and the rest of the paper is basically now sub-tabloid. He must have to spice up his style a little bit to blend in.
I could never understand Tsipras’ strategy in calling the referendum unless he wanted political cover for Grexit, because the creditors had already declared that they don’t trust Syriza to implement any deal they reached – so that the terms Greece might agree to are essentially irrelevant. Thus, gaining domestic political support for further negotiations was essentially futile. Instead, he has stoked the fires of resistance and will have to live with the results.
Of course, if he really thought they would lose, then he could go into opposition, and let the blame for implementing the “reforms” fall on the center-right parties.
I have difficulty believing this because the center-right never had the power to push such “reforms” through, even if the “yes” vote had won. So, the strategy of avoiding blame wouldn’t have worked and doesn’t make sense.
Instead of a center-right government, there would have been a power vacuum, with essentially nobody in charge, an angry Greek populace and the need for new elections. But, the creditors would never extended the debt pending new elections. Instead they would have insisted the new Greek government agree to immediate and total capitulation, which its doubtful any government could have really produced. And the creditors have known that the Greek government could not really do what they wanted since last Autumn. They have essentially forced 2 regime changes, and have gained nothing except Grexit.
The only logical conclusion is that they wanted Grexit all along, or else thought it was the least bad alternative.
In short, Grexit was going to happen anyway, so there wouldn’t be some alternative government capitulating to the Troika and taking the blame. There would be no effective government at all, and the rise of Nazism amid scenes of conflict in the streets reminiscent of the Greek Civil War. Syriza is better off by far being in charge now, than in opposition, passively awaiting the fate of the German Communist Party in 1933.
that’s the way i see it as well. either tsipras wanted a mandate for a grexit or he was played by those in his party who did.
leaking to the press a story that he secretly wanted to lose the referendum all the while syriza did everything they could to win it, right down to failing to link an oxi vote with a grexit in order to NOT scare voters away, plays into this strategy perfectly.
In complex conditions like this, it helps if we can keep things simple:
1) the “Troika” (banksters) want to extract wealth, (steal, swindle, plunder) in any way they can; i.e., they bribe officials, threaten, and squash them if they resist. They have no qualms about sending whole nations over the cliff, because chaos always feeds into fascist reaction; and the “Troika” and co. love to work with fascists. (The Greek Generals are just itching to get back in charge).
2) Syriza, in a long line of liberalesque “left” parties, completely under-estimated the ruthlessness of their opponents, and did not prepare for this situation.
I disagree that “Syriza is better off being in charge.” They have led their country into the abyss, (worse than the austerity-lackies) and utterly dis-credited “left” politics; which, of course, will likely lead to the rapid rise of “new dawn.”
You mention Germany in 1933. You’re analogy would be more-accurate if you likened Syriza to the German Social-Democratic Party, which had been ruling Germany for most of the years after WW1. Due to their endless promises and completely inability to face the true nature of the STATE apparatus, they UNWITTINGLY led the country into the hands of the Nazis, (while refusing to work with the communists).
Same old, same old.
The Troika are thugs but not all thugs are banksters. The ECB is the most powerful player and is a central bank. The IMF wants out but based on the latest report, it looks like it is part of the new deal assuming it gets done (the developing countries that represent half the IMF board votes are mighty unhappy re all the time and resources going to Europe and particularly Greece). Its more important role has been to act as the technocrat on behalf of the 18 European states that have guaranteed loans to Greece and would guarantee them in the next round. So think of the IMF as a combination of consultant and enforcer to the Eurostates as the big source of its power. Merkel et al have repeatedly said the IMF needs to sign off on any deal The ultimate lenders in those states are taxpayers, meaning voters and citizens, and not “banksters” the way you mean it. the European Commission is not a bank or a bankster.
The nasty negotiations going on now are not banks versus Greece, but European states versus Greece
Europe’s trap door slammed shut 4 months ago.
On March 12 to be exact.
Don’t trust me, just check it out by yourself
The Greek (supposedly) ‘impossible triangle’ is being solved right in fron of our very eyes right NOW.
Agree, Jeff S
i am leaning towards this conclusion as well. with polls so close and syriza leadership insinuating – at the very least – that they wanted an oxi outcome, it would have been a reckless gamble at best had they actually been looking for a nai win. furthermore, it would have been seen as a political defeat even if that was the outcome they really sought.
i can’t make sense of any of it so i’ll just wait to see how it all plays out. that the greek people will suffer is a foregone conclusion, but they may still save us all by breaking up the eurozone before the TTIP/TISA is passed.
The fact that Tsipras immediately conferred to seek the support of all parties save Golden Dawn is an important piece of evidence that you ignore. Virtually all the other parties whose “support” he sought campaigned for a “Yes”. With a 61% mandate, he does not need to confer with them. This looks almost as if he was on auto-pilot, forming the sort of coalition he’d need if the result was “Yes” or a “No” with such a thin margin that the legitimacy of the result would be in doubt.
there is a lot of contradictory evidence and some of it will have to be ignored as noise. it’s almost certain that syriza is deeply divided on the issue of grexit and if tsipras himself isn’t in that camp he may have been played by others who are.
crossing one’s fingers and hoping for a yes vote while campaigning for a no and not linking no with a grexit in the voters’ minds simply strikes me as incredible. while i can’t say that such a catastrophic level of incompetence is impossible, it’s too unlikely to consider as the most likely explanation.
I agree with Vidimi: I’m seeing way too much eleventy-dimensional thinking in the article itself and in the comments. [Which may be a result of U.S. political discourse and the banality of U.S. political thinking.]
No one goes through the expensive exercise of a referendum to defeat himself or herself. Asserting so sets off my Improbability Meter. [Although, again, the source of this thinking may be the tendency of U.S. Democrats to snatch defeat from the jaws of victory.]
Tsipras has said all along that he wanted to create a better economy and to get the boot of the creditors off the collective necks of the Greeks. And what deal do the creditors keep insisting on, as the article points out? Raising taxes in the vital and delicate tourism sector and screwing over the pensioners. [And not raising taxes on the rich, as has been reported elsewhere.]
And Tsipras is not rational? The rational thing is to form a government of national unity after the referendum and to prepare for major change–including exit from the Eurozone.
I note, too, that Mr. Ambitious, Matteo Renzi, is changing his tune. Sign of the times. And a real fear that despite the strengths of the Italian economy and its size, Italy is next for “reforms.”
As has been repeatedly pointed out here, Ambrose has pretty much been consistently wrong about almost everything concerning the Greek crisis. The primary reason given is that he is too close to his sources.
Now we are to believe him because… he is so close to his sources. Huh?
Ambrose seems to be a little miffed and slightly rattled by his less than stellar record on this crisis. There is an air of desperation to land the big scoop and erase the memory of past miscalculations. This article has the stink of a vendetta served up at a perfect time to cause a sensation. Whose vendetta? Maybe Varoufakis for being canned or maybe Ambrose for looking like a chump for so long. Either way, I’m not buying it.
Tsipras campaigns hard to lose? Forming a coalition is a sign of weakness, not solidarity in the face of overwhelming opposition? In other words, believe just the opposite of what you see. I like to count myself among the cynics of the world so this should be right up my alley, but it doesn’t pass the smell test.
See also the Syriza “war plan” (to call it something) that Tsipiras ultimately rejected in favor of attempting a kind of choreographed capitulation via the referendum.
How likely do other readers think this course of action is? Note, in this regard, earlier AEP piece about how Varoufakis successor Euclid Tsakalotos “shares little of Mr Varoufakis’s European idealism” and believes
Does that mean that Greece can at least burn down the Euro on their way out the door?
I think Varoufakis was more realistic than Tsakatotos. As Yves points out in this summary of AEP’s Telegraph piece, Greece is not self-sufficient by any stretch of the imagination. If you need to import food and resources, going to the Drachma and being booted from international payments systems is not going end well for you as a country.
One has to wonder if “Europe” is really willing to give the Greeks the full “Darfur Treatment” or some kind of compromise will be found. The British traders starved the Irish back in the day, but, maybe this time it’s different?
The central control over the media is marvelous – I saw the first article today in a “serious newspaper” about the crash on the Chinese stock market; This has been “unreported” (apart from crazy bloggers) for months!
OTOH – surely, pictures of starving children will never the less emerge and probably upset people. The election slogan of the Danish social democrats could be recast as “The Europe we know”, a couple of emaciated kids, some EU fat-cats on posters and social media and we could get a real revolt going.
There comes a time when both corrupt governments and neo-liberal regimes arrive at the breaking point. The two seem to have intersected in Greece.
Well the Washington Generals did win a few games, by accident.
“The Germans are already thinking beyond Grexit, planning for humanitarian aid and balance of payments support for the Drachma.”
First good thing that I’ve heard indicating willingness for a real solution- amicable ( sort of ) divorce.
Tsipras needs to grab this deal with both hands and not let go.
Beg shamelessly for as much “bridge” humanitarian relief as he can get, heavy duty technical assistance in setting up the electronic payment system that so concerns Yves and Clive, and tell the Folks Back Home that they just won their Second War for Independence- at enormous cost, they are once again their own Masters.
This whole story is so Made-For-TV goofy that I strongly suspect that it’s true; the Oligarch owned Greek Media lied through their Beautiful People teeth about the opinion poles showing a neck and neck race with Yes in the lead and Tsipras bought it. The lying Oligarchs hoisted on their own petard- there is a God in Heaven !
I suspect a capitulation.
It’s not shameful to say one wants to survive. National pride, fine. The world has not seen such valiance in quite a while. Time to move on. Euro-denominated pensions buy a lot of pharmaceuticals than Drachma denominated ones.
If there is a flaw in the article it lies in the fact that it is attempting to judge moods in European Capitals , Europe, the ECB, etc. from a few isolated interviews. They may be right but then many of the articles saying that the vote was going to be tight may also have been right too. This wouldn’t be the first time well connected reporters were surprised.
In any event, the real question is, could Syrza even capitulate hard enough at this point?
As the discussion here and at the Guardian has made clear they have almost nothing left to give except “labor market reforms” that even the IMF has doubts about. And if they make those and take the permanent damage that will hit them they will still likely be unable to meet the targets that are being imposed.
And with each passing round the public demands of Germany and the ECB seem to have only gone up making it likely that whatever the Greeks offer short of suicide will be insufficient for their moral creditors. Expansionary Austerity is false and all the self-immolation in the world won’t change that.
Capitulation is not really an option, because they can’t stop a Grexit. Actually Grexit has already happened – deposits in Greek bank are currently functioning as a currency, and exchanging for Euros is limited by strict capital controls. It’s actually a pretty standard peg failure crisis apart from the national currency being electronic-only.
Reversing the Grexit requires somebody to pay off more or less all the depositors of the Greek Banks. The ECB could, but that goes against their ideology. They could haircut the depositors in theory but I don’t think Syriza will let them.
Reads like Trojan Horse Resistance.
I guess only Nixon could go to China or Clinton welfare reform.
Looks like Tsipras may have been aiming for an early feathered-nest retirement and an Obama/Blair legacy. Probably had his fiery resignation speech cued up.
What makes this story credible are Operation Nemesis (riot control prep), YV’s sudden firing after talk of a parallel currency, lack of any capital controls or alternative planning, Tsipras’ too-late panicked capitulation days before the ref, and his consistent prior pattern of progressive backpedaling, as Obama did (more shrewdly) with all of his betrayals, notably single payer, public option and mandates. I think the World Socialist Web Site called this hope-and-shaft campaign correctly early on, as it did with Obama.
https://www.wsws.org/en/articles/2015/07/07/pers-j07.html
Yep, hate to say it, but I think Syriza (and the Greek people) got played by Tsipras. And here we thought Yanis was the master game theoretician. Turns out Tsipras was his better.
The game wasn’t a game of chicken with the risk being to exit the Euro.
Rather, the game was to use up all the time so that Grexit was no longer an option. The game was to create the TINA. As usual, a party being co-opted like that doesn’t recognize what’s going on til too late. That’s the whole idea.
Tsipras/Euro wins either way. Referendum loses: Euro wins. Referendum wins: Grexit is not an option.
I’m sure Tsipras wasn’t alone in Syriza in playing this game. Who knows, maybe Yanis was part of it. Maybe all of Syriza (at least the parts that mattered) was a trojan horse. Who knows.
Could you elaborate on how using up all the time results in Grexit not being an option? The Germans seem to think it is.
So these are the events that make History. But never find there way into the books.
Creating change is always a struggle? Power never readily relinquished?
The cans can no longer be kicked.
Europe–not just Greece–may have to start dealing with the consequences of the inadequate ways in which the euro was set up, and the economic impossibilities of Troika policies.
No winners here–unless all sides take creative, responsive approaches.
Changes are needed from the Maastricht treaty’s rules-based approach. It was destined to fail because of its many inadequacies in how it approached a monetary union without dealing with money creation.
(There are currently several interesting discussions about this on The Real News Network including with Lapavitsas and Lescaris, and discussions with Steven Keens on RT’s Kaiser Report and on Al Jazeera’s Inside Story.)
Tsipras is our Frodo. Frodo never wanted to be the one. It just befell him. It was his destiny. Now Tsipras has the ring. He must destroy it.
Well said. I highly doubt that Tsipras was hoping to lose the referendum. I had the feeling he thought he was going to win and was relishing that sensation. Other parts of the story do ring true. But the bottom line is that he has no honorable alternative at this point other than Grexit. Time to bite the bullet and do what needs to be done.
Huh? No one becomes the leader of a nation by accident, least of all Tsipras. A comment on Observing Greece:
If this story is true – unless this is some sort of deliberate, planted misinformation, an almost perfect expression of anti-triumphalism “thrice he refused the crown, he swore he thought it would be taken from him!” – then I recall this moment at the end of The Candidate:
https://www.youtube.com/watch?v=myEpap3TxVs
“an almost perfect expression of anti-triumphalism”
That’s interesting. There’s a story about journos who took a photo of Euclid’s notepad coming out of Eurogroup meeting today and then zooming in and trying to read his notes. One of the things on the notepad was “no triumphalism”. Probably not relevant but interesting.
http://www.theguardian.com/world/2015/jul/07/greeces-new-finance-minister-has-to-remind-himself-no-triumphalism
Doesn’t qualify as Greek tragedy when all that’s available for the poor is a bunch of cheap jokes.
Greece is stuck in an airplane with Leslie Nielsen.
Lysistrata
Unless this is deliberately planted misinformation, a sort of anti-triumphalist positioning in the extreme – and that seems a bit tinfoil even for me, then life is imitating art. From the end of The Candidate:
https://www.youtube.com/watch?v=myEpap3TxVs
Another interesting (and not inconsistent) take on the negotiations from Paul Mason of Channel 4 News, who appeared in a lengthy interview with Amy Goodman on today’s Democracy Now show. http://www.democracynow.org/shows/2015/7/7 Mason has conducted extensive interviews with Finance Ministers Yanis Varoufakis and Euclid Tsakalotos.
Paul Mason:
Mason analyzed the differences between the two finance ministers and give a sense of how Syriza leadership has been thinking:
Yes, the humble/humbled stance could in theory be posturing designed to elicit the greatest amount of humanitarian support in the initial painful months as Syriza prepares Greeks for the hard work ahead. Maybe.
Well this certainly casts the Varoufakis resignation in a new light.
Even if Tsipras capitulates, and the E.U. allows them to accept a crummy deal (which as you point out is questionable), then we’re right back here again in what, 3-6 months?
Just accept your role in history with dignity, Tsipras. Tell Merkel to go take long hike off a very short German pier.
Since Tsipras cobbled together a ‘coalition’ to get a capitulation done, which has been rejected by the people of Greece, can he pull off a “Government of National Unity” to get a Grexit done with the least disruption?
I do have sympathy for Tsipras and the Syriza central committee. They thought they were dealing with rational human beings. Instead, they got Troikas and Institutions; cold and heartless bureaucracies. This is also the albatross around the European Unions neck. C. S. Lewis got it right in “The Screwtape Letters.” H— most closely resembles a giant bureaucracy.
Can the release of this information at this time be some tactic to give Tsipras ‘cover’ for exiting the scene? “I have been caught. I must go. Goodbye.”
If Tsipras does go, who replaces him; better yet, whom plural? A Directory of sub-heads is possible in a National Unity Government.
My brother predicted a new war in Europe a few years back.
At the time, I thought that his prediction was excessive, later, I thought that we would see a cold war in Europe.
Now I am inclined to agree that there will be a shooting war, and it should be noted that as the EU country spending the greatest proportion of its GDP, the Greeks will punch well above their weight class.
I think you’re right about the Greeks. They have a form of compulsory military service (although, as I recall, it can be relatively short, like nine months). And the German military is a joke. After decades of letting the U.S. foot the bill and supply the materiel for Germany’s defense, they are worse equipped for a shooting war than France was in 1939.
They’ve really messed up. So many commenters have challenged Yves’s tone toward the Syriza gov, but we can’t let what we hope to see cloud our vision.
If they can pull out of this without a catastrophe, they might be the finest statesmen since Lenin and all those comrades. It’s not looking good.
These fine Leninist statesmen are preparing to sign the new Treaty of Brest-Litovsk, with German terms so harsh that even the German negotiator was shocked.
Reading AEPs piece today – I was thinking of the movie “The Producers”.
I find it hard to believe that Syriza didn’t want the “No” because their strategy to produce a Grexit has been flawless. They stretched out their negotiations while the Greeks withdrew huge numbers of Euros, transferring of the direct loss for the Grexit to the ECB. They offered to take the last offer from the EC, which was promptly withdrawn, showing the EC is being the bad guys. The Grexit itself was imposed by the ECB when they cut off ELA, so not Syriza’s fault (officially).
Then, at the end, they tossed the choice to the voters, where “No” implicitly supports a Grexit – without saying so and scaring off voters, and a “Yes” is for a totally unacceptable plan. Greece could not have survived the EC demands – it just wasn’t an option. I admit I was thinking Yes was more likely but in retrospect there’s just no way.
Finally, the Grexit, onto an electronic Greek Euro, can be relatively painless, with an immediate shift, not even a blip on the payment system for domestic transations, and no need to print currency. There’s a big side benefit in reducing the opportunities for tax evasion.
So is all this brilliant strategy an accident? Did Syriza execute a nearly flawless Grexit plan by accident? Hard to believe although stranger things have happened. I’m certainly surprised they had no compromise to propose to the EC in the event of a “No” vote – it was leading in the polls, they certainly should have been ready for it.
By “electronic Greek Euro,” do you mean like Bitcoin? If so, that won’t work in a country where cash is king and smartphone use is low.
No, standard electronic transactions (debit cards) and checks written on Euro-denominated accounts in Greek banks. Right now, if you’ve got a job (or pension) in Greece and a debit card, you can go about your business perfectly normally. Your paycheck gets deposited in your bank twice a month and you can go to the store, buy groceries, pay your rent, pay your utility bill, pay your taxes, etc., just like last month.
A perfectly functional currency – but it’s *NOT* currently the European Euro. You can’t use those account balances to get European Euros (except, basically, by a blackmarket transaction – you write a Greek Euro check and somebody gives you European Euros).
A side benefit for the Greek government is that while cash is king now, Gresham’s law is going to suck those physical European Euros out of circulation in a hurry. Everybody will be forced to switch to traceable transactions and tax collection will get a LOT easier.
I have been oscillating between the “brilliant strategy” and “bumbling idealist crusaders” since February. Hard to tell until the fat lady sings…
We will know on Sunday…
That’s the way it looks to me, too. And furthermore, I expect Yanis will be President, or whatever Tsipras is, in the near future by popular acclaim. He’s the only one with correct theory, acceptable answers, a plan and a personality to pull it off. I just hope he has good security, a lot of friends, and the will to win.
Reminds me of Indonesian shadow play or the Mahabarata recitals in India, everyone knows who the characters are and everything that will happen, here’s the good one, here’s the bad one, here’s the tragic one, etc. But they still watch, they watch each player act out the part that is designed for them, towards their fate which is pre-determined. In the Mayan cosmology, everything has already happened before and will happen again, it’s up to the priests through ceremony to try and make the next things happen in an order that keeps the community in as much harmony as possible, worked for 1200 years. It seems our priests however are drunk with power and hubris and the ceremony they enact is not designed to foster harmony for the maximum part of society,…quite the contrary.
Between this and the Chinese share market…time to put on the “canned food and ammo” trade.
Die grossesse Dummheit das machen wird!
So it’s Grexit then. Greece will be the first country to leave the Euro. I don’t think it will be the last. The German conservatives’ and the Troika’s hard line on austerity will destroy the European Union. They apparently do not remember the Treaty of Versailles.
Perhaps they need a refresher?
Walter Benjamin, from One-Way Street (written 1925-6):
Imperial Panorama
A Tour of German Inflation
I would like to remind you that there are 19 states that have to agree and the Germans aren’t even the most uncompromising. The Germans are downright soft towards the Greeks compared to the Finns or the Baltic States and the ranks of the staunch nay-sayers also include the The Netherlands, Slovakia, Slovenia and Austria. Pinning this on the Germans alone is an exercise in legend-mongering but I guess it’s always attractive to have a convenient boogeymann.
Conservative Germans and the Troika. Hardly blaming all Germans.
Not true for Austria. Many intellectuals in Austria have sympathy for Syriza, Tsipras and Varoufakis. Also, Tsipras consideres Austrian Chancellor Werner Faymann (Social Democrat) as a supporter within the euro area.
AEP said 15 of 18 states are now opposed or leaning towards opposed to Greece. France and Italy were the two he cited as not, and I suspect Austria is the third.
Please see My Greece. The Journey Inside Syriza. in which well-known Austrian journalist Misik reports on his meeting with Tsipras and others. Quote:
Yves has finally admitted that Europe will provide food, oil and medicine to avoid “being embarrassed” by African levels of misery within Greece. So if that is a worst case scenario, some form of Grexit is now a no-brainer. The alternative is continued and even more severe austerity which will both impoverish and depopulate Greece.
Tsipras can’t sign a deal that is even worse that the one Greek citizens rejected in the referendum without massive civil unrest breaking out and a good chunk of his erstwhile supporters considering him a traitor. And no other deal will be on offer from the Eurocriminals.
A) our position has always been in most worst case scenarios there will be humanitarian aid to Greece
B) this does not mean a grexit will be smooth. Thinking it will because of aid is utter stupidity and baseless. We’re talking about an economy where production collapses en mas. the fact that they won’t let them all starve or die of lack of medication/heat all at once is irrelevant. Once they’re completely directly dependent on the Troika for basic necessities the Troika holds all the cards. and that assumes there would be no conditionality on humanitarian relief, which is not a warranted assumption by any means.
C) there’s no guarantee it wouldn’t actually be a humanitarian crisis. The model I’m thinking of is Obama’s HAMP. The equivalent of HAMP “foaming the runway” for banks with homeowners being defrauded would be providing enough relief that it spaces out the starvation and death from lack of medication, it doesn’t ultimately stop it. They would have total political coverage in that scenario because they could (in some sense rightly) claim “despite being so against us we were so generous with them and provided these relief supplies as essentially gifts”. If you think that is the formula for independence from the Troika you’re delusional.
It’s not all that easy to keep a whole country under ones boot while threatening everyone else with getting the same *and* keeping ones head attached. If this is “the plan”, then we can expect the return of “The Competent Terrorist” from the 1970’s, the kind that had bigger goals than just blowing itself up.
The general populace will not care much about some representatives of the Troika getting whacked, they might even approve of the initiative (at least in private, not on the open internet, of course). Interesting times indeed.
Germany should have a mandatory “ONE Front at The Time”-lesson in primary school by now, but, obviously they haven’t.
This might be true long term but Greece doesn’t have the long term. Perversely, the way they’ve treated Outright Monetary Transactions (and gotten legal blessing from the ECJ) other countries may benefit from a grexit (because of aggressive bondbuying to counteract the possible effects).
I never said it would be smooth. I agree that Grexit will be painful and relatively long. How painful and how long are the key questions and I know that you have no answer to that. My position is that Grexit is the lesser of two evils because it means that economic levers return to Greece. At this point most of the Eurozone countries WANT Grexit, so there is no reason this can’t be an amicable divorce once it becomes the only option. One way or another Greece is not without friends and after a period of great suffering I think you will be surprised how fast the country can be rebuilt with proper fiscal policies.
Instead what you support is the complete slow strangling of Greece. As long as they stay in the single currency there is no avoiding the depopulation and economic destruction of this nation. For this to be avoided, there would have to be a generalized brain transplant among European leaders. Put simply, there is zero hope in what you are advocating.
A complete and voluntary failure of government in favor of private banking. Merkel says primly that the EU “shares sovereignty.” But what it really does is share so much political conflict that nothing can get done. But the EU is Merkels perfect mask for shrugging her shoulders and saying, it’s not the German banks, it’s the other members of the EU. This is in the same category as our derelict congress which has not lifted a finger to be fiscally responsible during this depression. Except to give the banks all the money they could possibly ever need to survive their own incompetence.
At this point, the personalities of the active political negotiators do not seem to count for much. A little less pension money, close down 2 instead of 4 hospitals, perhaps the circles of hell in Greece can sell naming rights to cell phone companies or other consumer product ad buying giants. What’s in a good deal or a bad deal. The debt needs to be cancelled. If this is Germany in a position of political power, who would want to continue to build a European Nation out of the EU and the Eurozone, if this is how you can expect to be treated over something as easy to come by as money from the European Central Bank. Who would want to be dominated by the likes of Merkel?
There is a school of thought that the division of Germany into 2 by the result of the end of WWII was probably the greatest political achievement of the 20 Century because it kept Germany with 2 big feet on it throat. One from Russia and one from the USA. And now look at it re-united. Someone asked me on this site why the US needs NATO, looking at German Government Policy towards its founding member in Greece, the answer is obvious. Someone still needs to keep a foot on the throat of Germany because its government still does not know how to behave like a civilized country. Doesn’t a several thousand year old civilization that invented rational thought and reason as a culture wide ideology instead of superstition mean anything to Europe? Does Homer and Plato and Aristotle mean anything to supposed apex of German intellect? No one will want to freely fight and die in a military alliance if it is only a matter of time before a capitalist bust breaks their country and Germans stands by like a petty shop keepers owed a bill from the good times and mercilessly demanding payment after you lose your job, your savings and your home. The European Union, The Eurozone and NATO will be composed of only the richest or most fearful of Russian dominance. A splintered Europe would be a political vacuum just waiting to be filled by Jihadists, Russia, and USA interference with no large scale countervailing political force of a united Europe.
It’s only money. You can produce more where it came from. Europe has only one chance at Civilization and this looting and vandalizing of Greece due to German intransigence is an outrage of epic proportions. It is global disaster from which there may be no comeback. Greece should not leave the Euro, not leave the EU and not leave NATO and resist paying a debt that can not be repaid. It is out the hands of Greece and in the hands of the core nations of Europe who with the stroke of a pen can end this brutality.
Well, as i think Churchill said, they’re either at your feet or at your throat. I deal with German companies a great deal in my business, and I believe it’s as true as it ever was. They have tendencies. ..
Exactly! +100!!
Germany is destroying the EU to save the Euro (and being Germans, they just don’t get it)!
The ECB could have directly bailed out their zombie banks instead, why didn’t they? Wouldn’t it have been more cost effective?
Even a 50% haircut would still leave the Greeks with the harsh medicine you prescribe. Me, I will be very pleased to see the euro fall apart.
Back in 2012 or so when Deutsche Bank would have failed, it is my impression that the ECB could not bail out the big banks. At least not without getting caught. The ECB is given its operating capital by dues from every member state. (I assume this is taxpayer money, not the dues paid by the private banking system which the ECB serves.) Because Merkel was soon forced to skip off to China and cut a deal, to do German bunds, the proceeds for which could be funneled thru the ECB to then bail out the big banks and Greece was used to hide the shady deal from German taxpayers. I don’t know how any of that worked, or even if it happened, but it did all coincide and the ECB, who had been unable to do anything, miraculously did something. It middle-maned the remittances.
Fortunately NC has decent commentariat. Comments like yours belong on another site because “Imagine a society where the people who dominate comments threads ruled over everyone. They tried that between 1933-1945”
Merkel (and Hollande, the Eurogroup et al) need to decide, do they want to go down in history as the ones who rescued the European project by finally setting up a fiscal union, thus completing the Euro and bringing Europe closer together, or do they want to be remembered for destroying the European project, by forcing Greece to leave the Euro, and thus setting off a chain reaction which can only end, in the long term, in the breakup of the Euro, and maybe even the EU.
There’s nothing Syria can do now, the ball is firmly in Europe’s court.
I’m not optimistic…
Paul Mason has not same reading of referendum as AEP – see Twitter.
But even if AEP is right, it only confirms that Syriza continues to be chaotic. And remember that the creditors created Syriza. It’s their baby.
The referendum has helped re-confirming that the two sides have fundamentally different positions and nobody wants to yield. I have the impression that Merkel has prepared nothing for the event that the Greeks do not break under torture. That seems to be her one and only plan. I can understand that Obama is seriously underwhelmed with Merkel.
If Merkel continues to deny debt relieft, her fingerprints will be on the trigger. If she agrees to debt relief, in principle, it would almost be an unsurmountable task to convince the austerity ayatollahs in the other euro states to agree. They have followed Merkel’s lead (had no choice, really) on breaking Greece for the past 5 years. Impossible to make them change DNA over a weekend. They will continue to demand Grecce’s scalp.
In such an impossible situation only a bit of creativity can help. First short-term financing to stop Greece from drowning tomorrow, then debt relief through a new SPV lubricated with freshly minted euros from the ECB. Or something. The point is to provide substantial debt relief while not forcing losses onto the balance sheet of Finland and the others.
And I trust Obama to be much more creative than any of the Europeans.
Karl Denninger’s post entitled “Dear Frau Merkel, Herr Tusk, and Herr Juncker” is one wild letter addressed to the Troika, but I believe it makes perfect sense.
https://market-ticker.org/akcs-www?post=230325
I posted part of his letter previously, but it has yet to be printed. I hope Naked Capitalism isn’t censoring; I’m sure they are just in bed asleep and my comment is awaiting moderation. Thank you.
I have been off for a couple of days, which is an eternity in this saga. But I have always thought that the referendum was a way out for Tsipras, that didn’t work either (BTW, there is the explanation for why “Tsipras looked surprised, even hurt” when his last but one (I think!) proposal was turned down, why the sudden decision about the referendum that that made the negotiator in Brussels, Nikos Huliarakis “dropped his pen” as some Greek journalists reported). But I checked a bit of the Guardian Livefeed and was impressed by the successive doorstep declarations of EU FinMin arriving at the Eurogroup, all very unfavourable to Greece.
What disturbed me in this post, too, is the idea of having Varoufakis as lose canon, feeding the press. If he never managed to keep his mouth shut as Finmin, he will not do it now…
AEP:
“It is hard to imagine what would remain of Franco-German condominium. Washington might start to turn its back on Nato in disgust, leaving Germany and the Baltic states to fend for themselves against Vladimir Putin’s Russia, a condign punishment for such loss of strategic vision in Greece.”
(sic!)
Everybody have their beef to push.
If this AEP gossip is true then Tsipras is just another dishonest SOB Greek politician. But one can speculate if there is a rift between Tsipras and Varoufakis. Was V removed from the negotiations by T? Can we trust V or is also he another one of these Greek “politicians” out for revenge?
“leaving Germany and the Baltic states to fend for themselves against Vladimir Putin’s Russia” – would that be in American interest? I am just asking, as George Friedman from Stratfor (https://www.youtube.com/watch?v=Sh3dp_AnlQI ) said quite the opposite; allegedly the biggest security issue for the US would be a union of German knowledge and Russian manpower (to the very last 5 min of the video) against the US would be the only two powers to jointly overcome the US – he said. So let the “Baltic’s fend for themselves” would be not be in American interest ? – or do I misread the situation?
I thought Varafoukis’ aim/solution was not just debt forgiveness, but also a form of federalism that redistributed wealth among the EU nations, much like the U.S. does with the States. By way of example (and please don’t hold me to precise amounts), as a Californian, for every tax dollar I send to the U.S. Treasury, the State gets something on the order of $0.92 back, but in Montana, the return is $1.08.
ALL red states receive more than they provide. All blue states are paying welfare to schizophrenic red states.
True dat!!
And when blue states eat red state agriculture didn’t they eat the subsidies to the red states?
Mostly true, but not completely true. At first I thought that you are entirely correct, but I decided to look it up anyway, because this is useful in discussions with red staters and their fellow travelers. I found that blue states Maine, Hawaii, and Vermont, and purple state New Mexico, get back more from the federal government than they pay in taxes. See:
http://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/
https://en.wikipedia.org/wiki/Red_states_and_blue_states
But all of the other states which get back more from the feds are red states such as South Carolina, Mississippi, Alabama, Montana, and Kentucky.
I realized a while after I posted my message that you were really only discussing the way that red states get more back from the feds than they pay, and I was listing the blue states that get more back from the feds. But there seem to be a few red states that send a lot more tax money to the feds than they get back, such as Kansas, Arkansas, and Utah. I guess most of the red states receive more than they provide, but not all of them.
All talk of Grexit seems to be destabilizing to the EU in its own right. The way the Looter Union (EU) was set up, you can join but can never leave. No EU country or collection of countries can force any other out as it breaks the founding document. The EU forcing Greece out also violates the charter, rendering it empty and meaningless. A good thing because the Looter Union really must go away and be reformulated without having banksters in the driver’s seat. The ECB needs to be subordinated to the social good of all members, not to the benefit of the organized crime that is big finance nor the fascists running Germany.
Color Revolution coming right up once the poor Greek citizenry has been starved for awhile. The Atlanticist elites never quit.
True, though I suspect a color revolution would actually be initiated if Greece makes any moves towards Russia. Of course, color revolutions don’t work well at all. Ukraine was a color revolution fully orchestrated by the CIA, the biggest bunch of bumbling sociopaths in history since the Nazi SS or Gestapo. See how well the color worked in Ukraine? It’s as bad off as Greece but the IMF still falls all over itself to keep funding the corrupt marionette government there, even though it uses the money illegally to fund military spending and war.
I appreciate ambiguities and scepticism as much as anybody, but why would anyone insist that this second guessing of the behind the scenes version of the ongoing situation is true, and not subject to its own pertinent ambiguities, or even desire that it be the truth of what’s going on without allowing adequate time to let the events play out as they stand. A kind of democracy carried the day, and will help shape the course of events come what may. But instead what we read Is almost a rejoiceful sort of need for self-justification and schadenfreude. True, we lowly citizens are duped time and time again, but “the arc of history is long. . .”
Ambrose Evans-Pritchard is the last to be engaging in schadenfreude. He’s been a very forceful and consistent Syriza supporter. For him to run a story like this after he’s been such a vocal backer must have been disconcerting.
Well, this is a whole lot of smoke blown up into the crevasse. It would be nice to have actual HUMAN SOURCES rather than psychic mind reading Tsirpas from afar. Maybe psychic hotline could help? And please say which one because I will call right away ;)
THE EARTH IS FLAT! GLOBAL HEATING IS A HOAX! OBAMA IS A MULSIM! SLAVERY WAS A SIDE ISSUE IN THE CIVIL WAR! Argle bargle.
Insanity if this so, pure insanity? Sources? Sources, please? CONFIRMED SOURCES. Boy does THIS ONE blow smoke right up into the crevasse. Or is this mind reading of Tsirpas from afar? Tell me what psychic hotline to use so I can call right away ;)
Frau Merkel, the soviet-educated East German Queen of Europe heads the FOURTH GERMAN REICH and is engaging in a sort of REVERSE anschluss strategery with Greece. Reverse Sudetenland strategery. Reverse invasion of Poland strategery. Reverse invasion of Belgium strategery. Reverse invasion of the Soviet Union strategery.
But for the SAME PURPOSE: TOTAL EUROPEAN DOMINATION BY THE ALPINE NORDIC RACE superior upper orders over the inferior browner lower orders residing about the Mediterranean.
Like Margaret Thatcher, Frau Merkel has NOT ONE ATOM OF HUMANITY.
So sad. Today’s headline could read, “The German’s Continuing War in Europe: albeit, this time w/o the military.” Alas, would that humankind would relent punishing the poor, who were led to penury by the plutocrats.
End of the road this weekend (which, to be honest, is a week longer than I thought it would take).
The most sensible approach by creditors now is to do damage limitations, as mentioned in the article. So, in effect, helping Greeks (probably w/o Syriza) to establish drachma, maybe “suspending” their EUR membership indefinitely (so that they would technically not leave, but could be readmitted… if ever), and stand by with food, fuel and medicines (which are easier to sell to voters, especially if you play the “if we let them go, it will open a route for all the Syria/African illegals” card, even if it’s the same money).
It gets the creditors what they want (you want out? Suffer!), while at the same time having reasonably good PR outside (“it was the referendum that did it, we had to take it.. ” – ironically it appears that the referendum gave more cover to creditors than to Tsipras), and inside (“we finally got rid of the freeriders, but we’re good citizens so do some charity but call it charity”).
I have to say that for creditors Tsipras was a blessing. I’d almost say “if T. wasn’t PM, creditors should have had made him”.
One always wants to assess the credibility of sources.
Chip Berlet on A. E-P 1999:
http://www.politicalresearch.org/1999/04/01/clinton-conspiracism-and-the-continuing-culture-war-what-is-past-is-prologue/#sthash.0tBgoPhE.dpbs
If the creditors as well as the debtors had to share the hit from negative shocks such as the Great Recession then all this hoopla over Greece might be much more subdued. Time human beings woke up to the fact that human existence is a constant battle to stop the few dominating the many and get tough!
EU fanatic EU-MP:s lashes out on Tsipras in the EU parliament, especially Verhofstadt is over the top.
Guy Verhofstadt plenary speech on Greece with Alexis Tsipras
youtu.be/P84tN0z4jqM
It’s a mystery why greek people at any price want to be bedfellows whit this EU elite that despise them.
Farage see it as the end of the Euro.
“Your moment has come, Mr Tsipras, take back control of your country – UKIP leader Nigel Farage”
youtu.be/94UcyJnRcGU
This all came to a head with the financial crisis but it’s pointing out some other problems. Greece could certainly go its own way and this seems to be supported by UKIP and the National Front who see advantages to being out of the EZ.
I think Podemos has more similar goals to Syriza which are more anti-austerity.
Immigration I think figures in here strongly and is a very difficult problem. I think all efforts should be made to improve conditions to avoid the need for immigration.
Greece likes being a eurozone member. It is challenging the elite leadership as to what that means. With the ECB acting in favor of banks rather that people I think that is a worthwhile challenge.
A Greek exit is not rocket science – B Mitchell
Australian ABC radio interviewer 1 July:
“My jokes about printing drachmas in the cellars, remain jokes?”
The then Greek Finance Minister replied: “Of course they do … we don’t have a capacity … because … Maybe you don’t know that. But when Greece entered the euro in the year 2000 … one of the things we had to do was to get rid of all our printing presses … in order to impress on the world that this is not a temporary phenomenon … that we mean this to be forever … we smashed the printing presses, so we have no printing presses”.
I doesn’t sounds like its figuratively speaking but literarily. Even if it really doesn’t matter if there is printing presses in Greece, many countries has it done by some supplier abroad. Sweden sold its money printing facilities to Finland. Even if Greece is more of a cash country printed money is a minor part of money in the economy.
Anyhow Greece still have its printing presses they are printing Greek Euros. Can one take this Varoufakis fellow seriously?
Would you trust an economist to manage a war? Economists have perilous little interest in anything practical. Their entire view of the world is based on model. The sort of thing that will make a Grexit a train wreck they assume away as “frictions”. Sorry, but not being able to pay for imports is not a “friction”. Have those conditions persist for any length of time and you get irreparable economic damage, in terms of import related businesses failing and the loss of the jobs they represented. And it’s not as if they get reconstituted overnight, either, particularly in a deeply distressed economy. Even in the entrepreneurial US, 9 out of every 10 new businesses fail within three years.
There is evidence, right now, in the media, of what is happening in Greece with mere bank closures that disproves what Mitchell is saying. He could also bother to have looked at the deep damage that occurred in far healthier Cyrus as a result of a mere 12 bank holiday. But no, they’d rather view the world through their pristine and tidy models than understand the role of banking in the economy.
“There has also been a lot of talk about the Greeks lacking the capacity to manage a currency swap. But it is only 15 odd years ago that the European nations (and their central banks) did exactly that. The transition to the euro was relatively smooth and the experience embodied from that transition would surely not be lost to the Bank of Greece.
They have already moved from drachma to euro – they know all the practical issues, albeit in a non-hostile environment where other Member States were doing the same thing. But the principles remain the same.”
From Mitchell’s post. This is economic malpractice. He doesn’t know anything about that transition to the Euro and how difficult it was. If he did he wouldn’t say ignorant things like this.