Greek elections

[brogdale]

Pretty good piece by Peston that gets to the nub of the issue...

It is a dispute about whether the eurozone's creditors will release funds so that they can pay themselves and avoid having to call Greece in default.

Or to put it another way, it is all about whether the IMF and eurozone can keep up the pretence that Greece is a sound and solvent debtor.

But doesn't it normally tell you something pretty important about those who owe you money when you have to lend to them so that they can keep up the payments to you?

History suggests that at some point the IMF, ECB and eurozone will have to recognise that Greece's 320bn euros of sovereign debts is a lot of spilled milk that will have to be cleaned up.

...
the only rational conversation for Greece's creditors to have with Greece is the one they refuse to have - which is on the scale of a write-off necessary to take the country off an inevitable road to dangerous penury.

So even if Greece and its creditors do achieve some kind of pact that allows it to meet its immediate bills, all that would mean is that the big conversation - about whether Greek debts need to be forgiven - has been deferred.
​

​

 

[brogdale]

Yanks (IMF) so desperate not to call Greek default that they've "let them" bundle-up all the June debts to be "paid" at end of month. Lol

 

[butchersapron]

Option was there for ages tbf - not a new last minute measure.

 

[brogdale]

Option was there for ages tbf - not a new last minute measure.

Yep, but fact that Syriza have invoked that clause at this point is a pretty clear signal to the eurobankers that they have 25 days to accept that write down of their debt is inevitable. The Greeks can't pay the bundle; they've obviously hoping that Obama will ensure that Merkel does not lose the EU nation bordering Turkey.

 

[J Ed]

Satisfying to watch the EU bureaucrats squirm and cry, but but he promised us that he'd hobble his own country to bail out our banks just yesterday! That isn't how we do things!

Who remembers the anti-austerity rhetoric of Hollande when he was campaigning? Now he wants Greece to punish its poorest as a precondition for the troika paying themselves. Disgusting.

 

[butchersapron]

Yep, but fact that Syriza have invoked that clause at this point is a pretty clear signal to the eurobankers that they have 25 days to accept that write down of their debt is inevitable. The Greeks can't pay the bundle; they've obviously hoping that Obama will ensure that Merkel does not lose the EU nation bordering Turkey.

...and how quickly we are into top down geo-politics (not a comment on your reading). Where have the w/c gone to these last two months?

 

[brogdale]

...and how quickly we are into top down geo-politics (not a comment on your reading). Where have the w/c gone too these last two months?

Good point...but tbf those looking top-down must fear what they see, if we are to make any sense of their dithering.

 

[brogdale]

Tsipras keen to mention his latest chat with Vlad.

US officials, including the Treasury secretary, Jack Lew, have repeatedly warned their European counterparts not to be complacent about the economic risks of a so-called “Grexit”, and President Obama is likely to reinforce that argument this weekend. The US president is likely to be particularly concerned that Greece could turn to Russia for aid. Tsipras underlined that risk on Friday by letting it be known he was holding a phone conversation with president Putin.

 

[J Ed]

...and how quickly we are into top down geo-politics (not a comment on your reading). Where have the w/c gone to these last two months?

Interview with a Syriza militant here refers to this

This column by Alexis Tsipras is important in a number of regards. It shows a qualitative change in the Greek situation, for many different reasons.

Before anything else, for the first time Tsipras provides us (Greek readers included) with a list of the concessions that the Greek government accepted during the negotiations with the institutions, as the troika has now been renamed.

And the list is an impressive one: agreement on budget surpluses; the effective abandonment of the demand of canceling the debt (not even mentioned in this text); a rise in the VAT; postponing the rise in the minimum wage and the restoration of collective bargaining to a vague future and on condition of an International Labour Organization approval; implementing cost-saving pension reforms; and rubber-stamping existing taxes on property, which Syriza had staunchly committed itself to abolishing.

And to that we should add another essential point: as the Greek version of Tsipras’s text makes clear, the “strengthening of the independence of public bodies” concerns not only the statistics agency ELSTAT but, most importantly, the state secretariat for public revenue.

Thus the very heart of the state’s economic apparatus is freed from the control of elected governments: in reality, it will work under the direct supervision of EU institutions. Keeping Katerina Savaidou in this strategic position, who was appointed in the last weeks of the previous government, was already an indication that the government had consented to keep this strategic body out of its field of control.

Let’s be clear. Firstly, these concessions, which Alexis Tsipras has recognized here for the first time, have never been publicly discussed at any level, neither in the party nor in parliament, nor even within the government, in the sense of a collective debate communicated to the citizenry. They are simply announced, after having been concocted during the entirely opaque negotiations with the EU.

Secondly, in this text Alexis Tsipras fails to pick up on a theme that he had referred to on many other occasions, including in his widely commented on Der Spiegel interview, namely the fact that since February the ECB has been using liquidity as a means of blackmailing Greece.

He only mentions the halt to the loan payments, which has forced the Greek government to reimburse its lenders by drawing on its own resources alone — a process that has led to the current situation, where the coffers are running dry. As such, he denies himself the central argument that could have allowed him to show what the EU is really up to — but which would, at the same time, have forced him to admit the weakening of his position and the harmful character of the February 20 agreement that he continues to defend.

Thirdly, it is clear that however the question is posed, the framework that Tsipras is proposing here is one of softened austerity, and in no sense a rupture with austerity. The whole edifice of the memoranda is renewed, but just trimmed at the edges. Conversely, not much is left of the Thessaloniki Program, which was, lest we forget, presented as an “emergency program” that would be applied immediately and independently of the outcome of the negotiations.

Even worse, the four red lines that Alexis Tsipras had himself set down on April 16 in a portentous declaration to Reuters (on pensions, VAT, privatization and collective bargaining) have all to some extent been crossed.

So some might ask where the blockage is, and why Alexis Tsipras is seeking to dramatize things, as the final sentence of the article (“for whom the bell tolls”) and certain passages would seem to indicate. The very simple reason for that is that the troika isn’t happy to continue with the existing austerity and memorandum framework.

The troika’s demand is to aggravate it, by imposing immediately further cuts in pensions and increased deregulation of the labor market, with the goal of humiliating Syriza. And Tsipras knocks the ball back into their court, saying, “You’re looking for rupture, not me. I, you see, am ready to manage austerity and defer sine die the program I was elected on, but you demand more than that, demanding that I go beyond even what you asked of Samaras.”

And then he brandishes the specter of the “division of Europe” and calls for its “values” to be respected, as if the burial of Syriza’s promises not even five months after it was elected was an acceptable sacrifice in order to preserve this European “unity”; as if accepting the “deal” he proposes could represent a step towards the “Europe of solidarity, equality and democracy” that he evokes (this is just empty phrase-mongering — rarely has it sounded so sinister).

Without playing at being a prophet and predict where all this is going to lead us, let’s simply note the current state of things:

The Greek government has entered into a veritable spiral of retreats, where one concession leads to another, and there is no reason to think it is going to stop.
All this was entirely predictable, because the majority of Syriza’s leadership didn’t prepare and adopt a line of confrontation as was proposed since the start of the crisis in the numerous interventions of the Left Platform and, more broadly, of the Syriza left.
Clearly, after all this, to persist in speaking of a rupture with austerity and neoliberal policies within the current European framework is either irresponsibility or a deliberate attempt to fool people.
There is an alternative.

Another way is still possible, that could spare the most promising experience of the Left for decades the disaster which is now looming. Its main elements have been pointed in the last document of the Left Platform, which got 44% of the vote at the last session of Syriza’s central committee.

The government should proceed to a counterattack with an alternative plan that is based on Syriza’s pre-electoral pledges and the government’s programmatic announcements, a plan structured along 
the following set of measures to be implemented immediately:

The nationalization of the banks with all necessary accompanying measures to insure their function along transparent, productive, developmental and social criteria.
The immediate termination of every grid protecting the country’s scandal-immersed oligarchy.
The substantial taxation of wealth and large properties, as well as the taxation of top earners and of high corporate profitability.
The immediate and full reintroduction, as well as safeguarding and practical implementation of labor legislation and rights to trade union organization.
The government has to counter decisively the propaganda of the ruling circles that terrorizes the people with the scenario of full disaster that the suspension of debt servicing and of an eventual exit from the eurozone will allegedly bring upon the country.

The priority of the next few days should be to default on the debt and not proceed to the next IMF payment on June 5

The greatest disaster facing Greece would be the imposition of a new memorandum that would signify the end of any hope for an alternative to the neoliberal shock therapy. 
This development must be avoided, as Malcom X used to say, by any means and sacrifice necessary.

I suspect that there is a lot that we are missing out on because we do not speak Greek, it's hard to imagine that it is being framed in this way in debates within the country.

 

[J Ed]

https://thenextrecession.wordpress.com/2015/06/06/ten-minutes-past-midnight/

In the early hours of Friday morning, according to the British paper, the Daily Telegraph (DT), five key players in the Syriza government, meeting in the Maximus Mansion in Athens, took an important decision. They decided that the government would not pay the IMF its debt repayment instalment due that day. Apparently, the IMF’s Christine Lagarde was caught badly off guard. IMF officials in Washington were stunned.

The Syriza leaders had the money to pay: it had been raked up from various sources and they had told Lagarde that they would pay. But at the late hour, they decided not to pay but instead ‘bundle’ all the repayments scheduled for June into one payment at the end of June – or €1.6bn. This was allowable under IMF rules but had only happened once before – by Zambia in the 1980s.

The reason that PM Tsipras, finance minister Varoufakis and the other Greek government leaders decided to hold back payment was two-fold. First, they were really angry that the IMF and the Eurogroup had completely refused to make any serious compromises on the terms of an agreement to release outstanding funds under the existing ‘bailout’ package, despite the Greeks making huge concessions in the negotiations over the last few months since an extension was agreed last February. Also, the leaders knew that their Syriza party members and MPs were incandescent with rage at the attitude of the Troika (IMF, EU, ECB). There was no way that they were going to support any deal along the lines of yet further austerity and neoliberal measures demanded by the Troika. So the Greeks have fired a warning shot across the bows of the IMF and the Eurogroup, hinting that they may prefer to default rather than be forced into further concessions.

According to sources for the DT, the IMF representative in the negotiations, Poul Thomsen, has “pushed the austerity agenda with a curious passion that shocks even officials in the European Commission, pussy cats by comparison” (here are the latest demands of the Troika (Greece – Policy Commitments Demanded By EU etc Jun 2015). The IMF is demanding further sweeping measures of austerity at a time when the Greek government debt burden stands at 180% of GDP, when the Greeks have already applied the biggest swing in budget deficit to surplus by any government since the 1930s and when further austerity would only drive the Greek capitalist economy even deeper into its depression. As the DT summed it up: “six years of depression, a deflationary spiral, a 26pc fall GDP, 60pc youth unemployment, mass exodus of the young and the brightest, chronic hysteresis that will blight Greece’s prospects for a decade to come”.

 

[butchersapron]

Call for a European bottom up mobilization, from movements of Greece: Unite against austerity and injustice - 20th-26th June

This call is not a petition, but a call for actions in solidarity with the people of Greece. If you want to get involved, pin yourself on the maps at the site of Change4All or send a message to add a pin to the map— or send a solo-message to contact [at] change4all.eu, but most importantly, use the dates 20-26th of June for local on- and off-line campaigns and actions in solidarity. United we stand, divided we fall!

In the period from now till the upcoming June, negotiations are taking place among the Greek Government and the European Institutions. The economic elite find it difficult to accept that someone challenges their policies and propose an alternative plan for economy. They are using all means to blackmail the Greek people and its Government. Show us we are not alone in this fight!

We must put pressure on these institutions to cease this unacceptable behavior and make them accept that it is the citizens of Europe who must decide for their future. Based on the recent decisions of the Athens meeting on the 2nd of May, we, a broad coalition of social organizations, unions and networks, intellectuals, artists, migrant organizations and various left, green and progressive political powers being active in Greece, propose international actions between the 20 and the 26th of June in order to create the positive social and political environment that will support the Greek struggle. Moreover we are willing to host an event here in Athens on the 27th to share ours and yours experiences of mobilizations and solidarity. It is significant to transform the European peoples from passive viewers to active players of this story.

 

[Diamond]

Fascinating but deeply grim stuff.

My view is that Greece is going to be managed out of the Euro and then the country will be plunged into a recession that will take years to recover from.

 

[ItWillNeverWork]

Fascinating but deeply grim stuff.

My view is that Greece is going to be managed out of the Euro and then the country will be plunged into a recession that will take years to recover from.

They've been in a recession depression for 7 years, so it's not like staying in the Euro has helped them. Leaving the Euro is necessary for them to devalue, and as a result increase exports/tourism. Being the issuer of their own currency would also allow them to run a govt deficit to boost aggregate demand.

 

[free spirit]

They've been in a recession depression for 7 years, so it's not like staying in the Euro has helped them. Leaving the Euro is necessary for them to devalue, and as a result increase exports/tourism. Being the issuer of their own currency would also allow them to run a govt deficit to boost aggregate demand.

one problem with that being that presumably all their debt is in Euros and would need to be repaid in Euros, so if they devalued then their debts would increase in relative value.

Ultimately though it probably is the only way now.... at least unless the rest of Europe is about to do a massive U-turn and do what they should have done 6 years ago, and put together a massive economic stimulus package for Greece and the other affected countries, now that austerity has been proven categorically to have been a complete disaster, and the entire economic basis for it has been refuted.

 

[jcsd]

The basic problem seems to be a lack of realism from both sides:

1) the creditors won't admit that the debt and overly draconian austerity measures are simply not sustainable for Greece. At some point, however politically unpalatable it may be they are going to have to write-off a huge portion of the Greek debt, because they're not getting it back either way.

2) Greece won't admit the scale of the reforms it needs to make. It can't expect it's creditors to write off the debt to help fund more generous social security arrangements or without increasing their tax revenues so they don't find themselves in the same position a few years down the line. Greece is going to have to do this at some point as it doesn't have the money and will not receive the money to do otherwise.

It's a bit like a Mexican stand-off with each side hoping the other will blink first, but both sides are going to have to compromise so the situation can be managed rather than spiral out of control.

 

[brogdale]

So Syriza correctly identify the only solution...European made-up money to pay European made-up debt.

 

[DotCommunist]

lol fictitious capital

 

[ItWillNeverWork]

one problem with that being that presumably all their debt is in Euros and would need to be repaid in Euros, so if they devalued then their debts would increase in relative value.

Ultimately though it probably is the only way now.... at least unless the rest of Europe is about to do a massive U-turn and do what they should have done 6 years ago, and put together a massive economic stimulus package for Greece and the other affected countries, now that austerity has been proven categorically to have been a complete disaster, and the entire economic basis for it has been refuted.

The debts have to be written off if Greece is ever to recover. It's as simple as that. Bankruptcy for individuals is written into the institutions of capitalism for a reason - it can't function without it, and the societal pressures created by ever-increasing debts pose too much of a revolutionary risk to those in power. I can't remember who said it, but there is a famous quote about all early revolutionary manifestos being essentially 'burn the debt records and redistribute the land'.

The only reason the same logic doesn't apply to entire countries is that those with power don't give a fuck if a country like Greece is in permanent debt-slavery. I mean, what are the Greeks going to do? Nothing.*


*unless you entertain the unlikely possibility of a post-Versailles Germany scenario, of course.

 

[J Ed]

*unless you entertain the unlikely possibility of a post-Versailles Germany scenario, of course.

The US also, successfully, refused to pay the debts of the Confederate States after the US Civil War.

 

[jcsd]

The debts have to be written off if Greece is ever to recover. It's as simple as that. Bankruptcy for individuals is written into the institutions of capitalism for a reason - it can't function without it, and the societal pressures created by ever-increasing debts pose too much of a revolutionary risk to those in power. I can't remember who said it, but there is a famous quote about all early revolutionary manifestos being essentially 'burn the debt records and redistribute the land'.

The only reason the same logic doesn't apply to entire countries is that those with power don't give a fuck if a country like Greece is in permanent debt-slavery. I mean, what are the Greeks going to do? Nothing.*


*unless you entertain the unlikely possibility of a post-Versailles Germany scenario, of course.

But there's also a point that debt forgiveness to countries does happen and would be the norm for the IMF these days when a country is saddled with a crippling debt that it doesn't have the means to pay. The problem is the IMF has become too deeply entangled with the EU.

I think though it is wrong to paint the Greeks as the victims of the big bad EU though. The crisis was a result of mismanagement by previous Greek governments and the current government is taking an unrealistic populist stance on reforms.

Both sides need to out aside populist sentiments and meet somewhere in the middle.

 

[ItWillNeverWork]

But there's also a point that debt forgiveness to countries does happen and would be the norm for the IMF these days when a country is saddled with a crippling debt that it doesn't have the means to pay. The problem is the IMF has become too deeply entangled with the EU.

I think though it is wrong to paint the Greeks as the victims of the big bad EU though. The crisis was a result of mismanagement by previous Greek governments and the current government is taking an unrealistic populist stance on reforms.

Both sides need to out aside populist sentiments and meet somewhere in the middle.

There are two crises here though. The first one (that of Greece losing the faith of its 'investors' after the 2008 crisis) could have been ended by now if it wasn't for the second one (that of a deflationary depression caused directly by a misguided austerity policy). It is the second crisis that has left pensioners shuffling through bins for food, nearly a third of people without a job, and a soaring rate of suicide. All of this was avoidable, and it was the 'big bad EU' that put Greece in the situation it now stands.

 

[brogdale]

There are two crises here though. The first one (that of Greece losing the faith of its 'investors' after the 2008 crisis) could have been ended by now if it wasn't for the second one (that of a deflationary depression caused directly by a misguided austerity policy). It is the second crisis that has left pensioners shuffling through bins for food, nearly a third of people without a job, and a soaring rate of suicide. All of this was avoidable, and it was the 'big bad EU' that put Greece in the situation it now stands.

Precisely on point two; and the consolidator state fundies are insisting on (conservative estimate) 50 more years worth....before they will admit that they won't get any money back from Greece.

 

[free spirit]

The debts have to be written off if Greece is ever to recover. It's as simple as that. Bankruptcy for individuals is written into the institutions of capitalism for a reason - it can't function without it, and the societal pressures created by ever-increasing debts pose too much of a revolutionary risk to those in power. I can't remember who said it, but there is a famous quote about all early revolutionary manifestos being essentially 'burn the debt records and redistribute the land'.

The only reason the same logic doesn't apply to entire countries is that those with power don't give a fuck if a country like Greece is in permanent debt-slavery. I mean, what are the Greeks going to do? Nothing.*


*unless you entertain the unlikely possibility of a post-Versailles Germany scenario, of course.

They don't even need to be written off, they merely need to be deferred to repayment over a more sensible timescale.

Fuck knows why they did it, but a shit load of the loans are repayable this year and next, but by 2017 the levels of loans falling due for payment are massively lower, so all they actually need to do is to agree to defer the repayments to spread them out over the next 20-30 years.

Then stop insisting on destructive austerity measures and let the Greeks get on and rebuild their shattered economy, only then will they be in a position to properly service their debts.

 

[free spirit]

Actually it's next year that the repayments drop massively, this year they're having to repay the original Troika bailout loans, along with the very short term borrowing they've been racking up over the last year or 2 to simply maintain their debt repayments from the earlier bailouts.

If they'd just done the bailouts on a more sensible timescale there'd be no issue.

more detailed breakdown of the debts here http://graphics.wsj.com/greece-debt-timeline/

 

[jcsd]

There are two crises here though. The first one (that of Greece losing the faith of its 'investors' after the 2008 crisis) could have been ended by now if it wasn't for the second one (that of a deflationary depression caused directly by a misguided austerity policy). It is the second crisis that has left pensioners shuffling through bins for food, nearly a third of people without a job, and a soaring rate of suicide. All of this was avoidable, and it was the 'big bad EU' that put Greece in the situation it now stands.

There's actually been a series crises, but they are all linked so you cannot artificially separate them. The EU is far from blameless in all of them (even the original crisis was caused in part by the EU rush to implement a single currency), but neither are the successive Greek governments, including Syriza.

 

[brogdale]

 

[Sunray]

It was pointed out many times, at the time, the entry point for the ERM was too high for these small countries especially Greece.

Bureaucrats running something that is a good idea but needed far harder decision making. Fudging thinking time will smooth it all out.

Here we are. Greece cannot go on like its creditors want it to, its essentially a humanitarian disaster that is being ignored by the EU. Being out of the Euro will make it one of the cheapest countries to visit in the EU and is geared up for tourists to visit en mass. Exclude their debt repayments and they are running a small surplus. Even if they make it through this, which is surprisingly looking unlikely, next year they have to repay the serious cash, so unless someone gives, there is one outcome.

If you owe the bank 5000 pounds and can't pay it back, your in the shit. If you owe the bank 320 billion and can't pay it back then the bank is in the shit. Why the fuck did you lend them so much cash!!

Its nice to see a country standing up for their poor, but I am unsure an exit from the Euro is going to be anything other than a crazy ride for the rest of the EU and in the end their poorest.

 

[brogdale]

Tsipras meets with Vlad again on Friday in St Petersburg. Keeps up the pressure on the Yanks to sort those pesky Euro-bankers out.

 

[frogwoman]

 

[Diamond]

Best case scenario if Greece leaves - they get to devalue their new currency, attract inward investment and export easier.

Worst case scenario - there is a massive run on the banks, there is literally no money left... not sure where you really go from there to be frank