Tsipras has just destroyed Greece

Greek chaos has reached a whole new level this morning with the release of its proposed compromises with the Eurozone. Here is the text in full:

Policy Commitments and Actions to be taken in consultation with EC/ECB/IMF staff:

1. 2015 supplementary budget and 2016-19 MTFS

Adopt effective as of July 1, 2015 a supplementary 2015 budget and a 2016–19 medium-term fiscal strategy, supported by a sizable and credible package of measures. The new fiscal path is premised on a primary surplus target of (1, 2, 3), and 3.5 percent of GDP in 2015, 2016, 2017 and 2018. The package includes VAT reforms (¶2), other tax policy measures (¶3), pension reforms (¶4), public administration reforms (¶5), reforms addressing shortfalls in tax collection enforcement (¶6), and other parametric measures as specified below.

2. VAT reform

Adopt legislation to reform the VAT system that will be effective as of July 1, 2015. The reform will target a net revenue gain of 1 percent of GDP on an annual basis from parametric changes. The new VAT system will: (i) unify the rates at a standard 23 percent rate, which will include restaurants and catering, and a reduced 13 percent rate for basic food, energy, hotels, and water (excluding sewage), and a super-reduced rate of 6 percent for pharmaceuticals, books, and theater; (ii) streamline exemptions to broaden the base and raise the tax on insurance; and (iii) Eliminate discounts on islands, starting with the islands with higher incomes and which are the most popular tourist destinations, except the most remote ones. This will be completed by end-2016, as appropriate and targeted fiscally neutral measures to compensate those inhabitants that are most in need are determined. The new VAT rates on hotels and islands will be implemented from October 2015.

The increase of the VAT rate described above may be reviewed at the end of 2016, provided that equivalent additional revenues are collected through measures taken against tax evasion and to improve collectability of VAT. Any decision to review and revise shall take place in consultation with the institutions.

3. Fiscal structural measures

Adopt legislation to:

  • close possibilities for income tax avoidance (e.g., tighten the definition of farmers), take measures to increase the corporate income tax in 2015 and require 100 percent advance payments for corporate income and gradually for individual business income tax by 2017; phase out the preferential tax treatment of farmers in the income tax code by 2017; raise the solidarity surcharge;
  • abolish  subsidies for excise on diesel oil for farmers and better target eligibility to halve heating oil subsidies expenditure in the budget 2016;
  • in view of any revision of the zonal property values, adjust the property tax rates if necessary to safeguard the 2015 and 2016 property tax revenues at €2.65 billion and adjust the alternative minimum personal income taxation.
  • eliminate the cross-border withholding tax introduced by the installments act (law XXXX/2015) and reverse the recent amendments to the ITC in the public administration act (law XXXX/2015), including the special treatment of agricultural income.
  • adopt outstanding reforms on the codes on income tax, and tax procedures: introduce a new Criminal Law on Tax Evasion and Fraud to amend the Special Penal Law 2523/1997 and any other relevant legislation, and replace Article 55, ¶s 1 and 2, of the TPC, with a view, inter alia, to modernize and broaden the definition of tax fraud and evasion to all taxes; abolish all Code of Book and Records fines, including those levied under law 2523/1997 develop the tax framework for collective investment vehicles and their participants consistently with the ITC and in line with best practices in the EU.
  • adopt legislation to upgrade the organic budget law to: (i) introduce a framework for independent agencies; (ii) phase out ex-ante audits of the Hellenic Court of Auditors and account officers (ypologos); (iii) give GDFSs exclusive financial service capacity and GAO powers to oversee public sector finances; and (iv) phase out fiscal audit offices by January 2017.
  • increase the rate of the tonnage tax and phase out special tax treatments of the shipping industry.

By September 2015, (i) simplify the personal income tax credit schedule; (ii) re-design and integrate into the ITC the solidarity surcharge for income of 2016 to more effectively achieve progressivity in the income tax system; (iii) issue a circular on fines to ensure the comprehensive and consistent application of the TPC; (iv) and other remaining reforms as specified in ¶9 of the IMF Country Report No. 14/151.

On health care, effective as of July 1, 2015, (i) re-establish full INN prescription, without exceptions, (ii) reduce as a first step the price of all off-patent drugs to 50 percent and all generics to 32.5 percent of the patent price, by repealing the grandfathering clause for medicines already in the market in 2012, and (iii)) review and limit the prices of diagnostic tests to bring structural spending in line with claw back targets; and (iv) collect in the full the 2014 clawback for private clinics, diagnostics and pharmaceuticals, and extend their 2015 clawback ceilings to 2016.

Launch the Social Welfare Review under the agreed terms of reference with the technical assistance of the World Bank to target savings of ½ percent of GDP which can help finance a fiscally neutral gradual roll-out of the GMI in January 2016.

Adopt legislation to:

  • reduce the expenditure ceiling for military spending by €100 million in 2015 and by €200 million in 2016 with a targeted set of actions, including a reduction in headcount and procurement;
  • introduce reform of the income tax code, [inter alia covering capital taxation], investment vehicles, farmers and the self- employed, etc.;
  • raise the corporate tax rate from 26% to 28%;
  • introduce tax on television advertisements;
  • announce international public tender for the acquisition of television licenses and usage related fees of relevant frequencies; and
  • extend implementation of luxury tax on recreational vessels in excess of 5 meters and increase the rate from 10% to 13%, coming into effect from the collection of 2014 income taxes and beyond;
  • extend Gross Gaming Revenues (GGR) taxation of 30% on VLT games expected to be installed at second half of 2015 and 2016;
  • generate revenues through the issuance of 4G and 5G licenses.
  • We will consider some compensating measures, in case of fiscal shortfalls: (i) Increase the tax rate to income for rents, for annual incomes below €12,000 to 15% (from 11%) with an additional revenue of €160 million and for annual incomes above €12,000 to 35% (from 33%) with an additional revenue of €40 million; (ii)  the corporate income tax will increase by an additional percentage point (i.e. from 28% to 29%) that will result in additional revenues of €130 million.

4. Pension reform

The Authorities recognise that the pension system is unsustainable and needs fundamental reforms. This is why they will implement in full the 2010 pension reform law (3863/2010), and implement in full or replace/adjust the sustainability factors for supplementary and lump-sum pensions from the 2012 reform as a part of the new pension reform in October 2015 to achieve equivalent savings and take further steps to improve the pension system.

Effective from July 1, 2015 the authorities will phase-in reforms that would deliver estimated permanent savings of ¼-½ percent of GDP in 2015 and 1 percent of GDP on a full year basis in 2016 and thereafter by adopting legislation to:

  • create strong disincentives to early retirement, including the adjustment of early retirement penalties, and through a gradual elimination of grandfathering to statutory retirement age and early retirement pathways progressively adapting to the limit of statutory retirement age of 67 years, or 62 and 40 years of contributions by 2022, applicable for all those retiring (except arduous professions, and mothers with children with disability) with immediate application;
  • adopt legislation so that withdrawals from the Social Insurance Fund will incur an annual penalty, for those affected by the extension of the retirement age period, equivalent to 10 percent on top of the current penalty of 6 percent;
  • integrate into ETEA all supplementary pension funds and ensure that, starting January 1, 2015, all supplementary pension funds are only financed by own contributions;
  • better target social pensions by increasing OGA uninsured pension;
  • Gradually phase out the solidarity grant (EKAS) for all pensioners by end-December 2019. This shall be legislated immediately and shall start as regards the top 20% of beneficiaries in March 2016 with the modalities of the phase out to be agreed with the institutions;
  • freeze monthly guaranteed contributory pension limits in nominal terms until 2021;
  • provide to people retiring after 30 June 2015 the basic, guaranteed contributory, and means tested pensions only at the attainment of the statutory normal retirement age of currently 67 years;
  • increase the health contributions for pensioners from 4% to 6% on average and extend it to supplementary pensions;
  • phase out all state-financed exemptions and harmonize contribution rules for all pension funds with the structure of contributions to IKA from 1 July 2015;

Moreover, in order to restore the sustainability of the pension system, the authorities will by 31 October 2015, legislate further reforms to take effect from 1 January  2016; (i) specific design and parametric improvements to establish a closer link between contributions and benefits; (ii) broaden and modernize the contribution and pension base for all self-employed, including by switching from notional to actual income, subject to minimum required contribution rules; (iii) revise and rationalize all different systems of basic, guaranteed contributory and means tested pension components, taking into account incentives to work and contribute; (iv) the main elements of a comprehensive SSFs consolidation, including any remaining harmonization of contribution and benefit payment rules and procedures across all funds; (v) abolish all nuisance charges financing pensions and offset by reducing benefits or increasing contributions in specific funds to take effect from 31 October 2015; and (vi) harmonize pension benefit rules of the agricultural fund (OGA) with the rest of the pension system in a pro rata manner, unless OGA is merged into other funds. The consolidation of social insurance funds will take place by end 2017. In 2015, the process will be activated through legislation to consolidate the social insurance funds under a single entity and the operational consolidation will have been completed by 31 December 2016. Further reductions in the operating costs and a more effective management of fund resources including improved balancing of needs between better-off and poorer-off funds will be actively encouraged.

The authorities will adopt legislation to fully offset the fiscal effects of the implementation of court rulings on the 2012 pension reform.

In parallel to the reform of the pension system, a Social Welfare Review will be carried out to ensure fairness of the various reforms.

The institutions are prepared to take into account other parametric measures within the pension system of equivalent effect to replace some of the measures mentioned above, taking into account their impact on growth, and provided that such measures are presented to the institutions during the design phase and are sufficiently concrete and quantifiable, and in the absence of this the default option is what is specified above.

5. Public Administration, Justice and Anti Corruption

Adopt legislation to:

  • reform the unified wage grid, effective 1 January, 2016, setting the key parameters in a fiscally neutral manner and consistent with the agreed wage bill targets and with comprehensive application across the public sector, including decompressing the wage distribution across the wage spectrumin connection with the skill, performance and responsibility of staff. (The authorities will also adopt legislation to rationalise the specialised wage grids, by end-November 2015);
  • align non-wage benefits such as leave arrangements, per diems, travel allowances and perks, with best practices in the EU, effective 1 January 2016;
  • establish within the new MTFS ceilings for the wage bill and the level of public employment consistent with achieving the fiscal targets and ensuring a declining path of the wage bill relative to GDP until 2019;
  • hire managers and assess performance of all employees (with the aim to complete the hiring of new managers by 31 December 2015 subsequent to a review process)
  • introduce a new permanent mobility scheme applied by Q4 2015. The scheme will promote the use of job description and will be linked with an online database that will include all current vacancies. Final decision on employee mobility will be taken by each service concerned. This will rationalize the allocation of resources as well as the staffing across the General Government.
  • reform the Civil Procedure Code, in line with previous agreements;  introduce measures to reduce the backlog of cases in administrative courts; work closely with European institutions and technical assistance on e-justice, mediation and judicial statistics
  • strengthen the governance of ELSTAT. It shall cover (i) the role and structure of the Advisory bodies of the Hellenic Statistical System, including the recasting of the Council of ELSS to an advisory Committee of the ELSS, and the role of the Good Practice Advisory Committee (GPAC); (ii) the recruitment procedure for the President of ELSTAT, to ensure that a President of the highest professional calibre is recruited, following transparent procedures and selection criteria; (iii) the involvement of ELSTAT as appropriate in any legislative or other legal proposal pertaining to any statistical matter; (iv) other issues that impact the independence of ELSTAT, including financial autonomy, the empowerment of ELSTAT to reallocate existing permanent posts and to hire staff where it is needed and to hire specialised scientific personnel, and the classification of the institution as a fiscal policy body in the recent law 4270/2014; role and powers of Bank of Greece in statistics in line with European legislation.
  • Publish a revised Strategic Plan against Corruption by 31 July 2015. Amend and implement the legal framework for the declaration of assets and financing of the political parties and adopt legislation insulating financial crime and anti-corruption investigations from political intervention in individual cases.

Moreover, in collaboration with the OECD, the Authorities will:

  • Strengthen controls in public entities and especially SOEs. Empower the Line Ministries to perform robust audit and control inspections to supervised entities including SOEs.
  • Strengthen controls and internal audit processes in high spending Local Government Institutions and their supervised legal entities.
  • Strengthen controls in public and private investment cases funded either by national or co-funded by other sources, public works and public procurement (e.g. in health sector, SDIT).
  • Strengthen transparency and control processes and skills in tax and customs authorities.
  • Assess major risks in the public procurement cycle, taking in consideration the recent developments (Central Purchasing and e-Procurement: KHMDHS and ESHDHS) and the need to have a clear governance framework. Develop strategy according to the assessment(Q4 2015)
  • Implement strategy to mitigate public procurement risks.(Q1 2016)
  • Assess 2 specific sectors, Health and Public Works in order to understand the existing constrains related to corruption and waste risks and propose measures to address them. Develop and implement strategy. (Q4 2015)

6. Tax administration

Take the following actions to:

  • Adopt legislation to establish an autonomous revenue agency, that specifies: (i) the agency’s legal form, organization, status, and scope; (ii) the powers and functions of the CEO and the independent Board of Governors; (iii) the relationship to the Minister of Finance and other government entities; (iv) the agency’s human resource flexibility and relationship to the civil service; (v) budget autonomy, with own GDFS and a new funding formula to align incentives with revenue collection and guarantee budget predictability and flexibility; (vi) reporting to the government and parliament; and (vii) the immediate transfer of all tax- and customs-related capacities and duties and all tax- and customs-related staff in SDOE and other entities to the agency.
  • on garnishments, adopt legislation to eliminate the 25 percent ceiling on wages and pensions and lower all thresholds of €1,500 while ensuring in all cases reasonable living conditions; accelerate procurement of IT infrastructure to automatize e-garnishment; improve tax debt write-off rules; remove tax officers’ personal liabilities for not pursuing old debt; remove restrictions on conducting audits of tax returns from 2012 subject to the external tax certificate scheme; and enforce if legally possible upfront payment collection in tax disputes.
  • amend (i) the 2014–15 tax and SSC debt instalment schemes to exclude those who fail to pay current obligations and introduce a requirement for the tax and social security administrations to shorten the duration for those with the capacity to pay earlier and introduce market-based interest rates; the LDU and KEAO will assess by September 2015 the large debtors with tax and SSC debt exceeding €1 million (e.g. verify their capacity to pay and take corrective action) and (ii) the basic instalment scheme/TPC to adjust the market-based interest rates and suspend until end-2017 third-party verification and bank guarantee requirements.
  • adopt legislation to accelerate de-registration procedures and limit VAT re-registration to protect VAT revenues and accelerate procurement of network analysis software; and provide the Presidential Decree needed for the significantly strengthening the reorganisation of the VAT enforcement section in order to strengthen VAT enforcement and combat VAT carousel fraud. The authorities will submit an application to the EU VAT Committee and prepare an assessment of the implication of an increase in the VAT threshold to €25.000.
  • combat fuel smuggling, via legislative measures for locating storage tanks (fixed or mobile);
  • Produce a comprehensive plan with technical assistance for combating tax evasion which includes (i) identification of undeclared deposits by checking bank transactions in banking institutions in Greece or abroad, (ii) introduction of  a voluntary disclosure program with appropriate sanctions, incentives and verification procedures, consistent with international best practice, and without any amnesty provisions (iii) request from EU member states to provide data on asset ownership and acquisition by Greek citizens, (iv) renew the request for technical assistance in tax administration and make full use of the resource in capacity building, (v) establish a wealth registry to improve monitoring.
  • develop a costed plan for the promotion of the use of electronic payments, making use of the EU Structural and Investment Fund;
  • Create a time series database to monitor the balance sheets of parent-subsisdiary companies to improve risk analysis criteria for transfer pricing

7. Financial sector

Adopt: (i) amendments to the corporate and household insolvency laws including to cover all debtors and bring the corporate insolvency law in line with the OCW law; (ii) amendments to the household insolvency law to introduce a mechanism to separate strategic defaulters from good faith debtors as well as simplify and strengthen the procedures and introduce measures to address the large backlog of cases; (iii) amendments to improve immediately the judicial framework for corporate and household insolvency matters; (iv) legislation to establish a regulated profession of insolvency administrators, not restricted to any specific profession and in line with good cross-country experience; (v) a comprehensive strategy for the financial system: this strategy will build on the strategy document from 2013, taking into account the new environment and conditions of the financial system and with a view of returning the banks in private ownership by attracting international strategic investors and to achieve a sustainable funding model over the medium term; and (vi) a holistic NPL resolution strategy, prepared with the help of a strategic consultant.

8. Labour market

Launch a consultation process to review the whole range of existing labour market arrangements, taking into account best practices elsewhere in Europe. Further input to the consultation process described above will be provided by international organisations, including the ILO. The organization and timelines shall be drawn up in consultation with the institutions. In this context, legislation on a new system of collective bargaining should be ready by Q4 2015. The authorities will take actions to fight undeclared work in order to strengthen the competitiveness of legal companies and protect workers as well as tax and social security revenues.

9. Product market

Adopt legislation to

  • implement  all pending recommendations of the OECD competition toolkit I, except OTC pharmaceutical products,  starting with: tourist buses, truck licenses, code of conduct for traditional foodstuff, eurocodes on building materials, and all the OECD toolkit II recommendations on beverages and petroleum products;
  • In order to foster competition and increase consumer welfare immediately launch a new competition assessment, in collaboration and with the technical support of the OECD, on wholesale trade, construction, e-commerce and media. The assessment will be concluded by Q1 2016.The recommendations will be adopted by Q2 2016.
  • open the restricted professions of engineers, notaries, actuaries, and bailiffs and liberalize the market for tourist rentals ;
  • eliminate non-reciprocal nuisance charges and align the reciprocal nuisance charges to the services provided;
  • reduce red tape, including on horizontal licensing requirements of investments and on low-risk activities as recommended by the World Bank, and administrative burden of companies based on the OECD recommendations, and (ii) establish a committee for the inter-ministerial preparation of legislation. Technical assistance of the World Bank will be sought to implement the easing of licensing requirements.
  • design electronic one-stop shops for businesses through analysing information obligations businesses have to comply with, structuring them accordingly and helping to design a project on developing the necessary ICT tools and infrastructure (Q3 2015). Setting up the institutional & co-ordination structure, identification of the business life events to be included, identification and mapping of information obligations & administrative procedures and training of officials (Q4 2015). Launch (Q1 2016)
  • adopt the reform of the gas market and its specific roadmap, and implementation should follow suit.
  • take irreversible steps (including announcement of date for submission of binding offers) to privatize the electricity transmission company, ADMIE, or provide by October 2015 an alternative scheme, with equivalent results in terms of competition, in line with the best European practices to provide full ownership unbundling from PPC, while ensuring independence.

On electricity markets, the authorities will reform the capacity payments system and other electricity market rules to avoid that some plants are forced to operate below their variable cost, and to prevent the netting of the arrears between PPC and market operator; set PPC tariffs based on costs, including replacement of the 20% discount for HV users with cost based tariffs; and notify NOME products to the European Commission. The authorities will also continue the implementation of the roadmap to the EU target model prepare a new framework for the support of renewable energies and for the implementation of energy efficiency and review energy taxation; the authorities will strengthen the electricity regulator’s financial and operational independence;

10. Privatization

  • The Board of Directors of the Hellenic Republic Asset Development Fund will approve its Asset Development Plan which will include for privatisation all the assets under HRDAF as of 31/12/2014; and the Cabinet will endorse the plan.
  • To facilitate the completion of the tenders, the authorities will complete all government pending actions including those needed for the regional airports, TRAINOSE, Egnatia, the ports of Pireaus and Thessaloniki and Hellinikon (precise list in Technical Memorandum). This list of actions is updated regularly and the Government will ensure that all pending actions are timely implemented.
  • The government and HRADF will announce binding bid dates for Piraeus and Thessaloniki ports of no later than end-October 2015, and for TRAINOSE ROSCO, with no material changes in the terms of the tenders.
  • The government will transfer the state’s shares in OTE to the HRADF.
  • Take irreversible steps for the sale of the regional airports at the current terms with the winning bidder already selected.”

This is basically the same proposal as that was just rejected by the Greek people in the referendum. There are some headlines floating around about proposed debt restructuring as well but I can’t find them.

This makes absolutely no sense. The Tsipras Government has just:

  • renegotiated itself into the same position it was in two months ago;
  • set massively false expectations with the Greek public;
  • destroyed the Greek banking system, and
  • destroyed what was left of Greek political capital in EU.

If this deal gets through the Greek Parliament, and it could given everyone other than the ruling party and Golden Dawn are in favour of austerity, then Greece has just destroyed itself to no purpose.

Markets are drawing comfort from the roll over but how Tsipras can return home without being lynched by a mob is beyond me. And that raises the prospect of any deal being held immediately hostage to violence.

Comments

  1. He was put there by Kissinger……what did you think he was going to do? Actually act in the best interests of the citizens?

  2. Varoufakis gets shown the door (or did he leave knowing this was coming?) and now this. There must be some very strong conversations going on behind closed doors.

    • I suspect a long post mortem of Varoufakis involvement. I always thought he was politically naive, I said as much in a number of posts, but as H&H writes this all makes no sense. Tsipras has just accepted a deal he was voted into parliament on the grounds of avoiding and in the meantime he and Yanis managed to destroy what was left of the Greek economy.

      • They had no plan. Tried brinkmanship, failed…but have given the bird (let the people vent, wave flags, and dance) to the Germans, simultaneously respecting the wishes of the majority not to exit the EU.

        BTW there are some rumours the plan presented to parliament included small part on debt relief (ex IMF?) and plan to creditors did not. https://twitter.com/spiegelpeter/status/619274607967776768

      • Some have suggested that he called the referendum in the hope that the people would vote yes, which would allow him to say that he tried, but that he respected the will of the people, and would step aside to allow someone else to negotiate a deal to keep Greece in the Eurozone.

        But when the people voted “no,” Tsipras had not plan B. He was never willing to pull the trigger, even with the backing of his own people – and so he finds himself in this unenviable position.

        Whether true or not, this would be one potential explanation for the circumstances Greece now finds itself in.

      • I think it makes perfect sense.

        The Greek public will not accept being lead out of the Eurozone so the only option was to try to fight for terms on which to stay would be viable.

        Those have never been on offer because the northern Europeans like the way the ‘Eurozone’ works. Lecturing the south while getting their own banks made good was a bonus.

        All the cards of a terrible hand have been played and the decision is quite rightly now whether the Greek parliament (and Greek people) will approve a dud deal. They were supposed to approve it last weekend but showed more spine than was expected.

        We know the Troika will accept the deal offered if it matches the Troikas last offer because for all their huffing and puffing they don’t want anyone to leave the Eurozone.

        If the Greek parliament/people do not wish to accept it – and they should not – the Greek govt will just need to start issuing IOUs / parrallel currency and let the Troika take whatever action they choose.

        The Troika may be talking tough but any attempt to extract vengeance and recriminations (kick them out of the EU) will get shut down pretty quickly as the aid and support starts flowing in from Russia, China and Melbourne.

        Greece will be fine outside of the Eurozone – like everyone else who is not part of a nutty monetary union.

      • Why not just leave?

        Because leaving is not an event. No one can stop Greek banks maintaining accounts in Euros and no one can stop the Greek government continuing to tax people in Euros. The Greeks can do things inconsistent with being full members of the Eurozone but there is no point at which a siren sounds and they ‘leave’.

        The Greek government must take action to restore economic activity in Greece and that means issuing IOUs if the ECB continues to refuse to honour its obligations to be lender of last resort for Greek Bank Euro deposit obligations.

        By defaulting on their debt obligations that is one massive drain on their Euro income receipts gone. By allowing the Euro to continue to be legal tender they will be able to collect Euros that flow in for trade in goods and services.

        Greece is running close to a trade surplus so there is demand for whatever Greeks will accept in payment.

        Greece just needs to do what needs to be done. Let the Eurozone work out what to call it and make the relevant accounting entries to write off the bad debts.

      • He just kicked the can, to the parliament, with some 60% Oxi, I wonder which way those elected in the parliament will go. Can he vote against it in the parliament?

      • Kicking the can is not a problem when you are the debtor and you are not paying your debts.

        It costs Syriza nothing to make another offer that claims to give the creditors what they want. It means nothing until actual payments are made or laws change.

        What does matter is what Syriza is doing to restore economic activity via expenditure and taxation. It needs to be moving fast to get those systems up and running. The sooner the banks open with new Drachma denominated accounts created to match customer Euro denominated accounts the better.

  3. Whether the rest of his party goes along with him will the real question. SYRIZA was made up of 13 different left wing groups. They are not all friends.

  4. So insane it must be deliberate.

    maybe just trying to get more bailout funds to revive the banking system before more generalised default?

  5. truthisfashionable

    Just when you think a politician is going to act in the best interests of their home nation and the people of that nation…

  6. Philosophy is not a good bargaining chip especially when crammed through game theory…

    Skippy…. pro tip… multilateral negotiations are not a team fortress hat market sim in a MOG.

    • What were the bargaining chips? The only bargaining chip was the Eurozone’s desire not to have anyone leave. Once it became clear the Greeks understood that and were going to play it hard, the creditors could either fold in part or in full or hold course.

      They decided to hold course.

      The only thing for Greece to do now is exercise their soveriegnty and take control of their economy and the way to do that is by taking control of their money supply.

      Fiat currency is a powerful force for good but only if the elected representatives of the people control it.

      • “We’ve been saying for a very long time that there were no good choices for Greece. You do not go into open confrontation and even worse, escalate when you have a very weak hand. We said Syriza’s only hope was to get support from other parties, most important the US and the European left. They never showed up to help. In fact, the Obama Administration threw Greece under the bus in February. Costas Lapavitas of the Left Platform said that Syriza’s original plan was a failure in early March. Yet the party stuck with a failed plan and made no Plan B. That persistence for months and refusal to change course is inexcusable, particularly since lives are at stake. Another big leg down from the depression that Greece is already in means more people die.

        I’m not about to come up with a rescue plan for Syriza when it got itself into a corner by doing something that was contrary to what I suggested was a better approach months ago. Step one would have been to impose capital controls. Step two was not to take the Grexit threat off the table (but downplay it as much as possible, as in “We really really don’t want to go that route, but we have to consider all options.”) Three would have been to take the negotiations out of the media spotlight and say, “Look, we are the only people that can crack down on the oligarchs. No ‘program’ will ever work in Greece unless we can tax more than the 30% of the economy that is taxed now. You see how you can’t get there by squeezing. But we can’t get tax receipts overnight and we certainly can’t get at oligarch property, particularly overseas, overnight and without help. You need us to look like a success, or at least not a failure, to do that. How do we negotiate a timetable of progress against that? And how do we finesse optics on the issues where we are at odds so we can both pretend to have won?”

        Instead, Syriza has managed to produce the worst possible outcome for Greece, worse than even if they had rolled over in January and just signed the memorandum. I am at a loss as to why readers cannot see that despite the overwhelming evidence.” – [email protected]

        Skippy… BTW Greece has no sovereignty, they gave it away as part of being in the EU to a 19 member voting block.

      • Yves – because readers wanted to see ‘Revolution’ where there was none. We’re in a post revolutionary world. Because Capitalism.

      • That is just a lot of wishful thinking. It assumes that had Greece played ‘nicer’ the northern Europeans would have given them a nice big fat ‘haircut’ – which is just a nicer way of saying partial default. I am surprised that you would endorse that thinking.

        The Eurozone has been shafting its ‘debtors’ since the GFC and it has shown few signs of changing course beyond a few minor snips around the ears.

        It has been an outrageous performance – though you would probably say not surprising.

        That Syriza tried to push buttons was a good thing. Everyone can now seen quite clearly what the Eurozone is about – bullying and anti-democratic almost fascist neo-liberalism.

      • Neo Liberalism!! hardly. Barroso, Van Rhumpy et al where Maoist communist! The EU highlights the disfunction that is the centralisation of power. Read the EU constitution it is all about creating a socialist paradise. The EU once again highlights the evilness and anti democratic nature of socialism.

      • It seems so many want to project their philosophical bent on Greece vicariously and not deal with the operational reality’s. 3D1K is more accurate here even if he uses the reductive term Capitalism [more accurately 3rd way].

        Pft your screed fails to take in the reality that Greece is not sovereign, it is more akin to a state in America, prostrations about “bullying and anti-democratic almost fascist neo-liberalism.”

        That the majority of the Western and developed world has been operating under the neoliberal economic theory for some decades, w/ has put us all in this fix, is not remedied by blowing everything to smithereens and starting all over again.

        Skippy…. does everyone want to do the dark ages again?

      • @Heisenberg,

        The EU has most defiantly been operating under the neoliberal, 3rd way or ordoliberalism-ish model for sometime, that the EU was conceived as a trading block to stave off romantic looks from the US private sector and to concerns in the East, is just par for course in a fundie market reality, survival of the fittest… eh.

        Skippy… its like everyone’s optics have have gone philosophical kaleidoscope terminology full loon pond setting, don’t like reality so just project pet peeve phraseology on it and point.

      • “Because Capitalism.”

        If this had any relevance to capitalism whatsoever then lenders would have been forced to realise losses rather than being bailed-out by governments.

      • Skippy,

        “…is not remedied by blowing everything to smithereens and starting all over again….”

        What on earth are you talking about? Leave the hysteria to the northern Europeans and their pals in the FIRE sector advertorial supplements.

        What is being proposed is that the Greek government starts to use its own currency again (alongside the Euro) and the Eurozone write off some debts that they can readily bury in their QE programs.

        It is no big deal. After a few months everyone will wonder what the fuss was about (which of course is what the eurozone managers are worried about)

        Your response is to quote Yves who is having a moan that if only the Greeks ‘negotiated’ better all would be fine.

        And then ramble on about how the Greeks are not soveriegn. Well duh – what do you think the discussion about Grexit means – it is nothing more than whether they get some of their sovereignty back (even if they dont want it).

        You like to rabbit on about Chicago boys and neo-liberalism as dreadful stuff but not if it means a country actually cutting its apron strings and ties to international capital.

        But then you do reckon the banking system just needs a squirt of regulation and not a major overhaul.

      • Not free market capitalism! Social democratic capitalism. Privatise the profits, nationalise the losses; promote global trade, encourage domestic subsidy; minimise tax burden, maximise incentives; permit social largesse, penalise via revenue reduction etc. All woven together, interconnected, vested interest tapestry of self interest. Debt ensures growth ensures compliance ensures necessity to maintain social democratic capitalism!

        Revolution? Nah. Everyone has skin in the game.

      • @pfh,

        What part of Greece not being sovereign does not compute and your palliatives would only increase the death of citizens that escapes you. Other small country’s in the EU are voting against Greece and the last pack of polies has screwed the pooch by playing silly games and not realpolitik.

        Skippy… this is not some virtual reality MOG game mate where you respawn after death.

      • Skippy… this is not some virtual reality MOG game mate where you respawn after death.

        More hysteria from the bankers friend. So austerity under your buddies in the Eurozone has been the path of least harm.

        Come on Skip tell us how you would NOW handle the situation – take your time – perhaps Yves has written something you can cut and paste.

      • Skippy ….what on earth are you talking about?

        Yep, I had the same problem with dippy Skippy (who has a few kangaroos loose in the top paddock). I try not to engage now.

        Some poetry seen elsewhere:

        Insanity’s reaching new peaks
        Tsipras has sold out the Greeks
        The mandate they gave
        Was not to enslave
        I’m shocked if he lasts a few weeks

        —-

        Can’t see why all minds are spinning
        The banksters as always are winning
        The SYRIZA lies
        Statism in disguise
        Was clear from the very beginning

      • @3d1k,

        Per your “Free market Capitalism” missive, oh contraire, free market capitalism is code for the unfettered financialization of previous regulated capitalism through increased influence peddling from aet – neoclassical – rubenite – neo / new Keynesian economic theory’s via their wealthy benefactors.

        You seem to overlook the reality of self interest as magnified by wealth in the sociopolitical arena e.g. the advent of staffing key governmental and academic posts with professional economists and not seasoned professionals i.e. it becomes a priest caste which is established by the wealth class to forward its interests by the force of its purchasing power in a dollar equals a vote democracy. Just think of a corp buying off the shelf software and constantly paying coders to fiddle with it, in an futile attempt to get it to perform to their unreasonable and unfounded desires.

        Skippy… I’ve got mates that have made small fortunes back in the day being paid to attempt such ludicrous managerial undertakings, the story’s are legion, manifold cost expenditures with greatly reduced functionality due to financial reporting shenanigans that effect C-suite remuneration metrics.

      • R2M,

        I know its difficult for you to formulate a cogent response and substituent with sophomoric banter, out of inability, but, leading with a cut and past that has zip relationship with any thing is just personalization for lack of any other means of redress.

        Play the topic and not the man dullard.

        Skippy… Pft your attempt to portray me as bank friendly is just your personal manic paranoia being hung on me, yet you can’t even identify the actual agency behind the majority of our problems save government and banks. Hint Pft people have agency not institutions, so what agency informs the people in said institutions, where did it come from and who drove that agenda.

      • Skippy Brevity is the sole of whit. Also we have already discussed the psycological reasons as to why someone speaks about themselves in the third person. I am always scared to respond to your posts because we receive an unending diatribe about various non sensical theories in response clogging up meaningful discussion. You never address an argument you just talk around wild theories. What R2M et al propose is eminately sensible. You think these personal comments reflect on us but it is on you. Your inability to concisely and logically argue a point is personally insulting to us because it assumes our time is not valuable.

      • @Heisenberg,

        WTF does comedic rim shots have to do with any of the discussion of events above, besides a distracting rhetorical tactic.

        Your difficulty in under standing my linguistics use is not indicative of psychological issues, but thanks for the homeopath quality diagnosis. Good family friend is head of the Royal here in Bis as is many other qualified practitioners, such as Prof. White. Now if you can show me your credentials which superseded all of theirs, I’ll take it into consideration.

        As to your suggestion of wild theory’s that’s your uninformed opinion, I can easily reference Yves Smith just for starters and add on many others, so it seems your problem is of a personal nature and not one of actual common knowlage.

        Skippy… It would have been customary for you to unpack your claim of wild theorys with something more than emotive pejoratives, but its becoming clear that’s beyond many here.

      • From a family of Medicos. Wife is even one along with old man and a host in my extended family but all that is totally irrelevant – could they tell you some stories about having absent faith in doctors! As usual you never answer a question or actually articulate an alternative viewpoint. I do not agree with you guys at all on Global Warming hysteria but R2M links to evidence, now I would counter that evidence but at least it is a discussion based on fact, not wild theories.You keep referring to higher authorities like doctors in Brisbane or random economists instead of addressing an argument.

        Also referring to yourself in the third person is seriously annoying only egomaniacs like Kobe Bryant and Donald Trump do this. Note they have a limited filter and give long winded diatribes. Hence my “amateur” diagnoses.

      • Heisenberg,

        You could have just said you don’t give a shit, I have my own special reality which I operate from and leave it at that.

        That you use psychology on one hand, in an attempt to diminish my character, and then dismiss the entire clinical profession when confronted with your homeopathic application…. well that’s patently absurd. Especially when the reverse observation is noted.

        Skippy… as I’ve said before, I can easily quote Yves Smiths book just for starters, just try reading it. I’ve also quoted many others such as Philip Mirowski, Mark Ames, Philip Pilkington [and other post Keynesians] Michal Hudson, et al.

        PS. signing off with my handle is not speaking in the 3rd party btw, its just a sign off, but that you think its 3rd says more about those that play that card than myself.

      • Great. We agree you live in your own reality. I am always keen to learn however always skeptical of economists as their theories are never held to account. I have read a number of the Austrian economists and that makes the most sense to me. Also read Keynes, Adam Smith, but I will do you the courtesy of reading the guys you suggest and if it makes sense, more than happy to be proven wrong.

        And yes I am dismissive of much of the medical profession, and yes I am qualified to make that statement. Your doctors may well be upstanding doctors and there are plenty of them, however many are not. But perhaps that is for another day!

      • Skippy disclosed to me a few days ago that he had a serious head injury that caused him to retire. I think we need to take this into account when reading his posts, and cut him a little slack. He is a bit belligerent and incoherent these days, but this is not unusual in such circumstances. He does add some colour to the commentary and thankfully always takes a strong left position, and pro-AGW (oh god can you imagine if it were the opposite? Think 3inch on steroids!)

      • Now I feel bad. I am sure he does not want our pity either. Never any tone in the typed word which makes such arguments all the harder At least you have another ally in the AGW debate

      • Skippy, it wasn’t a missive, rather an observation that nowhere exists free market capitalism. We have a hybrid as I’ve described above, that’s why there won’t be a revolution, everyone gets something from it.

      • Again neither of you two have provide any refutation to my statements above but endlessly speculate on my person. Contrary the two of you, and others, I do provide more than my unique perspective on matters. Yet when provided with that you tap dance around that actual material, too a fault, and endlessly focus on myself. That your unhappy about me not getting dragged into your attempts a managing the messaging is again your own personal issues.

        Head injury was not a matter of cognitive diminishment [scored quite high in post injury testing], it was only ear, eye and some balance issues, tho look at you two – assuming – otherwise. As noted before I’ve taken the opportunity to allow my wife to fulfill her career aspirations and not suffer becoming key latch kids for it. A few more out of year 12 and I shall evaluate that, not that I don’t offer my services to mates and locals a pro bono for legal or trade skills.

        Heisenberg that you read a bit of aet and it makes sense to you is a condition called bias conformation, that aet originally called itself the “psychological school” self awarded imo, is indicative of its modus operandi, no to mention the whole MPS thingy. Aet is reductive reasoning which bases all its beliefs on ex nihilo axioms and synthetic a priori w/ a dash of Kantian rigidity in the first order of examination rather than do the hard yard by using a multiple disciplinary approach based on data collection and seeing what it suggests and then further refine that process. Please feel free to pursue Philip Pilkington’s “fixing the economists” for a more thorough explanation. The Kantian rigidity is the biggest problem imo, its quasi religious in its closure.

        As far as Adam Smith is concerned most only read bits of it or exposed to small portions which are taken out of context to support a proposition incorrectly. Which is compounded by the gaping differences in our knowlage base to his time and its base economic foundation on agrarian – artisan economic activity. Its as bad as people and the biblical canons, most have zero clue to the entire tomb, how it was arrived at and contextualized through forensic anthro and not romanticized.

        Keynes was originally a gold standard monetarist but changed his views on deeper introspection and operational reality’s. He did say I am the only non Keynesian in a room full of them imo. Keynes died attempting to resolve problems with the monetary system during bretton woods as a sick man, where other economists of other affiliations seem to have a propensity to grasp Gov backed safety nets when the going get rough contrary to what they espouse as a day job.

        As far as dismissing the medical profession you might like Philip Mirowski “science mart” and the effect on academia due to treating it as a market for profit and not a place to advance knowlage and produce high quality professionals. My wife and her peers are gob smacked at the lowing the bar just to facilitate profitability, cop that action when you need a first responder in a critical moment. Then you’ll decry its all the governments fault or banks some how.

        R2M,

        We concur on AGW from the methodical approach science offers, tho we do not see eye to eye on other matters, that you can not or are not will willing to redress those issues, in a civil manner – is – a condition of your own making. If I was to hazard a guess its that like Heisenberg, you are an aet devote tho acknowledge environmental changes tho, view through the optics aet prescribes as – human nature – and as such your palliatives are attuned to it.

        Skippy…. be specific in the source of your opinions and I will respond in kind.

      • @3d1k,

        “Social democratic capitalism.” is where myself takes exception as everyone is not at the bloody table and as such have “skin in the game”. With an extra heaping of the debt meme thrown in for good measure as if we were all quantified as lumps of gold.

        Skippy… damn you mate your better than this… stop playing the fool…

      • Oh look…

        “This post’s headline comes from an assessment by the Australian website MacroBusiness of the proposal that Greece submitted to its creditors in the wee hours of the morning in Europe. Greece has capitulated, offering to implement more stringent austerity terms than those rejected by voters last weekend by a resounding margin in the Greek referendum. We are posting the full text of the Greek proposal at the end of this post.

        As MacroBusiness sums up:

        This is basically the same proposal as that was just rejected by the Greek people in the referendum…This makes absolutely no sense. The Tsipras Government has just:

        renegotiated itself into the same position it was in two months ago;
        set massively false expectations with the Greek public;
        destroyed the Greek banking system, and
        destroyed what was left of Greek political capital in EU.

        If this deal gets through the Greek Parliament, and it could given everyone other than the ruling party and Golden Dawn are in favour of austerity, then Greece has just destroyed itself to no purpose.

        Our observations:

        The proposal is indeed worse than the one rejected in the referendum last Sunday. From Kevin Drum, who links to the Washington Post (emphasis his):

        Last Sunday the Greek population overwhelmingly rejected the European plan 61-38 percent.

        So how did that work out for Greece? Not so well:

        Under a 10-page blueprint completed late Thursday, the country said it would undertake austerity measures worth between 12 billion and 13 billion euros ($13 billion to $14 billion), including raising taxes on cafes, bars and restaurants.

        The amount is significantly higher than the package of cuts that Greek voters rejected in a hastily called referendum on the bailout Sunday. But nearly two weeks of a banking shutdown that has brought the economy to a virtual standstill have left this Mediterranean nation with few other options to avoid sliding into bankruptcy.

        The Greek blueprint for pension cuts and VAT increases is essentially copied word-for-word from the June 24 European proposal. There may still be sticking points elsewhere (I haven’t done an exhaustive line-by-line comparison of the two documents), but VAT and pensions were always the key areas of difference. Combine those concessions with the higher deficit target in the new blueprint and Greece hasn’t just caved in to the Europeans, it’s all but prostrated itself and begged not to be kicked out of the eurozone.

        Or so it seems. There’s always the possibility of gotchas hidden away in a stray word or two. But at a first glance, it looks like total capitulation. Two weeks of bank closings and import stoppages has given the Greeks a vivid taste of what life would be like if Europe forced it to abandon the euro—as it seemed they were all too willing to do—and that short taste was quite enough, thank you very much. Viewed through that lens, apparently another few years of German-enforced austerity didn’t look so bad after all.

        Like Drum, I have not done a line for line comparison, but for instance, Section 8, Labour Market, looks identical to creditor language I’ve read previously. ”

        http://www.nakedcapitalism.com/2015/07/tsipras-has-just-destroyed-greece.html

      • For what it is worth, my areas of disagreement with Skippy are quite limited and largely relate to the extent to which the banking sector requires ‘regulation’.

        Skippy thinks we can get by with less, I am not convinced but as Skippy’s approach (which is essentially the MMT position) will be better than nothing I am not opposed.

        As our areas of agreement are much greater than our areas of difference it is usually just the snotty, ungracious, condescending and patonising tone that Skip adopts from time to time that prompts me to engage in the splitting of banking regulation hairs.

        If half of what Skippy recommends comes to pass – the world would be a better place.

      • @Pfh,

        Mate I would recommend making banking a boring utility and wall off the shadow sector to its own universe where it can’t kill anyone save its players to infinite destitution. Post office banking in America was only desisted due to the belief the sector had learned the hard lessons from the GD. Then a bunch of meth addicts took over the joint and picked a fight with anyone not as high as they were, and occasionally close relatives, in a hyper dopamine state of psychosis.

        Per your grievances wrt MMT in a nut shell – “MMT: Taxes function to regulate aggregate demand, and not to raise revenue per se. The funds to pay our taxes and buy government securities come from government spending.

        E.g. its not a commie plot or socialistic paradise, its about sound governance to provide uplift for everyone with out tearing each other apart over scraps in a “survival of the fittest” contest for domination over others, whilst the planet burns.

        Skippy… mean while the rubes are playing with casino chips [equity] and thinking their going to win the lotto, but yeah, fiat is the root of all ev’bal.

      • Skippy,

        Yes, our differences are even smaller than I thought. Post office banking, Wall Street neutered etc – all good.

        As for my supposed grievances with MMT they are all projections of yours – as you are so prone to do.

        My position on MMT is quite simple – it provides an excellent description of why banks endogenous money creation powers must be removed or greatly restricted. You subscribe to greatly restricted – no doubt because someone else says so. Good for you – as I said I will applaud any improvement in that regard even if i remain sceptical that you can cure the cancer by managing rather than removing the tumour.

        I know you think you are the only one who has sighted the promised land but rest assured I have a wonderful set of slides.

      • Pft,

        And I get accused of cryptic sophistry “You subscribe to greatly restricted – no doubt because someone else says so” – wrt banks endogenous money [credit] creation, that’s a massive case of inference without substantiation imo, due tell how you arrive at that conclusion.

      • Skippy,

        The first bit is not controversial – you consider there to be nothing wrong with endogenous money creation and you argue that abuses can be controlled with regulation. We disagree on this but I suspect we probably lose the room when we debate the point. Suffice to say we both agree at the very least on restoring much banking regulation that was removed.

        The second bit – about someone else saying so – was a dig at your use of authority when your own explanation would be more than enough – for me at least.

      • Pfh,

        If regulation did not work then the post office depository would not have abandonment. The state of HPM is a factor of the state, not may conservatives argue other wise now days. A sound endogenous money creation system is only a risk arb, that even the shadow sector is predicated on, tho you have yet to address that dilemma. Got issues with payday lenders or their ilk.

        So it seem the rub is what quantifies moneyness, to me its, the original, trust bound by human contract and not a substituent in the form of an inanimate object.

        Skippy… objects of faith are the domain of the religious.

        PS. the shadow sector dines on the lack of responsibility and is manifold the private sector.

      • Skippy,

        What are you referring to when you refer to HPM?

        I assume you are referring to the ES settlement accounts at the RBA. As there are no reserve requirements in Oz what exactly is high powered about an ES account. They are relevant to the target rate but that is about it. The banks ability to make loans is not some function of their ES balance.

        You don’t seem to understand the difference between an IOU created by a bank and IOUs created by other organisations – eg shadow banking.

        A banks IOU is fundamentally different to one created by a shadow bank or anyone else. Anyone can create an IOU which can be used in exchange or trade if someone is willing to accept it (but is not compelled) but that doesn’t mean you can pay your taxes with it and as we probably agree taxation is an important part of the monetary system.

        Bank IOUs are unique in that you get legal tender when you draw down on them.

      • Your still persisting that denomination is equal to lawful status in rights to recourse, not to mention your whole IOU status is redundant, and if you want to couch it in antiquity we all are interconnected by societal IOUs.

        Skippy… at least your not as prone to textual walls of metaphysical reasoning as old paul d king, man that guy can pontificate.

      • Skippy,

        Ok – now you do need to give me a specific reference as that made no sense. Don’t take offense (or at least not much) but when you do the Shaman routine it sounds like you are obsfucating.

        You seem to be suggesting that there is no significance to a banking licence. Bearing in mind the difference between countries please make the reference specific to a system similar to Australia.

      • Too above..

        “Consider: a couple of years ago, I knew someone in a senior staff position at Goldman who often did various studies for the management committee, usually on HR or firm culture matters. They would often be circulated among the managing directors, sometime more broadly. He was asked to look into the relationship between money and happiness. As most readers probably know, this is a fairly well investigated area, and most studies have come to the same conclusion: that once a threshold level of income is reached (usually enough to cover a middle class level of expenses, plus a bit of a buffer for savings/emergencies) more money does not make people happier.

        When he reported these non-controversial findings, not only was his audience scornful and dismissive, but he was also instructed to keep the results confidential!

        Now that may seem like an isolated example, but remember how quick and angry the reactions from most Wall Street denizens are when you challenge their pay levels. Their sense of entitlement is not based on a logically defensible position; it is an article of faith. But this exchange provides a crude but vivid reminder of the virtual impossibility of penetrating deeply held beliefs.

        As reader Skippy noted,

        The WBC is a prime example of how hard it is to engage in any reasonable discussion with BELIEVERS of any stripe, mental heroin methinks.

        I wonder how many realize the fight is just starting, warming up, and unprepared for the acts that may be used against them.”

        http://www.nakedcapitalism.com/2011/02/anonymous-speaks-with-westboro-baptist-church.html

        Skippy…. I spent to many summers in the Midwest, in concrete bunker awaiting its top sweating to death, listing to endless rubbish about the individual to be compelled by your bloviation… that science and natural history repudiates that antiquarian premiss… is your drama…

      • Skippy,

        Too above?

        What was that about !

        Westboro baptist ? Bunkers ?

        We were talking about HPM and you were going to unpack your comment with a reference.

      • ??

        I don’t waste my time unpacking your stuff anymore – like dodgy flat packs there are usually bits missing.

  7. it looks like WSWS was right about Syriza being fake-left bourgeoisie party, days before referendum …

    • Yeah and Obama was viewed as a progressive at onset….

      Skippy…. progressives were the first part of his constituency to view the underside of the proverbial bus.

      • ultimately neolib capitalism was saved by fake left despite being in bigger crisis than soviet communism in late 80s

      • DrX,

        The crazy bit is Larry offered a hair cut and Obama said nyet and paid at inflated par…

        Skippy…. then threw every victim of control fraud to the financial sector, especially RE to the wolves and got reelected… true story mate… can make this stuff up thingy…

      • Obama actually got himself elected by being the “peace” and “no more wars” candidate. In addition to this he made several statements regarding illegal wire tapping and the activities of intelligence agencies that he would stop if found to be unconstitutional.

        Another lying empty suit. He has expanded the wars he inherited as well as the surveillance programs and in general abused the power of the executive branch. He has been a complete let down.

  8. Are we getting the full story here??? Is this just a face saving deal for Germany and the Trokia with the real deal for Greece behind closed doors being much sweeter? Greece after all by itself, if you take out the cascading impact on the Euro and the Eurozone, is a relatively small problem when the amounts are considered. It is the fact that Greece’s financial problems could trigger the fall of a badly structured currency, the Euro, and the resultant flow on effects from it that have many people around the world worried.

    • I think people are mistaken in their understanding of who the targets of their game theories are. Ultimately their intent is the destruction of the “tyranny of preference” as my mate Yanis calls it.

  9. Looking forward to a book to be published in 2035 that explains what actually happened.

  10. I recall someone writing that Tsipras may have held the referendum assuming a yes vote would win and allow him to concede to the Eurogroup’s terms without taking the blame… seems likely that was the case if this is now the outcome.

    • Conspiracy theory like this doesn’t make sense, since Tsipras himself said on record he will resign and disband government if the referendum returns a ‘yes’ vote. I believe we’re missing some crucial information here, as this does not make sense. @_@

      • The US were keen for Greece to stay in the Euro, in case they ended up in Russia’s pocket. Perhaps the US are donating some funds to Greece behind the scenes to help out.

      • Ronin – I think his plan was to resign after the yes vote – it allowed him to get out clean and let someone else have to take responsibility for signing an agreement that will destroy Greece.

        While he called for the no vote – given the way he responded to it – you do have to question whether its actually what he wanted…

      • I actually think the US want Greece to leave the Euro. The US is in a much stronger financial position than when the Greek crisis first blew up and could now weather a Euro currency storm, that would eventuate from Greece leaving the Euro, relatively well compared to other nations.

    • “I recall someone writing that Tsipras may have held the referendum assuming a yes vote would win…”

      A few people have been saying that. I have no idea if it’s true or not but Evans-Pritchard is normally pretty good on these matters.

      http://www.telegraph.co.uk/finance/economics/11724924/Europe-is-blowing-itself-apart-over-Greece-and-nobody-can-stop-it.html

      Like a tragedy from Euripides, the long struggle between Greece and Europe’s creditor powers is reaching a cataclysmic end that nobody planned, nobody seems able to escape, and that threatens to shatter the greater European order in the process.

      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.

    • I assume if there was a strategy it was not thought through….. surely if they wanted a yes vote they could have enfranchised 500K working age population not in Greece, mostly availing themselves of EU mobility and work rights, elsewhere in the EU (acting as social tension release)? http://www.euractiv.com/sections/euro-finance/half-million-greeks-unable-vote-referendum-315990

      Oz is not much better, think if one is outside of Oz 12+ months, you are removed from the electoral roll by AEC which is ridiculous in these days of global mobility, or smart thinking by domestic or national(istic) politicians who do not trust their own citizens, if living outside their country and being corrupted by new ideas.

  11. I think Tsipras called the Europeans bluff and lost. The man has no guts – all talk and no action.
    Greece should leave the Euro and devalue the currency. Making tourist destinations cheaper rather than even more expensive than they already are (which is why people go to spanish and croation islands instead) is not going to help the economy one bit. Unemployment will continue to rise – whereas a low drachma would drive the unemployed to other countries to earn euro’s and send money home.

    • Unfortunately, it appears that what they should do, and what they will do, are two very different things :(

    • Maybe Tsipras doesn’t want to be blamed (as much) for Greece being forced out of the Euro…

  12. This isn’t a compromise deal it’s a surrender. I can see only two reasons to do this.
    If Greece’s concessions are conditional on a debt relief deal then its a last attempt to get the Eurogroup to compromise and see sense. Planning to either get a debt solution for Greece or be able to say No take the Grexit and honestly say they tried everything.
    If they take this deal without a solution to the debt issue then its just a sell out. And one Tsipras wouldn’t survive. Syriza would fragment and you’d either get a new government or a revolution.
    What continues to surprise me is Germanys refusal to negotiate. They have to know that if they don’t deal then they are never seeing any of the debt again AND Europe starts to fall apart. Sure they might get some votes out of it but its a terrible deal for Germany either way.

    • July 10…
      “Barack Obama has been forced to intervene in Greece’s protracted debt negotiations after European leaders openly threatened Athens with an imminent eurozone exit during a stunted round of emergency talks.

      The US president spoke to Alexis Tsipras, the Greek prime minister, and Angela Merkel, the German chancellor, as eurozone leaders gathered in Brussels last night (Tuesday), in his first personal involvement for months.

      Mr Obama and Ms Merkel “agreed it is in everyone’s interest to reach a durable agreement that will allow Greece to resume reforms, return to growth, and achieve debt sustainability within the eurozone”, said a White House statement. ”
      http://www.newindianexpress.com/world/Obama-Steps-Into-Greek-Crisis/2015/07/08/article2908893.ece

      http://nypost.com/2015/07/06/why-america-cant-leave-the-greek-crisis-to-the-europeans/

    • interested party

      willy_nilly,
      The US was always involved….just lately has been more overt.
      I suspect it is all part of the one play, and that is Russian containment. The EU wants gas from Qatar…preferably via Syria. The western powers do not want Russian gas via Greece so had to somehow contain ‘democracy’ within Greece whilst simultaneously keeping Greece within the EZ. The Greek people are mere pawns in a global game, and one can only assume the US believe they are expendable…..
      What we are seeing is one angle of a multi-faceted attack to contain or overthrow Russia.

      • IP,

        Well given it has been made blindingly obvious over the last decade or so that the US elite think that the US people (poor and middle class in particular) are expendable then there shouldn’t be any surprises, in the Greek people thinking that the “US believe they are expendable”.

      • Pretty much bang on IP. Brezinski and Wolfowitz doctrine being followed. Just remember, it’s not fair that all of that land belongs to Russia.

        The US is a supported of the EU because it is malleable and subordinate to its interests. Should it break down under the present difficult economic circumstances suddenly the large economy to the East with it’s manpower and vast untapped natural wealth looks more attractive to German industry, and indeed to the French. This would be a worst case scenario for the USA. A German and Russian marriage would mean the emergence of an economic and military power that can challenge US hegemony on the European continent.

  13. As I said yesterday Tsipras was always going to cave. To repeat I am not an anti semite, but he was never going to betray his tribe. Yanis was their only hope. Now the Greek people are set for even more poverty and seeing their assets sold off for cents on the dollar. So sad. It is that bad in Greece that some youth are contracting Aids on purpose as the get a bigger benefit.

    • Says so much about the financial takeover of the world. The birthplace of democracy is now a vessel state. Whatever the Greek people vote for does not matter. Similar calls referendum in Ireland a few years ago were shutdown. Free markets seem an anaemia to our elite

    • “It is that bad in Greece that some youth are contracting Aids on purpose as the get a bigger benefit.”

      Then they’re even more stupid than I thought.

      There is a lot of sympathy I’m seeing on MacroBusiness for the Greeks. far more than I think appropriate (or can you never have too much sympathy?)

      I can’t think offhand of a European nation more deserving of their present predicament.

      I hope there is significant and long-lasting cultural change which emerges from this. A recognition that root and branch upheaval is required to get them back onto a good footing.

  14. Many of the reforms can be viewed as necessary and desirable regardless of whether one has the euro or the drachma. Of course it’s a shame that the Greek political class required such a near death experience before adopting necessary but unpalatable measures.

    I’m not saying the entire package is desirable. Some kind of debt restructure seems necessary but many of the concessions in isolation are beneficial to Greece and achieve reform they couldn’t do by themselves.

    • “Of course it’s a shame that the Greek political class required such a near death experience before adopting necessary but unpalatable measures.”

      Same could be said for Australia, think Superannuation reform, think negative gearing reform, think taxation reform (to get multinationals and the very wealthy to pay their share of tax rather than use offshore tax havens), think land tax reform, think increasing the GST, etc, etc

      • I agree notsofast.

        I also wonder how many of those Australians who lecture the Greek populace would be wiling to give up their tax concessions and varied rorts

      • footsore,

        One of the reasons I follow MB is that it makes clear how dependent Australia and Australians are on Welfare from the International Money Markets. And the people Australians have most to thank for creating this Welfare dependence is none other than Howard and Costello with their Consenting Adult Theory of people/households taking on debt and their lack of regulation of Australia’s Big Banks which allowed the largely foreign controlled Australian banks to borrow heavily (effectively borrowing in US dollars, if they had borrowed in AUD it would not be as much of a problem) on the international money markets.

        If these International Money Markets were ever to withdraw this monetary Welfare to Australia and Australians then we would be in very big trouble. Australians will one day find out that the International Money Markets are not benevolent institutions and it would have been better that Howard and Costello did not allow this Welfare dependence to be created. They will ask for their money back at some point and it is likely they will do so when Australia is in position where it is least able to afford it.

        Australia is in many ways in a position similar to Greece.

  15. Why don’t they just partition itself to Euro-staying-I-love-austerity-North Greece and Grexit-South Greece, and allow its citizens to move for the next 60 days after which the border will be closed?

  16. “This makes absolutely no sense. The Tsipras Government has just”

    If we assume he called the referendum in the expectation that the “YES” vote would actually win, then it makes perfect sense.

      • Well, look at the Greek media, which is really just a mouthpiece for other interests. They were busy whipping up fear as to what would happen if the populace voted no. Didn’t count on the youth vote though. Once they woke up from the previous evenings partying their was an avalanche of OXI.

  17. The Greek people, every one of them able to stand should get out into the street tonight and send a message to the rest of Europe and their politicians.

    • “The Greek people, every one of them able to stand should get out into the street tonight and send a message to the rest of Europe”

      If that many are standing in their blue shirts, they’ll build up momentum and march in unison to conquer land up north to overrun the red shirts.

  18. ‘Alexis Tsipras is – and here I quote an economist friend – the spoiled boy who long ago managed to get on television with his interviews supporting students, his “face sweet, he was angry and aggressive”, his career spent in the internal politics of the left, zero experience of the real world.”

    Perhaps Robert Fisk’s friend is right after all.
    http://www.independent.co.uk/voices/greece-debt-crisis-what-happened-to-democracy-when-its-a-case-of-vote-yes-or-else-10362374.html

  19. when a nation’s debt to GDP is over 180%, it means its GDP has to grow at 1.8 times of borrowing rate to pay its interest…what is their borrowing rate? from what I know ,Greece Government Bond 10Y ‘s yield is sitting at 18%….you don’t expect Greece’s GDP will grow at 32% just to pay its interest …it is just a matter of time it hits the wall…

  20. – It was Always a matter of “Damned if you & damned if you don’t”. The moment the greeks started to withdraw their money from the banks, I knew the public had lost faith in the (economic) future of Greece.
    – I also reasoned that Tsipras would be booted out, no matter what decision the EU or Greece would make. Since there’re no good choices anymore, Tsipras would be blamed for every outcome. And EVERY outcome is bad. It’s a matter of a choice between one bad outcome and another bad outcome.

    And that’s the definitive outcome for the australian economy as well.

    • The options are bad and they always were bad. The only thing that has happened is that the can was kicked down the road for a few years. Unfortunately during this few years things only got worse for the Greek people. If the tough decisions had been made a fe years earlier Greece could be a few years further down the road to recovery.