The EU is a bigger farce of a democracy than is the US. Its not like Juncker was picked via anything resembling direct elections. It's not like anyone has much idea who they vote for in EU elections. It's not like anything about the process, post election, is much democratic. You seriously think anyone in the Mediterranean area would choose or support the troika? How about the IMF? Were these corrupt, scum, slime bankers (Rato, Lagarde, Strauss-Kahn, etc. it's a murderers row of fools and criminals) picked democratically?

This is just garbage. In Spain what austerity meant was covering 1 of 10 retirements in the public sector - I mean one of ten public school teacher, doctors, etc. - in two years they did damage that will take decades to reverse, if it can be reversed. But they don't care, because what they want is to force privatization and deregulation so their friends can get rich. Caja Madrid collapsed, got bailed out, got renamed Bankia, former IMF head Rato got put in charge, they issued debit cards to the big honchos who then each spent 30-200k on massage parlors and undergarments for their friends. That's austerity. But all the poor bastards defrauded out of their savings by the bank are out of luck. All the idiots with unpaid mortgages are in the street, and their dwellings resold to Blackstone. It's a ****fest of corruption.

and yet you can't argue the EU doesn't enjoy popular support. The countries are all democratic and they can vote to leave if they want to - no-one will force them to stay. That's a pretty healthy state of democracy imo.

A sad thing in Greece is it looks like they are staggering to a very confused referendum about no-one is sure quite what.

So you disagree with Joseph Stiglitz?

http://www.marketwatch.com/story/eur...acy-2015-06-29

Stiglitz is smart, but this read is incomplete. You have to remember that Greece has an army, so no one can force them to pay debts owed to French and German banks. Wells Fargo can take your house if you refuse to pay your mortgage, but no one these days will occupy the Parthenon to make Greece pay its debts. So the question that demands explanation is not "Why do the EU and the IMF want to wring as much money as possible out of Greece?" The answer to that is obvious: they don't want to give money to Greece, and they REALLY don't want to give scaled up amounts of money to all the other Southern European kleptocracies.

The real question is what Greece gets out of a negotiated deal with creditors. The answer is basically that it gets to stay in the euro. Why do they want to stay in the euro? Who knows, it's a suicide pact that's wrecking their country. But they do.

The desire for the Euro countries to keep the monetary union intact is the best card Greece has left to play. They leave it things get much worse in the short to medium term don't ya think? (I didn't phrase this well I would like to hear your thoughts on my assertion. I respect your opinion.).

Also Greece's creditors had to be bailed out if you did not want contagion from a non bailout to send interest rates to the moon thus completely ****ing Ireland, Spain and Portugal and putting massive strain on relatively healthy countries like the UK.

So yea arguably a problem stemming from a debt based currency system.

Greece is almost entirely dependent on imports for high value capital goods and natural resources (other than food and aluminum). Leaving the Euro will crush their standard of living.

And no, it won't improve the competitiveness of their export (except tourism to some extent). Their problems there are more structural (namely, intentionally or not, they have effectively discouraged large companies from forming.)

I think Tsipras miscalculated the amount of support he had. It should surprise nobody that Tsipras began to make overtures for another deal as soon as polls came out that Greeks were going to vote YES, which basically amounts to a vote of no confidence in Tsipras rather than support for some concrete deal.

Either that or he is making a hail mary play because he knew he was getting voted out of office as it became increasingly obvious he could not deliver on what he promised and he did not have the political capital to give any concessions.

I honestly have no idea. It's hard to imagine how things could get much worse than they currently are. Greece has had 25+% unemployment for years. It's the Great Depression over there.

It's a false choice to say that Greece's problems are either structural OR cyclical. They are clearly both. Greece has some level of productivity per capita, and that ultimately determines what their attainable level of wealth is. There are doubtless many structural reforms that could improve that number. But also, 25% of Greeks are unemployed because no one has enough euros to hire them because the ECB refuses to print enough euros. More fundamentally, unless there's some implicit wealth transfer from the EU (which the Germans are clearly averse to), being in the euro doesn't magically give Greece a GDP that's higher than what would be accounted for by the productivity of its people. The only thing being in the euro does is keep Greece from being able to manage demand through its own currency.

This seems close to the mark. His failure to maneuver a referendum about some plausible deal to offer seems pretty bad politics.

Partly because it's about political union and always has been.

Yeah, I think Tsipras misplayed his hand because he doesn't have public backing to leave the Euro. As bad as things are in Greece, leaving the Euro is going to bring a massive hit to the standard of living in the near term and if he doesn't have public support to take that hit then he kind of has to come to an agreement with the troika.

He'd have been in a better position if this was a few years ago and Greece leaving was going to put the EU in real jeopardy. As it is he's kind of stuck with few good options.

That's a polite way of saying they ignored economic reality in pursuit of fuzzy-minded euronationalism.

Anyways, Yglesias has a fantastic summary of the crisis that you should all read:

http://www.vox.com/2015/6/30/8868363...ault-austerity

Yes it was. I wonder what history will make of it all.

I'd still bet on it being a success that includes Greece (whether they leave the euro/eu now or not)

lol there's a gofundme

https://www.indiegogo.com/projects/g...ut-fund#/story

Has anyone in here read 'The Great Rebalancing'? I feel like I have a better grasp on the Euro situation after reading it, but also feel like a lot of the stuff I now believe is probably just an opinion with more nuance to it. Anyone disagree with his grasp on the crisis? Any recommended reading?

Some Greek officials are now offering to cancel the referendum in exchange for concessions from the EU. Everyone involved must be getting really tired of all this.

There are Greeks with nothing left to lose who would happily leave the euro and tell their creditors to go **** themselves, but most of the country still has a job or some savings. The uncertainty of what would happen if they leave the euro is scary to them.

Also, I dont think we can blame the euro for all of Greece's problems. If they werent in the euro they would still have rampant tax evasion and a broken budget. They probably would have been eaten by vulture funds by now.

Tsipras effectively surrendered.

EU will take the offer. Referendum will be called off. Syriza hardliners revolt when asked to implement reforms. Promised reforms don't materialize.

Water torture and death by a thousand cuts resume.

PS: I think Tsipras wants to get a bone to save his political career. I think rest of Europe is going to go out of their way to make sure Tsipras doesn't get it. Tsipras is right about one thing: he's about to get humiliated.

Doesn't sound like a credible offer as its in return for the 3rd bailout while negotiations were still about the last tranche of the 2nd bailout. I think?

I suspect Tsipras' offer is something along the lines "we accept the framework and we promise to legislate those reforms into law, next year. But can we have the money for next two years now please?"

EU will take that "offer" in return for calling off the referendum and another tranche of payments. Syriza/Tsipras balks at implementation and we get stuck in a loop until the Greek people either commit national economic suicide or vote a pro-EU-pro-austerity government in to make a deal. This is my guess.

I think your guess on how it will play out is about right. Some form of deal will be done and the referendum will get cancelled or delayed and turned into a clear question about accepting a deal that is on the table or not.

Hopefully the Eurozone understand that politically they need to address the debt mess Greece is in before we end up here again. No amount of Greek reform alone is going to do the job.

Thing is the banks made bad loans to a country with too much debt and a structurally unsound economy... now they are demanding payment and it ain't coming. Not today or next year or 10 years from now. That money is gone. And if that money is gone, the banks that made those loans are insolvent.

This seems to me to be more of a mathematical problem than a political one. The numbers don't add up and are never going to, because the loans are worthless or nearly so. So the EU needs to find another way to bail out the banks that doesn't involve more austerity for an already-crippled economy.

Foreign Banks don't hold much Greek debt (2.4B). The European tax payer needs the bailout. http://money.cnn.com/2015/01/28/inve...-most-to-lose/

BBC has USA owning 11B worth of debt, will post graf soon.

Have seen quotes saying Greece owes the UK at least 10 billion. Hilariously several on the left including one of the Labour leadership candidates want us to write the debt off as the austerity they'd suffer is wrong. Ironically that's about the same amount that would pay for all the proposed Tory welfare cuts, which they'd also rather not happen

The politics is Europe's commitment to PU.

The EU has the ability to push money in Greece's direction to allow them to get out of this hole. It's a form of writing off the debt that is far more politically acceptable.