Yeah this isn't a great deal or a great situation or anything at all for Greece - just that they are better off than they would have been voting YES in the referendum and neutral to slightly better than had they accepted the final offer on the table. And part of this is that Syriza is still their best hope, so their position having been massively strengthened is a win, however slight.

I'm pretty sure the eurozone made it clear that this had to be done before the negotiation for the third bailout would begin. This has been their MO for a while, just agree to everything we say, it's good for you, and let's have another conversation in a few months where we get to lecture you about how your failed state needs yet another bailout. This is what Varoufakis had written:

It seems to me that Greece's position has been consistent all along - bridge financing for some limited reforms OR long-term financing for ALL THE REFORMS.

This incoherent and overwhelming need to make Syriza look bad is an interesting theme I'm seeing in this thread. What am I missing here? This seems to be by far the best government Greece has elected in many, many years. They seem to have both the popular mandate and the flexibility to negotiate and govern.

Is left-wing populism that scary to you guys? I can't think of any recent populist government that is as grounded as Syriza has been and as effective at channeling the anger of the fringe into something vaguely productive. You guys understand where they come from and what kinds of feelings their voters have, right? I'm pretty agnostic about politics, lean center-right if anything, and I'm amazed by what they've accomplished. What do you think you're going to get aside from Syriza given the mood of the nation? You are quite well-aware that in a similar situation, the Germans chose Hitler, right?

Never mind the referendum should have never happened. A "yes" vote would have led to the dissolution of Tsipras' government with the opposition parties taking over to sign essentially the same deal.



No, this was never Greece's position. Varoufakis has never said anything along those lines. In fact, from the onset the Euros expressed a desire for a longer term deal with a big package of reforms. The piecemeal negotiations were results of Syriza not willing to sign on to any reform.



Varoufakis and Tsipras themselves don't think they had the flexibility to negotiate and govern. Their actions suggest they have no interest in governing. Their negotiation tactics and public pronouncements said they had no flexibility.


If Tsipras is what "grounded" left-wing populism look like, yes, it is that scary. They channeled the anger to lead Greece off an unnecessary cliff, to the detriment of all.

Sure I understand where the Greek people come from.

All they've accomplished is giving false hope, delaying the hard choices, and making the Greek people poorer, and lengthening the road to recovery.

Either rejecting the left wing or the left wing coming to grips with reality once elected into office. Syriza is in the process of latter. Tsipras still has a chance to rescue his legacy. He'll have to do it with opposition help because significant contingents in his own coalition will never go for the package Tsipras offered.

On the Varoufakis ran the game theory simulations in his head point:
His head failed to realize it's not a one off game. The loss of Greece was a smaller loss to the Eurozone than to give into Greece only to encourage rest of the PIIGS to pull the same stunt. Even without rest of the PIIGS, Eurozone was not interested in allowing Greece to come back again in 10 years.

God damn this thread is just such a perfect microcosm of economics (and politics) as morality play. Makes me want to gouge my eyeballs out. Kudos to PB for hanging with it this long.

Isn't moral hazard an economics term?

Can people stop referring to simply rolling over past due loans into new loans (with interest) as a "bailout" and reserve that term for an actual bailout.

Kthnxbye

very curious to see what the actual present value reduction of the debt ends up being. everything I've heard is just in general terms (lower interest rates, longer payback period) etc

I would like to see the market value of the Europeans Greek debt portfolio.

Depends on how you want to look at it.

Troika altogether paying each other with their own money means the periodic payment is effectively zero.

Add longer payment terms and nearly perpetual rollover... let's just say 30 year (I think this is more realistic because Greece will use some of the targeted 3.5% primary surplus to pay interest on new debt) average maturity, we're really looking at ~60 billion euros in present value, assuming 6% (about lowest they got to before Syriza started winning elections). Under 10 at market rates for Greek bonds.

If you want to assume 10 year (with 3.5% primary surplus and no interest expense, this is about right) time to maturity, about 190 and 90.

Another way to look at this is, if I remember correctly, is private lenders offered something like 17 billion in voluntary haircuts in hopes of getting a deal through. Estimates vary but private investors held probably about 40 billion. That's about a 42.5% discount. Applying that to Greece's total debt leaves us with just a little over 200. (350*0.575).

The way the debt is/will be structured will most likely, in effect, have an option built in that significantly raise the value of the bonds should Greece recover much more quickly than expected and gets access to private capital at German like rates again and loses the Troika rebates/subsidies.

Haha, thanks man. It's really interesting because multiple posters have been caught either having no idea what's going on and/or making stuff up and no amount of correction changes their opinions. It's clear to me that they are mostly making up the facts from their axioms (syriza = bad, greeks = bad, debt = moral obligations) rather than forming opinions based on facts. And of course ignoring all inconvenient facts and literally not even reading the posts they are responding to.

For example, if you go back and read, say, grizy's posts, he's been proven wrong on almost every prediction he made that it's possible to be already wrong about. It's incredible - every time he says something is going to happen, the exact opposite happens instead. None of this ever makes him question, maybe, the model he's using for understanding reality is wrong. Instead, he doubles down, even more eagerly searching for or making up facts that would prove him right.

The Greek debt crisis is a perfect right-wing cause where the scary foreigners are also the poor lazy debtors whose failure to pay back their debt is like super scary or something being debtors paying back is the basis for their understanding of capitalism in general and the worth of their assets specifically. I suppose it also threatens to invalidate their internalized sense of obligation - if we all are paying, why aren't they paying? Why aren't they making hard choices? It's hilariously bad economics - you know, not too different from the Mises/Goldbug/Neoconfederate nonsense that used to be popular around here, but hey it's the Greeks, they deserve bad policies or something I guess.

It does worry me greatly because it demonstrates how easily people adopt extreme right-wing positions where bombing a bunch of foreigners is no big deal, but a foreign politician asking to only increase their VAT by 1% instead of 2% is so scary that he may as well be a terrorist lovechild of Stalin and Hitler. I have grizy pegged at somewhere around center-right, smart and reasonable as far as this forum is concerned and the right-wing rhetoric he's been spewing, from an American perspective, is indistinguishable from the content-free lunatic fringe stuff I used to read and listen to, in order understand the relationship between political extremism and mental illnesses. It's like the exact reverse of what's going on with Syriza. They managed to put together politically radical groups to present, effectively a compromise that even its ideological opponents would agree with. It's extremely heart-warming and encouraging - they are literally turning **** into gold. On the other hand, the right-wing populism here seems to be accomplishing the exact opposite - it's turning otherwise reasonable-seeming people into fringe-rhetoric-spewing zombies.

I'm sitting here somewhere to the right of Paul Krugman, Ben Bernanke and Hank Paulson, two of whom are Republicans, largely satisfied with both the popular vote in Greece and the compromise in Europe and I get called a lefty-pinko steelhouse by someone who thought there was some nefarious, shady deal between the fed and investment banks that allow them to get FIRST DIBS on freshly printed money or something that allow them to get INSTITUTIONAL RATES that aren't available to plebes like himself. The level of delusion is stunning.

Unshackled Varoufakis tells it like it is and says Grexit has always been the goal for Schäuble, German finance minister

I was proven wrong on almost every prediction except that Greece would eventually cave, even to demands from Euros or to economic realities on the ground.

I simply could not believe Greek people would do what they did.

That was not something I wanted to be wrong about.

I mean the Eurocrats are like "Hey we know you could have really screwed us over by just defaulting and exiting the Euro in 2010, and we appreciate the 5 years of abject suffering your people have endured while we got to the point where you could exit without dragging the rest of us down with you, but we really can't set a bad example for those other lazy southern Europeans (and more importantly their left wing parties) so have fun eating sawdust for the next 10 years or so."

I don't know why people aren't more disgusted by this (I mean I do, but it makes me sad to think about.)

How is this possibly true?

If you assume Europe was only going to get serious about debt sustainability, why is it the best course of action to negotiate a bailout when your opponent can enact the harashest terms it wants and you have no other alternative than to accept or get kicked out of the euro?

Banks aren't functioning and you think NOW is the best time to negotiate?


For what its worth, I honestly think a complete debt writeoff is the only right thing to do here. There's no investment in more bailout funds and you won't get that money in any near future, or long term. If you bankrupt Greece all that money is lost regardless. Merkel obviously cannot do this without having a collective uproar from Euro nations.

So now you go to my left and agree with the commies that reforms were never for Greece, but some kind of sadistic punishment that Europe imposes on Greece just because they had leverage. How are they opponnets here in this sense?

Greece has more leverage now than they did earlier - they still have no alternative other than Grexit just as they had no alternative other than Grexit, but now the Euros are also scared and the US and the IMF are being much more supportive and assertive. In other words, they are slightly more desperate than they were, but the rest of Europe/world is way more desperate than they once were. This is a massive improvement and it's exactly why now an actual bailout and debt relief and stimulus and all that stuff is being discussed meaningfully for the first time. Basically nothing other than some kind bridge financing was on the table before and it appears that Germany was really never gonna accept any bailout until now anyway. Grizy's insistence that this kind of deal was always available aside, nothing remotely comparable was ever offered and it's not even clear Germany would've agreed to what was offered either.

This is exactly right and it's sickening.

I think Christine Lagarde (who by all accounts is not your typical IMF neolib asswhipe) refusing to give air cover to the Euro hardliners wanting to force a punitive Grexit is the most important thing thats changed in the last few days. Not sure whether this has anything to do with the way Tsipras has played it or wether she was always going to hold her fire until it would be the most effective but either way she's definitely moved the needle.

I didn't see that one, just these:

Your track record makes me worried because you also said:

The deal Greece offered looks an awful lot like the last two deals. Add reports of Juncker's offer of 35 billion (with IMF/ECB actions on top of this, 50+ most likely) during last minute negotiations, it's probably fair to assume debt relief in every form except writing down principal value was always on the table.

Again, you keep saying debt relief was never on the table. Germany said it, Greece said it, the capital markets and objective valuation of debts held by rest of Europe say otherwise.

The last assertion of mine you quoted was followed by Greece was going to kick itself out. Thankfully I was wrong on that. They pulled themselves back from the cliff, but not without doing serious damage to the Greek economy first.

Tsipras was rebuffed by Europe and emboldened by polls turning toward no. I was undoubtedly premature in my predictions of doom. I also underestimated how much patience rest of Europe had left. I further underestimated Greek capacity for self-delusion.

But I am happily wrong about Tsipras/Syriza's ability to face reality. Now, can they follow through?

Again, the question was never, was debt relief and long-term bailout ever being going to be available, but was it part of the framework that was being offered in exchange for the reforms. The answer is no. Stop obfuscating the issue. It's like saying that getting 5 apples for $10 and getting 1 for $10 is the same because I can always go back to the grocery store and buy more later. Sure but it costs extra time and money.

And the latest news is that Germany is absolutely not thrilled with the Greek offer and Merkel may not have the votes to offer Greece anything. You may have a chance at getting that last prediction wrong too. And it does also doom your revisionist idea that all this money was always available - it's not clear if Germany had the votes to give Greece much at any point.

Edit:

http://www.theguardian.com/world/201...conomic-reform

Germany doesn't want to pay.

I have no idea where Phone Booth and Double Eagle get this idea from that there is an intense dislike of the left-wing populist movement in Europe and that the European Union officials are set on making them fail. It borders on conspiracy thinking, in my opinion.

The left-wing populist movement is not that big in Europe and it's not very threatening compared to right-wing populism. And from following the debate from Northern Europe, I get no such vibe, so I'm curious how you get that from an American context.

Not that it automatically means they are supportive of left-wing populism, but it should help Syriza that some of the key players and vocal critics of Greece's position are left-wing themselves, or are in coalition with left-wing parties: Merkel is currently in coalition with social democrats, Dijsselbloem is a social democrat, Hollande is from the socialist party, Renzi (prime minister of Italy) is a social democrat, Kazimir (finance minister of Slovakia, very critical of Greece's behavior) is a social democrat - and there are more.

The logical extension of there argument is that somehow Angela Merkel is some right wing lunatic fringe politician far to the right of the average American republican.

Also Phone Booth, if you think this thread is bad, you should go check Tooth Sayer out in the Greek thread in BFI.

lol Varoufakis

This is an interesting take from an insider:

http://www.mediapart.fr/en/journal/i...km?onglet=full

Is he wrong?

http://www.businessinsider.com/schub...he-euro-2015-7

"Schäuble reportedly told Greece: 'How much money do you want to leave the euro?'"

It seems to me that he's been trying to find European consensus to kick out Greece and didn't have much interest in a bailout that would keep Greece. Again, this whole idea that it's Syriza that's been unreasonable does seem absurd in light of the reports that are coming out.