Interesting. This saga will make a good book.

Lagarde and IMF's position was always restructuring, but without outright writedown, for reforms was the way to go. Her comments about debt restructuring was not the revelation some people think it was.

It's also a mischaracterization of Germany's position that it was not at all open to negotiations on debt. They were open to negotiations on debt in exchange for reforms. Their problem was Varoufakis and Inc. put forward nothing to negotiate on.

All the way back in January, when Syriza first came to power, Dijsselbloem and even Schaube hinted that they'd be open to debt "rescheduling" "restructuring" (or some other euphemism), but only in return for more reforms.

Cash for reforms was always the default position of the Eurozone. They wouldn't take face value hair cuts because that's politically not very viable, in part because that may require member parliaments to vote on it. But every bailout has come with debt relief, quite a lot of it in fact.

I for one am amazed that articles based on the testimony of a member of the Greek negotiating team make said team seem more reasonable.

Having lived in the real world Im going to go with both parties having moments of being reasonable and unreasonable and not one party being totally reasonable and the other totally unreasonable.

Greece got a lot of help from France, apparently. The French president happily advertises that he spent most of the week on the phone trying to make a deal happen. According to Le Monde, it went farther than that and the last Greek proposal was written with the help of the French ministry of finances. Also, people at the European Commission have noticed that French and Greek negociators tend to show up to meeting with strikingly similar documents.

Greece's allies seem to be France, Spain and Italy (the Mediterranean countries with some debt). Northern countries and Germany are clearly on a tougher position. There are also countries like Latvia that went through a crisis and hard reforms recently without getting much help from the EU and that really really dont want to send money to Greece.

If the Germans agree this then we are just on a timeline defined by however big the loan is given to Greece to finance its existing payments for previous loans till it again is unable to meet those payments because the economy just got utterly shafted by capital controls and now austerity but even more severe.

At that point no way will it be politically possible for Germany to renegotiate any "softer" terms for Greece on any aspect of the economic relationship and the Greeks will be just as politically suspicious of more of the same.

Grexit is inevitable unless there are real moves to fiscal union or there is a debt re profiling that allows the repayments to be spread from here to infinity and thus be affordable. However if that happens and no fiscal union then we just have to wait till the deterministic pressure of having a dumb monetary union show themselves again.

This is just a can kicking exercise, and its the last kick, if the can ever needs kicking again, it wont be.

http://blog-imfdirect.imf.org/2015/0...-path-forward/

This is some interesting analysis from the chief economist at the IMF even though his hands are tied. At least he almost tells like it is - he admits that austerity reforms aren't for the Greek economy, but mainly to pay off the creditors and there's a fundamental tradeoff between the two - the less reforms Greece agrees to, the more debt relief that's needed to close the gap. He stops short of admitting that self-flagellation doesn't really help much with debt sustainability, but merely a necessary condition to create the political will elsewhere to help Greece, but he doesn't really deny it strongly either.

Reading some of the old articles, it looks like the German position has always been the same. First, Greece should not merely agree to reforms, but pass and implement the reforms unilaterally, then if that turns out not to be enough, maybe we'll either think about the bailout or debt relief or maybe all you'll get are more reforms. It's not entirely clear at all that Germany ever offered anything.

Greek parliament has approved.

If it goes through I'll make you a friendly wager that one day the can will be kicked again and no Grexit happens.


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If the Greek Parliament has approved, this means that this can is still only ~33% kicked.

That said the other 67% will probable kick.

Yes I was referring to your claim about the future if it does go through this time.

Well I just want to see how Germans react this time before entering into a friendly wager.

Politicians always amaze me with their can kicking, infact can kicking is one of the major flaws in our political economic organisation which incentives kicking a can past the next election.

Its interesting what will happen in Greece.

Next year or so is going to be rough as sandpaper, they elected a radical we will take a hard line party that promised no more austerity, yet has totally renegaded on that promise.

Greeks have elected a radical party, that all said and done has achieved nothing remotely radical, a bigger loan yes and possibly yet to be quantified debt restructuring, but these are outcomes that still belong well within the bounds of business as usual. The main driver of the move to the left still remains, aggressive deficit reduction.

As the situation worsens on the ground and it will, where do the Greek electorate go?

Think its safe to say that anyone who does not define austerity as always wrong all the time as a truism has a much more nuanced understanding of austerity than you.

Obviously anyone looking at the bolded and accusing you of being polarized must of course be mental deranged.

Inb4 But u did not fact and something something post 5 years ago.

Ireland

Spain

Latvia

http://www.bbc.co.uk/news/business-33470220

Fair enough that Spain is hardly a poster boy for Austerity, but it is off the programme and growing after a massive shock, call me crazy and PB probably will if he hasnt all ready, but I think there might be more to Austerity than always wrong, all the time.

Great post OAFK

With the rhetoric that's coming from the Troika and Germany today it's looking more and more like they simply do not want a deal. That's not to say I am very confident that even Tsipras wants one at this point either.

oh well, who needs euros anyway? I'm bout to stack dem IOUs baby.

+1

Syriza having been pretty horrible for Greece seems to be about as close to being objectively true as you can get imo.

I dont know what indicators you want to use but they all look pretty ****ty. Growth, stability, debt sustainablity and so on. T

hey took over a country that was stable, and probably growing, and now cant keep the banks open without €25bn of foreign money. I dont get how anyone can consider that not horrible.

Now they're going to accept a deal they probably could have gotten their first day in office, but with an added cost to pay for damages of these past 6 months. That's just objectively poor.

They might get some debt relief, but it will only be on the Eurozone debt, which they dont really start paying until 2020, and they need a good deal of it just to get back to where they were. They're are hardly paying anything on debt at the moment anyway, so what good is cheaper payments in 2036 if the cost is a 3% contraction this year?

You can read the same story here from about as left-leaning an economist as you'll find in a US paper http://www.washingtonpost.com/blogs/...roying-defeat/

Leftwing populism is kinda scary. At it's worst Syriza sounds Chavez-esque with ideas about going after the media and nationalising industries. Here for example: https://www.youtube.com/watch?v=_BW_7AYoApU

But I actually liked the optimism whey they got elected and was relieved that it was not the neo-nazies that were gaining strength.

The results, and the way they've handled the negotiations, have just terrible. I dont even see how you can come to any other conclusion.

They are basically asking for a time table so they could figure out what strings to attach to the aid.

This is a little wrong imo.

Greece didnt want to exit the Euro in 2010. They wanted a deal. And they got major debt restructuring in 2012 reducing their debt by €170bn and making the eurozone debt pretty cheap. I think the first primary surplus they had was last quarter of 2014, so it's not like it's debt payments that have caused the suffering. It's not the debt they been paying for.

Most importantly the austerity would have happened either way. I guess it would probably have been worse without the deal. In 2009-2010 they had a structural deficit of 15-20% of GDP and nowhere to borrow money. Even if they had defaulted on all they could they would still have had to balance a budget somehow (with better monetary policy tho).

All that said, the rest of the Eurozone should stop ****ing about and come up with a plan that actually makes Greece better, even if it comes at a cost. A new Greek unity government from next week would need support. It might be the last chance to salvage something from this bloody mess.

What a mess, right-wingers "True Finns" attempting to block a 3rd bailout package.

A bailout will work only if Greece has an austerity plan

There's a table showing countries voting power and they need 15%+ to block. Finland have 1.8%

https://twitter.com/WhelanKarl/statu...651904/photo/1

In practice they need Germany, France, Italy and Spain to approve.

From what I read it is not yet clear whether they can use the emergency 85% clause in this situation. This can only be used if lack of action "...would threaten the economic and financial sustainability of the euro area".

German grexit proposal is interesting as well, looks like they would consider a haircut in that case?

https://twitter.com/mathieuvonrohr/s...049792/photo/1

this is the newer one with Latvia and Lithuania apparently https://pbs.twimg.com/media/CJqPdf9UMAAcntU.jpg:large

Greece + Germany, France, Italy and Spain is a little under 80% as far as I can tell, so you can probably get there somehow. though it's not making it easier that they can hardly push Greece any further even though they've given up fighting. it's just a mess.

Germany basically said they don't trust the Greek government at all and the only way Germany will fork over the money is if Greek government puts up all of its assets as collateral.

Can't say I blame them. But the demand is still stupid. It's practically fiscal annexation and Greece will still just shrug and say no if it so wished in future.

They need to find a way to monitor and ensure compliance while allowing the government to save face.