Meh, broke is broke.

Other country has more harsh terms but is able to pay just shows us how much of a basket case Greece is.

The banks reopening on Monday is a good sign.

Still cash controls tho.

This should be a lesson that agreeing with someone and wishing them well doesn't magically guarantee competence.

German parliament voted yes with a clear majority.

Next step is debt relief in politically acceptable fashion.


Expect extensions, rebates, some fiscal transfers, lower interest rates, and pretty much everything but nominal haircut.

Amazing the contortions it's gone through to get where it was always almost certainly going.

So hard to tell who has gained and/or lost from all of this. I'm sure it will have been obvious one day.

Everyone lost.

I'm not so sure. There's a cost which we are seeing now but it's made clearer that polical solutions are needed which isn't worthless

Greece is going through an unnecessary x% contraction which is awful. For that they'll be put on roughly the same payment plan as before resulting in something like planned 3.5% primary surpluses basically forever.

The debt was maybe close to sustainable before but is nowhere near it now. Meaning the creditors will have to pony up another €86bn or so, but can expect even less back than they could before.

Tsipras has ruined his momentum and split his party.

The mainstream opposition in Greece lost the referendum and their leadership in the process.

The negotiations created confrontations and ill will everywhere and nobody came out of them looking great. I think Merkel has even said something about this being Greece's last chance.

Structural reforms and privatisations will have to carry the day for any of it to be turned into a win but that's a lot to ask for from bakery liberalisation and utility privatisation.

Maybe Varoufakis added a zero to his next book deal and Draghi doesnt have to buy his own beers in Athens ever again, but that's about it imo.

I can't consider Greece in isolation. The main game in town is the EU/Eurozone and if they're understanding the problems with the Euro and with Greek debt more realistically and with more political impetus then that can have a huge impact on Greece medium/longer term that could dwarf the short term downside.

This guy pretty much nails it - he brings up the exact points I brought up, but supports them much better. These sound pretty much exactly like what I'd write if I had the energy to write my thoughts out:

http://www.interfluidity.com/v2/5965.html
http://www.interfluidity.com/v2/6013.html
http://www.interfluidity.com/v2/6069.html

^

That's how I see it too but we shouldn't underestimate the political problems individual countries have and the numbers of people who don't see things as European but as national. Politics is the art of the possible and what we want may simply not yet be possible. My belief and hope is we are moving closer to it being possible but the Europe project can take generations.

Much easier not to have done such a bad job of the Euro in the first place but people are reluctant to properly consider what can go wrong. Maybe that wasn't possible either.

The fundamental goal of the EU project is to establish in an orderly way German (and to a lesser extent French) domination over their natural sphere of influence. Greece is a troublesome province of the empire that needs to be brought back into the fold.

Waldman is such a great writer, I can imagine this entire screed spilling out onto his computer screen in one fell swoop, DVaut-style.

The EU project was intended to put to rest the possibility of a 3rd homicidal intra-European war. So they wanted to pull as many countries in as possible, on the theory that nations economically united would never go to war.

The problem is, it's gone way beyone economically united.

Article nearly nails it but fails ultimately due to one oversight.

What happens in a world where creditors are more accountable?



Now to be clear, im not saying thats a bad thing, its probably a very good thing prior to 2008.

However the political class has a massive interest in driving interest rates down, more so than the financial class.

Which brings us onto another issue, do the "debtors" actually suffer?

Yes the "people" suffer, a lot.

But the people did not take out the loans.

At least in terms of sovereign debt, those that put pen to paper on the loans probably did not suffer that much if at all, maybe there pensions were not quite so good, at most.

So in taking on loads of debt you actually have a situation where the down side for the actual agents in the process is fairly limited, both creditor and debtor.

Yes the debtor can be put out of office, but this is just a bump in the road for political elites.

But some bankers did actually lose jobs, take haircuts etc.

So actual procedural debtors do have at most a marginal downside but the people have a massive downside.

However, lets say we try and fix this now, make the creditors more accountable.

BOOOOOOOM! Nothing ****s the "recovery" like higher interest rates, because debt is so high.

Central banks have dropped interest rates to near 0 for a reason.

Creditors say FU we own this game.

The solution of making creditors more responsible creates an effect absolutely in contradiction to the effect sought by the monetary policy of CBs in response to the crises.

So blaming debtors or creditors is ultimately a false dichotomy.

The system that defines such is ultimately at fault.

Ultimately a money supply predicated on debt is the problem.

http://positivemoney.org/

The real cost will transpire when this bailout will fail as much as those before because of Greek inability to reform as much as needed to be on the same track with the rest of the Eurozone

It's possible, either way the short term cost quite likely wont determine how this is judged in the future.

At this point no amount of reform could lead to a situation where liabilities could be met, that ship sailed a long time ago.

Well, theoretically it could, because what Greece has to pay is not actually that much and much less than they had to pay for their debt prior to the Euro. But in practical terms you're absolutely right, there is no way this will actually happen. Just looking at the news of today Tsipras is likely to be calling for another general election in autumn, it's not hard to imagine what that will mean for the economy.

The Greek election will be very interesting.

I wonder if the left will do that well if they seek another mandate to renegotiate. I would have though the Greek people now believe that they can't have both and will vote for something more constructive or for a 'Grexit' party.

The Greeks can elect all the Nazis they want, but they're not organized enough to do a blitzkrieg.

Higher rates and underserved populations (a lot of people aren't worth underwriting if you need to actually research their credit worthiness before making a loan, like a mortgage).

This is gold bug level idiocy. Debt based money supply is one of the killer apps of modern economy. It's one of the main mechanisms that allows capital to flow to where it's most productive (one that doesn't work too well with super low near zero rates).

Noting to do with goldbugs.

So you are saying its works really well accepting for the inevitable outcome of such a system, e.g. interest rates near zero.