Time to copy 1953 German Debt Write-Off?

golfwallah

Oops, of course, I should have said that the first thing Yanis Varoufakis referred to in his press conference was his rejection of the deadline being imposed for a decision on an extension to the current bail-out agreement. I can understand the need for member states to have as much detail as possible on any new package that they can bring back to their own parliaments – but the same applies to Greece. What they need is a bit of breathing space to develop a politically acceptable alternative course of action that will deliver some growth with which to resolve their political/economic problems. This needs to be more workable that the current process of impoverishing almost everyone and reducing them to a subservient, vassal state within the EU.

Interesting to hear Brendan Howlin on radio this morning making points from a viewpoint sympathetic to the Greek position – in stark contrast to our government’s perceived position of siding with Germany and the other states that are insisting that the current austerity approach (or minor tweaking thereof) is the only way!

Vincent Brown has also been making sympathetic noises towards the Greek position and how it is difficult to understand the craven position being adopted by our political leaders in siding with Germany against cutting a bit of slack towards Greece. Germany has benefited enormously from the Euro project and made other less well organised states poorer in the process by not being able to respond in the old pre-Euro way. Maybe some new found moral courage “to do the right thing” needs to be thought through and voiced by a lot more people. Kicking a neighbour who is down and removing all hope of recovery can never be the “right thing to do” – no matter what conventional wisdom has been up to now!

As regards fear of supporting the likes of Sinn Fein at home, maybe FG should simply “man up” and take on some of their more sensible policies as their own – particularly with regard to toning down austerity and making it more politically viable. We have plenty of examples from history, such as happened to the Greens all over Europe when mainstream parties took on their political clothing, thus rendering them obsolete.

Some quotes from noted economist, J.K. Galbraith may be appropriate here, with regard to how the new wave of Greek political leaders are conducting themselves:

“All of the great leaders have had one characteristic in common: it was the willingness to confront unequivocally the major anxiety of their people in their time. This, and not much else, is the essence of leadership”.

“Politics is not the art of the possible. It consists in choosing between the disastrous and the unpalatable”.

“In all life one should comfort the afflicted, but verily, also, one should afflict the comfortable, and especially when they are comfortably, contentedly, even happily wrong”.

“The conventional view serves to protect us from the painful job of thinking”.

“All successful revolutions are the kicking in of a rotten door”.

golfwallah

sarumite wrote: »

Blaming Greeces poor economic purely on the affects of austerity require a certain amount suspension of disbelief. Italy hasn't grown since the crisis, but then it didn't grow before the crisis ether so no change there. Personally I do not support the out and out austerity as being promoted by Germany, but when people make blanket statements of "austerity doesn't work" I am always left waiting for their alternative. The likes of Syriza, Podemos and Sinn Fein keep saying they will end austerity but other than tax the rich, they don't have any viable plans to do so.

I agree with most of what you say but would add that the Greek government need to be cut a bit of slack to develop their alternative to the present austerity plan.

This will not be achieved in a quick fix manner, either by adhering to strict austerity and protecting the rich at the expense of the majority or by simply "taxing the rich".

I believe the Greeks have an outstanding, courageous, competent and rational planner, man of action and spokesman in their Finance Minister, Yanis Varoufakis. They need a bit of time to put together specific proposals - timelined a bit more realistically than next Friday.

And Varoufakis and others have already put forward their "modest proposals" here.

What is needed now is a bit of time to allow the new Greek leaders to develop a more realistic plan out of their current dilemma.

sarumite

sarumite wrote: »

when people make blanket statements of "austerity doesn't work" I am always left waiting for their alternative. The likes of Syriza, Podemos and Sinn Fein keep saying they will end austerity but other than tax the rich, they don't have any viable plans to do so.

That's because power to stimulate the economy, which contributed significantly to US and UK recovery, has been stripped from individual MSs, both in terms of the discretions afforded to the Commission, and the constraints imposed on (and by) the European Central Bank.

Just as the anti-austerity parties of Europe are struggling to evince an adequate political response to a six-year-old crisis, so too are the parties who favour more restrictive fiscal policies.

When we talk of structural problems in the European economies, we talk of squeezed profit margins, and high taxes, and boring-old-fart institutions generating red tape.

Nobody ever seems to refer to the EU's and EA's own structural problems that have left the small European nations with little choice but to pursue policies with adverse cyclical outcomes in terms of job destruction, plummeting demand and productive investment falling off a cliff.

Little wonder then, that miserable little politicians and ashen-faced economists are left stammering for solutions. They've just awoken to the aftermath of a great bacchanalian party with their knickers around their ankles, their handbags empty, their overdraft withdrawn, and some wretched tire-au-flanc has made-off with their endowment.

The democratic institutions of these member states have been swindled. Don't act so surprised when they don't have any solutions.

sarumite

golfwallah wrote: »

I believe the Greeks have an outstanding, courageous, competent and rational planner, man of action and spokesman in their Finance Minister, Yanis Varoufakis. They need a bit of time to put together specific proposals - timelined a bit more realistically than next Friday.

This is where we differ. I have absolutely no faith in Varoudakis, Tsipra or Syriza to put together meaningful reforms that they could actually implement. Worse still I think to leave the Greek government to their own devices could actually exacerbate the problem with more bloated state spending and an erosion of Greek competitiveness.

I agree the Greeks need more time, however the vast majority of their debt is owed to European taxpayers who need assurances that their money will be repayed. The Greeks are demanding the former while making minimal effort to provide anything of the latter.

sarumite

A Tyrant Named Miltiades! wrote: »

That's because power to stimulate the economy, which contributed significantly to US and UK recovery, has been stripped from individual MSs, both in terms of the discretions afforded to the Commission, and the constraints imposed on (and by) the European Central Bank.

The Greek economy was a basket case before they joined the Euro. They used the access to cheap currency to paint over the cracks in the foundation of their economy and when the foundation started to crumble they started blaming the paint.

golfwallah

sarumite wrote: »

This is where we differ. I have absolutely no faith in Varoudakis, Tsipra or Syriza to put together meaningful reforms that they could actually implement. Worse still I think to leave the Greek government to their own devices could actually exacerbate the problem with more bloated state spending and an erosion of Greek competitiveness.

I agree the Greeks need more time, however the vast majority of their debt is owed to European taxpayers who need assurances that their money will be repayed. The Greeks are demanding the former while making minimal effort to provide anything of the latter.

If everyone agreed entirely with either the Greek position or that of the dominant EU states (and the financial troika masters), what a boring, utopian world we would live in!

But regardless of history, we have to deal with the situation "as is" and move , hopefully, to a better negotiated one.

And, as I see it, the differences between Greece and other member states' position (on whether to call it a loan extension or a new bridging loan) are more about appearances, window dressing and face saving than anything else.

The Greeks need to bring back something to their parliament and electorate - as do the other member states.

Some face saving formula needs to be found. No one is talking about debt write-offs any more and the Greeks need to be given the means to come up with a plan that will help them and the EU re-build their economies.

sarumite

sarumite wrote: »

The Greek economy was a basket case before they joined the Euro.

I don't believe 'basket case' is accurate. It was an economy with major structural problems, indeed. But this has nothing whatever to do with my point.

A history lecture is not a solution unless it contains a lesson. Calling Greece a basket case is just invective.

The 1953 debt conference however, is quite possibly a valuable lesson.

View

golfwallah wrote: »

And, as I see it, the differences between Greece and other member states' position (on whether to call it a loan extension or a new bridging loan) are more about appearances, window dressing and face saving than anything else.

The Greeks need to bring back something to their parliament and electorate - as do the other member states.

The Greek government could try telling their electorate the Truth. If they have lied to their electorate, that is their problem, not anyone else's.

It would be highly questionablefor the other governments to agree to semantic nonsense such as the "Troika" isn't the Troika if we call it the "Trio" or something equivalent.

Successive Greek governments have misled their electorates and helping another one to do so is not in the interest of either the other member states or the Greek people.

sarumite

A Tyrant Named Miltiades! wrote: »

I don't believe 'basket case' is accurate. It was an economy with major structural problems, indeed. But this has nothing whatever to do with my point.

A history lecture is not a solution unless it contains a lesson. Calling Greece a basket case is just invective.

The 1953 debt conference however, is quite possibly a valuable lesson.

I suppose when I used the term 'basket case' I was referring to an economy which had major structural problems, where corruption was endemic and tax evasion was a way of life. However I am happy to retract the term 'basket case'. However the problems I described above still persist today. Offering Greece a solution to their problems is useless unless it contains a lesson. It is possible that requiring the Greek government adheres to prudent fiscal policies would also be a valuable lesson.

sarumite

golfwallah wrote: »

If everyone agreed entirely with either the Greek position or that of the dominant EU states (and the financial troika masters), what a boring, utopian world we would live in!

But regardless of history, we have to deal with the situation "as is" and move , hopefully, to a better negotiated one.

And, as I see it, the differences between Greece and other member states' position (on whether to call it a loan extension or a new bridging loan) are more about appearances, window dressing and face saving than anything else.

The Greeks need to bring back something to their parliament and electorate - as do the other member states.

Some face saving formula needs to be found. No one is talking about debt write-offs any more and the Greeks need to be given the means to come up with a plan that will help them and the EU re-build their economies.

Syriza have talked themselves into a corner, promising the undeliverable in return for votes. Now confronted with the reality of their demagoguery they are doubling down and digging themselves into an entrenched position. A compromise needs to be met, however worrying about the popularity of a bunch of populists should not be high on the list of priorities.

golfwallah

sarumite wrote: »

Syriza have talked themselves into a corner, promising the undeliverable in return for votes. Now confronted with the reality of their demagoguery they are doubling down and digging themselves into an entrenched position. A compromise needs to be met, however worrying about the popularity of a bunch of populists should not be high on the list of priorities.

What’s more important about the Greek Debt Crisis – an honourable, workable solution for Greece and the EU or proving a point of view about austerity?

This article in the Fiscal Times throws an insightful perspective on the negotiations to date:

Bill Rhodes looks on, knowing it didn’t have to be this way.
Rhodes, formally William R. Rhodes, is a former Citigroup senior vice chairman, and he may have negotiated the successful end of more sovereign debt crises than anybody on the planet.

Buy-in from the Greek public, he said, is essential. “A problem of the previous Greek governments, starting with Papandreou, is they didn’t take account of the need to really sell the package to the public.”
That’s the task facing Tspiras and Varoufakis, he said.
“When you go through such a horrendous economic downturn like they have, this has the makings of revolution, both politically and economically. I think the key thing is that Tsipras and Varoufakis have to come up with a plan that they feel they can sell to their constituents that’s viable, and that the Europeans can accept.”
And, he added, Greece’s European creditors need to be practical about what they can expect — insisting on adherence to a specific pre-existing deal can’t be prioritized over a practical solution.
“We should really have substance here more than form – if the Europeans insist too much on form and not on substance, it’s a mistake,” he said. “They’ve got to be realistic.”
In the end, he said, “It doesn’t suit the creditors not to have Greece growing because then they’re not going to get their money back, or any part if it for that matter.”

sarumite

golfwallah wrote: »

What’s more important about the Greek Debt Crisis – an honourable, workable solution for Greece and the EU or proving a point of view about austerity?

This article in the Fiscal Times throws an insightful perspective on the negotiations to date:

An honourable workable solution is the obvious best outcome. However, Syriza have talked themselves into a position where an honourable solution and a workable solution would appear to be two mutually exclusive options. Hopefully I am wrong.

golfwallah

sarumite wrote: »

An honourable workable solution is the obvious best outcome. However, Syriza have talked themselves into a position where an honourable solution and a workable solution would appear to be two mutually exclusive options. Hopefully I am wrong.

Reconciling apparently irreconcilable differences is the art of a good negotiator and good politician. If you think about it, freedom and equality are also mutually exclusive ideas, but these are also the basic tenets of democracy.

All it requires is good will, the desire to find a solution (not just stick to existing positions that are not working), the will to compromise and the courage to implement it.

Set against that is the fear on both sides of facing their electorates. There hasn’t been much on TV here in Ireland about how the man on the street in Germany feels about the Greek Debt Crisis, but quite a few of interviews with ordinary Greeks. I don’t get the feeling that Greek people realistically expect Syriza to deliver on all their election rhetoric. Rather, I think they are hoping for a better way to get themselves out of their current situation than has been foisted on them in an unrealistic manner by outsiders for the last 4 years or so.

But, then I prefer to be optimistic (as Churchill said “there is not much point in being anything else") – and look at how seemingly mutually exclusive positions have and are being solved already, in Northern Ireland, for instance.

I would prefer to see the EU Finance Ministers sitting down, genuinely listening to and considering one another’s positions, finding common ground and solutions – as opposed, to immediately countering each sides positions and attacking them in public. Part of the solution is also finding the courage to bring realistic solutions that have a good chance of working before their people. But then, Churchill described courage as the one quality that determines all the rest.

Harry S. Truman:

Men make history and not the other way around. In periods where there is no leadership, society stands still. Progress occurs when courageous, skillful leaders seize the opportunity to change things for the better.

Nobody said it was going to be easy or that there were perfect, guaranteed solutions. To my mind, what we want is leadership instead of dogma and a realistic planned approach as opposed to kicking the problem down the road with the appearance rather than the substance of a solution.

golfwallah

For now EU Finance Ministers seem to have the basis for an agreement covering the next 4 months, according to this Reuters report.

This morning’s Sean O’Rourke programme contained good coverage of the issues involved – ref. RTE1, RTE Player (1st 21 minutes of interviews with Channel 4’s Paul Mason in Brussels and then Irish economist, David McWilliams):

The following is a summarised version of many of the points made in the interviews (quite insightful, I think):

Paul Mason:
• Divisions emerging in the EU between Germany in alliance with Slovakia, Finland and Baltic states and the rest.
• 2 contentious areas - what will happen to Europe economically and politically?
• At EU Summit level, Prime Ministers see higher priorities, e.g. Ukraine, etc. They also seem able to see the scope for agreement on economic issues, leaving the details to be sorted out by the Finance Ministers, which is where it all seems to fall apart.
• The new Greek government has 80% support at home.

David McWilliams:
• Germans are playing a dangerous game.
• Northern Europeans led by Germany are the Creditor countries.
• The Euro is turning into a weaker currency which is not what Germany originally imagined.
• Germans willing to push Greece into a banking run.
• This could very likely lead to Germany becoming totally isolated with a threatening position of “their rules or else”. This prompts asking who’s next (France, Italy, the UK, etc.).
• Up to now it been one step forward and a few back but all moving forward collectively together.
• Now it’s creditor countries calling the shots and pointing the finger at debtor countries – when the Germans led the charge in granting huge unaffordable loans in the first place (despite protestations from other members states about this course of action).
• We are not all “little Germans”.
• The next 18 months bring about massive elections in France, UK and Ireland.
• If Germany “wins” and the Greeks are humiliated, austerity becomes the main policy in Europe.
• This will strengthen rather than weaken anti-austerity parties, who will increasingly move from being marginal to being mainstream.
• This poses dangers for both the Euro and the entire European project.
• A policy of austerity and “creditors first” becomes the norm.
• More austerity to heavily indebted countries is akin to proscribing starvation as the cure for anorexia – it simply cannot work.
• Issues that are currently localised play into a greater thing.
• The EU is ultimately a democracy – German view is working for Germany but for no one else.

Paul Mason contrasted what was being said by ordinary folk in Germany and in Greece:
• What is being said in Greek bars / pubs – resonances from WW2 – the Greek partisans won, Greece got no reparations, Germany got Debt forgiveness, my Grandfather fought in that war and still talks about it.
• German press are full of headlines such as “Smash the Greeks”.

David McWilliams:
• Eurocrats in Brussels are a very elitist lot, constantly talking about the European project but totally removed from what ordinary people are thinking and talking about. It’s the project, the project, the project all the time.
• What happens if Greece goes – Who’s next?
• The project was supposed to be irreversible.

Good loser

golfwallah wrote: »

For now EU Finance Ministers seem to have the basis for an agreement covering the next 4 months, according to this Reuters report.

This morning’s Sean O’Rourke programme contained good coverage of the issues involved – ref. RTE1, RTE Player (1st 21 minutes of interviews with Channel 4’s Paul Mason in Brussels and then Irish economist, David McWilliams):

The following is a summarised version of many of the points made in the interviews (quite insightful, I think):

Paul Mason:
• Divisions emerging in the EU between Germany in alliance with Slovakia, Finland and Baltic states and the rest.
• 2 contentious areas - what will happen to Europe economically and politically?
• At EU Summit level, Prime Ministers see higher priorities, e.g. Ukraine, etc. They also seem able to see the scope for agreement on economic issues, leaving the details to be sorted out by the Finance Ministers, which is where it all seems to fall apart.
• The new Greek government has 80% support at home.

David McWilliams:
• Germans are playing a dangerous game.
• Northern Europeans led by Germany are the Creditor countries.
• The Euro is turning into a weaker currency which is not what Germany originally imagined.
• Germans willing to push Greece into a banking run.
• This could very likely lead to Germany becoming totally isolated with a threatening position of “their rules or else”. This prompts asking who’s next (France, Italy, the UK, etc.).
• Up to now it been one step forward and a few back but all moving forward collectively together.
• Now it’s creditor countries calling the shots and pointing the finger at debtor countries – when the Germans led the charge in granting huge unaffordable loans in the first place (despite protestations from other members states about this course of action).
• We are not all “little Germans”.
• The next 18 months bring about massive elections in France, UK and Ireland.
• If Germany “wins” and the Greeks are humiliated, austerity becomes the main policy in Europe.
• This will strengthen rather than weaken anti-austerity parties, who will increasingly move from being marginal to being mainstream.
• This poses dangers for both the Euro and the entire European project.
• A policy of austerity and “creditors first” becomes the norm.
• More austerity to heavily indebted countries is akin to proscribing starvation as the cure for anorexia – it simply cannot work.
• Issues that are currently localised play into a greater thing.
• The EU is ultimately a democracy – German view is working for Germany but for no one else.

Paul Mason contrasted what was being said by ordinary folk in Germany and in Greece:
• What is being said in Greek bars / pubs – resonances from WW2 – the Greek partisans won, Greece got no reparations, Germany got Debt forgiveness, my Grandfather fought in that war and still talks about it.
• German press are full of headlines such as “Smash the Greeks”.

David McWilliams:
• Eurocrats in Brussels are a very elitist lot, constantly talking about the European project but totally removed from what ordinary people are thinking and talking about. It’s the project, the project, the project all the time.
• What happens if Greece goes – Who’s next?
• The project was supposed to be irreversible.

I am never much impressed by either of those two!

The new Greek Govt does not have 80% support at home.

Williams reckons if Germany 'wins' (and the numbers are 18 v 1) austerity (or, efficiency) becomes the norm - which will strengthen 'anti austerity parties' which in turn causes danger to 'the Euro and the entire European project'. Exaggerated, tendentious rubbish imo.
Surely if austerity is bad the advance of the anti-austerity parties is a good thing?

Anyway who is now proposing 'more austerity for heavily indebted countries'?

golfwallah

Good loser wrote: »

I am never much impressed by either of those two!

The new Greek Govt does not have 80% support at home.

Williams reckons if Germany 'wins' (and the numbers are 18 v 1) austerity (or, efficiency) becomes the norm - which will strengthen 'anti austerity parties' which in turn causes danger to 'the Euro and the entire European project'. Exaggerated, tendentious rubbish imo.
Surely if austerity is bad the advance of the anti-austerity parties is a good thing?

Anyway who is now proposing 'more austerity for heavily indebted countries'?

In fairness to the two commentators, their main points were around the futility of expecting any country (Greece, in this instance) to get back on a sound economic track using austerity alone, after that country’s means to generate growth had been removed.

Growth, as we all know, is one of the key enablers to service and repay debt and well as maintaining political and social cohesion. There are also other key enablers, such as reduction in corruption, tax evasion measures, affordable levels of social protection, health and the cost of the public sector, etc.

Good to see some progress now being made with approval of Greece’s fiscal reform proposals by EU Finance Ministers as a condition to extending loans: http://www.bbc.com/news/world-europe-31606986

The Greeks have also had to roll back on privatisations, minimum wage, etc. but have room for manoeuvre on some of the harsher sides of austerity. Let’s hope it enables them to bring the population along with them over the next few months and then for many years thereafter.

golfwallah

I’ve no doubt that Greek Finance Minister, Yanis Varoufakis, is an intelligent guy, trying to do his best for his country. We don’t expect him to dress in sackcloth and ashes but sometimes he sends out the wrong message with a high class lifestyle that is way beyond most Greeks:
• Re dress sense, as reported in Reuters:

Some pointed comments were directed at Varoufakis, an outspoken Marxist economist and blogger, and his casual style. "Even hardliners like us have to give the benefit of the doubt to a communist in a Burberry scarf," an official of one hawkish European country joked.

• Re French magazine shoot, “white wine socialism”: http://uk.businessinsider.com/varoufakis-paris-match-pr-disaster-2015-3?r=US
• Re “doctored” finger video: http://uk.businessinsider.com/yanis-varoufakis-middle-finger-controversy-real-fake-bohmermann-jauch-2015-3

This is the kind of stuff that leads many to believe that a “Grexit” might be better for all concerned in the long run.

But is a first exit from the single currency in anyone’s interest and how would it play out politically and in the markets?

And what kind of leadership should we expect from Germany – continuation of the softly softly consensus approach or more decisiveness, as per this BBC article? http://www.bbc.com/news/world-europe-31940452

It will be interesting to see how the Greeks perform against their plan over the next few months - the great Euro experiment continues!

micosoft

golfwallah wrote: »

Germany has benefited enormously from the Euro project and made other less well organised states poorer in the process by not being able to respond in the old pre-Euro way. Maybe some new found moral courage “to do the right thing” needs to be thought through and voiced by a lot more people. Kicking a neighbour who is down and removing all hope of recovery can never be the “right thing to do” – no matter what conventional wisdom has been up to now!

That's simply not true. Germany contributed during the good times through massive structural transfers to the likes of Greece and Ireland. It was up to the individual countries to decide how they invested that money. In the case of Ireland is was largely good. In the case of Greece it was largely poor.
This appalling attempt to blame the Germans of running the country properly is shameful. The Germans have had austerity since the early ninties when they reunified and rebuilt east Germany. At the same time they made the largest contribution to the EU Structural funds.

The Germans seem damned if they do and damned if they don't.

The simple reality is that if Greece had not joined the EU it would have had an economy similar to the other Balkan countries like Serbia. i.e. it would never have gotten the false wealth it had for a couple of years. Greece is still light years ahead of where it would have been had it not been in the EU. It's just adjusting downwards (Austerity) is much harder then never having the money in the first place.

golfwallah

micosoft wrote: »

That's simply not true. Germany contributed during the good times through massive structural transfers to the likes of Greece and Ireland. It was up to the individual countries to decide how they invested that money. In the case of Ireland is was largely good. In the case of Greece it was largely poor.
This appalling attempt to blame the Germans of running the country properly is shameful. The Germans have had austerity since the early ninties when they reunified and rebuilt east Germany. At the same time they made the largest contribution to the EU Structural funds.

The Germans seem damned if they do and damned if they don't.

The simple reality is that if Greece had not joined the EU it would have had an economy similar to the other Balkan countries like Serbia. i.e. it would never have gotten the false wealth it had for a couple of years. Greece is still light years ahead of where it would have been had it not been in the EU. It's just adjusting downwards (Austerity) is much harder then never having the money in the first place.

I think you are mixing the 2 concepts of the Euro Project (Monetary Union / Fiscal Compact Treaty) and the EU’s social cohesion policy and treating them as one.

Monetary policy and fiscal policy are related but separate. Additionally, some EU states have chosen to remain outside the Euro.

To illustrate the difference you only have to compare the EU with the USA. The USA has monetary and fiscal union, whereas the EU has elements of both but not the complete package. On the monetary side, the Euro is a common currency area without being a real monetary / banking union. On the fiscal side, EU backed spending represents about 1% of EU GDP, whereas federal spending in the USA comes to about 25% – 30% of GDP. (see post #53)

German business culture favours a strong currency and the country has been a great beneficiary of the Euro project – for example, German exports to Greece alone are around double its imports from Greece. Germany does not spend an enormous amount of its GDP on defence, whereas Greece, on the outer borders of the EU spends about 5% of GDP on defence. The EU does not have a common defence policy nor is it a political union.

And being in the Euro, the old pre-Euro policy of devaluation is not available to the Greeks – that is unless they opt for “Grexit”, which nobody in the EU (including the Greeks) really wants.

The current reality is that Greece has been given a 4 month extension in which to implement slightly different policies to those they had agreed in their last bailout. The deals on Euro and EU membership have been done. As they say “we are where we are” and comparisons with where Greece might have been if they remained outside either the EU or the Euro are like saying “I should have waited to sell my house and I would have gotten a lot more for it”.

All that can be done now is to move on from where we are and hope that the loan extension with its still onerous conditions start to work. The alternative may be “Grexit” with its message to the markets that the Euro is not “irrevocable” – and who knows where that will lead!

sarumite

golfwallah wrote: »

I’ve no doubt that Greek Finance Minister, Yanis Varoufakis, is an intelligent guy, trying to do his best for his country.

I have no doubt that he is an intelligent guy also, however his truculent attitude, belligerent negotiations style and his overtly loquacious nature is turning him into one of their main liabilities. Personally I think Tsipras would do well to replace him sooner rather than later.

golfwallah

sarumite wrote: »

I have no doubt that he is an intelligent guy also, however his truculent attitude, belligerent negotiations style and his overtly loquacious nature is turning him into one of their main liabilities. Personally I think Tsipras would do well to replace him sooner rather than later.

Maybe, maybe not! The labels certainly fit - not so sure about him being replaced.

What we are watching now is history in the making and maybe it will become a case of "cometh the hour, cometh the man"!

He is certainly not lacking in courage, nor is he afraid to speak his mind - qualities to be admired, even if it does make him some enemies among the Euro political elite. He is taking an adversarial approach, vaunted by many as the right one to be adopted by our political leaders, when we first faced the current economic crisis.

If you think about it, many would have applied the same negative labels and conclusions to Churchill before be was made prime minister in 1940.

Time will tell, I guess!

golfwallah

golfwallah wrote: »

I’ve no doubt that Greek Finance Minister, Yanis Varoufakis, is an intelligent guy, trying to do his best for his country. We don’t expect him to dress in sackcloth and ashes but sometimes he sends out the wrong message with a high class lifestyle that is way beyond most Greeks:
• Re dress sense, as reported in Reuters:
• Re French magazine shoot, “white wine socialism”: http://uk.businessinsider.com/varoufakis-paris-match-pr-disaster-2015-3?r=US
• Re “doctored” finger video: http://uk.businessinsider.com/yanis-varoufakis-middle-finger-controversy-real-fake-bohmermann-jauch-2015-3

This is the kind of stuff that leads many to believe that a “Grexit” might be better for all concerned in the long run.

Seriously?

Who advocates a Grexit based on Varoufakis's clothing, and vinous preferences?

The great intellects over on TV3's Exposé?

golfwallah

A Tyrant Named Miltiades! wrote: »

Seriously?

Who advocates a Grexit based on Varoufakis's clothing, and vinous preferences?

The great intellects over on TV3's Exposé?

Nobody!

But that's not the issue I was referring to, which is that all these histrionics and lifestyle messages are not in keeping with the position Greece is in - i.e. running out of money, needing support and goodwill from its EU and Euro fellow states, poor market rating, etc., etc.

I accept that Greece has points to make and wants to get the best deal possible for its people but why totally alienate powerful / influential people you depend upon?

This Bloomberg report illustrates recent thinking and actions in the bond markets.

golfwallah

golfwallah wrote: »

all these histrionics and lifestyle messages are not in keeping with the position Greece is in

In other words, you think the Greeks are getting above their station: "The rich man in his castle,/ The poor man at his gate", and so on?

This is an attitude at which Queen Victoria's governments would chortle in boisterous agreement.

I don't think it has any relevance at all, let alone a role in Eurozone policymaking. I can't tell whether or not you agree. I mean what's your point? Are you suggesting the cut of Varoufakis's jacket is relevant or not?

I accept that Greece has points to make and wants to get the best deal possible for its people but why totally alienate powerful / influential people you depend upon?

They don't necessarily depend on the Eurozone. Grexit is a viable option, which I think Greece ought to consider for its own sake.

golfwallah

A Tyrant Named Miltiades! wrote: »

In other words, you think the Greeks are getting above their station: "The rich man in his castle,/ The poor man at his gate", and so on?

This is an attitude at which Queen Victoria's governments would chortle in boisterous agreement.

I don't think it has any relevance at all, let alone a role in Eurozone policymaking. I can't tell whether or not you agree. I mean what's your point? Are you suggesting the cut of Varoufakis's jacket is relevant or not?


They don't necessarily depend on the Eurozone. Grexit is a viable option, which I think Greece ought to consider for its own sake.

It has been widely reported that Finance Minister, Varoufakis, himself regrets the photoshoot. See this article from the Guardian.

There's no need to make assumptions about what I think. It's how the negotiations are being conducted and public pronouncements / perceptions that matter here. What the Greeks need and most people would like to see is a "win / win" approach which is respectful to both sides of the argument. The flouting of ostentatious wealth, whilst looking for a fair crack of the whip on behalf of your countrymen, who are in deep financial trouble, is not exactly a recipe for gaining support.

golfwallah

Letter from Greek Prime Minister, Alexis Tsipras, to German Chancellor, Angela Merkel dated 15th March 2015: http://www.thetoc.gr/images/articles/2/article_63894/Letter_AM.pdf

This letter has been published on Facebook Page of Finance Minister, Yanis Varoufakis, and expresses concerns that the latest agreement with Euro Ministers is not being implemented as agreed, but in accordance with the much harsher terms of the Memorandum of Understanding that predates the agreement of 20th February 2015 and 25th January 2015.

It is difficult to believe that our partners consider that a successful reform drive can be carried out under such restrictive and pressing constraints, including the financial squeeze that my government is currently labouring under.

"All is fair in love and war", it would seem, but I'd like to see the latest agreement being given at least some chance of working!

sarumite

golfwallah wrote: »

"All is fair in love and war", it would seem, but I'd like to see the latest agreement being given at least some chance of working!

I would like to see the Greek government address the concern expressed by many that they have been somewhat lethargic in their implementation of reforms. The latest agreement can only work if the Greeks are willing to implement it. the ball is in their corner.

golfwallah

sarumite wrote: »

I would like to see the Greek government address the concern expressed by many that they have been somewhat lethargic in their implementation of reforms. The latest agreement can only work if the Greeks are willing to implement it. the ball is in their corner.

I’d agree to some extent that the Greeks have not implemented all the reforms they should have. But they have had austerity for the last 4 years and that didn’t produce the financial improvements forecast by the Troika either. Nothing much seems to have emerged in terms of political solution from yesterday’s high level meeting between Chancellor Merkel and Prime Minister Tsipras – so it looks like we’re back where we started – i.e. German and EU insistence on reforms and Greek difficulty in accepting this solution politically, forcing them to an extremely hard fight against ingrained cultural corruption / tax dodging plus austerity for years to come.

You might ask who is the real villain of the piece – Greece, Germany, Netherlands? Maybe it’s no particular EU state but more the Euro!
Before the Euro, national states had monetary options of national currency devaluation and interest rates to help them regulate their economies and keep them competitive. There were pros and cons to this approach but we all bought into the Euro / EU, perhaps without fully realising the downside risks that have only become apparent with hindsight.

That risk was availability of cheap credit from the wealthier states to the likes of Greece, Spain, Ireland, etc., who then went on to spend too little on wealth creating investment and too much on populist stuff like housing bubbles, increases in public service pay, welfare, excessive public infrastructure, etc.

When the party ended, the debt funded overspending was “socialised”, resulting in austerity and enforced immigration / poverty for years to come in all these debtor EU states (including ourselves). You only have to listen to reports of unaffordable housing, looming property repossession, unemployment, dissatisfaction with increased charges and the growth of “anti-austerity” political parties. Meanwhile political parties in opposition when the bubble burst blame their national political opponents (here it was FF) but never the Euro, which is seen as sacrosanct.

The jury is out on where this will all lead. Will populations put up with austerity for years under the Euro, with growing debt that the “slow adapters” (like Greece) may never repay, hoping economies gradually adapt to the strong currency model. Or are we watching the beginning of the end for the Euro and the EU?

golfwallah

Tax evasion on a massive scale has reportedly been happening in Greece. And it’s not just the rich who are at it – it appears to be widespread amongst self employed middle class professionals (and self employed people make up to a third of the workforce there). See this report in Business Insider UK re massive under reporting of income:

Among the reported tax reforms in Greece, there is a strong prospect of a tax windfall of €15b on its way to being recovered from Swiss bank deposits by the Greek super-rich, most of which is untaxed:
http://www.dw.de/greece-to-tackle-tax-evasion/av-18344561

Good to hear also, that the EU has drawn up an agreement with Switzerland to put an end to such tax evasion by EU citizens using Swiss banks – this type of action is long overdue.

Some evidence that the Greeks are working towards changing their deep rooted tax evasion culture is starting to emerge with the recent criticism in parliamentary debate by Prime Minister Tsipras of opposition leader Antonis Samaras’ failure to tackle tax evasion whilst in office. According to the Facebook page of Yanis Varoufakis, the question asked was:

why the previous government did not proceed with tax audits (mentioned Samaras' associate Mr.Papastaurou) on people included in the Lagarde List, out of which, -as he said-, only 25 of 2,062 names have been audited.

These names are now being investigated one by one. Further evidence of change is the setting up of a “bad bank” and increased auditing of Greek bank transfers abroad.

The present left wing Greek government, for all its faults, is at last starting to tackle the deep rooted problem of tax evasion in their own country (even if they are being forced into it, which probably helps politically). Let’s hope they succeed for the sake of the Euro project and the EU overall.

Farmer Pudsey

There is ''Labour's way and the Frankfurt way'' can now read ''the Greek way and Frankfurt way''. It looks like the same result. In reality with the Labour and Greek way you need to be willing to pull the trigger. Most politicians have not the guts to do that. If they decided to default and exit the euro would the Germans blink.

It looks like the Greeks lack a pair of liathroidi just like our crowd did. I do not think the Greeks can continue as they are. However they are unwilling to default