PITY Karolos Papoulias. The 82-year-old president of Greece has spent over a week trying to persuade the country's fractious political leaders to form a government after a general election on May 6th failed to produce a clear winner. Mr Papoulias, a soft-spoken former foreign minister, handed out mandates to various party leaders, none of whom could deliver, and made a three-day effort of his own, before finally giving up yesterday.
Success would have given Greece breathing space, if only for a few months, to pursue urgent reforms—such as recapitalising its insolvent banks and getting on with privatisation—to help restore its credibility with European partners and financial markets. Instead, another election now looms, on June 17th. Until then the country will be run by a caretaker government under Panagiotis Pikrammenos, Greece's most senior judge. Lucas Papademos, the ex-European central banker who has run a coalition government for the last six months, overseeing a €206 billion sovereign-debt restructuring and Greece's second bail-out, was not asked to stay on.
The transcripts of Mr Papoulias's last three meetings, made public at the request of Alexis Tsipras, the leader of Syriza, a hard-left coalition, and Greece's rising political star, reveal a disturbing lack of vision among the men who are supposed to be Greece's leading politicians. Rather than tackle serious issues, such as how to keep Greece in the euro, they swapped insults and shrugged off a warning that a bank run was imminent. “They're all irresponsible, none of them is capable of ending this crisis,” says Aristomenes Antonopoulos, a lawyer. “How to vote now?”
Support among Greeks for staying in the euro is up from 70% to 80% over the past three months, according to opinion polls. Yet fears that prolonged political instability could trigger a “Grexit” are also increasing. Greek savers withdrew €3 billion from local banks—about 2% of total deposits—as hopes of forming a coalition collapsed. Greece has seen a steady erosion of bank deposits over the past two years, yet few bankers were prepared for such a rapid acceleration of withdrawals. Deposits had increased in March and April, thanks to smooth handling of Greece's partial default.
Today, cash was being taken away from the banks in orderly fashion. There were no queues outside branches in central Athens or its suburbs. Customers ordered cash by telephone and picked it up 24 hours later. Some went straight into safety-deposit boxes at the same bank; some was stashed beneath mattresses in case Greece has to re-adopt the drachma. "People are taking preventive measures," says one veteran banker. "If you own a pile of euros, you'll feel rich in a drachma environment."
Despite their enthusiasm for holding on to the euro, Greeks are fed up with the austerity that German politicians say is the price of continued membership. Syriza suggests that such views are compatible, arguing that Greece can stay in the euro but also reverse the reforms imposed by the "troika" (the European Union, the European Central Bank and the International Monetary Fund).
This is a message Greek voters appear to like. A recent poll found that Syriza would win the next election with 20.5% of the vote, just ahead of the pro-euro New Democracy party on 19.4%, but well short of an overall majority. The PanHellenic Socialist Movement (Pasok), the only other electable party that supports reform, would come a distant third with 11.8%.
Mr Tsipras is reorganising his party and renewing his campaign, neighbourhood by neighbourhood, in Athens and other cities. His rhetoric is sharper than ever, yet his dream of forming a left-wing government is no closer to being realised than at the previous election. Potential partners have sounded more cross than co-operative since Mr Tsipras bounced into second place behind New Democracy on May 6th.
Antonis Samaras, the New Democracy leader, will pull out all the stops. If his centre-right party cannot form a government this time, his career will be over. A new alliance with a small liberal party should give him another couple of percentage points at the election. As for Evangelos Venizelos, the Pasok leader and a potential coalition partner, he is struggling to prevent more voters defecting for Syriza.
Even with the extra 50 seats that go to the party that comes first, the two pro-bailout parties will still struggle to form a government after the second election. The long-suffering Mr Papoulias is likely to be back in action on June 18th.
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Greece cheated her way into the eurozone. Was never fit to be there. isn’t fit, and will never be, judging from what Greece has shown during the past decades. There is no justified hope that Greece will ever change. It is a failed state.
So forget all the poiltical blabla and economic theorizing, since the only relevant question is, whether Greece stays in the eurozone or not: what standard of living are other nations (mainly the eurozone core countries) prepared to fund (w/o ever getting the money back, that’s for sure).
Very True, if Greece could not even invest the 'cheap' money it had received since entering the Eurozone properly allowing it to have a more stable infrastructure and actually produce something besides tourism, what hope do they have to become competitive while experiencing crushing austerity.
Until they become a functioning economy they will continue to cost the Eurozone billions until they eventually get it right (unlikely) or the EU members finally tire of wasting their money and eject greece (likely).
This has been answered in many threads here and in many articles of mainstream media such as the BBC, WSJ, FT etc.
Prior to the introduction of the Euro there was an agreement, one of the many, calling for debt of 60%GDP and 3% deficitit. This was broken by Greece, Germany France and Italy not once but many times. Most important factor was the deficit number.
According to the Eurostat Greece entered the EZ with 3.07% deficit. Better number than what France or others had.
Then the happy time started. The core of the happy time was this. Germany was creating huge export surpluses. Hence had plenty of cash. Borrowing was easy for all. The goods were absorbed by the South (and the rest of the world as well). To get the goods the South borrowed. By who? By the one that had the cash Germany. German economy was growing southern economies were enlarging and building debt or bubbles. During the happy time everybody knew .. all politicians knew. The people learned what was happening when the crisis started. At that point they realized the huge debt of the South.
So it is not an issue of who cheated and by how much and who was fit. This is quite clear to all now and simplifications such as the good boys and the bad ones are not valid. The model of growth was wrong and above all the lack of action, implementation and adjustment of treaties while it was still early were the real causes.
Now the south will pay through austerity and in fact it does. Just this will not solve the problem. The current attitude is leading Southern countries to the wall. Again this is supported by all major economists and credible media.
Payment of government debts ECB debts IMF debts takes precedence over any other kind of debt and it takes no haircut, default or not, Euro or not Euro. If not a country will never ever be able to enter the markets again. This is a rule.
Until now countries of the North have been paid in full and with interest. And as explained this will not stop no matter the economic path of the country. Moreover according to German media and analysts, Germany has been making huge profits due to the influx of cash to its banks since they are considered safe and due to very low borrowing rates.
So getting the money back is not an issue.
Spain has a true debt of almost 85%GDP. Its banking sector has failed. The deficit for this year after the last revision will run at 7%. It is a country practically in default. The unemployment is at 25%. Yesterday the borrowing rates have climbed to 6.5%. That is a lot more than with what Greece or Portugal had when they entered the rescue programs. It is a country in default. And this country borrowed to save the first of its banks that went down.
At the same time the only solution offered to it is austerity when it is already deep in recession. This is insanity.
Italy follows closely.
Add Portugal add Ireland add Greece and do not exclude Belgium and France.
The failed states are not only the countries of the South. The failed state is the EU.
dimit71
You're mistaken about Germany.
With the Euro first a hughe capital outflow started from the core to the periphery. Growth in Germany grinded to a halt (contrary to what you write) and unemployement grew to record highs.
Germany only really grew since 2009. In addition now capital is flowing back into Germany which also helps.
Of course you can delude yourself with your own narrative, but you will never arrive at correct conclusions.
Enlisted,
Sadly, you're very wrong indeed. As most people believing the German moralistic propaganda these days.
German domestic policies, combined with the Euro architecture design, were the cause of both a depressed German demand and its counterpart: capital exports.
So YOU can arrive at the correct conclusions, may I suggest some reading? It's Economics 101 level and pure common sense, but I'm sure you'll find it very interesting:
http://www.mpettis.com/2011/06/14/how-to-become-virtuous-and-save-more/
http://www.mpettis.com/2011/07/19/current-account-dilemma/
These two articles by Michael Pettis should be necessary reading by every person in Europe.
No matter if I believe it or not, I have merely reproduced the historical facts that are currently accepted by credible German European and US media. some of which I have mentioned. hence anybody can do his research and find out.
Non seasonally adjusted German GDP has been increasing since 1992 almost every single year. Trade deficit the same.. always on the + side and growing.
The growth you are referring to at 2009 is the recovery of the German economy after the recession of the 2008 global crisis, and it is of topic.
Accusing them as dillusional is you right. The facts remain.
Enlisted,
I unfortunately disagree with what you have written above. You will find that out of the entire Euro it is Germany who has benefitted the most which is why they are trying so hard to keep it together.
If that wasn't the case they would have thrown in the towel long ago.
A very interesting thought from a Greek's mouth.
As the article states 80% of Greeks want a Euro stay and the increase in votes of fringe parties reflects nothing more than unhappiness at the current situation with no party offering an agreeable route out of this mess.
The greeks are now very worried as to how this unhappiness has resulted in the prominence of fringe parties headed by thugs and idiots and despite the current polls giving the lead to Syriza, most Greeks will likely vote for the mainstream parties keeping Greece a little more stable.
www.1percentblog.com
Another neoliberal outlet outraged at the prospect that Greeks may use their sovereignty to prevent their corrupt leaders from plunging them into even deeper misery, and predicting (rather, warning) that not taking the "bitter pill" will result in their expulsion from our exclusive club.
The thing is, I can only wish all leaders in the "spendthrift" South were as bold as Tsipras, and had the guts to stand up to the growingly authoritarian diktats that impose "austerity" measures that are only deepening the crisis and hastening the undoing of the European Union. With a bit of luck, Syriza will win the elections and with the extra 50 seats the winner gets may form a stable coalition with the other two leftist parties.
Syriza's program is entirely sensible, in spite of all the scorn The Economist insists in pouring on it:
1) halting the "adjustments"
2) abolishing parliamentarian immunity
3) reforming the electoral law
4) declaring a moratory to the servicing of the debt until an international audit establishes its true origin
This exercise of sovereignty and transparency is seen in Berlin (and by The Economist) as a dangerous challenge, perhaps because an audit could leave in a very bad place not only the traditional Greek political parties, but also the French and German banks and the arms exports from those countries to Greece: Greece is the country that spends the greatest share of GDP in defense, and it's the main market for German weapons (37% of the total), Germany being the third arms exporter in the world. Now tell me that is not crazy.
Now with Hollande at the helm in France and winds of change blowing throughout the Union, perhaps there will be a chance to redress the disastrous policies imposed by hardcore neoliberals on Greece and the European population. For that, we Europeans will have to get out of our apathy, and dare to take to the streets like Greeks and Spaniards are doing, and show our politicians where they can put their "bitter pills".
That Greece is the country that spends the greatest share of GDP in defense is a new information for me. I wonder, who Greece defends herself from? Is she in war? (Except of the never ending shouting war with Turkey and Macedonia.)
You are not familiar with the history of the Balkans. Or of the actions of Turkey towards Greece since the 70s staring from the invasion of Cyprus and leading to incident of Imia. You do not have an idea of the effects of the invasion of your air space by fighter jets constantly or of your seas by warships. Or constantly having your borders and national sovereignty being disputed. and all that while you do not provoke and on the contrary you call for a solution according to international laws and treaties which the other side does not accept. And this other side is who? Maybe a democracy? Well in democracy you do not have half you military leadership in prison with the accusation of planning a coup which will be triggered by creating a small scale war with Greece and establish a new status quo in the Archipelago. And it is not a democracy a country that has been condemned for constant violation of human rights. With a population that is largely illiterate and hence it can be manipulated easily. That has ambitions to become a regional superpower at what cost nobody knows. At the same time this country is Muslim and situated in a strategic position in the middle east a fact that it exploits and the US and western powers are flexible and tolerant towards it.
Europeans could not care less for the electoral law as Greeks do not care for the electoral law in Germany. Which by the way if it was applied in Greece, Syriza would have been out of parliament decades ago. It is a law designed to deter the entrance of very small parties in parliament because the Germans have been "burned' by that in past times.
Same apples for the immunity which in any case is supported by all political parties in Greece.
What you are mentioning here though, it is not the program of Syriza.
Foreign intervention to another countries election procedures is unacceptable.
But Greece is a member of a Union. A Union of independent states and of citizens.
Citizens of other countries have a right to know, if they choose to, on the programs of parties of other countries. After all this might affect them as well.
So it is only fair for the economist or the International press to translate and publish the program of Syriza as a whole.
Also to describe which are the coordinates of this coalition.
Finally journalists have a right to criticize. They can judge the decision of Syriza to make public the transcripts of the meetings with the President, which in fact degraded the discussions to election speeches, and subtracted all possibilities for manoeuvres, flexibility, constructive discussion and synthesis of views.
This misinterpretation of democracy is rule number one in the book of populism.
And it is not intervention.. it is common sense to point it out.
After all practices like that has brought Greece to where it is at the moment.
Syriza is doing what populists always do: tell people what they want to hear. If by "asserting sovereignty" you mean breaking international agreements then you should be very careful for what you wish for. If Greece does declare a moratorium then there will be no more money from either the bailout fund or the bond markets.
Regarding President Hollande, while he is likely to try and renegotiate the rules around the ESF, and may well have some success in this, he will not be doing for Greece but for France in, er, an exercise of sovereignty.
Having failed to appoint a government of national unity for a reasonable period of time last autumn, Greece has dug itself into a hole and now seems determined to keep on digging. The contrast with Italy couldn't be greater. The bizarre situation where a government has to be formed within 12 days doesn't help. The parties should have more time to form a government. Forcing another election is antidemocratic.
As there is no legal mechanism for leaving the Euro it may not come to pass even if there is a default. Introducing a new currency is a difficult and expensive task that takes time but Greece may have no choice as it will not be able to print Euros. If it does breach the treaty then the consequences may be very far-reaching: expulsion from the EU by the other 26 members a definite possibility.
Turkish military planes invade the Greek air space over the Greek islands which are close to Turkey on an almost daily basis.
Dispute between the two countries over a number of islets is ongoing and in the past (e.g. in the '90s) things have escalated.
Plus Turks invaded Greek Cyprus only 38 years ago.
Are these reasons enough?
Turks invaded Cyprus in 1974, full stop. There is no such country as Greek Cyprus. Ethnicity of different groups of Cypriots is irrelevant - unless you accept the existence of Turkish Cyprus as well. By international law, there are no such mutts.
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There are plenty of airports in Europe in such a close proximity to state borders, that every landing or take off involves violation of other nation's air space. Surely something could be done about this, except spending the greatest share of one's GDP on defense?
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So no, those are no reasons.
Cyprus is not and was not part of Greece.
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As I already told to commenter 'greekinlondon', ethnicity of different groups of Cypriots is irrelevant, except you agree that there are Greek and Turkish Cyprus, but by the international law there are no such mutts. Won't repeat about the airspace violations.
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I know very well all the shortcomings and drawbacks of Turkey's dangerous slippery path to Islamism, away from the secular state with special role of army, as bequeathed by Ataturk. But the reality is, Turkey's role in the region already IS of a superpower, either benign or evil (matter of opinion). Greece with all her economic problems and much smaller if more enlightened population just isn't capable of matching Turkey militarily. Even if she started to spend on defense like North Korea...
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So, instead of wasting money Greece has not on useless military wares, she should put in an effort to be a valued member of international community in general and EU in particular - that is much more effective defense. Alas, Greece does exactly the opposite.
"Turks invaded Cyprus in 1974, full stop"? No "full stop", as the northern part of Cyprus is not recognised by any other country besides Turkey. It's an ongoing issue, there is no "full stop".
I'm talking about Turkish military planes intentionally violating the Greek air space, to challenge the sovereignty of these Greek islands.
It is clear by your answer that you have no idea of what's happening in Greece or Cyprus...Completely ignorant, I'm afraid
Btw, Greece is not the only country in the region not getting on with Turkey...That says something...Greece is not lucky enough to share land borders with Ireland only.
Yes, Greece cannot match Turkey militarily, I agree. But what does this mean? That Greece should not have any army whatsoever? This logic is wrong.
Sorry I wasn't clear enough using the 'full stop' term. It meant just that the invasion of Cyprus in 1974 wasn't of "Greek" Cyprus. And you're absolutely right saying that the northern part of Cyprus is not and has no prospect to be recognized as a state. Same goes for "Greek" Cyprus, right?
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I have no doubts that Turkey provokes Greece militarily invading her airspace and waters. Does it justify the enormous defense spending by Greece? For me, it doesn't make sense. Except if Greece is capable of Israeli style doggedness and sophistication in confronting those who threaten her.
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Though I cannot see Turkey threatening the very existence of Greece, like Arab neighbours of Israel do.
Greeks invented ethnocentricity [indeed its a Greek word], the Cyprus situation and hostility over the Republic of Macedonia are due entirely to this. The Greeks of Cyprus were trying ethnic cleansing, to force Turks who had been living on the island for centuries to leave. Greek aggression was also evident in Macedonia, Thrace and Epirus.
The Greeks were warned several times by Turkey to cease the anti-Turkish pogrom. Turkish intervention was deterred on at least one occasion because of US and UK intervention. The Greek Military Dictatorship has been accused of undermining President Makarios in order to attain Enosis, union of Cyprus and Greece. Then Greek arrogance led to Turkish invasion to protect Turkish Cypriots.
Greek hostility [based on irrelevant to the modern world ethnocentric notions] prevented the people of the former Yugoslav Republic of Macedonia from having their name and flag recognized.
Is it coincidence that nations on Greece's borders have problems due to Greek ethnocentrism and arrogance? Greeks are also foolish. Turks and Turkey are not to be messed with, because the old saying is true,"Turks make the best friends and the worst enemies." So Greece, having enraged the Turks, fearfully overspends in the hope of deterring Turkish vengeance that has already taken place [Taksim, partition].
Thanks for historical reference. I've to add just one thing: Turkish Ethno/Religious/centricity stinks as much as the Greek one, and Turkish invasion of Cyprus remains an illegal and intolerable act of aggression.
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It looks like both countries are forever jammed in notions of their medieval past.
Like most neighbors, Greece and Turkey loath each other, yet they resemble each other more than they like to admit. In this case, much like in Turkey, Greece has suffered an unhealthy degree of influence from its military ever since the time of the Junta. The top brass makes sure it keeps enjoying its privileges no matter the cost. Of course, all this is justified in the name of defense against your bogeyman of choice, the old Ottoman occupier, in this case. Never mind that both Greece and Turkey are NATO members. Nationalism doesn't need much rationality.
Things get specially suspicious (and nasty), when it turns out that those very European powers that so adamantly demand "adjustments" and "austerity" are in the same breath encouraging, if not forcing, this insane waste of precious resources. Here is an article from the Guardian that perfectly sums it all:
http://www.guardian.co.uk/commentisfree/2012/mar/21/greece-austerity-mea...
"One major factor is that France and Germany's arms industries have greatly profited from this profligate military spending, leading their governments to put pressure on Greece not to cancel lucrative arms deals. In the five years up to 2010, Greece purchased more of Germany's arms exports than any other country, buying 15% of its weapons. Over the same period, Greece was the third-largest customer for France's military exports and its top buyer in Europe. Significantly, when the first bail-out package was being negotiated in 2010, Greece spent 7.1bn euros (£5.9bn) on its military, up from 6.24bn euros in 2007. A total of £1bn was spent on French and German weapons, plunging the country even further into debt in the same year that social spending was cut by 1.8bn euros. It has claimed by some that this was no coincidence, and that the EU bail-out was explicitly tied to burgeoning arms deals. In particular, there is alleged to have been concerted pressure from France to buy several stealth frigates. Meanwhile Germany sold 223 howitzers and completed a controversial deal on faulty submarines, leading to an investigation into accusations of bribes being given to Greek officials."
Then one realizes why Germany fears so much an audit on Greece's debt: it's all dirty.
See my comment to Reluctant Polluter to understand why Syriza is right to demand an independent audit of the debt before agreeing to service it. There is much reason to believe this debt was far from being in the Greek people's interest, but rather for the profit of its arms dealers, Germany and France.
If they have nothing to hide, they should accept this condition.
Again, our views are fairly close. Both Greeks and Turks are: ethnocentric, nationalistic, religious and nursing real and imagined grudges. They have behaved like children squabbling in the school yard [but with weapons]. Neither admits that the other has genuine grievances [among the inflated ones].
Because they are feared [not without reason] by their neighbors, who were formerly occupied by them, those neighbors are [particularly Greeks and Armenians] prone to cast aspersions toward the Turks. Very much like many Americans, Turks do not take that well and respond in kind.
While I have a lot of sympathy with the Greeks [and especially Armenians] because of the history, I favor the Turks on Cyprus because they intervened to stop ethnic cleansing of Turkish residents. The situation was very murky, and some blame may attach to both sides, however, like Kosovo and Bosnia, I must err on the side of opposing genocidal actions.
Thanks for mentioning that both countries are NATO members - this obvious fact somehow slipped out of my attention. Yes, it really does all that Greeko-Turk sabre and yataghan rattling utterly moronic and wasteful.
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As to The Guardian... sorry, as a reptilian right-winger I deem that rag as The Morning Star replacement and ignore them. :-)
Yes, we're close on that... though by no means in unison.
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You may think you're erring on the side of opposing genocidal actions, when in the reality you err on the side of closing your eyes shut to the genocidal actions of one of the sides (which were more than two, as usual in the Balkans).
Closed my eyes to the other side? You don't seem to credit the attacks on Turks to achieve "enosis" and ethnically cleanse Cyprus. The military junta in Athens actually seems to have sabotaged rapprochement with native Turks by the legal Cyprus government of Pres. Makarios. All in aid of "enosis."
What do you call Greek intransigence over Macedonia? What do you call Greek actions re Corfu, Epirus, Dodecanese, etc. This is a bit off the topic, except that a non-EU Greece that goes into a hyper-nationalist victimization fugue like post WW I Germany could be a real menace.
Yes there were provocations on both sides in Hravatska, Srbska, Bosnia and Kosovo. And I always [I hope] err on the side of the victims of ethnic cleansing. I don't deny that the Greeks suffered under Turkish rule, but one has to bury the hatchet sometime [and NOT in the other person's head].
Something about my reply bothered me so I rechecked my history. I should not have included Corfu, what I was partially remembering was the "Protocol of Corfu" that attempted to resolve the dispute over Northern Epirus.
The Greeks will tell you that trying to save Greek Epiriotes from Albanian oppression was justified. Then out of the other side of their mouths claim that the Turkish intervention to save Turks in Cyprus from Greek ethnic cleansing there was not justified. We have previously agreed that there were provocations on all sides, I believe.
The only sure bet in the Balkans is to bet on Murphy's Law, Balkan version, 'In the Balkans truth is as rare as teeth in hens, and peace is as rare as feathers on a horse.'
Enosis or no enosis, EU or no EU, both Turkey and Greece cherish their membership in NATO too much to do anything too silly...
Well, the vision of Balkan peoples (of any religion or ethnicity) as stupid, blockhead savages, incorrigible bullies, torturers and so on, is Western European conventional wisdom. Meaning, intellectual laziness... 'cause even quick comparison of number of casualties/victims of conflicts among the Western states with that in Balkan conflicts will show you who's is real savage of the continent.
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Yes, people of the Balkans regularly engage in scuffles with each other, but when they've finished that job, they actually go along quiet nicely. Mark Mazower in his 'Salonica, City of Ghosts: Christians, Muslims and Jews, 1430-1950' says that even between the two world wars the street beggars in Thessaloniki spoke at least seven languages... Anyway, no savage ethnic cleansing, Balkan style, can even come close to what the 'civilized' countries of the West did to each other - or to the Balkan people.
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When someone like Bubba Clinton leaves his interns alone for awhile, and tries to bring Balkan savages to order, the result creates new problems and perpetuates the existent. Thus Kosovo and Bosnia...
The Greek people have already made up their minds. They will opt out, from the EU as well if they must. The rest have another 30 days to prepare for the day after.
I am certain the EU will sustain the hit rather well. Not so sure about Greece. But sometimes that's just how things must be.
Few nations on earth have the courage to walk alone. Greece is first on that list. Who knows? Perhaps something good could come out of this in the end.
Stop complaining about Germany, the Greeks are always keen to point out they are a proud country, well, roll up your sleeves and show you are strong, and stop holding up your hand in Brussels again and again. Greece has been receiving billions and billions of help from the EU already for the last 30 years, the EU is not a one way honeypot to live from. Greece should have been a net contributor by now, helping our new members in Eastern Europe, instead of the other way around
Yeah, I entirely agree with your point of view. But Greece will have to borrow from Germany, France and others ... to contribute to the EU fund ... and then Greece will borrow from the EU fund ... and then ... who know what?
OK there's another election on 17 June. Some parties get more votes than before. Others get fewer. But no one party has an overall majority. So, we're back in the coalition-forming game again. But how can that be prevented from becoming another stalemate leading either to a third election on 29 July or to the financial plug on Greece being pulled.
If I were a Greek voter, I would want each major party to commit in advance to join one of two coalitions after the next election. Both coalitions could be temporary affairs, if need be, united only by their shared view of how to deal with Brussels. Parties would have to be prepared - for this purpose only - to work alongside colleagues whose views on other issues they find distinctly uncongenial.
Coalition A would head for Brussels in an attempt to 'amend' the bailout terms or (as per Hollande's approach) to cut a side-deal with some growth-stimulating measures and financial help in it. But the messages from the backers of this coalition would be that (a) voters cannot expect major concessions from the Troika and (b) if push comes to shove, the priority is to stay in the Euro, even if the concessions extractable from the Troika are negligible or non-existent.
Coalition B would head to Brussels to tell the Troika that the existing bailout terms are not acceptable and to insist on a new and more generous deal. Their message to voters would be that (a) there's a good chance of getting a significantly better deal than the current one and (b) if push comes to shove, Greece will have to leave the Euro rather than live with whatever terms the Troika imposes.
Of course, political leaders don't like having to clarify their intentions re coalitions before an election. So, I'd like to see the President leaning on all leaders to sign up to one of two clear propositions such as the above - with the subtext message to Greeks that "A vote for a fence-sitter or weasel-words merchant is probably a vote wasted".
I have a suggestion. Greece could ask the royal family to return from exile (like Spain did) and issue a extraordinary law forbidding 1) communists and their proxies to participate in running the state forever; 2) appoint a technocratic ancillary government; 3) appoint currency board controlled from without the country to run finances. Then certain economic benchmarks should be determined; after they're reached, the monarch may designate the date of new elections...
Could be an analogy here to 2008. EU decides to let Greece 'fail', Greece falls out of the Euro, economy collapses. Investors begun flood out of Spain, causing Spanish bond yields to spiral. ECB steps in with huge bailout package basically guaranteeing any Spanish or Italian bond. Cost to EU (mainly Germany) - huge. But crisis finally averted and confidence restored.
Replace EU with US Government, Greece with Lehman Brotehrs, Spain with AIG :)
Apologies for any errors in terminology, it's beer'o'clock in NZ!
I was rather inclined to go the other way. The US seems intent on mirroring what's happening in Greece in terms of dysfunction.
The analogy is poor as countries are not companies. Furthermore, the Euro zone has already moved to show that it isolate member countries from the bond markets. Yes, it's a muddle but a considerable improvement on the situation in 2008.
The consequences of a Greek default are still unclear. Certainly, they don't have time to set up a new currency. And without a majority in parliament it's difficult to see the necessary capital controls being imposed to mitigate capital flight as default looms. Greece might technically leave the Euro only to keep it as a means of payment.
This a Greek drama in an unknown number of acts.
Not really, I don't think you can't compare Greece to the US. the US prints its own currency, Greece does not. The US has growth prospects. It makes more sense to compare the US with the Eurozone as a whole and I think it is an interesting experiment in economics. The US has explicitly gone the other way to the Eurozone. Prompted by Germany and France, the Eurozone has insisted that every country sign a constitutional balanced budget provision, and nearly all have done so. Ireland is due to have a referendum on this on May 31, which will likely pass. This is Tea-Party economics. The US by contrast has gone the Keynesian route with public spending and support for key industries. So far the US looks like it is doing much better, though a renewed recession in Europe could put paid to that.
I'm looking at the comparison more in the poltical spectrum for this one. While the US is in a a different circumstance because it controls its own currency, the mood is sour and any economic hits are prone to illicit reactionary behavior. But more to the point, we are like Greece in that there are large economic (financial) concerns who resist legal measures to leash their reckless behavior.
We have been reading about this for two years now. Please do it already. The entry was based on lies. The exit will be based on lies. I wonder if anyone will ever trust Greece
Become a state, Greece. Problem solved. Convert all debt to dollars at current rate.
The ignorance by the economic experts all over the world have worked to the advantage of the more developed nations in the Euro Zone. Why... because the value of the euro currency is what might be the value of the German human resources & energy represent. Therefore, the less developed nations’ “PIIGS” “fine balance” between the euro currency value in circulation in those countries has to match the monetary value of their human resources & energy in circulation in each of these countries. The most obvious way to establish the “fine balance” is by making people unemployed, i.e. take human resources & energy out of circulation (euro currency in circulation equals human resources & energy in circulation)... consequently growth reverse... more human resources & energy out of circulation... etc. etc. etc. (down ward spiral) This is all regulated by the Laws of Economics which we cannot break, as much as we cannot break the Laws of Physics. Greece is the first to spiral down as the moral and social corruptness take their toll. For your information Google “The World Monetary Order to Come”.
I am for kicking them out of Europe. The EU needs to pass a clear message to its members that its rules must be respected.
I totally agree, but do we remember what the punishment was for germany and france in 2003 when they overspent above the legally binding 3% of GDP?
So even those who wrote the rules still break them themselves, and undermine the respect those rules deserve
(I'm not letting Greece of the hook here for one minute by the way: they were, are and always will be accountable to their own destiny).
My own favourite addage in this case is that rules are for the guidance of the wise and for the obeyance of fools.
Agreed! At least one country needs to be made an example of. Greece has turned this union between nations into a complete farce. To them the EU was just a sneaky way of stealing.
So you are on a road and you see another car driving towards you on the wrong side.
Your solution is to ram the other car because you are in the right. Yeah, lets crash the car and make an example of them. To hell with the rest of the Eurozone, the single market, the world economy.
And lets not forget that Eurostat knew full well that Greece was fiddling the books but did nothing about it. That would have jeopardised the huge German and French arms deals to Greece.
It really is not as simple as you think.
I agree with you 100%.
The Greeks are like drivers who don't know what side of the road to be on. They should never be granted driver's licenses, they should never be in a car. If they are in a car they should be arrested.
A perfect analogy.
People on these blogs often hold a view as if the Eurozone (or the EU for that matter) would be a temperature-controlled conservatory, shielded against all tempests fronts from outside.
But of course, this isn't so; it's just a fragile 'shelter' that might give protection to some extent . . . providing that all engage in keeping the outer shell weatherproof. But this was not the case in the past.
Some even used the common shelter's essential 'building material', the Euro, excessively for bolstering their own individual comfort zones ... way beyond their means of productivity. The result now is a leaky roof and windy side panels.
Those who were excessively bolstering their 'own', beyond their production of 'building material', need to give it up now, engage in keeping the outer shell weatherproof, and must learn to live within their means of productivity, so that the 'building material', the Euro, can be used again to secure the common cause.
It seems that some are just too selfish to understand this (market) interdependence. This is why they engage in self-destructive distribution battles now . . . while the common shelter gets leakier and leakier.
I always ask who were the fools to lend them money? Takes two to tango.
"who were the fools to lend them money?"
In the first place Greece's own banks and pension institutions. They held 38% of Greece's sovereign debt before the March haircut, while e.g. the much chided German bank held only 6.32% before the haircut and are now down to 2.1% of Greece's total public debt.
Greek politicians purposely didn't keep 'open books'. Lots of their borrowings were done in secret, e.g. through 'swapping' relatively 'cheap' credit from eurozone partners for expensive dollar borrowings from London and Wall Street.
What of the other ~55%? This is a giant self administered charlie foxtrot, no matter which way one looks at it.
It still stinks that London and Wall St enabled all this.
Thanks for the info.
The are mostly tagged as 'undisclosed overseas debt holdings'.
No problem. Declare bankruptcy and get it over with. Let the investors take a bath. Greece will stand on its own--it will sink or swim on its own. Those are the tradeoffs.
Democracy in the Greece case is failing!Greece needs iron-handed man and measures to get out of the crisis.Democracy does not solve all problems,and ballots will not buy beef.
Problems can't be solved substantially in the future viewpoint by simply giving away free money ,the core of the crisis is about the way Greek government is run .So the European expectations on Greece is on the right track,the government gotta show some tendency to change its living style ,although it maybe hard in the first stage.
Not just Greeks have been desperately withdrawing money from banks lately, apparently Spanish are doing likewise.
If the possibility of Greece quitting Eurozone soon is dragging the global stock markets down that fast, what happens when Spain, with a much larger economy, has to go too? Can one imagine its vast negative impact then? (mtd1943)
Spain is the key, until now the crisis is only in his onset. The real crisis will start when Spainsh banks report the current value of their real estate assets.
Actualy Spanish banks keep on cheating in three ways.
1.The million of unsold houses that they own should be depreciated at least 75% according with the 1998 appraisal, when the bubble began.
2.Actualy in Spain when you don't pay the mortgage the bank take over your house but also request you the difference between the new appraisal (of course made by them) and the total amount of the original loan. This unfair system allow banks to mantain in their assets billions of euros that hardly they will finally make.
3. But the biggest trick ever made is in the Spanish rural lands. Banks funded for 10 years millions of square meters in every village of Spain, forecasting that they would build thousands of residential neighborhoods, making billions of euros. Actualy goats keep on of grazing there and the real value of this lands is almost nothing.
As a result when finally banks are force to report reality, all of them will collapse and the real crisis will begin. The bill is roughly 350 billions that banks loaned to construction companies and they will never recuperate. Spanish bankruptcy is inevitable , the bail out is not possible and bankers and politicians are responsible to cover reality.
Greece should sell Corfu to China for say ...$100B
Problem solved.
When you can't pay your morgage you lose your house ....why should this be any different.
Why buy Corfu when the coming chaos may give the opportunity to occupy it? Greece may in a worst case scenario split up as it did in medieval times and under occupation in WWII.
Because individual people own properties in Corfu. The island is not uninhabited. You can't just drive locals away and take their properties in order to pay a public debt.
The guys from Syriza would easily and happily do exactly that. Communists never sobbed over private property rights and moving large masses of population - to camps or to the better world.
I believe that the 2 "european" parties, New Democracy and Panhellenic Socialist Movement (PA.SO.K.) should change a lot in the very following days, so as to form a solid proposal for the future of Greece, as expected by a lot of Greeks, the so-called "silent majority". The changes i am speaking about should be deep, reaching both leaders as well, who already proved their inability to handle such conditions. We need a vision in this country, a feeling that our sacrifices will lead Greece to a more productive future. Apart from the recession, depression is also depicted in the recent elections and this depression can only be fought with vision.
Greek crisis is for Greeks to solve, because no one else can save Greece.
This is age of globalisation and free trade. If you don't produce and export, you are not going to import anything. Borrowing and handouts from Northern Eu members is not going to continue.
Globalisation and free trade is NOT compatible to the concept of single currency. You cannot join the rich men's country club, if you are not rich.
Didn't the rich men loan their money to the greeks?
So what happens next? This is a game of brinkmanship.
Greek politics is moving to a position where Greece is not going to implement the troika's demands and the troika is threatening to refuse further funding.
Given the outcomes so far, if anyone blinks, I expect it to be the troika. Greece has actually done reasonably well so far. By playing hardball, they got a big haircut. The fact is that Germany and the rest of the Eurozone has a lot to lose.
If no-one blinks then I believe Greece is going to try to default and stay within the Euro. This may actually be possible at least for a short while. Then there will be some half-compromises, maybe short term extensions.
We have been waiting for some big crash moment, but from past experience, I would expect more of the same chaos, more summits, more half fixes, more fudges, for several more months. The ESM is due to come into force in July, so at the very least they will try to hold off until then.
I could be wrong, perhaps Greece will leave the Euro overnight, but I just don't think they are that organised.
"but I just don't think they are that organised."
Countries like Sweden and UK deliverately avoided joing the euro for good reasons. Why Greece joined the euro? Because Greek elites are idiots and lazy handout seekers!
"I believe Greece is going to try to default and stay within the Euro."
Agreed - if 70%-80% of the Greeks want to retain the € and a presumably large percentage also consider Greece's current debt load to be unreasonable then the democratic course is default with no printing of Drachmas.
Sweden and the UK already had fairly strong currencies, there was no need for them to join the euro.
The Greek drachma was a very weak currency, that is why the majority of Greeks were in favour of adopting the euro, which is a much stronger currency.