Greek Financial Crisis

[hullefc]

Telegraph.

"Looks like the White House is being forced into another euro intervention. This time it's Helsinki who are getting it in the ear, and none other than a certain Olli Rehn (former EU economics tsar) whose being leaned on to get the Finns to say Yes to a new deal".

Splits in Germany.

Meanwhile, Germany's SPD leader Sigmar Gabriel has put out the following statement:

The SPD continues to pursue the goal of keeping Greece in the euro zone, if the necessary conditions can be created. That is also the objective of the federal government. And above is currently being discussed in Brussels. The SPD places special emphasis on a common and coordinated approach with France. The Federal Finance Minister Wolfgang Schäuble proposal's for a temporary withdrawal of Greece from the eurozone is naturally known by the SPD. In such a difficult situation, every possible proposal needs to be examined impartially. This proposal would, however, only be realized if the Greek government would however have no better alternative.

 

[davek]

The Germans know they have been stitched up. The suppose great 'cave in' by Syriza is nothing of the sort as they have a virtual veto over everything they proposed. They can reverse all the proposals if it is not in the 'economic or social interests' of the Greek people. Syriza has played a blinder, proposing 'reforms' and when the Germans ask for more the response is 'why kick someone in the goolies when they are down and out, you nasty lot'. The Italians are the first to break rank and blame German intransigence. As Varoufakis warned the German game was to punish Greece and force it out of the Euro.

The Germans are clearly trying to depose Syriza with their outside body independently 'vetting' of reforms. Placing technocrats in Athens, like in Rome. The difference is that in Italy no one liked the government anyway. It will be a different kettle of fish in Greece, where a very hostile large section of the population have got the bit between their teeth for a fight.

But a Grexit will only push Greece further on the road to joining BRICS. And allow the Chinese to make more investments in Greek ports, airports, rail and roads. In the proposal document the bidder for privatised airports has already been accepted i.e the Chinese. Any further demands from the Eurozone for more privatisation will increase Chinese involvement in the Greek economy. The possibility of Greece having closer ties to Russia and selling off state assets to China is the reason the US are demanding a debt write off and rescheduling the debt by kicking it into the very long grass i.e 50 year government bonds. Washington will be working frantically tonight and tomorrow morning.

This crisis has all the ingredients for a break up of the Eurozone with a lot of recriminations.

The way the Greek Government's offer has been presented in the media - as you would expect - is to portray it as a huge departure from what the were saying last Sundays referendum was about. It's nothing of the sort. The Greek Government rejected the last raft of reforms proposed by the creditors because there was no upside for them. They asked the Greek people to reject that and send them back in with a mandate to get debts cancelled or swapped or effectively kicked miles down the road, and to obtain more loans. That's exactly what they've done - and, as you've stressed, with a large slice of progressive reforms plus caveats on the nasty stuff.
It's a huge spinning operation to see this otherwise.

What we're seeing now is the EU/ECB having their feet held to the fire on holding up their end of any deal, and if they don't there's the possibility of splitting the whole of the European project in two. They're in that position precisely because of that referendum result and the spadework the Greeks have done before and since politically to marginalise the hawks amongst the creditors and drive this through to a favourable settlement.

I know it's easy to read into these things what you want to be there (and, imo, Syriza should have gone for grexit) but to see where we are right now as anything other than looking at the probability of a major strategic defeat for the creditors and a relative victory for the Greek Government is folly. Of course, the presentation of it all has to be skewed through the prism of neoliberal propaganda, so that it becomes a message of defeat for a movement against austerity, but thats strictly for the birds.

 

[marnie]

Right foot not knowing what the left foot is doing at the moment !!!!!!

 

[dholliday]

The way the Greek Government's offer has been presented in the media - as you would expect - is to portray it as a huge departure from what the were saying last Sundays referendum was about. It's nothing of the sort. The Greek Government rejected the last raft of reforms proposed by the creditors because there was no upside for them.

Which in turn makes it understandable the creditors are rejecting the new proposals.

Ifya know yer history and all that.


(from the BBC via The Guardian)

■ 2009: December

Greece’s credit rating is downgraded amid fears of debt default. The prime minister, George Papandreou, announces heavy cuts in public spending.

■ 2010: April/May

Eurozone countries approve a €110bn rescue package, in return for even more stringent austerity measures.

■ 2011: July

EU leaders agree a major bailout for Greece, channelling €109bn through the European Financial Stability Facility.

■ October

A 50% debt write-off is agreed in return for further austerity.

■ November

Papandreou announces his resignation.

■ 2012: February

Amid violent protests on the streets of Athens, the Greek parliament approves a package of tough austerity measures as the price of a €130bn bailout.

■ March

Greece reaches a “debt swap” deal with its private sector lenders.

■ June

Parliamentary elections boost New Democracy, albeit leaving it without a majority. Leader Antonis Samaras assembles a coalition with third-placed Pasok and smaller groups to pursue the austerity programme.

■ 2013: January

Unemployment rises to 26.8% - the highest rate in the EU.

■ April

Youth unemployment climbs to almost 60%.

■ December

Parliament passes a budget predicated on a return to growth after six years of recession. Hailed as the first step towards exiting the bailout.

■ 2014: March

MPs narrowly approve a big reform package that will open more retail sectors to competition, part of a deal with international lenders.

■ April

Eurozone finance ministers say they will release more than €8bn of bailout funds.

2015: January

Alexis Tsipras of Syriza becomes prime minister and forms a coalition with the nationalist Independent Greeks party.

February

The government negotiates a four-month bailout extension.

■ June

The European Central Bank ends emergency funding. Greece closes banks and imposes capital controls.

■ July

Greece becomes first developed country to miss a payment to the IMF.

■ 5 July

A referendum is held on the bailout. Over 61% vote against the measures proposed by the EU.

■ 10-11 July

Parliament agrees new proposals for a third bailout, imposing tough new tax and spending restrictions. Eurozone finance ministers meet to consider the proposals.

 

[Clint Planet]

Because Jeffrey Sachs has an unblemished record on these things.

Well, he has pretty impressive credentials in terms of advising Poland, Bolivia etc and I'd trust him more than a lecturer at Birmingham, especially since his views seem to be backed up by Stiglitz and Picketty too.

 

[davek]

Which in turn makes it understandable the creditors are rejecting the new proposals.

Ifya know yer history and all that.


(from the BBC via The Guardian)

■ 2009: December

Greece’s credit rating is downgraded amid fears of debt default. The prime minister, George Papandreou, announces heavy cuts in public spending.

■ 2010: April/May

Eurozone countries approve a €110bn rescue package, in return for even more stringent austerity measures.

■ 2011: July

EU leaders agree a major bailout for Greece, channelling €109bn through the European Financial Stability Facility.

■ October

A 50% debt write-off is agreed in return for further austerity.

■ November

Papandreou announces his resignation.

■ 2012: February

Amid violent protests on the streets of Athens, the Greek parliament approves a package of tough austerity measures as the price of a €130bn bailout.

■ March

Greece reaches a “debt swap” deal with its private sector lenders.

■ June

Parliamentary elections boost New Democracy, albeit leaving it without a majority. Leader Antonis Samaras assembles a coalition with third-placed Pasok and smaller groups to pursue the austerity programme.

■ 2013: January

Unemployment rises to 26.8% - the highest rate in the EU.

■ April

Youth unemployment climbs to almost 60%.

■ December

Parliament passes a budget predicated on a return to growth after six years of recession. Hailed as the first step towards exiting the bailout.

■ 2014: March

MPs narrowly approve a big reform package that will open more retail sectors to competition, part of a deal with international lenders.

■ April

Eurozone finance ministers say they will release more than €8bn of bailout funds.

2015: January

Alexis Tsipras of Syriza becomes prime minister and forms a coalition with the nationalist Independent Greeks party.

February

The government negotiates a four-month bailout extension.

■ June

The European Central Bank ends emergency funding. Greece closes banks and imposes capital controls.

■ July

Greece becomes first developed country to miss a payment to the IMF.

■ 5 July

A referendum is held on the bailout. Over 61% vote against the measures proposed by the EU.

■ 10-11 July

Parliament agrees new proposals for a third bailout, imposing tough new tax and spending restrictions. Eurozone finance ministers meet to consider the proposals.

That has no relevance to what I said.

 

[atrottel]

Which in turn makes it understandable the creditors are rejecting the new proposals.

As far as I understood it, the creditors accepted the new proposals and it was Schäuble, the Finnish government (because of the right-wing nationalists) and various other Eastern European countries who were holding out for rejection.

 

[hullefc]

High noon for Germany's vision of Europe.

"Jean Asselborn, the Luxembourg foreign minister, has declared that “Grexit has to be prevented, warning that:

“It would be fateful for Germany’s reputation in the EU and the world.

“Germany’s responsibility is great. It’s about not conjuring up the ghosts of the past,” Asselborn told Munich’s Sueddeutsche Zeitung.

“If Germany goes for Grexit, it will trigger a deep conflict with France. That would be a catastrophe for Europe.”

IG’s Chris Beauchamp explains:

Like a dysfunctional family, the cracks in European unity are coming to the surface, and not just between the Greeks and the rest.

If no deal is done by tonight, the market reaction will be severe, although should things look to be turning too unpleasant there is always the prospect that the ECB will step in with some emergency action to stabilise matters.

 

[TheFinnFan]

Finland wont accept another package.

True Finn party will block it.

 

[davek]

High noon for Germany's vision of Europe.

"Jean Asselborn, the Luxembourg foreign minister, has declared that “Grexit has to be prevented, warning that:

“It would be fateful for Germany’s reputation in the EU and the world.

“Germany’s responsibility is great. It’s about not conjuring up the ghosts of the past,” Asselborn told Munich’s Sueddeutsche Zeitung.

“If Germany goes for Grexit, it will trigger a deep conflict with France. That would be a catastrophe for Europe.”

IG’s Chris Beauchamp explains:

Like a dysfunctional family, the cracks in European unity are coming to the surface, and not just between the Greeks and the rest.

If no deal is done by tonight, the market reaction will be severe, although should things look to be turning too unpleasant there is always the prospect that the ECB will step in with some emergency action to stabilise matters.

Those caveats in the Greek reform package: looks like the Eurogroup are trying to get them removed in favour of more concrete measures and time commitments: http://mobile.reuters.com/article/idUSKCN0PM0EP20150712?irpc=932

I think if that goes back now to Greece for a vote it'll fracture the Government if they accept it...which is probably the strategy of the Eurogroup: to unseat Syriza.

They should kick that into touch and force a Eurozone split and massive US retaliation.

 

[hullefc]

Those caveats in the Greek reform package: looks like the Eurogroup are trying to get them removed in favour of more concrete measures and time commitments: http://mobile.reuters.com/article/idUSKCN0PM0EP20150712?irpc=932

I think if that goes back now to Greece for a vote it'll fracture the Government if they accept it...which is probably the strategy of the Eurogroup: to unseat Syriza.

They should kick that into touch and force a Eurozone split and massive US retaliation.

Laying the ground work for civil war. Which Syriza should have warned the population about and got rid of that ANEL defence minister, when he indicated that the military and police may be called on in case of civil strife. Allende's Chile always springs to mind, when it becomes clear a major power is after regime change, because they are not acting in the interests of that power. The democratic legitimacy of the Greek government, and its sovereignty is being called into question with the Euro groups call for, 'A working group with the institutions shall provide proposals for better implementation mechanisms'. Unelected technocrats determining the economic direction of a sovereign government.

Syriza should kick any new amendments to their proposals into touch and it would force the Germans to kick them out of the Euro. A failed German experiment. German intransigence is already splitting the Eurozone and it will only get worse. The Greeks can seek finance elsewhere and could always ask to join BRICS and invite further Chinese investment. Telling the Euro group that they will pay back the debts of previous governments when there is sufficient economic growth.

The Euro zone was always going to end in tears and recriminates that will see Europe pull apart.

 

[Eggs]

......I expect Russia are not only watching this situation carefully but talking directly to the Greeks. Putin could well be looking strategically at extending Russia's footprint into Europe.

 

[TheFinnFan]

......I expect Russia are not only watching this situation carefully but talking directly to the Greeks. Putin could well be looking strategically at extending Russia's footprint into Europe.

they certainly will use this situation.
but at the same time russias own economy is going down like a cows tail. it's all smokescreens and props.

latest news from finland would suggest greece will get another package but it will derail our government into cricis cause second biggest party True Finns wont be accepting it.

 

[davek]

Laying the ground work for civil war. Which Syriza should have warned the population about and got rid of that ANEL defence minister, when he indicated that the military and police may be called on in case of civil strife. Allende's Chile always springs to mind, when it becomes clear a major power is after regime change, because they are not acting in the interests of that power. The democratic legitimacy of the Greek government, and its sovereignty is being called into question with the Euro groups call for, 'A working group with the institutions shall provide proposals for better implementation mechanisms'. Unelected technocrats determining the economic direction of a sovereign government.

Syriza should kick any new amendments to their proposals into touch and it would force the Germans to kick them out of the Euro. A failed German experiment. German intransigence is already splitting the Eurozone and it will only get worse. The Greeks can seek finance elsewhere and could always ask to join BRICS and invite further Chinese investment. Telling the Euro group that they will pay back the debts of previous governments when there is sufficient economic growth.

The Euro zone was always going to end in tears and recriminates that will see Europe pull apart.

The pressing for a new government in Athens has to be the point the Greeks walk away on. If Varoufakis was in there now this would be over. I know he gave his support on Friday to his successor to do a deal on the grounds they were putting forward, but I'd be interested to know what his thoughts are now.

I can see the practical problems of exiting and the short term pain it'd bring (very acute for Greek society), but a decision like that has to be taken. The IMF/US has to act here and save the Europeans from themselves.

 

[SNova]

High noon for Germany's vision of Europe.

"Jean Asselborn, the Luxembourg foreign minister, has declared that “Grexit has to be prevented, warning that:

“It would be fateful for Germany’s reputation in the EU and the world.

“Germany’s responsibility is great. It’s about not conjuring up the ghosts of the past,” Asselborn told Munich’s Sueddeutsche Zeitung.

“If Germany goes for Grexit, it will trigger a deep conflict with France. That would be a catastrophe for Europe.”

IG’s Chris Beauchamp explains:

Like a dysfunctional family, the cracks in European unity are coming to the surface, and not just between the Greeks and the rest.

If no deal is done by tonight, the market reaction will be severe, although should things look to be turning too unpleasant there is always the prospect that the ECB will step in with some emergency action to stabilise matters.

The EU going into shambles right before our referendum. Cone on Greece, leave the EU.