Open thread July 10, 2015 Dan Crawford | July 10, 2015 9:34 am Tags: open thread Comments (14) | Digg Facebook Twitter |
I’m surprised by the news from Greece the past 24 hours. The Greeks have offered up a deal for the EU that has even more austerity than what the Troika last insisted – and there is no provision for debt relief.
But what about that election a week ago? That vote means nothing any more? Are the same people who celebrated in the streets at the “victory’ going to now celebrate the coming defeat?
The articles and comments at AB on this topic seemed to line up with the NO side. It was “screw the bankers, the Troika, Germany, the Euro and the debt”.
As of this morning it looks like the pensioners will pay the price for this deal. Go figure.
It is not the same deal
Greece’s prime minister to sell austerity deal to reluctant party
Greece gets 8X the Euros and much more time. As opposed to having to come back hat in hand in a few months having ALREADY given away the pension cuts. Perhaps not the ideal deal from the standpoint of those here who urged ‘OXI’, but if accepted much better than the take it or leave it deal the ‘NAI’ folks were offering.
I am afraid I am in the same boat with Krasting here. If, as many have said, the austerity was guaranteed to produce recession… unnecessarily… then, aside from the pain it will cause the people, what is the point of accepting it, even for more (borrowed) money?
i really know nothing, but for what it’s worth, this looks to me like more of the Obama grand bargain thinking: it’s all about the money, never mind the people that get hurt.
how are they going to pay back this new bigger, longer term, loan if austerity crashes the economy?
Dale you have to think about it in political negotiating terms.
A few years back the Republicans attempted to use the first instance of a debt ceiling increase standoff to demand that the entirety of their economic platform be conceded in exchange for what was a temporary lift of the debt ceiling. That is they went for maximal and even more than maximal concessions for a minor acknowledgment that it wasn’t in the U.S. interest to default on its debt. It was not much more egregious than say demanding permanent extensions of Bush tax cuts so as to get unanimous consent to move on a bill to rename a Post Office. Instead they were forced to back down in exchange for much less or nothing. And this set the pattern going forward, you don’t give up everything for a temporary concession.
In this case Tspiras has in effect cut eight simultaneous deals for eight installments of debt financing for the same price as one deal. However you slice it that is an advance. Plus let me isolate the one part of the sentence I DIDN’T bold:
“as well as some form of debt relief”
Which makes the following from BK a little suspect on two counts:
“The Greeks have offered up a deal for the EU that has even more austerity than what the Troika last insisted – and there is no provision for debt relief.”
One have the Greeks actually offered a deal with MORE austerity? Maybe, but I haven’t seen it yet. And two the deal as proposed DOES have a provision for debt relief. Hope there is freeboard in that boat you are sharing with Krasting. Not that I will be embarking, I just would hate to see you go down when it swamps.
A pretty good article giving some idea of each sides proposals as they developed over the last few weeks (i.e. from pre-referendum to now). I see a number of concessions by Greece, but none that clearly represent MORE austerity than the deal on offer before.
no danger of me going down with the ship.
there is only one ship i insist i know anything about. that is the SS… well, SS.
meanwhile I wait and see.
as for “more” austerity, it seemed to me the Greeks voted for LESS. and the economists we believe in argued that less was better.
as for politics, maybe the Germans offered the Greeks a deal they couldn’t refuse.
Dale I don’t know that $70 billion in access to credit will result in 8X the results that 7.2 billion Euros would have. But what it should do over the next three years is continue the creditor shift that had Greece owing billions and billions to private banks and small countries in the Eurozone in 2008 to one where most of those smaller lenders have been bailed out and the credit risk shifted to the Central Banks and lending facilities that could, if they chose, simply write off the debt.
Right now countries like Slovakia and Latvia have skin in the game. But if handled correctly the new lending authority could allow remaining relatively small creditors to be paid off in full with funds supplied by the ECB and the IMF. Which would buy Greece political room in an EU structure that allows small countries to cast a veto.
I saw an article that showed that Latvians are pissed. Because they have pensions and standards of living roughly a third of those in Greece and don’t see why they should have to pay pensions for barbers in Greece who can claim early retirement at 50 because of their job hazards (which is a true story). Well under the new deal proposed by Greece some of the farcical elements of the Greek retirement system will be phased out even, as I suggest, as Latvia and similar creditors get their debts paid off in full. And maybe, just maybe this will give Greece the light at the end of the tunnel that they need.
Because as you well know perhaps the key element is political and economic governance comes down to “Whose Ox is Being Gored”. And if the answer is “Well not YOURS” then the response can often be “Well who gives a crap? You guys can work it out”
To change metaphors a bit. I used to play chess and the key to recovering from being pinned is to find some way to grab back space, time, and tempo from the opponent. Which requires understanding that not every risky move, not every gambit is guaranteed to pay off. On the other hand what ya’ goin’ do? Tip over your King?
ah, yes. chess. like that eleven dimensional kind.
trouble is, when you get too cute your base doesn’t understand what you are up to and you get a bad reputation and lose elections.
me, i never been smart enough to be a good liar.
if “the rest of the story” is that greeks are all retiring at 50 and otherwise have life expectancies and job opportunities that don’t explain why this is wise… then why weren’t we hearing about that from stiglitz, krugman, roth et al.?
Webb – At the bottom of this article is the letter sent to EU. Help me – I don’t see the paragraph about debt relief.
I see a loan request to cover the next 3 years. A portion of that new lending would be to pay interest on existing debt.
Is that debt relief? Or a Ponzi?
Am I missing something?
Krasting are you trying to prove you are just trolling here?
“At the bottom of this article”
Which you don’t bother to cite in your initial comment. How the fuck am I supposed to know you are basing that comment on some article from ZeroHedge?
And then you ask this:
“I don’t see the paragraph about debt relief”. Hmm maybe do you think that maybe it is implicit in the SECOND paragraph?
“The broad strokes: a 3 year, €53.5 billion bailout program, including €35 billion of growth measures, lasting through June 30, 2018 requesting funds from the ESM, seeking to finally put the IMF off to the side.”
Maybe “seeking to finally put the IMF off to the side” doesn’t NECESSARILY imply ‘debt relief’ ON NET. But it certainly implies a restructuring of debt. And this from an article WHICH YOU NEVER CITED TO BEGIN WITH!
Yes you are missing something. A commitment to honesty in debate. Pulling crap from ZH after the fact is somewhere intellectually below George Costanza insisting that “The Card says ‘Moops'” Even if it supported your contention, which near as I can see it doesn’t.
Maybe next time you can cite Alex Jone’s Infowars or something.
Finally. Every year, hell every month, the United States Treasury borrows money on the public markets and uses much of that to redeem existing debt and yes “pay interest on existing debt”. Which means that a good deal of existing U.S. debt Held by the Public is a result of compounding interest adding to principal. If that is a crime then every past participant in the bond market is an accessory to a felony. So maybe you should just turn yourself over to the Federal Marshals post-haste.
Refinancing debt is not the same as a Ponzi scheme. Else everyone who ever shifted balances from one credit card to another would be in a cell next to Bernie Madoff.
It’s quite the dilemma. Yes I talked my fiance into giving Bernie a monthly stipend while he’s still out there giving the DLC types fits.
But now I’m uncertain. Maybe I should give The Donald a few coins now and again just to keep the entertainment value of his campaign going? Is it so wrong to want to keep this braying ass on the stage? I admit I’m tempted but please don’t tell him.
Webb – I read the Greek letter in the Wall Street Journal. I know you don’t have access to the WJS so I linked to the exact same transcript at a free site. And you complain? Why?
Here is the link:
This same letter is available on a dozen sites. Why do I have to site a source when the document is available all over the place? These are ‘Webb rules’?
You can read through the lines as you like. But, “finally getting the IMF to the side” is not language that connects to debt relief.
You liken the roll over of Greek debt to the US rolling over debt. Not the same thing. Greek two year notes are yielding 34%. The ECB will roll over the Greek debts at a fraction of Greece’s borrowing cost. So this is a form of debt relief. It is subsidized financing.
To me this is just kicking the can down the road. Real debt relief would be a haircut on the principal.
We shall know by next week if there is any real debt relief in the latest deal.
I pose a question on an open thread and you jump ugly. Why? Grumpy?
Webb – In the Saturday Naked Capitalism is an article by Silvia Merler (ECFIN). This article first appeared in Brugel. A credible source in a credible publication. Silvia describes the Greek proposal in detail. Her words:
“This proposal as it stands does not include any mention of debt relief.”
Contrast those words with mine that you objected to:
“and there is no provision for debt relief”
Only two possibilities – 1) Krasting, Merler, Brugel (and many other sources) are right or 2) Webb is right.
You tell me – is it 1 or 2?
The article from NC:
Donald Trump is the best advertisement for an incredibly high estate tax rate.