Greece votes a resounding “no” to bailout terms
Greece just said “no” to the bailout, in a landslide.
That’s a victory for the socialist Greek government, which had urged a “no” vote. But is it a Pyrrhic victory?
They seem to think this will strengthen their hand vis a vis the EU. But why? How badly does the EU need the membership of Greece? And if Greece exits the EU, will it be able to pull itself out of the tailspin without the EU’s help?
Mr Varoufakis is due to meet senior Greek bankers later on Sunday. State Minister Nikos Pappas, a close ally of Mr Tsipras, said it was “absolutely necessary” to restore liquidity to the banks now the referendum was over.
However, Germany’s Deputy Chancellor, Sigmar Gabriel, said renewed negotiations with Greece were “difficult to imagine”. Mr Tsipras and his government were taking the country down a path of “bitter abandonment and hopelessness”, he told the Tagesspiegel daily.
Others sounded more conciliatory.
Italian Foreign Minister Paolo Gentiloni tweeted: “Now it is right to start trying for an agreement again. But there is no escape from the Greek labyrinth with a Europe that’s weak and isn’t growing.”
Belgium’s finance minister said the door remained open to restart talks with Greece “literally, within hours”.
Eurozone finance ministers could again discuss measures “that can put the Greek economy back on track and give the Greeks a perspective for the future,” he told the VRT network.
This is also part of a larger argument over the basic question of whether austerity helps an economy in the position of Greece, or whether it hurts. That argument’s been going on for a long, long time.
<i?“But is it a Pyrrhic victory?”
If it is pyrrhic it will not be the Greeks who’d struck and set the lit match.
Here, the EU in all its infernal perfidy.
What to be done with such people? Either you dissociate and have nothing to do with them, or, having means and opportunity, you hang the lot as as Ivan the Terrible teaching moment.
The crux of the link:
Instead, they called ‘Time Out’ and kicked the can a little further down the road. It was not a particularly proud moment for the European Union. But what’s even worse, is the subterfuge that preceded the meetings; that’s what cast doubt on the character of the people running EU negotiations. Here’s the scoop: About 15 minutes before the confab began, Varoufakis was given a draft communique outlining the provisions of the proposed loan extension. He was pleasantly surprised to find that the document met all his requirements and, so, he was prepared to sign it. Unfortunately, the document was switched shortly before the negotiations began with one that backtracked on all the crucial points.
I’m not making this up. The freaking Eurogroup tried to pull the old switcheroo on Varoufakis to get him to sign something that was different than the original. Can you believe it? And it’s only because Varoufakis studiously combed through the new memo that he was able to notice the discrepancy and jam on the brakes. As it happens, the final copy was just a rehash of the same agreement that Varoufakis has rejected from the onset. The only difference was the underhanded way the Eurogroup tried to slip it by him.
George Pal:
I certainly am not a defender of the EU! I have written quite a few pieces saying what I think about that enterprise in general.
However, the article you linked to originally appeared in Counterpunch, a far, far leftist periodical. The author is a contributor to a book praised by Chomsky and put out by Counterpunch.
Now, that doesn’t mean the information in the article is incorrect. But I certainly wouldn’t trust said information unless independently corroborated by a source I do trust.
The problem with being a Greek socialist is that eventually you run out of Germany’s money.
How long till the Greeks turn to the Muslim World or Russia for a bailout, with strings attached?
George Pal:
I heard essentially the same rumor here tonight as the news broke out. No idea if it is true.
There are all sorts of questions going forward. On the one hand though, they chose wisely. But if it was merely for more ‘something for nothing’… How many voted just hoping for that? Even if they get it, the culture that suggests they get without paying, it’s going to absolutely destroy them. It already has, actually. We are just discussing how badly, when the bottom is found and how, or whether another can kicking program can begin.
Our boomers, who have almost nothing put away to the urban leach who hasn’t even earned an honest dollar, less so when compared to all they cost on society they have generated. There is no future because thugs and layabouts ate it right out from under their, and our, great grandchildren. Still, even if for the wrong reasons, they made the right choice. I simply hope their hope of even more debt, or debt forgiveness that will keep them in chains, fails. For their own good.
Neo-neocon,
Fair enough about corroboration though my default position always corresponds in size or degree to past performance – in the case of the EU that would be resolute and unrepentant treachery. I will believe them innocent when they have proved it. And though I hold no truck with Leftists and Chomsky, I am of the opinion no-one is wrong all the time. As an example, the Left had long railed against bankers and running dog capitalists and now, finally, they have a point. Wait long enough and the worm turns and every dog has his day. This may not conform to the wheel of life but I think it apt for the wheel of civilizations and utter corruption.
How can the Greeks possibly expect to get better terms after “stiffing” the people who loaned them so much?
Things just got interesting.
I agree with those who have a strong dislike for the dictatorial EU, however the disaster in Greece seems to be primarily an economic issue caused by the Greeks themselves. If Greece leaves the Euro they will have a very difficult time indeed. Their currency will be almost worthless and they will have almost no access to international credit but at least their destiny will be in back in their own hands. The other European countries will not let the Greeks starve. They will probably supply them with emergency food and other basic necessities until Greece gets back on its feet – as much as a Socialist/Communist leaning people can reestablish an economy.
Whatever the Greeks decide, whatever the Europeans decide – I don’t really know what would be best; However, I just hope our U.S. politicians decide to keep our tax dollars out of it.
I do NOT want to bail out a people who have tried to live off the work of others.
Greece was a position where there really ever was one way forward. It will now be up to Greece to make that path forward better. I doubt they will do that, but it is in their hands now.
George Pal Says:
July 5th, 2015 at 7:07 pm
in the case of the EU that would be resolute and unrepentant treachery. I will believe them innocent when they have proved it.
They deserve each other:
Greece admits deficit figures were fudged to secure euro entry.
Basic problem here is that only rich men clubs are feasible. You let in welfare recipients … hmmm…
First you run out of other people’s money. Then you run out of your own money.
Or, as Hemingway wrote, ‘How did you go bankrupt? Two ways. Gradually, then suddenly.’
Belmont Club notes: “According to some reports, there’s only a billion euros left in the Greek banking system – about 90 euro for every man, woman and child in Greece. Unless the European Central Bank lends them money, there’ll literally be no money left on Tuesday for the ATMs to dispense.”
Folks, we’re looking at the end game of MACRO-embezzlement.
While the bezzle was underway, there was a general euphoria.
Lest any not know, Athens is STILL running a clear cut budget deficit — BEFORE debt service.
This is also the polity that permits various blue collar trades to retire — and collect a pension — from ages as young as 39.
{ Too much standing around for those poor hair dressers. }
It’s also — almost uniquely — THE land that is targeted by impoverished Eastern Europeans — as the climate and beauty mean that one can, quite literally, live outdoors most of the year.
The consequence is that Greece has simply no end of squatter-villes — which the MSM refuse to publicize — as to do so would be MOST politically incorrect.
As you might imagine, ALL of the squatters (claim to) have paperwork in the mill and are seeking residency somewhere else within Europe. (even if it takes the rest of their lives)
Greece is — to a staggering degree — a nation of dependants. Whatever it had going — as a going concern — blew up when Athens gained access to Berlin’s credit card.
The real losers in all of this are NOT the Greeks. The true economic pain MUST fall upon its creditors. That means Germany, France, Holland, Austria, on down the line.
The last five years have consisted of getting the PRIVATE holders of Greek sovereign debt off the hook — to shift the stink to the ECB and the tax payers of the aforesaid national governments.
Interestingly enough, the largest PRIVATE holders of Greek debt reside in Britain and America.
Can you say “Hedge Funds?”
Other than this crowd, all of the Greek sovereign debt is held be European (governmental, quasi-governmental) institutions.
&&&&&&&&
As previously posted, here and elsewhere, there NEVER WAS a EURO — it’s a totally fictive currency — a myth.
Instead the ACTUAL treaty provided for multiple Euros — each uniquely backed by each particular sovereign nation — NEVER to be cross-collateralized — that would APPEAR to the proles to be equivalent because the various central banks would conspire to trade each across to each other at 1:1 — true parity.
The rest of the Treaty was crafted so as to put a straight-jacket around spend-thrifts such as Athens, Rome and Madrid, so that they’d not break down and out of parity.
Well, the result is in: it didn’t work. The ‘bodice’ was ripped off from the very first — in Athens.
Now that it’s high time to break parity between the Greek Euro and the other Euros ( German Euro, French Euro, Dutch Euro, etc.) the top spin crafters can’t bear the ‘nudity.’
Ersatz America didn’t quite pencil out.
Folks, Europe has been through this drill before, and before, and before, and before:
The terminal stages of a rigid exchange rate regime.
The historical norm has been depression, war — or both.
Fortunately, there can be no anabasis up to Berlin — Brussels — Paris.
There is a ringer in play: Moscow is in economic quicksand. Putin’s in dire straits. His economy is contracting. Oil prices are soft and a European depression, Red Chinese contraction is a poison pill for him.
Worse, American oil production (increases) refuses to let up.
AND, if things can’t get any worse: Ukraine has stiffed Moscow over natural gas… not taking any more deliveries after June 30, 2015.
!
While actual production is sure to be a state secret, everything points to Ukraine revving up its own natural gas production (American wildcatters) in its western districts — close by the existing Soviet trunk lines to Poland and Germany.
The collapse in OPEC pricing combined with her own gas fields may well make it VERY practical for Kiev to stop Russian gas imports — from this point forward.
Lest we forget, the largest consumers of Russian natural gas — in Ukraine — sit in the east — exactly where Putin has invaded. The rest of Ukraine is largely un-industrialized — in keeping with Stalin’s anti-Ukrainian policies going back eighty-years.
Up until now, Putin had the whip hand on Kiev — every winter!
Looking down the road, Kiev is just going to drill and drill. The players believe that Ukraine has enough gas potential to become a significant exporter. Certainly, the pipelines have already been laid. (!)
(They are Ukraine’s national assets, BTW, consequent to the dissolution of the USSR.) Ukraine gets to charge transport rents to Moscow — STILL.
Virtually EVERY step Putin has taken since he re-entered the Russian presidency has been disastrous.
One by one, EVERY export to the West is being cut off. Whereas, his need for German manufactures never quite lets up.
{ Siemens largely re-habbed the Russian train system – and current Russian trains are stuffed with imported German (IEC) power controls. These machines are the pride of Russia — a rail centric society even today. }
Given the above, what are we to make of Moscow bailing out Athens?
The destitute bailing out the impoverished, I’d say.
Still, Russia is a military threat. Look at what their SVR is doing in Syria, Iran, and points elsewhere.
Say, is there any chance that KSA is shipping middle distillate to Ukraine on lenient credit terms — just to put the screws to Moscow — over its support of the Shi’ites and Alawites in Syria, Iran?
Would that EVER cross Saudi minds?
It could happen.
Part of capitalism is capital destruction. Entities go bankrupt and assets are lost. This is the reason for limited liability companies. Yes, Greece lied and shouldn’t have been allowed into the Euro (I believe that the Euro should never have been created and was active in the UK at the time trying to stop entry), but that was all known in 2008 and Greece should have defaulted then. The settlement that was imposed on them by the EU to protect other EU economies and banks has actually been much worse for the Greeks than if they had taken the pain then. So I guess I don’t blame the Greeks for voting no.
On the issue of Greek banks running out of money, I believe that they are running out of physical cash not assets. Its a liquidity issue not a solvency one. Its like the Fed telling California that it won’t deliver any more bank notes there. California banks would likely run out of cash but they’d still be solvent.
Europe enjoyed its virtual economy. Greece enjoyed its taste of utopia. All parties benefited from this arrangement.
Despite the large economy in America, we have the same arrangement. Recall:
Mr. Chairman, we do not have a crisis at Freddie Mac, and in particular at Fannie Mae
Then today, we have Obamacare, that further compensates for a progressive misalignment between production and consumption, between wealth and debt. Worse, one third of our debt is today held by foreign entities. Better, we could potentially be an autonomous economy. However, the rush to secure the dollar as a global reserve currency implies that our position is not nearly stable. I wonder what collateral is being offered to secure our position.
I read that southern Italy is twice as large as Greece (by population), and worse off by almost every measure:
http://econlog.econlib.org/archives/2015/06/europes_soft_un.html
To borrow a line, “Don’t Cry For Me, Argentina!” (Or whatever.)
blert, if the FWM creates the radicidis with the fotutronis the TCL might force the DLO to intersect with the quasi-dimensional space divider.
IYKWIM.
The European Soviet has collapsed…
or at least the south wing…
one positive thing you can say for communism is that its consistent… consistently economically defunct…
get ready for crapola in the markets…
The markets are going to let the games of about 11 million or so people trash the 1.5 billion in the world economy…
OXI!!!!
“In political post-anthropology all is reversed: leisure and work, knowledge and ignorance…. Traditional male and female roles are reversed. Rather than being esteemed and experienced elders, politicians are chosen for their youth, glamour, appearance and inexperience. Victims become the criminals and vice versa….” – Alexander Dugin – The Fourth Political Theory
If it wasnt real it would be a comedy
instead is a comedic tragedy of international proportions…
There’s a real irony involved in Greece’s looming train wreck with reality. The direct result of lying to gain access to Germany’s money, so as to live beyond their means.
The irony is that Greece is literally sitting on trillions in Gold, plus Oil and Natural Gas deposits. Had they lived within their means, acquiring the investment funds needed to develop those resources would be easily attained, instead they’ve spent the past 4+ years spinning their wheels getting nowhere. Now, they’ll pay through the nose to gain access to just part of those resources.
Compounding the irony is that the exact same scenario applies to America thanks to the diligent efforts of the Left, enabled by the support of their liberal useful idiots.
Artfldgr Says:
July 6th, 2015 at 9:29 am
“In political post-anthropology all is reversed: leisure and work, knowledge and ignorance…. Traditional male and female roles are reversed. Rather than being esteemed and experienced elders, politicians are chosen for their youth, glamour, appearance and inexperience. Victims become the criminals and vice versa….” — Alexander Dugin — The Fourth Political Theory
Yo! That racist!
University Professor John Caputo Denounces Sanity as Racist.
IMO, Greece should default and get it over with. They might require some humanitarian assistance for a time. However, their riches lie in their climate, scenery, and antiquities. By going back to the Drachma they could become THE least expensive vacation destination in the world. Tourism dollars/Euros make up the major part of their present foreign capital flows. Why not go all in on tourism? Yes, they would be a much poorer country and people would have to work long and hard to make ends meet. With a reformed, streamlined government that pays its bills and stays out of the way of entrepreneurs, Greece might become a poor but viable country which could eventually raise the capital to exploit the riches of resources of which Geoffrey B, spoke.
Anything else, IMO, is kicking the can down the road and will make the eventual bankruptcy even worse. There is a lesson here for those willing to understand it, but it’s doubtful that the progs will get it.
The Greek leadership is in league with the Left in this country.
What is it that defines them on this issue?
They are teaching, very successfully mind you, that you can, “eat chocolate cake without gaining any weight.”
The narrative is that simple. That alluring.
And quite simply, that dangerous.
It is beyond comprehension that adults could be so very deceiving; that’s politics from the Left.
__________
Bernie Sanders, from this side of the pond, gave his own deceptive, negligent commentary with this bit of colossal nonsense:
“I applaud the people of Greece for saying ‘no’ to more austerity for the poor, the children, the sick and the elderly.”
He said it. And to think in such despicable terms is as offensive as the Greek leaders spewing their nonsense.
There is a lesson here for those willing to understand it, but it’s doubtful that the progs will get it.
If they were to “get it”, you somehow think they’ll change their ways. You underestimate the power of evil with that naivete.
Greece is wonderful. Where else can you be paid for working 14 months a year? Even the civil service unions here don’t get that good a deal.
And though I hold no truck with Leftists and Chomsky, I am of the opinion no-one is wrong all the time. As an example, the Left had long railed against bankers and running dog capitalists and now, finally, they have a point.
They are wrong all the time, cause otherwise they would have admitted that those bankers and crony capitalists only exist because of Leftist power.
George Pal:
Don’t come to me and ask me to spot you a $20 until payday. You won’t pay me back, then you’ll holler that I’m a criminal for not loaning you any more.
Tonawanda Says:
July 6th, 2015 at 8:14 am
This blog is not a primer.
I write in a compressed style because of my finger speed limit.
I do confess that I oft forget that the readership is not ‘hip’ to the trade lingo of the financial world, or that chaining connections may not appear to hold up.
Such is blog life.
@neo-neocon
Greece is a member both of the EU (“European Union”) and the “Eurozone”, those 19 out of 28 EU member states that adopted the Euro. The United Kingdom, e.g., is part of the EU but not of the Eurozone.
There is no means by which Greece could be forced out of the EU or the Eurozone. Legally, it could abandon the Euro only by exiting the EU (possible under the Lisbon Treaty).
But be it as it may, one shouldn’t confuse such basic facts.
https://soundcloud.com/hoover-institution/the-classicist-with-victor-3
Brief interesting interview, with Victor Davis Hanson, on “Understanding the Greek Mind.”
As the title implies, this is a discussion of Greek mentality, politics, and culture. Essentially, Greece is a pre-modern state in a dangerous neighborhood. False victimization, narcissism, paranoia, and corruption are the norm.
The sad part is that the Greek population (most, anyway) know NOTHING about economics. If they did, they would understand and perhaps care about themselves and their country.
Now a little more from personal experience. I used to sell wholesale to the retail trade. There was one dealer who ALWAYS ran late with his payments. Funny (at least to me), the crap (getting new loans) that Greece is going through . . . reminds me of one of my conversations with this dealer . . . During one of my phone conversations (trying to collect from a Past Due Invoice) . . .
He asked me, Do you know what my problem with you is? No Robert, What problem is that?
He replied, I don’t owe you enough money.
Hmmm. And I responded by telling him, . . . and you never will.
Well, that’s where Greece is (IMHO). Too small to be of any consequence. And their people will suffer if they don’t agree to AUSTERITY. They too should have learned from the past. It NEVER ENDS WELL. This time will be no different.