In genuinely serious battles between politics and economics, I'd be interested in hearing examples of politics winning the war not just the battle.
It can happen in severely repressive dictatorships such as Stalin's Soviet Union. That's not to say you won't get some bizarre or perverse results but then sometimes the market delivers that. Where people have choice, ultimately, economics will always prove stronger.
But economics trumped political ideology in the USSR. Lenin's initial reforms had to be quickly reversed with the New Economic Policy. A similar thing happened with the reopening of the private markets in North Korea following the 90s famine.
I mentioned Stalin, not Lenin. It's true that the NEP was brought in after Civil War Communism failed but if anything, that proves the point. Even after economics won that battle, politics came back and won the war. Obviously, in the long term, communism collapsed but when it did, it was politics as much (if not more than) economics that did for it. For politics to trump economics you have to have a great degree of repression. The Soviet leaders after Stalin decided to go for managed coercion rather than all-out state terror, which led to stagnation. It's hard to keep Stalin's levels of repression (though N Korea seems to have done so). Still, again, that's politics trumping politics, not economics doing so.
It really does feel like the EU is in some serious trouble. The number of people who passionately believe in the project and, more than that, like the way things are and will continue to be structured, was never massive, but there were a lot of people who either didn't really mind it, or didn't like parts of it but were not motivated to actively oppose it. It is starting to feel as though the general 'don't like it' crowd are transitioning to 'will, in some circumstances, oppose it', even if that is not outright euroscepticism.
As I wrote the other day it has a whiff of Austria Hungary fin de siècle about it. We joined in 73 because frankly they'd done better tha us post 1945 and it looked like the future for our business. Behold the chaos on our TV screens right now where Peston is openly talking of medicine and food shortages within days in a European country all entirely caused by European unification policy.
Surely we stare from our side of the Channel at the least thanking to God we are at least semi detached from this fiasco by not having the single currency?
The two strongest arguments for the EU were that it caused economic prosperity and reduced tensions between European nations. Both arguments are looking very shaky tonight.
I looked forward to the Empress of Europe explaining what she now intends to do. Backpedaling, I imagine.
Right now she will be on the phone to the rest of the asylum trying to concoct a way of keeping the Greeks in without making it look like a compromise.
I looked forward to the Empress of Europe explaining what she now intends to do. Backpedaling, I imagine.
Right now she will be on the phone to the rest of the asylum trying to concoct a way of keeping the Greeks in without making it look like a compromise.
Not clear to me why civil unrest would boost tourism, but maybe you're a different kind of tourist to me,
Well maybe you are a better economist than the one on Bloomberg who said Greek fundamentals were relatively strong and he expected Greek Shipping and Tourism to boom on Greek default.
I am a recently converted stay at home tourist BTW
Greek fundamentals are awful. Inflexible labour market, stifling red tape, high nominal taxation, corruption as a way of life.
I don't see how tourism will benefit if people can't get money out of the bank. A default definitely doesn't help them in terms of tourism, Grexit might, but given that Greece imports most of the basic essentials it is going to be a long road to get companies and other countries to take Drachma as a form of payment for anything and they will have basically no access to foreign currency should they leave the EMU.
I looked forward to the Empress of Europe explaining what she now intends to do. Backpedaling, I imagine.
Right now she will be on the phone to the rest of the asylum trying to concoct a way of keeping the Greeks in without making it look like a compromise.
Mark my words the Greeks will not be kicked out.
Surely she/they must have a plan b? Stupid not to be prepared in the event of a no vote.
I don't know where we go from here. Surely Grexit by Tuesday, the ECB can't keep the taps on now that there is no chance of a deal and the EU surely can't u-turn on all of the rhetoric over the last few days without a massive uprising in Spain and Portugal for anti-austerity parties.
It has to be Grexit, I don't see any road where Greece stays in the Euro now, the EU will turn into a joke if they allow things to carry on as before with more unproductive talks.
The EU are a joke and they will cave in.
You have been right on this so far Nigel.
I reckon a haircut will be seen as preferable to a complete default
The thing is a massive haircut was always the only way to resolve this. This is not to say I agree with the way Greece has handled its affairs over the last 2 decades but when you have a former senior official from the IMF saying that the demands that were being made of Greece and the deal that was being offered were never going to resolve the crisis and that they were only making the situation worse you have to start to think that maybe the current Greek government had a point.
The analogies being used by RCS and others about borrowing from a bank are false. What Greece has been borrowing from are loan sharks and the terms of the loans meant that Greece was never, ever going to be able to sort itself out.
Some of my colleagues have been hauled into the office to have strategies ready for tomorrow morning. (How's that for preparation...)
I'm a fairly decent analyst and I seriously don't see where this is going to go. If it is Grexit then it has to happen in the next few days, Greece cant afford for the banks to be closed for another two weeks and have a return to wartime style rationing and state food handouts.
Also, what the hell does the ECB do tomorrow? How can they extend ELA funds to a country that has just voted no to a fairly reasonable bailout deal, it must break their charter to give money to insolvent banks who have no way of paying it back and who have a very uncertain future wrt the EMU.
Tsipras needs to get in touch with De La Rue tonight and have Drachma ready to go into cash machines by the end of the week and have more shipped until they can get a local printing press sorted out.
I also don't know how the EU reacts to the very likely default that is now coming. Greece owes the EFSF around €150bn in Euro denominated bonds. There is no way that Greece is ever going to be able to pay that back and I highly doubt the EU will accept a retroactive change to the terms of those bonds to renominate them into Drachma.
Finally, who now lends to Greece? They have to raise FX in London and NY to pay for basic essentials like oil and grain, but I don't see anyone but the hedge funds getting involved which means 15%+ interest rates for short term debt at least until Greece can prove its creditworthiness. Having pissed the IMF off royally, how will Tsipras approach them now and try and get a reasonable debt restructuring through, especially with the LatAm defaults all ready to blow up soon.
If there was a worse way for Greece to leave the Euro, I can't think of one. This has got to be the single worst strategic move I have ever seen.
Good point r.e the bit in bold. Nevermind, apparently it's Merkel and co. who are the big losers in this. Sometimes, I think people's hatred of EU forbids them of seeing reality.
I looked forward to the Empress of Europe explaining what she now intends to do. Backpedaling, I imagine.
She's doomed at home, if she caves in to Greece. Rock and a hard place.
Does caving involve a new deal.
Is the alternative not considerably more costly ie 100% default.
Haircut methinks
Not sure - Podemos could get a boost in Spain if Tsipras gets his way. And the Euro could not take a Spanish euroexit.
Spandexit?
Theyll get a boost if Greece does well and get a kicking if Greece struggles. Greece's currently woes have seen them down a fair bit (for other reasons as well, I assume).
Not clear to me why civil unrest would boost tourism, but maybe you're a different kind of tourist to me,
Well maybe you are a better economist than the one on Bloomberg who said Greek fundamentals were relatively strong and he expected Greek Shipping and Tourism to boom on Greek default.
I am a recently converted stay at home tourist BTW
Greek fundamentals are awful. Inflexible labour market, stifling red tape, high nominal taxation, corruption as a way of life.
I don't see how tourism will benefit if people can't get money out of the bank. A default definitely doesn't help them in terms of tourism, Grexit might, but given that Greece imports most of the basic essentials it is going to be a long road to get companies and other countries to take Drachma as a form of payment for anything and they will have basically no access to foreign currency should they leave the EMU.
No one of sound mind will be planning a holiday in a country with no means to buy imported supplies for hotels, devoid of unpaid staff, and non functioning hospitals if one fell ill whilst away.
Jeanette Minns 18 MINUTES AGO Ryan Heath writes: An unemployed man who now sells bottled water from a mobile cart said he was not political but proud to vote No.
“We say Yes to Greece. We want to save Greece not Europe. We have survived thousands of years, we will survive what happens tomorrow. We want our freedom.”
2/3 of votes counted now, and if anything a slight move to NO over the past hour. http://ekloges.ypes.gr/current/e/public/index.html?lang=en# 05-07-2015 22:44 Registered 6.296.060 Reporting 67,20 % Voted 60,94 % Invalid/Blank 5,72 % NO 61,41 % YES 38,59 %
It really does feel like the EU is in some serious trouble. The number of people who passionately believe in the project and, more than that, like the way things are and will continue to be structured, was never massive, but there were a lot of people who either didn't really mind it, or didn't like parts of it but were not motivated to actively oppose it. It is starting to feel as though the general 'don't like it' crowd are transitioning to 'will, in some circumstances, oppose it', even if that is not outright euroscepticism.
As I wrote the other day it has a whiff of Austria Hungary fin de siècle about it. We joined in 73 because frankly they'd done better tha us post 1945 and it looked like the future for our business. Behold the chaos on our TV screens right now where Peston is openly talking of medicine and food shortages within days in a European country all entirely caused by European unification policy.
...
But it's not is it? That's just hyperbole. Greece's problems are caused in Greece; nowhere else. Certainly, joining the Euro and fiddling the figures to get in hasn't helped but their basic problem is their taxing, spending and borrowing habits. Greece being serially irresponsible doesn't undermine the EU unless the EU now takes an action that encourages other members to adopt irresponsible policies.
I don't know where we go from here. Surely Grexit by Tuesday, the ECB can't keep the taps on now that there is no chance of a deal and the EU surely can't u-turn on all of the rhetoric over the last few days without a massive uprising in Spain and Portugal for anti-austerity parties.
It has to be Grexit, I don't see any road where Greece stays in the Euro now, the EU will turn into a joke if they allow things to carry on as before with more unproductive talks.
The EU are a joke and they will cave in.
You have been right on this so far Nigel.
I reckon a haircut will be seen as preferable to a complete default
The thing is a massive haircut was always the only way to resolve this. This is not to say I agree with the way Greece has handled its affairs over the last 2 decades but when you have a former senior official from the IMF saying that the demands that were being made of Greece and the deal that was being offered were never going to resolve the crisis and that they were only making the situation worse you have to start to think that maybe the current Greek government had a point.
The analogies being used by RCS and others about borrowing from a bank are false. What Greece has been borrowing from are loan sharks and the terms of the loans meant that Greece was never, ever going to be able to sort itself out.
I think that's the point that most EUphiles seem to be missing. The terms of the original bailout were highly destructive, Greece would be paying over 4% of their GDP in debt servicing costs for 50 years. It made no sense then and makes no sense now. Not just that but the 4% of GDP is of GDP not of government spending, which in Greece is about 40%, so a full 10% of annual government expenditure would go on the debt servicing bill. To put that into context our debt servicing bill is about half that as a proportion of government spending and it is on the edge of being unsustainable.
The Greek bailout was a German/French bank bailout through the back door, no more, no less. The EU bollocksed up spectacularly when they forgot to think about how to get Greece back on its feet while they were patting themselves on the back for saving the German and French banking systems.
Not clear to me why civil unrest would boost tourism, but maybe you're a different kind of tourist to me,
If the ships' owners have overseas debts, might the ships not be subject to sequestration?
Why? They are not owned by the state.
Not because they're state assts (ignoring sovereign immunity and conflict of law) but perhaps because where they are subject to charter parties on a limited recourse basis relying on local revenues to service monthly rentals while those rentals are in USD thy are, to use a technical legal term, f****d.
Good evening, Berlin, this is Athens calling. Here are the results of the Greek jury.
Austerity, IMF, Troika, nul points...
And here is the German response
@mathieuvonrohr: German Vice Chancellor Gabriel: Tsipras "has demolished the last bridges on which Europe and Greece could have moved towards a compromise"
This is the view of the former IMF bail out chief Ashoka Mody
"As an international organization responsible for global financial stability, it is the IMF’s role to explain clearly and honestly the economic parameters of a bailout negotiation. The Greeks, many said, benefited from low interest rates and repayments stretched out over many years. Therefore, no debt relief was needed. But, of course, as the IMF now makes clear, if a country has to repay about 4 percent of its income each year over the next 40 years and that country has poor growth prospects precisely because repaying that debt will lower growth, then debt is not sustainable. If this report had been made public earlier, the tone of the public debate and the media’s boorish stereotyping of Greeks and its government would have been balanced by greater clarity on the Greek position."
Those defending the IMF and EU in the way they have handled Greece should perhaps read this.
Not clear to me why civil unrest would boost tourism, but maybe you're a different kind of tourist to me,
If the ships' owners have overseas debts, might the ships not be subject to sequestration?
I think many of the ship owners moved elsewhere some time back. Their main assets are highly mobile after all...
Yes, most "Greek" shipping companies are "Greek" in the sense of registering their flags there for tax reasons. Given the nationlistic loyalty of the average Greek shipowner, the flag will change approximately 1.2 nanoseconds after it becomes inconvenient (a.k.a. they get asked to pay tax)
@andrew_lilico: Greek banks now can't open next wk with Greece in € & no depositor haircut. How long can Tsipras keep them shut? Opening = Grexit or haircut
@stephenkb: And once again, you wonder why the SNP were so keen to have a currency union but not a political one.
The EU certainly hasn't helped much in this whole mess, but no-one forced the Greeks down this path either, and they've had years to get their shit together even if we accept that they'd had no help whatsoever, which isn't the case, or that the original problems were caused by elites. I'm intending to vote Out in the EU referendum (surprise me with a spectacular deal, Mr Cameron), but it strikes me as unfair to suggest the EU 'caused' this debacle when a free country has made its own choices, under pressure or no.
Jeanette Minns 18 MINUTES AGO Ryan Heath writes: An unemployed man who now sells bottled water from a mobile cart said he was not political but proud to vote No.
“We say Yes to Greece. We want to save Greece not Europe. We have survived thousands of years, we will survive what happens tomorrow. We want our freedom.”
I agree. And Greece would be far better served outside the Euro, and I have no doubt Greek's creditors would probably recieve a higher proportion of monies owed if Greece left the Euro.
However, I think Greece's leadership has been fundamentally dishonest with its people.
Whether Greece is inside our outside the Euro, there will be a requirement to repay debts and to cut spending. There is no democratic mandate to not repay what you owe. When Tsipiras went to the IMF at the start of this year, he was bitterly disappointed to discover the IMF still required reform and cuts in the event he took the country out of the Euro.
My issue with this all is that the Greek leadership is being fundamentally dishonest with the people. As MaxPB, no rabid Europhile, has pointed out - this is a particularly stupid way to leave the Eurozone. Not being able to pay for imports of food or fuel is not a political victory, it is a practical failure of monumental proportions. Alex Tsipiras has told the people that they can have the Euro with the consequences. That is a lie. And this referendum was based on that lie.
Tomorrow the people of Greece will discover that, despite their leadership's rhetoric, the banks are still not open, and the shops are increasingly bare of essentials. If this is a victory against the hated EU, it is surely a pyrrhic one for the people of Greece, too many of whom will find themselves hungry in the coming weeks.
Good evening, Berlin, this is Athens calling. Here are the results of the Greek jury.
Austerity, IMF, Troika, nul points...
And here is the German response
@mathieuvonrohr: German Vice Chancellor Gabriel: Tsipras "has demolished the last bridges on which Europe and Greece could have moved towards a compromise"
Looks like Germany will definitely 'cave in' then....
The EU certainly hasn't helped much in this whole mess, but no-one forced the Greeks down this path either, and they've had years to get their shit together even if we accept that they'd had no help whatsoever, which isn't the case, or that the original problems were caused by elites. I'm intending to vote Out in the EU referendum (surprise me with a spectacular deal, Mr Cameron), but it strikes me as unfair to suggest the EU 'caused' this debacle when a free country has made its own choices, under pressure or no.
I'm in absolutely agreement, at least as much of the blame lies with Greece for taking the original bailout terms. They should have walked back then and let the German and French banks go to the wall. However, the original deal to "save" Greece was never anything more than cover to recapitalise French and German banks who had lent irresponsibly to Greek companies and the Greek government, to view it as anything more than that is a mistake.
The EU certainly hasn't helped much in this whole mess, but no-one forced the Greeks down this path either, and they've had years to get their shit together even if we accept that they'd had no help whatsoever, which isn't the case, or that the original problems were caused by elites. I'm intending to vote Out in the EU referendum (surprise me with a spectacular deal, Mr Cameron), but it strikes me as unfair to suggest the EU 'caused' this debacle when a free country has made its own choices, under pressure or no.
I suggest you read that article I linked to.
Basically it didn't matter what Greece did since 2008. She was still screwed if she followed the conditions of the EU/IMF bailouts.
I'm trying to imagine the convoluted explanation of how a climbdown as a result of this vote would not be a climbdown, and I'm struggling - I guess this was a rejection of the previous offer, which the creditors will say was already rejected on their end because Greece took too long to sign up to it, so them going back to the table now is not a reaction to the referendum, which was pointless as it was on an expired deal, and something they were considering anyway?
Doesn't hold up, given the rhetoric flying around, but they can be wizards with their misuse of words and distortion of reality, EU bureaucrats.
This is the view of the former IMF bail out chief Ashoka Mody
"As an international organization responsible for global financial stability, it is the IMF’s role to explain clearly and honestly the economic parameters of a bailout negotiation. The Greeks, many said, benefited from low interest rates and repayments stretched out over many years. Therefore, no debt relief was needed. But, of course, as the IMF now makes clear, if a country has to repay about 4 percent of its income each year over the next 40 years and that country has poor growth prospects precisely because repaying that debt will lower growth, then debt is not sustainable. If this report had been made public earlier, the tone of the public debate and the media’s boorish stereotyping of Greeks and its government would have been balanced by greater clarity on the Greek position."
Those defending the IMF and EU in the way they have handled Greece should perhaps read this.
We are currently paying 7% of govt spending on interest, equivalent to 3% of GDP. Is that extra 1% for a debt burden twice the percentage share of GDP really unreasonable?
I don't know where we go from here. Surely Grexit by Tuesday, the ECB can't keep the taps on now that there is no chance of a deal and the EU surely can't u-turn on all of the rhetoric over the last few days without a massive uprising in Spain and Portugal for anti-austerity parties.
It has to be Grexit, I don't see any road where Greece stays in the Euro now, the EU will turn into a joke if they allow things to carry on as before with more unproductive talks.
The EU are a joke and they will cave in.
You have been right on this so far Nigel.
I reckon a haircut will be seen as preferable to a complete default
The thing is a massive haircut was always the only way to resolve this. This is not to say I agree with the way Greece has handled its affairs over the last 2 decades but when you have a former senior official from the IMF saying that the demands that were being made of Greece and the deal that was being offered were never going to resolve the crisis and that they were only making the situation worse you have to start to think that maybe the current Greek government had a point.
The analogies being used by RCS and others about borrowing from a bank are false. What Greece has been borrowing from are loan sharks and the terms of the loans meant that Greece was never, ever going to be able to sort itself out.
I think that's the point that most EUphiles seem to be missing. The terms of the original bailout were highly destructive, Greece would be paying over 4% of their GDP in debt servicing costs for 50 years. It made no sense then and makes no sense now. Not just that but the 4% of GDP is of GDP not of government spending, which in Greece is about 40%, so a full 10% of annual government expenditure would go on the debt servicing bill. To put that into context our debt servicing bill is about half that as a proportion of government spending and it is on the edge of being unsustainable.
The Greek bailout was a German/French bank bailout through the back door, no more, no less. The EU bollocksed up spectacularly when they forgot to think about how to get Greece back on its feet while they were patting themselves on the back for saving the German and French banking systems.
As your on top of the detail of all of this - the IMF were indicating that Greece requires a further 50 billion Euro - if the IMF step in with this - what would the UK's exposure be?
This is the view of the former IMF bail out chief Ashoka Mody
"As an international organization responsible for global financial stability, it is the IMF’s role to explain clearly and honestly the economic parameters of a bailout negotiation. The Greeks, many said, benefited from low interest rates and repayments stretched out over many years. Therefore, no debt relief was needed. But, of course, as the IMF now makes clear, if a country has to repay about 4 percent of its income each year over the next 40 years and that country has poor growth prospects precisely because repaying that debt will lower growth, then debt is not sustainable. If this report had been made public earlier, the tone of the public debate and the media’s boorish stereotyping of Greeks and its government would have been balanced by greater clarity on the Greek position."
Those defending the IMF and EU in the way they have handled Greece should perhaps read this.
In any case, the issue has never been does Greece need a haircut. Yes, of course it does.
But Greece has had one haircut. And the creditors who accepted that haircut did on the condition of reforms and privatisations that did not happen. Can you blame them for demanding that Greece carried our what it previously promised?
The EU certainly hasn't helped much in this whole mess, but no-one forced the Greeks down this path either, and they've had years to get their shit together even if we accept that they'd had no help whatsoever, which isn't the case, or that the original problems were caused by elites. I'm intending to vote Out in the EU referendum (surprise me with a spectacular deal, Mr Cameron), but it strikes me as unfair to suggest the EU 'caused' this debacle when a free country has made its own choices, under pressure or no.
Unfortunately, for your average Greek it's taken this long for them to realize the consequences of the deal that the previous governments signed them up to. A bit of honesty and the Greeks could have skipped to this decision some time ago. My worry for the Greeks right now is that they still don't fully understand what is likely to happen to them in the short term. But maybe nigel4england is right and the EU will back down.
Jeanette Minns 18 MINUTES AGO Ryan Heath writes: An unemployed man who now sells bottled water from a mobile cart said he was not political but proud to vote No.
“We say Yes to Greece. We want to save Greece not Europe. We have survived thousands of years, we will survive what happens tomorrow. We want our freedom.”
I agree. And Greece would be far better served outside the Euro, and I have no doubt Greek's creditors would probably recieve a higher proportion of monies owed if Greece left the Euro.
However, I think Greece's leadership has been fundamentally dishonest with its people.
Whether Greece is inside our outside the Euro, there will be a requirement to repay debts and to cut spending. There is no democratic mandate to not repay what you owe. When Tsipiras went to the IMF at the start of this year, he was bitterly disappointed to discover the IMF still required reform and cuts in the event he took the country out of the Euro.
My issue with this all is that the Greek leadership is being fundamentally dishonest with the people. As MaxPB, no rabid Europhile, has pointed out - this is a particularly stupid way to leave the Eurozone. Not being able to pay for imports of food or fuel is not a political victory, it is a practical failure of monumental proportions. Alex Tsipiras has told the people that they can have the Euro with the consequences. That is a lie. And this referendum was based on that lie.
Tomorrow the people of Greece will discover that, despite their leadership's rhetoric, the banks are still not open, and the shops are increasingly bare of essentials. If this is a victory against the hated EU, it is surely a pyrrhic one for the people of Greece, too many of whom will find themselves hungry in the coming weeks.
I would suggest the real villains in this whole mess are not so much the EU - they have just been their normal stupid incompetent selves - but the IMF.
Good evening all. I don't understand the situation. It's like everyone joined the Eurozone with their collective brains switched off.
Good for the Greeks for voting 'No', but it's essentially the same as Staffordshire voting to have lower taxes than the rest of the country. It's a non-sequitur.
You can't vote your way out of debt. I appreciate that Tsipras might think he's gained a better negotiating position, but why?
It really does feel like the EU is in some serious trouble. The number of people who passionately believe in the project and, more than that, like the way things are and will continue to be structured, was never massive, but there were a lot of people who either didn't really mind it, or didn't like parts of it but were not motivated to actively oppose it. It is starting to feel as though the general 'don't like it' crowd are transitioning to 'will, in some circumstances, oppose it', even if that is not outright euroscepticism.
As I wrote the other day it has a whiff of Austria Hungary fin de siècle about it. We joined in 73 because frankly they'd done better tha us post 1945 and it looked like the future for our business. Behold the chaos on our TV screens right now where Peston is openly talking of medicine and food shortages within days in a European country all entirely caused by European unification policy.
...
But it's not is it? That's just hyperbole. Greece's problems are caused in Greece; nowhere else. Certainly, joining the Euro and fiddling the figures to get in hasn't helped but their basic problem is their taxing, spending and borrowing habits. Greece being serially irresponsible doesn't undermine the EU unless the EU now takes an action that encourages other members to adopt irresponsible policies.
Yes but Greece is a symptom. The worst one sure but just a symptom. A blind eye turned to let them in was only one of a series. Italy and not even Belgium should've been let in on the convergence criteria. The re voting in Ireland and the Netherlands of various referenda. Swathes of countries not allowed a vote on the Euro. The nonsense that is The CAP, the baroque structures of the Commission, QMV, heads of Govt, EZ group, the bizarre straying off piste of the ECHR, the likes of Juncker reckoning lying is ok really, the "Spitzenkandidat" magicked out of thin air between the lines of a treaty. It goes on and on and with bugger all way of Joe average being able to put an X in a box and stop " the project " if he wants. And like Austria circa 1890 Europe is slowly drifting downhill.
Mr. Apocalypse, not au fait with German politics, but I'd be surprised.
On that note, Mr. P, I'm very surprised to hear some chanting about getting Greece out of the euro. Well, I'm surprised it's Greeks chanting it. I'd be less surprised if it were Germans.
This is the view of the former IMF bail out chief Ashoka Mody
"As an international organization responsible for global financial stability, it is the IMF’s role to explain clearly and honestly the economic parameters of a bailout negotiation. The Greeks, many said, benefited from low interest rates and repayments stretched out over many years. Therefore, no debt relief was needed. But, of course, as the IMF now makes clear, if a country has to repay about 4 percent of its income each year over the next 40 years and that country has poor growth prospects precisely because repaying that debt will lower growth, then debt is not sustainable. If this report had been made public earlier, the tone of the public debate and the media’s boorish stereotyping of Greeks and its government would have been balanced by greater clarity on the Greek position."
Those defending the IMF and EU in the way they have handled Greece should perhaps read this.
In any case, the issue has never been does Greece need a haircut. Yes, of course it does.
But Greece has had one haircut. And the creditors who accepted that haircut did on the condition of reforms and privatisations that did not happen. Can you blame them for demanding that Greece carried our what it previously promised?
Read the article Robert. It deals with the issues of haircuts and also the many other failings of the IMF. Oh and Greece cut its pensions by 40%. Can you imagine the UK government cutting pensions by 40% and not seeing riots in the streets - okay they would be rather slow riots dominated by zimmer frames and wheelchairs and would probably stop every hour or so for a nice cup of tea and some afternoon TV but still the point remains.
Jeanette Minns 18 MINUTES AGO Ryan Heath writes: An unemployed man who now sells bottled water from a mobile cart said he was not political but proud to vote No.
“We say Yes to Greece. We want to save Greece not Europe. We have survived thousands of years, we will survive what happens tomorrow. We want our freedom.”
I agree. And Greece would be far better served outside the Euro, and I have no doubt Greek's creditors would probably recieve a higher proportion of monies owed if Greece left the Euro.
However, I think Greece's leadership has been fundamentally dishonest with its people.
Whether Greece is inside our outside the Euro, there will be a requirement to repay debts and to cut spending. There is no democratic mandate to not repay what you owe. When Tsipiras went to the IMF at the start of this year, he was bitterly disappointed to discover the IMF still required reform and cuts in the event he took the country out of the Euro.
My issue with this all is that the Greek leadership is being fundamentally dishonest with the people. As MaxPB, no rabid Europhile, has pointed out - this is a particularly stupid way to leave the Eurozone. Not being able to pay for imports of food or fuel is not a political victory, it is a practical failure of monumental proportions. Alex Tsipiras has told the people that they can have the Euro with the consequences. That is a lie. And this referendum was based on that lie.
Tomorrow the people of Greece will discover that, despite their leadership's rhetoric, the banks are still not open, and the shops are increasingly bare of essentials. If this is a victory against the hated EU, it is surely a pyrrhic one for the people of Greece, too many of whom will find themselves hungry in the coming weeks.
I would suggest the real villains in this whole mess are not so much the EU - they have just been their normal stupid incompetent selves - but the IMF.
The IMF should have had nothing to do with any EZ country. They don't exist to bail out screwed up currency unions that don't want to bail themselves out.
Mme Legard is probably wishing that her role in this was to help Greece out of the Euro in a (somewhat!) controlled manner next week.
I don't know where we go from here. Surely Grexit by Tuesday, the ECB can't keep the taps on now that there is no chance of a deal and the EU surely can't u-turn on all of the rhetoric over the last few days without a massive uprising in Spain and Portugal for anti-austerity parties.
It has to be Grexit, I don't see any road where Greece stays in the Euro now, the EU will turn into a joke if they allow things to carry on as before with more unproductive talks.
The EU are a joke and they will cave in.
You have been right on this so far Nigel.
I reckon a haircut will be seen as preferable to a complete default
The thing is a massive haircut was always the only way to resolve this. This is not to say I agree with the way Greece has handled its affairs over the last 2 decades but when you have a former senior official from the IMF saying that the demands that were being made of Greece and the deal that was being offered were never going to resolve the crisis and that they were only making the situation worse you have to start to think that maybe the current Greek government had a point.
The analogies being used by RCS and others about borrowing from a bank are false. What Greece has been borrowing from are loan sharks and the terms of the loans meant that Greece was never, ever going to be able to sort itself out.
I think that's the point that most EUphiles seem to be missing. The terms of the original bailout were highly destructive, Greece would be paying over 4% of their GDP in debt servicing costs for 50 years. It made no sense then and makes no sense now. Not just that but the 4% of GDP is of GDP not of government spending, which in Greece is about 40%, so a full 10% of annual government expenditure would go on the debt servicing bill. To put that into context our debt servicing bill is about half that as a proportion of government spending and it is on the edge of being unsustainable.
The Greek bailout was a German/French bank bailout through the back door, no more, no less. The EU bollocksed up spectacularly when they forgot to think about how to get Greece back on its feet while they were patting themselves on the back for saving the German and French banking systems.
As your on top of the detail of all of this - the IMF were indicating that Greece requires a further 50 billion Euro - if the IMF step in with this - what would the UK's exposure be?
I don't know where we go from here. Surely Grexit by Tuesday, the ECB can't keep the taps on now that there is no chance of a deal and the EU surely can't u-turn on all of the rhetoric over the last few days without a massive uprising in Spain and Portugal for anti-austerity parties.
It has to be Grexit, I don't see any road where Greece stays in the Euro now, the EU will turn into a joke if they allow things to carry on as before with more unproductive talks.
The EU are a joke and they will cave in.
You have been right on this so far Nigel.
I reckon a haircut will be seen as preferable to a complete default
The thing is a massive haircut was always the only way to resolve this. This is not to say I agree with the way Greece has handled its affairs over the last 2 decades but when you have a former senior official from the IMF saying that the demands that were being made of Greece and the deal that was being offered were never going to resolve the crisis and that they were only making the situation worse you have to start to think that maybe the current Greek government had a point.
The analogies being used by RCS and others about borrowing from a bank are false. What Greece has been borrowing from are loan sharks and the terms of the loans meant that Greece was never, ever going to be able to sort itself out.
I think that's the point that most EUphiles seem to be missing. The terms of the original bailout were highly destructive, Greece would be paying over 4% of their GDP in debt servicing costs for 50 years. It made no sense then and makes no sense now. Not just that but the 4% of GDP is of GDP not of government spending, which in Greece is about 40%, so a full 10% of annual government expenditure would go on the debt servicing bill. To put that into context our debt servicing bill is about half that as a proportion of government spending and it is on the edge of being unsustainable.
The Greek bailout was a German/French bank bailout through the back door, no more, no less. The EU bollocksed up spectacularly when they forgot to think about how to get Greece back on its feet while they were patting themselves on the back for saving the German and French banking systems.
As your on top of the detail of all of this - the IMF were indicating that Greece requires a further 50 billion Euro - if the IMF step in with this - what would the UK's exposure be?
Not a lot and there has yet to be a single occasion where the IMF didn't get its money back. I am sure the Greeks will repay what is due (~€34bn iirc).
Edit: Just over £1bn in terms of the current bailout.
This is the view of the former IMF bail out chief Ashoka Mody
"As an international organization responsible for global financial stability, it is the IMF’s role to explain clearly and honestly the economic parameters of a bailout negotiation. The Greeks, many said, benefited from low interest rates and repayments stretched out over many years. Therefore, no debt relief was needed. But, of course, as the IMF now makes clear, if a country has to repay about 4 percent of its income each year over the next 40 years and that country has poor growth prospects precisely because repaying that debt will lower growth, then debt is not sustainable. If this report had been made public earlier, the tone of the public debate and the media’s boorish stereotyping of Greeks and its government would have been balanced by greater clarity on the Greek position."
Those defending the IMF and EU in the way they have handled Greece should perhaps read this.
In any case, the issue has never been does Greece need a haircut. Yes, of course it does.
But Greece has had one haircut. And the creditors who accepted that haircut did on the condition of reforms and privatisations that did not happen. Can you blame them for demanding that Greece carried our what it previously promised?
Shouldn't they be blaming themselves ?
Since the institutions most exposed are now those governments which turned a blind eye to Greece's unsuitability to enter the Euro shouldn't they just face facts and cough up ?
Why does moral hazard only apply to the borrower ?
Not clear to me why civil unrest would boost tourism, but maybe you're a different kind of tourist to me,
If the ships' owners have overseas debts, might the ships not be subject to sequestration?
Not sequestration per se but if any money's are owed to a third party that 3rd party can place a lien on the vessel or asset. This was shown to all concerned previously by nailing a writ to the main mast. These days similar is done but the writ is pasted. The harbour authorities are notified that an outstanding debt is owed and a writ has been served. As such the vessel can no longer achieve "clearance" to proceed and depart the port until resolution has been achieved. There are variants to the above but essentially that's the approach.
I am presently doing just this to a ship right now. (It's not Greek)
Jeanette Minns 18 MINUTES AGO Ryan Heath writes: An unemployed man who now sells bottled water from a mobile cart said he was not political but proud to vote No.
“We say Yes to Greece. We want to save Greece not Europe. We have survived thousands of years, we will survive what happens tomorrow. We want our freedom.”
I agree. And Greece would be far better served outside the Euro, and I have no doubt Greek's creditors would probably recieve a higher proportion of monies owed if Greece left the Euro.
However, I think Greece's leadership has been fundamentally dishonest with its people.
Whether Greece is inside our outside the Euro, there will be a requirement to repay debts and to cut spending. There is no democratic mandate to not repay what you owe. When Tsipiras went to the IMF at the start of this year, he was bitterly disappointed to discover the IMF still required reform and cuts in the event he took the country out of the Euro.
My issue with this all is that the Greek leadership is being fundamentally dishonest with the people. As MaxPB, no rabid Europhile, has pointed out - this is a particularly stupid way to leave the Eurozone. Not being able to pay for imports of food or fuel is not a political victory, it is a practical failure of monumental proportions. Alex Tsipiras has told the people that they can have the Euro with the consequences. That is a lie. And this referendum was based on that lie.
Tomorrow the people of Greece will discover that, despite their leadership's rhetoric, the banks are still not open, and the shops are increasingly bare of essentials. If this is a victory against the hated EU, it is surely a pyrrhic one for the people of Greece, too many of whom will find themselves hungry in the coming weeks.
I would suggest the real villains in this whole mess are not so much the EU - they have just been their normal stupid incompetent selves - but the IMF.
Yes, the IMF has bollocksed this up big time. Their latest Greek debt sustainability report is quite an eyeopener, massive departure from the previous rubbish.
The EU certainly hasn't helped much in this whole mess, but no-one forced the Greeks down this path either, and they've had years to get their shit together even if we accept that they'd had no help whatsoever, which isn't the case, or that the original problems were caused by elites. I'm intending to vote Out in the EU referendum (surprise me with a spectacular deal, Mr Cameron), but it strikes me as unfair to suggest the EU 'caused' this debacle when a free country has made its own choices, under pressure or no.
I suggest you read that article I linked to.
Basically it didn't matter what Greece did since 2008. She was still screwed if she followed the conditions of the EU/IMF bailouts.
I think you're arguing with the wrong person - I was not addressing principally one way or another that Greece was screwed if she followed the conditions of the bailout, but that Greece cannot absolve itself of all responsibility for getting itself in this mess (which is not to say others have no part in it, even a major part in it). Encouraged into it, tempted into it by others, made worse by others, all that may be true, and I'm sure it's true the current deals were unsustainable - everyone seems to agree that they were - but they are a free nation and they allowed themselves to get into this mess, and have ultimate responsibility for not getting out of it.
What some, not all, are trying to do is suggest this is all the fault of the EU/IMF, and I cannot accept that they 'caused' this (cause being the key word) when they would not be involved now had Greece not got itself into a mess. They would deserve sympathy for getting into that mess, but given the length of time to address the issues, not as much remains whoever tempted them into it and whoever is not being fair now.
The EU and IMF are not coming out of this looking great, not at all. But Greece is not blameless is merely the point that bothers me, as their pity act is wearing thin, though I understand it given the suffering they have been going through. The 'undemocratic' bull has really been the annoying thing; there is plenty that has been undemocratic, but others not agreeing to a deal (even if that deal would be sensible) is not it.
Mr. Apocalypse, not au fait with German politics, but I'd be surprised.
On that note, Mr. P, I'm very surprised to hear some chanting about getting Greece out of the euro. Well, I'm surprised it's Greeks chanting it. I'd be less surprised if it were Germans.
Ms Apocalypse....;)
Just to clarify, I was being sarcastic (in case you thought otherwise). I think Gabriel's statements indicate that Germany is unlikely to cave into Greek demands.
This is the view of the former IMF bail out chief Ashoka Mody
"As an international organization responsible for global financial stability, it is the IMF’s role to explain clearly and honestly the economic parameters of a bailout negotiation. The Greeks, many said, benefited from low interest rates and repayments stretched out over many years. Therefore, no debt relief was needed. But, of course, as the IMF now makes clear, if a country has to repay about 4 percent of its income each year over the next 40 years and that country has poor growth prospects precisely because repaying that debt will lower growth, then debt is not sustainable. If this report had been made public earlier, the tone of the public debate and the media’s boorish stereotyping of Greeks and its government would have been balanced by greater clarity on the Greek position."
Those defending the IMF and EU in the way they have handled Greece should perhaps read this.
In any case, the issue has never been does Greece need a haircut. Yes, of course it does.
But Greece has had one haircut. And the creditors who accepted that haircut did on the condition of reforms and privatisations that did not happen. Can you blame them for demanding that Greece carried our what it previously promised?
Read the article Robert. It deals with the issues of haircuts and also the many other failings of the IMF. Oh and Greece cut its pensions by 40%. Can you imagine the UK government cutting pensions by 40% and not seeing riots in the streets - okay they would be rather slow riots dominated by zimmer frames and wheelchairs and would probably stop every hour or so for a nice cup of tea and some afternoon TV but still the point remains.
Jeanette Minns 18 MINUTES AGO Ryan Heath writes: An unemployed man who now sells bottled water from a mobile cart said he was not political but proud to vote No.
“We say Yes to Greece. We want to save Greece not Europe. We have survived thousands of years, we will survive what happens tomorrow. We want our freedom.”
I agree. And Greece would be far better served outside the Euro, and I have no doubt Greek's creditors would probably recieve a higher proportion of monies owed if Greece left the Euro.
However, I think Greece's leadership has been fundamentally dishonest with its people.
Whether Greece is inside our outside the Euro, there will be a requirement to repay debts and to cut spending. There is no democratic mandate to not repay what you owe. When Tsipiras went to the IMF at the start of this year, he was bitterly disappointed to discover the IMF still required reform and cuts in the event he took the country out of the Euro.
My issue with this all is that the Greek leadership is being fundamentally dishonest with the people. As MaxPB, no rabid Europhile, has pointed out - this is a particularly stupid way to leave the Eurozone. Not being able to pay for imports of food or fuel is not a political victory, it is a practical failure of monumental proportions. Alex Tsipiras has told the people that they can have the Euro with the consequences. That is a lie. And this referendum was based on that lie.
Tomorrow the people of Greece will discover that, despite their leadership's rhetoric, the banks are still not open, and the shops are increasingly bare of essentials. If this is a victory against the hated EU, it is surely a pyrrhic one for the people of Greece, too many of whom will find themselves hungry in the coming weeks.
I would suggest the real villains in this whole mess are not so much the EU - they have just been their normal stupid incompetent selves - but the IMF.
The IMF should have had nothing to do with any EZ country. They don't exist to bail out screwed up currency unions that don't want to bail themselves out.
Mme Legard is probably wishing that her role in this was to help Greece out of the Euro in a (somewhat!) controlled manner next week.
The IMF bailed out German and French banks on DSK's watch. Funny that.
This is the view of the former IMF bail out chief Ashoka Mody
"As an international organization responsible for global financial stability, it is the IMF’s role to explain clearly and honestly the economic parameters of a bailout negotiation. The Greeks, many said, benefited from low interest rates and repayments stretched out over many years. Therefore, no debt relief was needed. But, of course, as the IMF now makes clear, if a country has to repay about 4 percent of its income each year over the next 40 years and that country has poor growth prospects precisely because repaying that debt will lower growth, then debt is not sustainable. If this report had been made public earlier, the tone of the public debate and the media’s boorish stereotyping of Greeks and its government would have been balanced by greater clarity on the Greek position."
Those defending the IMF and EU in the way they have handled Greece should perhaps read this.
We are currently paying 7% of govt spending on interest, equivalent to 3% of GDP. Is that extra 1% for a debt burden twice the percentage share of GDP really unreasonable?
And if Greek debt is intolerable then is it not wise for Greece to live within its means?
It is unreasonable when the result of the debt repayments is to shrink your economy. The amount being asked for is equivalent to 10% of government spending each year - at a time when the Greek economy has already shrunk by 25%.. It is a debt deflation cycle that is unbreakable without external help.
This is the view of the former IMF bail out chief Ashoka Mody
"As an international organization responsible for global financial stability, it is the IMF’s role to explain clearly and honestly the economic parameters of a bailout negotiation. The Greeks, many said, benefited from low interest rates and repayments stretched out over many years. Therefore, no debt relief was needed. But, of course, as the IMF now makes clear, if a country has to repay about 4 percent of its income each year over the next 40 years and that country has poor growth prospects precisely because repaying that debt will lower growth, then debt is not sustainable. If this report had been made public earlier, the tone of the public debate and the media’s boorish stereotyping of Greeks and its government would have been balanced by greater clarity on the Greek position."
Those defending the IMF and EU in the way they have handled Greece should perhaps read this.
In any case, the issue has never been does Greece need a haircut. Yes, of course it does.
But Greece has had one haircut. And the creditors who accepted that haircut did on the condition of reforms and privatisations that did not happen. Can you blame them for demanding that Greece carried our what it previously promised?
Shouldn't they be blaming themselves ?
Since the institutions most exposed are now those governments which turned a blind eye to Greece's unsuitability to enter the Euro shouldn't they just face facts and cough up ?
Why does moral hazard only apply to the borrower ?
If I lend you 100 pounds on the condition you stop going to the pub every night, and you then continue to go.
And you then ask for another 100 pounds, am I not entitled to be cross?
Clearly, first reactions from Germany not looking good for #Greece. Even Vice-Chancellor Gabriel says #Tsipras has "torn down last bridges".
With more than 50% of Germans wanting Grexit even before this result, German politicians have to consider their electorates too, not just those in Greece
I remember thinking at the time of the second bailout that it was obvious it would never be paid back and was therefore really a gift, not a loan. But as everyone pretended it was a loan, the current crisis was inevitable I guess. Greece really cannot pay it, no matter what they do, but since they appear unwilling to do much (or rather not as much as the creditors want them to, to show contrition), the Germans and others are unwilling to look the other way and pretend some more this time.
This is the view of the former IMF bail out chief Ashoka Mody
"As an international organization responsible for global financial stability, it is the IMF’s role to explain clearly and honestly the economic parameters of a bailout negotiation. The Greeks, many said, benefited from low interest rates and repayments stretched out over many years. Therefore, no debt relief was needed. But, of course, as the IMF now makes clear, if a country has to repay about 4 percent of its income each year over the next 40 years and that country has poor growth prospects precisely because repaying that debt will lower growth, then debt is not sustainable. If this report had been made public earlier, the tone of the public debate and the media’s boorish stereotyping of Greeks and its government would have been balanced by greater clarity on the Greek position."
Those defending the IMF and EU in the way they have handled Greece should perhaps read this.
We are currently paying 7% of govt spending on interest, equivalent to 3% of GDP. Is that extra 1% for a debt burden twice the percentage share of GDP really unreasonable?
And if Greek debt is intolerable then is it not wise for Greece to live within its means?
It is unreasonable when the result of the debt repayments is to shrink your economy. The amount being asked for is equivalent to 10% of government spending each year - at a time when the Greek economy has already shrunk by 25%.. It is a debt deflation cycle that is unbreakable without external help.
It is easy to break.
Leave the Eurozone.
But Greece's government has promised the people there is no need to leave the Eurozone.
(As an aside, even before the crisis, Greece had the worst ratio of working people to government retirees in the world. In the Euro, outside the Euro, that is not sustainable.)
This is the view of the former IMF bail out chief Ashoka Mody
"As an international organization responsible for global financial stability, it is the IMF’s role to explain clearly and honestly the economic parameters of a bailout negotiation. The Greeks, many said, benefited from low interest rates and repayments stretched out over many years. Therefore, no debt relief was needed. But, of course, as the IMF now makes clear, if a country has to repay about 4 percent of its income each year over the next 40 years and that country has poor growth prospects precisely because repaying that debt will lower growth, then debt is not sustainable. If this report had been made public earlier, the tone of the public debate and the media’s boorish stereotyping of Greeks and its government would have been balanced by greater clarity on the Greek position."
Those defending the IMF and EU in the way they have handled Greece should perhaps read this.
In any case, the issue has never been does Greece need a haircut. Yes, of course it does.
But Greece has had one haircut. And the creditors who accepted that haircut did on the condition of reforms and privatisations that did not happen. Can you blame them for demanding that Greece carried our what it previously promised?
Shouldn't they be blaming themselves ?
Since the institutions most exposed are now those governments which turned a blind eye to Greece's unsuitability to enter the Euro shouldn't they just face facts and cough up ?
Why does moral hazard only apply to the borrower ?
If I lend you 100 pounds on the condition you stop going to the pub every night, and you then continue to go.
And you then ask for another 100 pounds, am I not entitled to be cross?
But once you've lent another hundred quid and Alanbrooke keeps going to the pub even after super-promising not to, who is really at fault?
Mr. Apocalypse, not au fait with German politics, but I'd be surprised.
On that note, Mr. P, I'm very surprised to hear some chanting about getting Greece out of the euro. Well, I'm surprised it's Greeks chanting it. I'd be less surprised if it were Germans.
Ms Apocalypse....;)
Just to clarify, I was being sarcastic (in case you thought otherwise). I think Gabriel's statements indicate that Germany is unlikely to cave into Greek demands.
I think you need to work on your sarcasm-across-the-internet, Miss Apocalypse. Online it usually needs to be a blunt force tool rather than a scalpel.
This is the view of the former IMF bail out chief Ashoka Mody
"As an international organization responsible for global financial stability, it is the IMF’s role to explain clearly and honestly the economic parameters of a bailout negotiation. The Greeks, many said, benefited from low interest rates and repayments stretched out over many years. Therefore, no debt relief was needed. But, of course, as the IMF now makes clear, if a country has to repay about 4 percent of its income each year over the next 40 years and that country has poor growth prospects precisely because repaying that debt will lower growth, then debt is not sustainable. If this report had been made public earlier, the tone of the public debate and the media’s boorish stereotyping of Greeks and its government would have been balanced by greater clarity on the Greek position."
Those defending the IMF and EU in the way they have handled Greece should perhaps read this.
We are currently paying 7% of govt spending on interest, equivalent to 3% of GDP. Is that extra 1% for a debt burden twice the percentage share of GDP really unreasonable?
And if Greek debt is intolerable then is it not wise for Greece to live within its means?
It is unreasonable when the result of the debt repayments is to shrink your economy. The amount being asked for is equivalent to 10% of government spending each year - at a time when the Greek economy has already shrunk by 25%.. It is a debt deflation cycle that is unbreakable without external help.
Greece needs to make structural reforms if it wants to grow, either within or without the EZ, or for that matter the EU.
Corruption, a feather bedded civil service, an expensive military, an inflexible labour force, a low fertility rate and an unwillingness to pay or collect taxes are the obstacles to economic growth.
@jamesmatesitv: Greeks with cash, gold, jewellery in safe deposit boxes being told they can't touch it. Ominous. Is this 1st step towards seizing savings?
This is the view of the former IMF bail out chief Ashoka Mody
"As an international organization responsible for global financial stability, it is the IMF’s role to explain clearly and honestly the economic parameters of a bailout negotiation. The Greeks, many said, benefited from low interest rates and repayments stretched out over many years. Therefore, no debt relief was needed. But, of course, as the IMF now makes clear, if a country has to repay about 4 percent of its income each year over the next 40 years and that country has poor growth prospects precisely because repaying that debt will lower growth, then debt is not sustainable. If this report had been made public earlier, the tone of the public debate and the media’s boorish stereotyping of Greeks and its government would have been balanced by greater clarity on the Greek position."
Those defending the IMF and EU in the way they have handled Greece should perhaps read this.
We are currently paying 7% of govt spending on interest, equivalent to 3% of GDP. Is that extra 1% for a debt burden twice the percentage share of GDP really unreasonable?
And if Greek debt is intolerable then is it not wise for Greece to live within its means?
It is unreasonable when the result of the debt repayments is to shrink your economy. The amount being asked for is equivalent to 10% of government spending each year - at a time when the Greek economy has already shrunk by 25%.. It is a debt deflation cycle that is unbreakable without external help.
It is easy to break.
Leave the Eurozone.
But Greece's government has promised the people there is no need to leave the Eurozone.
(As an aside, even before the crisis, Greece had the worst ratio of working people to government retirees in the world. In the Euro, outside the Euro, that is not sustainable.)
I agree that will be a start. But they will still need a huge cut in debt. And as it stands without leaving the EU they cannot leave the Eurozone.
@NCPoliticsUK: The polling error on this #greekreferendum is set to be bigger than at the UK elections of 1970, 1992 and 2015 *put together*... #greece
This is the view of the former IMF bail out chief Ashoka Mody
"As an international organization responsible for global financial stability, it is the IMF’s role to explain clearly and honestly the economic parameters of a bailout negotiation. The Greeks, many said, benefited from low interest rates and repayments stretched out over many years. Therefore, no debt relief was needed. But, of course, as the IMF now makes clear, if a country has to repay about 4 percent of its income each year over the next 40 years and that country has poor growth prospects precisely because repaying that debt will lower growth, then debt is not sustainable. If this report had been made public earlier, the tone of the public debate and the media’s boorish stereotyping of Greeks and its government would have been balanced by greater clarity on the Greek position."
Those defending the IMF and EU in the way they have handled Greece should perhaps read this.
In any case, the issue has never been does Greece need a haircut. Yes, of course it does.
But Greece has had one haircut. And the creditors who accepted that haircut did on the condition of reforms and privatisations that did not happen. Can you blame them for demanding that Greece carried our what it previously promised?
Shouldn't they be blaming themselves ?
Since the institutions most exposed are now those governments which turned a blind eye to Greece's unsuitability to enter the Euro shouldn't they just face facts and cough up ?
Why does moral hazard only apply to the borrower ?
If I lend you 100 pounds on the condition you stop going to the pub every night, and you then continue to go.
And you then ask for another 100 pounds, am I not entitled to be cross?
But once you've lent the hundred quid and Alanbrooke keeps going to the pub even after super-promising not to, who is really at fault?
Both, but Alanbrooke moreso. Enabling someone can be both foolish and destructive, but the person taking advantage of the enabling still had a choice not to do it.
@jamesmatesitv: Greeks with cash, gold, jewellery in safe deposit boxes being told they can't touch it. Ominous. Is this 1st step towards seizing savings?
All property is theft. Tsipras wants to fleece savers elsewhere. Why not at home too?
@jamesmatesitv: Greeks with cash, gold, jewellery in safe deposit boxes being told they can't touch it. Ominous. Is this 1st step towards seizing savings?
Greece banks will run out of money within 1 day of reopening.
Those cheering crowds will be desperate by Tuesday. How popular will Tsipiras be then?
@jamesmatesitv: Greeks with cash, gold, jewellery in safe deposit boxes being told they can't touch it. Ominous. Is this 1st step towards seizing savings?
Step one to a lawless state. Not a good look from the Greek government.
@jamesmatesitv: Greeks with cash, gold, jewellery in safe deposit boxes being told they can't touch it. Ominous. Is this 1st step towards seizing savings?
Greece banks will run out of money within 1 day of reopening.
Those cheering crowds will be desperate by Tuesday. How popular will Tsipiras be then?
Ironic thing was under Samaras Greece was beginning to grow again and unemployment falling and its finances beginning to improve, if anyone is entitled to say 'the voters have voted, the bastards!' it is him.
Comments
http://ekloges.ypes.gr/current/e/public/index.html?lang=en#{"cls":"level","params":{"level":"ep","id":"38"}}
https://twitter.com/?lang=en-gb
Mark my words the Greeks will not be kicked out.
I don't see how tourism will benefit if people can't get money out of the bank. A default definitely doesn't help them in terms of tourism, Grexit might, but given that Greece imports most of the basic essentials it is going to be a long road to get companies and other countries to take Drachma as a form of payment for anything and they will have basically no access to foreign currency should they leave the EMU.
I'll get me coat......
The analogies being used by RCS and others about borrowing from a bank are false. What Greece has been borrowing from are loan sharks and the terms of the loans meant that Greece was never, ever going to be able to sort itself out.
Edited for missed question mark
Looks like a historic night. A 60% No would be fairly hefty. Can you believe the pollsters got it wrong?
Why? They are not owned by the state.
Ryan Heath writes: An unemployed man who now sells bottled water from a mobile cart said he was not political but proud to vote No.
“We say Yes to Greece. We want to save Greece not Europe. We have survived thousands of years, we will survive what happens tomorrow. We want our freedom.”
http://ekloges.ypes.gr/current/e/public/index.html?lang=en#
05-07-2015 22:44
Registered 6.296.060
Reporting 67,20 %
Voted 60,94 %
Invalid/Blank 5,72 %
NO 61,41 %
YES 38,59 %
The Greek bailout was a German/French bank bailout through the back door, no more, no less. The EU bollocksed up spectacularly when they forgot to think about how to get Greece back on its feet while they were patting themselves on the back for saving the German and French banking systems.
And for those who want a little break from the Greek situation, don't forget to check my post-race analysis here:
http://enormo-haddock.blogspot.co.uk/2015/07/united-kingdom-post-race-analysis.html
This race weekend was (hedged) the most profitable for about six years. Which is quite surprising.
I make it about $50bn since the polls close.
Austerity, IMF, Troika, nul points...
And here is the German response
@mathieuvonrohr: German Vice Chancellor Gabriel: Tsipras "has demolished the last bridges on which Europe and Greece could have moved towards a compromise"
"As an international organization responsible for global financial stability, it is the IMF’s role to explain clearly and honestly the economic parameters of a bailout negotiation. The Greeks, many said, benefited from low interest rates and repayments stretched out over many years. Therefore, no debt relief was needed. But, of course, as the IMF now makes clear, if a country has to repay about 4 percent of its income each year over the next 40 years and that country has poor growth prospects precisely because repaying that debt will lower growth, then debt is not sustainable. If this report had been made public earlier, the tone of the public debate and the media’s boorish stereotyping of Greeks and its government would have been balanced by greater clarity on the Greek position."
Those defending the IMF and EU in the way they have handled Greece should perhaps read this.
http://www.bruegel.org/nc/blog/detail/article/1669-in-bad-faith/
@stephenkb: And once again, you wonder why the SNP were so keen to have a currency union but not a political one.
(apologies if that was too soon BJO!)
However, I think Greece's leadership has been fundamentally dishonest with its people.
Whether Greece is inside our outside the Euro, there will be a requirement to repay debts and to cut spending. There is no democratic mandate to not repay what you owe. When Tsipiras went to the IMF at the start of this year, he was bitterly disappointed to discover the IMF still required reform and cuts in the event he took the country out of the Euro.
My issue with this all is that the Greek leadership is being fundamentally dishonest with the people. As MaxPB, no rabid Europhile, has pointed out - this is a particularly stupid way to leave the Eurozone. Not being able to pay for imports of food or fuel is not a political victory, it is a practical failure of monumental proportions. Alex Tsipiras has told the people that they can have the Euro with the consequences. That is a lie. And this referendum was based on that lie.
Tomorrow the people of Greece will discover that, despite their leadership's rhetoric, the banks are still not open, and the shops are increasingly bare of essentials. If this is a victory against the hated EU, it is surely a pyrrhic one for the people of Greece, too many of whom will find themselves hungry in the coming weeks.
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Basically it didn't matter what Greece did since 2008. She was still screwed if she followed the conditions of the EU/IMF bailouts.
Doesn't hold up, given the rhetoric flying around, but they can be wizards with their misuse of words and distortion of reality, EU bureaucrats.
UK debt expenditure sourced here:
http://www.ukpublicspending.co.uk/piechart_2015_UK_total
And if Greek debt is intolerable then is it not wise for Greece to live within its means?
In any case, the issue has never been does Greece need a haircut. Yes, of course it does.
But Greece has had one haircut. And the creditors who accepted that haircut did on the condition of reforms and privatisations that did not happen. Can you blame them for demanding that Greece carried our what it previously promised?
2nd Referendum
I assume it's a pretty thin market...
Good for the Greeks for voting 'No', but it's essentially the same as Staffordshire voting to have lower taxes than the rest of the country. It's a non-sequitur.
You can't vote your way out of debt. I appreciate that Tsipras might think he's gained a better negotiating position, but why?
On that note, Mr. P, I'm very surprised to hear some chanting about getting Greece out of the euro. Well, I'm surprised it's Greeks chanting it. I'd be less surprised if it were Germans.
Mme Legard is probably wishing that her role in this was to help Greece out of the Euro in a (somewhat!) controlled manner next week.
Edit: Just over £1bn in terms of the current bailout.
Since the institutions most exposed are now those governments which turned a blind eye to Greece's unsuitability to enter the Euro shouldn't they just face facts and cough up ?
Why does moral hazard only apply to the borrower ?
I am presently doing just this to a ship right now. (It's not Greek)
What some, not all, are trying to do is suggest this is all the fault of the EU/IMF, and I cannot accept that they 'caused' this (cause being the key word) when they would not be involved now had Greece not got itself into a mess. They would deserve sympathy for getting into that mess, but given the length of time to address the issues, not as much remains whoever tempted them into it and whoever is not being fair now.
The EU and IMF are not coming out of this looking great, not at all. But Greece is not blameless is merely the point that bothers me, as their pity act is wearing thin, though I understand it given the suffering they have been going through. The 'undemocratic' bull has really been the annoying thing; there is plenty that has been undemocratic, but others not agreeing to a deal (even if that deal would be sensible) is not it.
Just to clarify, I was being sarcastic (in case you thought otherwise). I think Gabriel's statements indicate that Germany is unlikely to cave into Greek demands.
Wanting to renegotiate but will to accept anything and nothing.
Do remember though, that general government expenditure has been cut - in percentage terms - by less than in Ireland (see: http://www.ft.com/cms/s/0/777f7a58-129c-11e5-bcc2-00144feabdc0.html#axzz3f07v7b40).
Also, IIRC ESFS loans are at a c. 3-3.5% interest rate, so I'm not sure loan shark is fair.
Greece should have left the Euro in 2011. Or at the beginning of this year.
What they should not have is a leadership that repeatedly lies to them about the consequences of their actions.
Maxime Sbaihi – @MxSba
Clearly, first reactions from Germany not looking good for #Greece. Even Vice-Chancellor Gabriel says #Tsipras has "torn down last bridges".
Perhaps we shouldn't be surprised. The Greeks have a history of being stubborn and fighting unwinnable battles.
And you then ask for another 100 pounds, am I not entitled to be cross?
Ryan Heath –
PHOTO - only one office light on in the Finance Ministry of #Greece, figuring out what to do next #GreeceCrisis
@Reuters: BREAKING: Greek conservative opposition leader Samaras steps down. LIVE coverage: http://t.co/xTiNeDqeMG
Leave the Eurozone.
But Greece's government has promised the people there is no need to leave the Eurozone.
(As an aside, even before the crisis, Greece had the worst ratio of working people to government retirees in the world. In the Euro, outside the Euro, that is not sustainable.)
Which way did you vote?
Online it usually needs to be a blunt force tool rather than a scalpel.
Corruption, a feather bedded civil service, an expensive military, an inflexible labour force, a low fertility rate and an unwillingness to pay or collect taxes are the obstacles to economic growth.
Those cheering crowds will be desperate by Tuesday. How popular will Tsipiras be then?