politicalbetting.com » Blog Archive » Greece: It’s looking like NO

JEO said:

david_herdson said:

FPT -

matt said:

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.

nigel4england said:

kle4 said:

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.

bigjohnowls said:

rcs1000 said:

bigjohnowls said:

Shipping and Tourism to boom on Greek default.

Shipping will be totally unaffected.

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

nigel4england said:

kle4 said:

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.

GIN1138 said:

felix said:

bigjohnowls said:

watford30 said:

kle4 said:

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?

MaxPB said:

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.

GIN1138 said:

felix said:

bigjohnowls said:

watford30 said:

kle4 said:

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?

felix said:

rcs1000 said:

Euro trading down just less than 1%. Would expect European markets to be down mid single digits tomorrow, and US to be down 2-3%.

Where is the euro being traded right now?

No_Offence_Alan said:

rcs1000 said:

bigjohnowls said:

Shipping and Tourism to boom on Greek default.

Shipping will be totally unaffected.

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?

felix said:

rcs1000 said:

Euro trading down just less than 1%. Would expect European markets to be down mid single digits tomorrow, and US to be down 2-3%.

Where is the euro being traded right now?

Richard_Tyndall said:

bigjohnowls said:

nigel4england said:

MaxPB said:

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.

foxinsoxuk said:

No_Offence_Alan said:

rcs1000 said:

bigjohnowls said:

Shipping and Tourism to boom on Greek default.

Shipping will be totally unaffected.

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...

Moses_ said:

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.”

Scott_P said:

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"

kle4 said:

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.

MaxPB said:

Richard_Tyndall said:

bigjohnowls said:

nigel4england said:

MaxPB said:

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.

kle4 said:

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.

rcs1000 said:

Richard_Tyndall said:

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.

http://www.bruegel.org/nc/blog/detail/article/1669-in-bad-faith/

While interest payments of 4% of GDP is high, it is by no means unprecedented. See the chart on this page for the UK: http://www.economicshelp.org/blog/3028/economics/interest-payments-on-uk-debt/

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?

calum said:

MaxPB said:

Richard_Tyndall said:

bigjohnowls said:

nigel4england said:

MaxPB said:

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?

calum said:

MaxPB said:

Richard_Tyndall said:

bigjohnowls said:

nigel4england said:

MaxPB said:

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?

No_Offence_Alan said:

rcs1000 said:

bigjohnowls said:

Shipping and Tourism to boom on Greek default.

Shipping will be totally unaffected.

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?

Richard_Tyndall said:

rcs1000 said:

Moses_ said:

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.

Morris_Dancer said:

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.

Richard_Tyndall said:

rcs1000 said:

Richard_Tyndall said:

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.

http://www.bruegel.org/nc/blog/detail/article/1669-in-bad-faith/

While interest payments of 4% of GDP is high, it is by no means unprecedented. See the chart on this page for the UK: http://www.economicshelp.org/blog/3028/economics/interest-payments-on-uk-debt/

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.

Alanbrooke said:

rcs1000 said:

Richard_Tyndall said:

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.

http://www.bruegel.org/nc/blog/detail/article/1669-in-bad-faith/

While interest payments of 4% of GDP is high, it is by no means unprecedented. See the chart on this page for the UK: http://www.economicshelp.org/blog/3028/economics/interest-payments-on-uk-debt/

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 ?

Moses_ said:

Maxime Sbaihi
Maxime Sbaihi – ‏@MxSba

Clearly, first reactions from Germany not looking good for #Greece. Even Vice-Chancellor Gabriel says #Tsipras has "torn down last bridges".

TW1R64 said:

Am in Greece on holiday for a week. No sign of panic or shortages yet....

rcs1000 said:

Richard_Tyndall said:

foxinsoxuk said:

Richard_Tyndall said:

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.

http://www.bruegel.org/nc/blog/detail/article/1669-in-bad-faith/

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?

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?

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.)

MaxPB said:

rcs1000 said:

Alanbrooke said:

rcs1000 said:

Richard_Tyndall said:

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.

http://www.bruegel.org/nc/blog/detail/article/1669-in-bad-faith/

While interest payments of 4% of GDP is high, it is by no means unprecedented. See the chart on this page for the UK: http://www.economicshelp.org/blog/3028/economics/interest-payments-on-uk-debt/

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?

Scott_P said:

@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?

SeanT said:

Samaras resigns