Moon of Alabama Brecht quote
June 27, 2015

The Greek Tragedy: Curtain Closes On Most Absurd Act

Nothing was posted here so far on the Greece tragedy. I did not touch the issue as there was excellent coverage elsewhere and what the whole issue produced so far was more absurd theater than serious economic policy. But one act of the drama is now coming to a preliminary end and the tragedy may now unfold into something new with potential serious geopolitical consequences.

Greece took up a lot of debt when banks were giving away money without caring for the ability of the debtor to pay back. When that game ran out, some six years ago, Greece could not no longer take up new credit to pay back its old debts. That is the point where it should have defaulted.

But the Greece government was pressed on to pay back the debt to the commercial banks even when it had no money and not enough income to ever do so. Bank lobbyists pressed other EU governments to raid their taxpayers to indirectly cover the banks' losses. These other governments then pushed Greece to take on "emergency loans" from their states to pay the foreign commercial banks.

Nothing of that money ever reached the people in need in Greece. Here is a gif that explains what happened to all those foreign taxpayer loans treats "given to the Greek".

To get these new loans Greece had to agree to lunatic economic measures, an austerity program and neoliberal "reforms", to fix its balance of payments. But austerity has never worked, does not work and will never work. It crashes economies, lowers tax incomes and thereby further hinders a government to pay back it debts. It creates a vicious cycle that ends in an economic catastrophe.

After six years of austerity nonsense the Greece voted for a new party that promised to end the cycle and stop the austerity measures. But the new Syriza government misjudge the situation and the nastiness and criminal energy of the other governments and organizations it was negotiating with. It early on said it would not default and thereby took away its own best negotiation argument. The negotiations failed. The creditors still demand more and more austerity. Now it will have to default but under circumstances that will make it much more difficult for Greece to get back on its feet.

Yesterday the Syriza prime minister Tsirpas, in a speech to his people, called for an end of the blackmail and for a referendum to decide on the way forward:

Fellow Greeks, to the blackmailing of the ultimatum that asks us to accept a severe and degrading austerity without end and without any prospect for a social and economic recovery, I ask you to respond in a sovereign and proud way, as the history of the Greek people commands.

To authoritarianism and harsh austerity, we will respond with democracy, calmly and decisively.

Greece, the birthplace of democracy will send a resounding democratic response to Europe and the world.

Paul Maison of Channel 4 news sees this as a positive and likely successful step. The people will vote no to austerity and the IMF, European Central Bank and various country governments will still keep giving fresh money to Greece. Yves Smith at Naked Capitalism does not believe that this will happen. She calls the referendum a sham. Greece will default and the only thing the referendum will do is to keep Syriza in the political business. She blames Tsirpas for having misjudged the situation and for being unprepared of what is likely to come:

Greek defiance of its creditors will make it more, not less dependent on them in the next year. How badly things turn out for Greece will depend in significant degree on how much they do to ameliorate the impact of the implosion of the banking system, whether they take extreme measures to keep Greece in the Eurozone, and if Greece tumbles out, how much they provide in humanitarian aid and targeted trade financing (most important, for petroleum imports).

Greece should have defaulted six years ago. Tsirpas should have prepared for default immediately after he became premier. He should have used it as a threat during the negotiations. Greece will now have to default in the worst possible situation and with little thought given to the consequences of the default.

But the consequences will not be limited to Greece.There will be consequences for the EU, for NATO and for the political balance in the Mediterranean. Greece may now decide to leave the "western" realm and thereby set an example others could follow.

The German and other European governments promised their taxpayers that Greece will not default and that the austerity program pushed onto it will succeed. They will now rightfully lose some of their political and economic credibility. The Greece default will be a somewhat harsh and expensive lesson for the voters in those countries too. Let's hope that they will draw the right conclusions.

Posted by b on June 27, 2015 at 10:30 AM | Permalink

Comments
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Greece's "closed banks"

Online banking transactions inside Greece will work normally, so will card payments in shops, but transfers abroad will require approval from a Ministry of Finance commission, the statement added.

It is Xinhua reporting this, in Western media you get the "bank run"

Posted by: somebody | Jun 29, 2015 12:26:21 AM | 101

oh the Guardian has become pro Greece - editorial wise - they do report on the Greek solution to the cash problem.

Looks like Syriza was well prepared and the might very well survive.

Generally, the British press. Financial markets don't like what Eurocrats are doing.

Posted by: somebody | Jun 29, 2015 12:45:43 AM | 102

written last night
Greece's bank holiday from hell
Robert Peston

http://www.bbc.com/news/business-33306158
Greek banking sources tell me that the banks have been instructed to close for at least a week and a day.

And during that period of closure the following capital controls will be imposed:

a) a maximum of 60 euros can be withdrawn per bank card per day or per account per day;

b) no cash can be moved abroad at all, except for vital commercial transactions that would have to be pre-approved.

The hope would be that banks could open their doors again some time after the result of the referendum is known next Sunday night, probably the Tuesday - so long as Greeks vote for a bailout on the terms demanded by the country's eurozone and IMF creditors.

But European finance ministers and the IMF have not guaranteed that the deal will still be available. So it is possible the emergency bank closures will continue beyond the current signaled end of next Monday night.

Posted by: okie farmer | Jun 29, 2015 1:32:03 AM | 103

http://www.bloombergview.com/articles/2015-06-29/mohamed-el-erian-what-now-for-greece-
Sadly, the “Graccident” has happened.

The Greek economy is now in intensive care, as its parts -- and notably its banking system -- grind to a halt. The economy that eventually comes out of intensive care will be smaller and uncomfortably different in form, but it will also have the potential to prosper over the longer term if some important decisions are made rapidly and consistently.
~~~
These highly likely developments will make Greece’s continued membership of the euro zone extremely difficult, if not impossible. As a result, the Greek economy that eventually emerges will not just be smaller and fragile, it will also likely operate in a fundamentally different context.
~~~
The government would need to move quickly to completely restructure the banking system -- much of it likely to be transferred to public ownership. Amid significant losses imposed on an array of constituencies, including shareholders and creditors, the recapitalization of a handful of banks would probably be feasible only in the context of a new monetary arrangement that most likely would involve the return of a national currency.
~~~
Even though Greece is likely to exit the euro zone, it will be crucial -- for both social and geopolitical reasons -- to ensure that it isn't untethered from Europe. Its European partners -- no matter how frustrated they are now -- have an important responsibility. If they are unable to maintain Greece as a full member of the European Union, they need to quickly come up with some type of association agreement.

Posted by: okie farmer | Jun 29, 2015 4:16:21 AM | 104

Posted by: okie farmer | Jun 29, 2015 4:16:21 AM | 103

:-))

They might have miscalculated - like the dodo. You do not need cash machines and bank branches in the time of EC cards, credit cards and electronic transfers.

Greece could be very well be the last fight of an out of date banking system.

Posted by: somebody | Jun 29, 2015 4:22:53 AM | 105

http://www.bbc.com/news/business-33307810
fnially some good news
Greece debt crisis: Global stock markets slide

Posted by: Mina | Jun 29, 2015 5:41:08 AM | 106

Greece is endemically corrupt, like Italy, but much, much poorer. only by way of education and rule-of-law can this putrefaction of society be assuaged. at some point along this long and crooked path, after they've finally learned to dispense with usurious monetary policy, they will see how perfectly poised they actually are to devine a brave new sunsplashed world.

Posted by: john | Jun 29, 2015 6:38:59 AM | 107

Posted by: john | Jun 29, 2015 6:38:59 AM

Greece has a long history of - bloody - geopolitical and class conflict. It is the first chance they have in three generations.

Greek society is fine. They suffer from a corrupt elite.

Posted by: somebody | Jun 29, 2015 8:54:32 AM | 108

It is good to have you back, somebody. Your perspective on Greece - and Ukraine - is invaluable. To me, at any rate.

Posted by: jfl | Jun 29, 2015 9:01:49 AM | 109

SwedishLex, a commenter at NakedCapitalism, notes that as a member of the EU, Greece has a veto. And that could make life rather difficult for the EU.

Posted by: Jackrabbit | Jun 29, 2015 9:24:38 AM | 110

About NC coverage of Greece...

As I mentioned, there has been much push-back in comments to Yves depiction of the Greeks and the negotiation. While it's hard to single out any particular one as an example (spanning hundreds of comments to two dozen or so posts over 3 months),

Posted by: Jackrabbit | Jun 29, 2015 9:39:58 AM | 111

to continue:

... Gemini33 (who claims to be a long-time reader) just posted a comment expressing dismay at the way that the referendum is being characterized. (see http://www.nakedcapitalism.com/2015/06/consent-governed-tsipras-style.html#comment-2465367)

I would also add that Yves or Lambert addresses most of the comments that push-back, but it is best for anyone that is interested to evaluate these interactions for themselves (any description from me would not do them justice).

Posted by: Jackrabbit | Jun 29, 2015 9:49:23 AM | 112

Talking about history, Greeks celebrate something called "no day".

Posted by: somebody | Jun 29, 2015 10:46:31 AM | 113

The Greek Debt Crisis and Crashing Markets


Eurozone financial strategists made it clear that they wanted to make an example of Syriza as a warning to Spain’s Potemos party, and anti-euro parties in Italy and France. The message was supposed to have been, “Avoid our austerity and we will cause chaos. Look at Greece.”

But the rest of Europe is interpreting the message in just the opposite way: “Remain in the eurozone and we will only create money to strengthen the financial oligarchy, the 1%. We will insist on budget surpluses (or at least, no deficits) so as to starve the economy of money and credit, forcing it to rely on commercial banks at interest.”

Greece has indeed become an example. But it is an example of the horror that the eurozone’s monetarists seek to impose on one economy after another, using debt as a lever to force privatization selloffs at distress prices.

In short, finance has shown itself to be the new mode of warfare. Resisting debt leverage andfinancial conquest is as legal as is resisting military invasion.


It's nice to read the opposite of the imperial propaganda push. I think there is every chance that the Grexit will turn out well for Greece, and not as long from now as is assumed.

Posted by: jfl | Jun 29, 2015 11:07:43 AM | 114

Indeed. Greece didn't have the income (taxrevenues) to service its debts. Every greek did the utmost to avoid paying taxes.

Posted by: Willy2 | Jun 29, 2015 12:26:57 PM | 115

jfl, from your CP link:

By going through the sham negotiations with The Institutions, Syriza gave Greeks enough time to protect what savings and cash they had – by converting these bank deposits into euro notes, automobiles and “hard assets” (even boats).

Which was my take from about two months ago.

Posted by: okie farmer | Jun 29, 2015 12:50:34 PM | 116

somebody says:

Greek society is fine. They suffer from a corrupt elite.

well, your idealism is really quite charming. how do you feel about, say, American society, aside from its corrupt elite? and what exactly is this corrupt elite? the faceless power brokers and money changers behind the curtains? the mafia dons in their gaudy villas? the corporate ceos who boost profits by dumping toxic waste into the rivers? the idiot politicians who amass fortunes buttering their own bread? the cop on the beat who'll let your girlfriend off easy for a blowjob?

no, my friend, Greek society is not fine, though i agree that it's a great opportunity for them to get their shit together. but i pretty much said that in my previous comment.

Posted by: john | Jun 29, 2015 1:04:29 PM | 117

@116 john.. in light of that, can you name any society that is fine?

Posted by: james | Jun 29, 2015 1:31:17 PM | 118

Not sure how these views can be reconciled:

YVES writes:

http://www.nakedcapitalism.com/2015/06/consent-governed-tsipras-style.html#comment-2465287
Summary: The Euro project is inherently flawed and Greece is a victim.

http://www.nakedcapitalism.com/2015/06/consent-governed-tsipras-style.html#comment-2465330
Summary: I'm hard on Tsipras because he's setting back "whats left of the European Left" by 10-years or more.

So, despite the inherent flaws and injustice of the EZ - and its likely (some would say certain) demise (or deep reform), the meager prospects of a European left that failed and is still struggling/compromised should be given some sort of preference to the active resistance of the only European government that is standing against the neoliberal stranglehold of austerity?

Yves makes this claim because she _assumes_ that Greece outside the Eurozone will fail. But I have seen comments to the effect that after a 6-12 month adjustment period, Greece could be doing well (though they still must deal with the euro-denominated odious debt). And would it be BETTER that Syriza fail/capitulate to the Troika (as the Troika evidently hoped for; see jfl@113)? Micheal Hudson doesn't think so (see Delphi Initiative).

Note: Continuing push-back on the NC analysis and harsh tone:

http://www.nakedcapitalism.com/2015/06/why-greek-banks-are-likely-to-be-toast-no-deposit-insurance.html#comment-2465499

Posted by: Jackrabbit | Jun 29, 2015 1:33:45 PM | 119

Wow!! Even Krugman gets it and has adopted Hudson's line of thought: "Finally, acceding to the troika’s ultimatum would represent the final abandonment of any pretense of Greek independence. Don’t be taken in by claims that troika officials are just technocrats explaining to the ignorant Greeks what must be done. These supposed technocrats are in fact fantasists who have disregarded everything we know about macroeconomics, and have been wrong every step of the way. This isn’t about analysis, it’s about power — the power of the creditors to pull the plug on the Greek economy, which persists as long as euro exit is considered unthinkable." http://www.commondreams.org/news/2015/06/29/anger-aimed-troikas-ruthless-neoliberalism-greece-exit-looms

Hudson: "What commentators miss is that Syriza (at least its left) wants to be transformative. It wants to free Greece from the post-military oligarchy that evades taxes and monopolizes the economy. And it wants to transform Europe, away from ECB austerity to create a real central bank. In the process, it demands a clean slate of past bad debts. It wants to reject the IMF’s austerity philosophy and refusal to take responsibility for its bad 2010-12 bailout.

"This larger, transformative picture is at the center of Syriza-left plans.

"I’m in Germany now (on my way to Brussels), and have heard from Germans that the Greeks are lazy and don’t pay taxes. There is little recognition that what they call “the Greeks” are really the oligarchs. They have gained control of the old coalition Pasok/New Democracy parties, avoided paying taxes, avoided being prosecuted (New Democracy refused to act on the “Lagarde List” of tax evaders with nearly 50 billion euros in Swiss bank accounts), orchestrated insider dealings to privatize infrastructure at corrupt prices, and used their banks as vehicles for capital flight and insider lending." http://www.counterpunch.org/2015/06/29/the-greek-debt-crisis-and-crashing-markets/

Posted by: karlof1 | Jun 29, 2015 2:02:01 PM | 120

james

well, in ultimate terms, probably not, but in our present context, in the western world at least, i would cite the northern European societies...Norway, Sweden, Denmark, Iceland...

they are well educated, multi-lingual, they know their neighbors and their history. as such they are well equipped to deal with societal problems like poverty, corruption, immigration, security, etc in intelligent, efficient, humanistic ways.

they are closing down prisons 'cause they don't have enough prisoners.

Posted by: john | Jun 29, 2015 2:07:06 PM | 121

james

remember this story?

Posted by: john | Jun 29, 2015 2:31:40 PM | 122

Jürgen Habermas: Why Angela Merkel is wrong on Greece

Angela Merkel brought in the IMF from the outset for her dubious rescue moves. This body is responsible for dysfunctions in the international financial system; as therapist it takes care of its stability and thus acts in the common interest of investors, especially of institutional investors. As Troika members, European institutions also coalesce with this player so that politicians, in so far as acting in this function, can retreat into the role of untouchable agents acting strictly according to the rules of the IMF. This dissipation of politics into market conformity helps to explain the chutzpah with which representatives of the federal German government, all of them highly moral people, can deny their political co-responsibility for the disastrous social consequences that they nevertheless took on board as opinion leaders of the European Council through the implementation of the neoliberal austerity programmes.

The scandal within the scandal is the constipated manner in which the German government perceives its leadership role. Germany is indebted for the stimulus behind the economic recovery from which it still benefits today to the wisdom of the creditor nations which, in the London Agreement of 1953, wrote off around half of its debts.

But this is not about moral embarrassment but about the political core of the matter: The political elites in Europe should no longer hide from their voters and themselves dodge the alternatives posed to us by an politically incomplete currency union. It’s the citizens, not the banks, which must retain the final say in existential questions for Europe.

As regards the post-democratic lulling to sleep of public opinion, the switching of the press into a therapeutic type of journalism is a contributory factor – as it marches arm in arm with the political class in caring for the wellbeing of customers, not citizens.

I would translate the last part as "journalism and politics turning into a care industry looking after the well-being of clients" ...

Posted by: somebody | Jun 29, 2015 3:05:09 PM | 123

From the archives at Joseph Stiglitz.com who, back in 2010, thought currency speculators were going to wreck the Euro via Greece.
Don't Leave Greece to face Speculators Alone

...
As the doyen of City economists, Stephen Lewis, noted today, news that the president of the European Central Bank had cut short a visit to the antipodes conjured up images of Denis Healey turning his car round at Heathrow airport to deal with the sterling crisis that eventually required the assistance of the International Monetary Fund.

Different decade, different currency, same old story. A country struggling with severe economic problems and high levels of borrowing has been targeted by financial speculators. For Britain in 1976, read Greece in 2010. Traders and hedge funds, according to reports, have placed an $8bn (£5bn) bet that the problems of the eurozone's weakest link will result in a fall in the value of the single currency.

Joseph Stiglitz, the Nobel prize-winning economist, told the Guardian today that the only way to deal with the speculators was to meet fire with fire. He says Europe should do what Hong Kong did when first its currency and then its stock market were targeted in the Asian crisis of 1997-98, when it "burnt" the speculators by massively buying stocks. "The markets are not looking for what's good for the long-term viability of the euro. They are looking at what's going to happen in the next 24 hours."

Stiglitz said he fully supported the campaign for a "Robin Hood" tax on financial transactions to be launched tomorrow but said a small 0.05% levy would not be enough to deter speculative attacks on Greece. Instead, the answer was for Europe to show a commitment to help Greece that would "reduce the opportunity for speculative gain".

By chance, a summit in Brussels on Thursday, which has been called to map out a way to make Europe the most dynamic and competitive economy in the world by 2020, provides an opportunity for leaders of the 27 EU member states to adopt a more robust approach to the speculative attacks.

Until now, they have stuck to the letter of the Maastricht treaty, which decrees that "the Community should not be liable for or assume the commitments of central governments, regional, local or other public authorities of another member state". This means a country in trouble should not expect Germany to pick up the tab for a bailout.
...
The article is here
http://www.theguardian.com/business/2010/feb/09/elliott-eurozone-greece-stiglitz-speculation

Posted by: Hoarsewhisperer | Jun 29, 2015 3:20:42 PM | 124

Stiglitz today:

Europe’s Attack on Greek Democracy

Posted by: Jackrabbit | Jun 29, 2015 3:50:44 PM | 125

@121/122 john... thanks.. i was unaware of that story from iceland, but it is liberating just to read it and think of the possibilities for other societies on the globe.

Posted by: james | Jun 29, 2015 4:22:21 PM | 126

Posted by: Jackrabbit | Jun 29, 2015 3:50:44 PM | 125

Great timing! He's the only economist I know of who hasn't contradicted himself
- for more than a decade.

Posted by: Hoarsewhisperer | Jun 29, 2015 4:23:00 PM | 127

If the greek banks remain closed for a week then I expect to see riots in Greece before the end of the week.

Posted by: Willy2 | Jun 29, 2015 4:35:31 PM | 128

Posted by: Willy2 | Jun 29, 2015 4:35:31 PM | 128

You can still pay by EC or credit card in Greece, you can transfer money electronically and 60 Euro per day is quite a lot to spend in cash. And there are a lot of tourists around spreading cash ...

Posted by: somebody | Jun 29, 2015 5:10:22 PM | 129

EU Chief Says Greek 'Egotism' Behind Rejection of Bailout Terms


The European Commission chief, Jean-Claude Juncker, said he feels “betrayed” by the Greek government’s refusal to accept the E.U.'s conditions for a bailout deal, calling it by the “egotism” on behalf of the left-wing government.

The EU feels betrayed. The Greeks were gong to cave and Syriza disappear ... and ... and they haven't! Betrayal!

They insist on remaining ... in Greece ... alive! What "egotism"!!

Posted by: jfl | Jun 29, 2015 6:43:06 PM | 130

guest77 @100

I totally agree.

I don't comment at NC, but I read it daily. Yves has strongly stated from the beginning that Greece would not default, nor leave the EU - despite some pretty good arguments to the contrary. One theory that she's ignored, I think, is that Syriza was buying time and drawing out negotiations for 2 reasons:

1) To show the Greek people that the Troika do not have Greece' best interest in mind. To expose them as dictators, willing to squeeze Greeks' sovereignty and quality of life through painful austerity.

2) To allow greek people to adjust before a potential grexit - remove money from banks.

An interesting comment I read recently, if Syrizia are true socialist, they would want to nationalize the banks and the economy. Getting out from under the thumb of the EU/IMF/ECB would be a first step.

There will be pain, but I think Tsipris and Var have played this well given their position.

Posted by: Nolaguy | Jun 29, 2015 6:56:11 PM | 131

Posted by: Nolaguy | Jun 29, 2015 6:56:11 PM | 131

Greece's economy is completely dependent, and Syriza's leadership is very professional middle class. Varoufakis is a professor of economics with a very international career. Tsipras used to be a building engineer. They insist on staying in the EU and in the Euro - for very good reason.

What they want is a chance to start economic expansion and get some liquidity, like every sane business person would. They have run into a wall of competitive national politicians hiding behind Brussels bureaucrats.

Posted by: somebody | Jun 30, 2015 3:07:07 AM | 132

But with the banks closed how long are those tourists willing & able to spend money ?

Posted by: Willy2 | Jun 30, 2015 6:29:03 AM | 133

I think the tourists that went on holiday in Greece this summer were out of their mind. Anyone who followed the news coming out of Greece in the last 5 years could have know that the situation in Greece was deteriorating (financially).

Posted by: Willy2 | Jun 30, 2015 6:36:50 AM | 134

@62:

Wrong ! In the 1980s & 1990s Europe benefited from falling oilprices and a weakening USD. That meant that Europe benefitted MORE from falling oil prices than the US.

People in Spain were complaining in 2007 that as a result of the Euro prices had gone up so much. Sheer nonsense. From 2001 onwards (when the Euro was introduced) oilprices started to move higher (from $20 up to over $140 in mid 2008). The Euro/USD went up in the same timeframe from ~0.80 up to ~1.60. As a result over in Europe (OIL-)price inflation was only half of what it was here in the US.

One has to look at interest rates !!!!

Look what happened from mid 2004 up to mid 2006: US short term rates went up from 1% to 5.25% and that killed here in the US the housing markets.

Posted by: Willy2 | Jun 30, 2015 7:10:29 AM | 135

@62: In other words: that article is cherry picking.

Posted by: Willy2 | Jun 30, 2015 7:11:08 AM | 136

One should also keep in mind that if/when Greece defaults on its debts then that will also be a blow to the credibility of the US dominated organisation called "IMF". Then that's indirectly a blow to the prowess/power of the US financial elites.

Posted by: Willy2 | Jun 30, 2015 8:02:40 AM | 137

Posted by: Willy2 | Jun 30, 2015 6:36:50 AM | 134

Aren't you slightly hysterical? All you need is an EC card and some cash to survive ...

Posted by: somebody | Jun 30, 2015 8:13:11 AM | 138

i love a good default...crouch behind the concrete barrier,pull the pin,give the grenade to the instructor and then ...by default...run like hell waving the pin and shouting.....pinny pinny pinny.

Posted by: mcohen | Jun 30, 2015 8:30:35 AM | 139

DSK coming to the rescue of Moscovici and Christine lagarde?

His proposal , inserted in between the French article in English and French

http://www.liberation.fr/monde/2015/06/28/dsk-s-exprime-sur-la-grece-entre-mea-culpa-et-propositions_1338825

Posted by: Yul | Jun 30, 2015 11:11:10 AM | 142

@142 Enter the pimp. Europe has some fine specimens of morality on its side.

Posted by: yellowsnapdragon | Jun 30, 2015 11:42:44 AM | 143

How many years has this event been in the making? How many years does it take for stark choices to crystallize …. in enough of the public for the referendum to be a fair reading on what the public really wants? not a name at 8

It was in 1994 that the EU started some kind of procedure against G for being too heavily indebted. I don’t remember anything about that. In 1996 G public debt culminated at 112% of GDP, and it sank a bit in the following 3 years (to about 100% or like that.) In 2000 Germany: 59, France, 58.

It was Chirac and Jospin (usually level-headed but a fantastical Hellenophile) who insisted that G join the Euro, with on their side Juncker (yes him) and the Portuguese. The Germans - Khol - were against but capitulated. The EU parliament voted G-in-Euro in 2000. OECD and IMF wrote positive reports. It joined in 2001 (after some preliminary steps, etc.)

French Banks ran to Athens to make deals, in tens of billions.. German banks then soon followed…

Simitis was on board with it all and pegged the drachma to the Euro; he set up a program of privatisations, froze State salaries, promised to ‘reduce Gvmt’ etc. and this apparently was seen as fantastic progress. We all know about the wink-wink miscalculation of the debt to Goldman Sachs.

At the time, G was seen as economically weak and sick, and the Euro was a cure! (Or, that was the official ambiance.) I don’t know the numbers, if I did it wouldn’t help, but imho it is not fanciful to opine that without the Euro (and aid from EU etc.) Greece would have defaulted around then, in 1998-2000, or 2008-9, financial crisis.

Greece defaulted in 1826, 1843, 1860, 1894 and 1932. (see forbes for ex.) http://tinyurl.com/ogupcwj

In this last episode, it was clearly taken for a ride (ppl tend to forget that some made huge profits out of this mess)…

All this was spun to the Greeks as joining the Euro-club-Med and being able, amongst other things, to borrow at Euro rates - btw Greek private debt is also alarmingly large and seems to esscape notice… By now, private individuals, municipalities, businesses, all owe money all over to each other, the Gvmt, the banks, etc.

As neretva says, it is a kind of neo-colonialism. But in this case it is a beast feeding on its own body or its own children. A blow for the image, status, finances, of the EU. Note that often ‘bad models’ justify themselves by expansion. When expansion halts ppl take note and older considerations re-surface.

Posted by: Noirette | Jun 30, 2015 11:56:15 AM | 144

@ 143

If he is a pimp , then Petraeus must be a choirboy :(
At least he knows what he is talking about ,not a general who keeps the picture of a bimbo journo on his desk or couldn't keep it zipped for his neurotic biographer who was ready to kill the competition

Posted by: Yul | Jun 30, 2015 1:12:12 PM | 145

@144 noirette.. great post.. thanks..

i note the cyclical nature of the defaults from the past - "Greece defaulted in 1826, 1843, 1860, 1894 and 1932". - 2 of those are 17 year spans, with the following one a 34 year span (17x2) and then the anomaly - 1932 which would have been world wide.. the financial world of today has screwed any study of cycles..

Posted by: james | Jun 30, 2015 1:39:30 PM | 146

james @146

Interesting numerology. Continuing:

April 1967: Military Coup
(about 34 years after the 1932 bankruptcy)
The coup came after a disasterous 1964 agreement to pay pre-war debt.
The Military Junta makes plans to pay the debt with asset sales but is overthrown before that is done. (see link below)

2001: Greece joins EuroZone
(34 years after the military coup)
Entry is fudged by Goldman Sachs.


(see more at link below)

=

For those interested in the sad history, I found a review at:

http://sofisintown2.blogspot.com/2011/06/greek-bankruptcy-and-bailout-history.html?_escaped_fragment_=#!

Posted by: Jackrabbit | Jun 30, 2015 4:00:50 PM | 147

re 46

"d'ya recall that the khediv of Egypt Muhammad Ali was an Albanian? that Greeks were all over the Egyptian delta, as were the Italians for centuries?
In the Ottoman empire, frontiers were quite fluid, so i can't buy your "speaking Albanian and having Albanian names". When exactly did the Greeks impose a political ideology?"

If the Greeks are so open, why do they insist so much on their national ideology?

Their ethnic cleansing was in the past. for the moment I'm willing to admit that. I'm all in support of Greece at the moment.

Posted by: Laguerre | Jun 30, 2015 5:33:01 PM | 148

financial matters asks Yves the question that naturally follows my comment @119.
( see: http://www.nakedcapitalism.com/2015/06/greece-asks-for-last-minute-deal-before-bailout-expires.html#comment-2466454 )

=

Yves attack on "the pom pom wavers on the left" (to which financial matters responded) seem rather ardent given some of her own choices. She initially supported Mary Jo White as SEC Commissioner and currently supports Bernie Sanders for President.

Oh, and it isn't just the "pom pom wavers of the left" that see a meaningful referendum. Even Juncker is treating it as a meaningful exercise as he lobbys for a 'YES' vote.

Posted by: Jackrabbit | Jun 30, 2015 11:32:12 PM | 149

@147 jackrabbit.. that is interesting..

Posted by: james | Jul 1, 2015 1:45:14 AM | 150

Posted by: Jackrabbit | Jun 30, 2015 11:32:12 PM | 149

Reactions here in German media show that the prospect of Greece defaulting before or after the referendum (i.e. creditors lose everything) have sobered the discussion to the point where a meaningful deal might be imminent.

The breaking point will be reached when Angela Merkel is forced to confess to her constituency that the billions spent "on Greece" i.e. saving the banks have gone down the drain and that more money will have to be spent for saving the Euro. She is on record now with "A failure of the Euro will mean a failure of Europe" which presumably is going to haunt her like "Spying on friends is inadmissable".

Posted by: somebody | Jul 1, 2015 3:21:54 AM | 151

Yves has now described what she would do if she led Greece: (link: http://www.nakedcapitalism.com/2015/07/tsipras-accepts-most-terms-as-merkel-insists-on-referendum.html#comment-2466856 )

Well, giving in to the Troika, and continuing the farce on the best terms that a solicitous Greece could manage to get is one option, but it strikes me as far from the best option.

Greece tried to reason with the Troika. The Troika threatened to destroy Greek banks if they didn't get their way. And 'their way' would've destroyed Syriza - and with it, any possibility of resistance.

The Troika insisted on a 2-step process whereby Greece would describe how they would service the debt BEFORE any talks on debt restructuring. Notably, the Greeks had been promised debt restructuring before, but it never materialized. So Syriza was understandably wary and has several times tried to get verbal assurances put into writing.

Did Syriza fritter away time and money in negotiations? Should they have imposed capital controls and/or made an immediate GRexit? They had no mandate for such 'drastic' action. They would've been characterized as undemocratic and 'radicle' - people would have rebelled. But, by trying to work with 'the system' they have demonstrated how corrupt and heartless it is; and have gained the support of the people in the process. NOW there is a realistic chance that people will vote 'NO' in support of the government.

Note: only weeks ago, Schauble dared Tsipras to hold a referendum. Now the Troika/Eu-elite has:
- attacked the holding of a referendum
- refused to accommodate the holding of a referendum
- attempted to influence the vote by saying NO=GRexit
- refused further negotiations and called for regime change - despite the fact that (as I understand it) the referendum is narrowly worded as: should the government accept the creditor's (take it or leave it) offer of June 28th (I may be off on the actual day).

Posted by: Jackrabbit | Jul 1, 2015 6:01:15 PM | 152

@152 jr... it is interesting the idea of the world financial system wanting regime change...i guess it goes with the undemocracy of it!

they want the same deal in russia, and it was the same deal in ukraine and it is the same deal in syria... regime change, lol.. the real regime change is going to come, but not until this financial oligarchy has had it's head chopped off - a real regime change if there ever was one..

so much revolves around finances..

Posted by: james | Jul 1, 2015 8:20:06 PM | 153

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