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You're not supposed to say yes when the Devil offers you a deal.
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Jul 12, 2016 13:06
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GaussianCopula posted:At this point it's probably important to remind people that Wolfgang Schäuble reportedly offered Greece to default on their debt and quit the Euro - which the Greek government refused. Hang on, reportedly? I thought this was proven fact. Has he ever confirmed this?
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Jul 12, 2016 13:23
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Tesseraction posted:Hang on, reportedly? I thought this was proven fact. Has he ever confirmed this? There is no on the record statement from him that states "Germany offered a Greece a Grexit on these terms" but it's pretty clear that the offer was made.
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Jul 12, 2016 13:33
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GaussianCopula posted:There is no on the record statement from him that states "Germany offered a Greece a Grexit on these terms" but it's pretty clear that the offer was made. From what? And why wouldn't he put it on the record? Surely if it was an above board offer and not a poisoned chalice he would be happy to confirm it?
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Jul 12, 2016 13:37
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e; ^ If you want something on paper, there was the "timeout from the Euro" offer he made. It was, of course, going to be a Grexit on Schauble's terms. Just because a Grexit offer is made doesn't mean it's a good one. YF-23 fucked around with this message at 13:40 on Jul 12, 2016 |
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Jul 12, 2016 13:37
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I've been wondering, how could a non-destructive *xit be handled? There are no such mechanisms in place now, but If for arguments sake we assume a future scenario in which both the country that is leaving (greece, finland perhaps) and the rest of the eurozone have both agreed it'd be better for both if it left the eurozone and a proper framework for exiting with minimal disruption is made. Would such a thing be possible, what would it entail? I am thinking perhaps having a transitional period where both currencies are in use, perhaps pegging the new currency against the euro for a time and the ECB backing the new currency initially to keep it stable until it gets it's footing and the euro is phased out from country X. Perhaps this could be done in a 5-10 year transitional period?
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Jul 12, 2016 13:43
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Making the Euro a more "flexible" currency, membership to which can gained or withdrawn on a whim, would totally undermine it, especially as a political project. You can have the most beautiful, well-oiled legal framework for such a process, and it will mean absolute poo poo-all if no-one believes in that framework.
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Jul 12, 2016 13:47
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What would a "good" Grexit offer look like? [note: there can be no pegging of the new currency to the Euro, because Greece would have full control of the printing presses]
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Jul 12, 2016 13:48
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YF-23 posted:e; ^ If you want something on paper, there was the "timeout from the Euro" offer he made. Ah, so a poison chalice. Yes I wonder why Greece didn't just let Dr Doom oversee their exiting of the Eurozone after how generous he's been until now. 
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Jul 12, 2016 13:52
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YF-23 posted:Making the Euro a more "flexible" currency, membership to which can gained or withdrawn on a whim, would totally undermine it, especially as a political project. You can have the most beautiful, well-oiled legal framework for such a process, and it will mean absolute poo poo-all if no-one believes in that framework. Yes well what's the alternative, do you think the euro will be around in 10 years of the same? 20 years?
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Jul 12, 2016 13:53
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GaussianCopula posted:What would a "good" Grexit offer look like? Honestly? There probably isn't one. A "good" exit would have to involve deep political discussion about the future development of the common currency, a real roadmap set for it, and as part of that roadmap countries that object should then decide whether they want to leave the currency. A country being singled out for an exit, and the nature of the Euro not being discussed at all as part of a discourse on whether the country should leave it or not is just never going to work.
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Jul 12, 2016 13:54
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His Divine Shadow posted:Yes well what's the alternative, do you think the euro will be around in 10 years of the same? 20 years? Not sure Greece will be around anymore by then if poo poo continues as-is.
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Jul 12, 2016 13:55
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Tesseraction posted:Not sure Greece will be around anymore by then if poo poo continues as-is. Oh well, problem solved? Talk about a final solution though.
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Jul 12, 2016 14:03
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His Divine Shadow posted:Oh well, problem solved? Talk about a final solution though. From the Cradle to the Grave of Democracy.
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Jul 12, 2016 14:06
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His Divine Shadow posted:I've been wondering, how could a non-destructive *xit be handled? There are no such mechanisms in place now, but If for arguments sake we assume a future scenario in which both the country that is leaving (greece, finland perhaps) and the rest of the eurozone have both agreed it'd be better for both if it left the eurozone and a proper framework for exiting with minimal disruption is made. Would such a thing be possible, what would it entail? It would not be possible, because the economics just don't allow it. It would, if organized in a competent manner, perhaps not be as bad as Varoufakis's "Plan B" for euro exit, which foresaw: quote:•declaring of a state of emergency This is currently causing an uproar in Greece, though the plan was never seriously considered by Tsipras, nor was it ever developed enough to become practical. But this should give an idea of what exit might involve. Any kind of exit plan would require capital controls to prevent capital flight (or, alternatively, have to be sprung on the population by surprise), and would have to involve measures to keep a suddenly much poorer population under control. No transition period would work because people would simply hold on to their euros if their new drachma or markka was just going to devalue over time. But without a transition period you'd simply see a redistribution of wealth between people who already were hiding their money abroad and would thus be little affected by devaluation, and those without the opportunity to do so (and leaks are as good as inevitable anyway - when Russia devalued its currency in the 90s in another financial crisis, politically connected people were forewarned). There's a reason Schäuble was offering humanitarian aid as a sweetener.
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Jul 12, 2016 14:55
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How is that news? I can't remember when specifically this was last discussed but it was a long time ago. 
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Jul 12, 2016 15:13
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MiddleOne posted:How is that news? I can't remember when specifically this was last discussed but it was a long time ago. It's because Varoufakis's adviser, James Galbraith, just released his book about last year's drama.
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Jul 12, 2016 15:30
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MiddleOne posted:How is that news? I can't remember when specifically this was last discussed but it was a long time ago. What Tukker said, and because Varoufakis is an easy target, so whenever anything about contingency planning he did comes up the centrist opposition (ND, PASOK, Potami) throws a fit about how dangerous SYRIZA is and what they wanted to do to the country etc etc.
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Jul 12, 2016 15:34
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But didn't he come forward about this like a month after he get ousted?
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Jul 12, 2016 15:36
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MiddleOne posted:But didn't he come forward about this like a month after he get ousted? No, he was still busy hacking his own ministery's software back then.
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Jul 12, 2016 15:40
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MiddleOne posted:But didn't he come forward about this like a month after he get ousted? I don't think you should be trying to find too much sense into it. He said it then, and the opposition went "aha, look at what this guy wanted to do to the country!". It came up again a few months ago and the opposition said "aha, look (again) at what this guy wanted to do to the country!". Now it came up again and it's the same thing. This will never said, to those people's narrative Varoufakis wanted to play crazy scientist and should have charges brought against him for that, and that is a super easy line to sell to the Euro-fetishist part of their voter base, because those people have always thought that.
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Jul 12, 2016 15:42
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Baxta posted:Yeah it really sounds like Greece should never have been allowed to join the EU. The problem isn't Greece joining the European Union (and they joined the EEC before it turned into the EU anyway), the problem was Greece getting into the monetary union. But there was a political desire to have as many countries as possible in the monetary union, so Greece's creative accounting was swept under the rug.
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Jul 12, 2016 15:54
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Cat Mattress posted:The problem isn't Greece joining the European Union (and they joined the EEC before it turned into the EU anyway), the problem was Greece getting into the monetary union. Joining the Eurozone didn't create the root causes of Greece's problems either (lack of industry, tax evasion, etc...). They would likely still be in a hole if they didn't join the monetary union, just maybe not as deep and it wouldn't have dragged half of the world in with it.
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Jul 12, 2016 17:32
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The_Franz posted:Joining the Eurozone didn't create the root causes of Greece's problems either (lack of industry, tax evasion, etc...). They would likely still be in a hole if they didn't join the monetary union, just maybe not as deep and it wouldn't have dragged half of the world in with it. Lack of industry yes, though. They had exports before they joined a monetary union that essentially meant their exports were too expensive. Greece proved by existing 1950-1990 that low quality exports with a cheap currency (and thus cheap exports) is a perfectly workable strategy. It was the Euro and the bailouts that destroyed the productive tissue of the country. Also, all of this would have been avoided if the EU had a legal department or some economic experts that would have raised the alarm. What a pity it didn't! [/Sarcasm]]
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Jul 12, 2016 17:46
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Oh France, never change https://twitter.com/spignal/status/752905834523402240 Dawncloack posted:Lack of industry yes, though. They had exports before they joined a monetary union that essentially meant their exports were too expensive. Greece proved by existing 1950-1990 that low quality exports with a cheap currency (and thus cheap exports) is a perfectly workable strategy. It was the Euro and the bailouts that destroyed the productive tissue of the country. The German Bundesbank actually raised the alarm but France convinced Schröder that they had to let Greece in. As to the 1950-1990 existence, Greece always relied on external funding, whether it was, the US or the EU (and its predecessors) Greece never was a functioning nation on its own.
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Jul 12, 2016 17:50
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People saying that Greece should have defaulted and grexited have literally no idea what they are talking about. Greece imports basically all of their essentials, most notably food and energy and a default would have completely locked them out of the financial markets save the vulture lenders who would make the troika look like fuzzy bunnies by comparison. Venezuela is the example to look at for what it would look like and anyone who thinks that is hyperbole has not ran the numbers. Grexit is the refuge for people who don't understand how financial markets function. The problem lots of people have when they talk about topics like this is they think there's no possible way things could get worse. Things can get so so so much worse.
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Jul 12, 2016 17:51
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quote:People saying that Greece should have defaulted and grexited have literally no idea what they are talking about. Greece imports basically all of their essentials, most notably food and energy and a default would have completely locked them out of the financial markets save the vulture lenders who would make the troika look like fuzzy bunnies by comparison.
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Jul 12, 2016 17:57
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GaussianCopula posted:The German Bundesbank actually raised the alarm but France convinced Schröder that they had to let Greece in. As to the 1950-1990 existence, Greece always relied on external funding, whether it was, the US or the EU (and its predecessors) Greece never was a functioning nation on its own. That's like trying to say that any country that has ever taken a loan isn't a functioning nation on its own.
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Jul 12, 2016 18:18
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GaussianCopula posted:The German Bundesbank actually raised the alarm but France convinced Schröder that they had to let Greece in. As to the 1950-1990 existence, Greece always relied on external funding, whether it was, the US or the EU (and its predecessors) Greece never was a functioning nation on its own.
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Jul 12, 2016 18:54
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In other news, the majority of Greeks are anti-semites:quote:Pew found the EU average to be just 16 percent, noting that Greece is major exception with a 55 percent majority expressing a negative view about Jews. http://www.ekathimerini.com/210369/article/ekathimerini/news/poll-finds-greeks-among-most-anti-migrant-in-eu
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Jul 12, 2016 18:57
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GaussianCopula posted:In other news, the majority of Greeks are anti-semites: Well what do you expect when you let the Jew bankers run their country into the ground 
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Jul 12, 2016 20:47
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Phone posting,just a reminder: Portuguese debt to GDP ratio was around 70% in 2010.six years and one troika intervention later its close to 130%. The public debt is around 230 billion euros.private debt is 500 billion euros. The problem was never public debt. Also ecofin decided to move forward with the procedure to fine Portugal and Spain for excessive budget deficit in 2015,by a whooping 0.2%.ya know, the year Portugal exited the restructure program devised implemented and monitored by the troika.amazing how this just happens when Portugal elected a slightly leftish government.
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Jul 13, 2016 02:01
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Baxta posted:I've read a lot about how Greece has had high levels of debt for basically forever and they fudged numbers to get into the EU. After getting into the EU, they exploited the new stabler economy by borrowing like crazy and when 2008 came, it all backfired. By "they" I mean the politicians and bankers who were allowed to get away with all this and not Mr and Mrs Citizen Papadopoulos. There are two sides to every transaction. Nobody forced the banks to lend to Greece at 3% -- but Euro politicians did get an agreement to treat Eurozone government bonds as all having the same risk. The result was Greek debt fell from north of 15% yield to 3%. That's crazy and has no relationship to reality without the implicit guarantee that Eurozone bond deal was offering. Then when the time came to back up that promise by running the poo poo out of the printing presses there was no system in place and nobody did it, and Greek bonds bounded back to their market rate and blew apart the Greek government's budget. This really is an epic man-made catastrophe. There are so many policy own-goals it's hard to disentangle at this point who hosed up, because the fuckups go back to decisions made in the early 90s. The Greeks hosed up sure, but the banks, the architects of the Euro, and the ECB hosed up on a grander scale entirely. This is a "regional political order threatening to collapse" level of fuckup. Greece is a useful scapegoat because their public debt is so high, and bank bailouts are deeply unpopular. It's much easier to tell a story about Greek profligacy than a story about empty promises, bad government, and large bailouts. While they may share some blame Greece's economy is small in the European context, and if their defaulting has systemic repercussions then the system is really at fault.
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Jul 13, 2016 04:19
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Lazy nazi greeks profligate public spending ARGH!
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Jul 13, 2016 04:44
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Arglebargle III posted:There are two sides to every transaction. Nobody forced the banks to lend to Greece at 3% -- but Euro politicians did get an agreement to treat Eurozone government bonds as all having the same risk. The result was Greek debt fell from north of 15% yield to 3%. That's crazy and has no relationship to reality without the implicit guarantee that Eurozone bond deal was offering. Then when the time came to back up that promise by running the poo poo out of the printing presses there was no system in place and nobody did it, and Greek bonds bounded back to their market rate and blew apart the Greek government's budget. The only ones lending to Greece below 3% were the EMU partners during the bailouts. It was mostly Greek banks and pensionfunds lending to their government in the decades before, accounting for about 60% of outstanding debt if I remembr correctly. Most debt to domestic and foreign banks was written off and the remainder refinanced with yearly effective costs close to 1%. What is in the Greek books now is debt csused by new deficits, and debt caused by the need to recapitalise their banks (bailing out Greek private sector assets, which were unfortunately promptly moved abroad. Who could have guessed?) There is no agreement, nor has there ever been one, that sais all government bonds carry the same risk, that's impossible, the markets make the risk assasments. It is quite the opposite with articles explicitly stating that individual debt shall never be mutualised. There was never a promise made. What are you talking about? The ECB has run a huge QE action, e.g. the ECB providing liquidity in exchange for lovely government bonds. Greek banks could not participate since they already got to offload all their lovely debt in an earlier stage. What articles are you reading? I agree the situation is a clusterfuck, but your description of passed events are beyond inaccurate, they lack any factual basis.
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Jul 13, 2016 06:53
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Lagotto posted:The only ones lending to Greece below 3% were the EMU partners during the bailouts. It was mostly Greek banks and pensionfunds lending to their government in the decades before, accounting for about 60% of outstanding debt if I remembr correctly. greek yields indeed ballooned post-crisis and early on funds/banks were crawling over eachother to get a piece of that high-yield pie. Acceptance into the EEC and EU - as well as all that bank investment - seems to imply a certain level of guarantee, which indeed got followed through on.
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Jul 13, 2016 09:16
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TheDeadlyShoe posted:you seem to be talking about after the bailouts, particularly the second one. The lowest yield was 3.14% but to take that as a baseline is a bit disingenuous. Regardless, that was a market assessment and they have suffered for it, all be it not enough in my view. After the first bail out there were no private sector lenders of importance, all financing was done against very low yields by the EMU partners, so I do not get where your idea of funds and banks crawling over eachother to lend Greece more comes from. If that were the case, there would have been no need gor a 'Troika'. Whatever you think acceptance in the EU (or EMU I suppose) implies is irrelevant, since the charters explicitly prohibit risk sharing. Any market party (Greek or otherwise) gambling otherwise should be harshly punished with a default of that debt, not being bailed out by bank recapitalisations etc..
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Jul 13, 2016 09:26
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Lagotto posted:The lowest yield was 3.14% but to take that as a baseline is a bit disingenuous. Regardless, that was a market assessment and they have suffered for it, all be it not enough in my view. After the first bail out there were no private sector lenders of importance, all financing was done against very low yields by the EMU partners, so I do not get where your idea of funds and banks crawling over eachother to lend Greece more comes from. If that were the case, there would have been no need gor a 'Troika'. Despite the crisis, the Greek government's bond auction in January 2010 of €8 bn 5-year bonds was 4x over-subscribed.[51] The next auction (March) sold €5bn in 10-year bonds reached 3x.[52] However, yields increased, which worsened the deficit. Rating agencies then downgraded Greek bonds to junk status in late April 2010. This froze private capital markets, requiring a bailout to avoid a sovereign default.[53] In April 2010, it was estimated that up to 70% of Greek government bonds were held by foreign investors, primarily banks -wiki the charter's words are one thing; the risk is shared by virtue of the governments sharing a currency. therefore, the EU will (and did) take action to mitigate the problem. since we're talking about the market judgements, the market clearly judged this would be the case, or why else would those bond auctions be oversubscribed in 2010?
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Jul 13, 2016 09:37
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TheDeadlyShoe posted:Despite the crisis, the Greek government's bond auction in January 2010 of €8 bn 5-year bonds was 4x over-subscribed.[51] The next auction (March) sold €5bn in 10-year bonds reached 3x.[52] However, yields increased, which worsened the deficit. Rating agencies then downgraded Greek bonds to junk status in late April 2010. This froze private capital markets, requiring a bailout to avoid a sovereign default.[53] In April 2010, it was estimated that up to 70% of Greek government bonds were held by foreign investors, primarily banks That's 13€ billion, hence my 'of importance '. That 70% figure is from before the bail out, 80% of that was written of either directly or by capping future servicing costs. And I agree that the markets got rewarded by out weak kneed politicians. My entire point and position is that they never should have, especially given the charters and treaties those same politicians drafted and signed. Greek did not default, that does not mean I do not get to argue that they most definetely should have. That the market assessment of the political actions were largely correct just goes to show how deeply rotten the entire EMU project is and that our priority should be a dismantling and complete restructuring of it before we ever start up something similar again.
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Jul 13, 2016 10:06
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The fatal flaw was/is that banks could basically use a money pump with this easy scheme: Bank buys government debt with interest rate i Bank uses this debt to get more money from the ECB at interest rate j (j<i) repeat ad infinitum.
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Jul 13, 2016 10:15
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