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  • Greece to submit draft reform bill [View news story]
    I acknowledge your reply and agree with some of your points and disagree with others. It's a very intelligent and informed comment and I appreciate the time you took to write it.

    Since the lengths of our comments are getting a little ridiculous, I'll leave your analysis aside, and my disagreements with it, for the moment and address your predictions for Greece:

    1) If indeed Greece backs away from its demands then what has been Greece's rolling default will also continue and the end result will only be magnified. I understand there's a lot of support behind the notion that Greece should bend over and abide by a continuance of the austerity regime because of the impendency of a of primary budget surplus that it is believed (wrongly I'd say) that the austerity was creating, but I will suggest people need to think about how increasing debt and shrinking GDP end. The path is just unsustainable and merely prolongs misery for all involved. As well as increasing the money extended to Greece by its creditors. A haircut is inevitable in this case, and a default, and all sorts of problems.

    2) Your number 2 needs to be rephrased. "Greece *and* its creditors stick to their positions and there is no deal." Greece has already, and, as it continues to state explicitly, continues to be willing to compromise on most of its agenda. It doesn't disagree that reform is needed. The belligerence is coming from the creditor side. Greece is looking for a reform program that works inside certain parameters, and the creditors are the ones who are refusing the parameters.

    I can't imagine anyone believes any longer that the 2012 restructure was handled properly. I watched it go down in abject horror. Even the captive political sector was dismayed and struggled to find a man soulless and stupid enough to sign off on it. 3 years later and we're back in the same place, with people supporting the same ideas that started in 2010 and led to 2012. 5 years of rolling default have done nothing to take Greece off the table. It really is time for a change of direction. The Greek people knew it and elected a government capable and interested enough to perform on it, one hopes they can convince the EMU.
    Apr 30, 2015. 12:32 PM | 1 Like Like |Link to Comment
  • Greece to submit draft reform bill [View news story]
    Quant I was primarily curious about your assertion that Syriza's rhetoric is not close to what the EMU was intended to be.

    I don't disagree when you state that the EMU's goal was "economic and fiscal convergence", and won't here discuss the failures of the peripheral countries entrance into the EMU. But I take issue with your implication that Greece hasn't already been engaged in a dramatic and tremendous "shake up" that has absolutely failed to achieve the ends envisioned by its drafters: Greece's creditors, or the "Troika".

    Syriza's perspective, as I have elaborated in this and other comment threads, is that the austerity has pretty much run out of road and has achieved as much as it ever was going to, and that further austerity will only prolong the pain and dramatically increase the probability of hard default. The solution proposed is to alter the direction to a pro-growth strategy, which, if facilitated and supported by its lenders, would potentially enable Greece to pay off its debt and return to a growing and fully functional and competitive economy. Further austerity and cuts will absolutely lead to a hard default and pain for everyone.

    Syriza's agenda, if you look into it behind the hype and hyperbole, is very rational, very moderate, and very reasonable. The goals are 100% in-line with the stated goals of its creditors. The breakdown occurs in how those goals are achieved, which is why Syriza has frequently made the comment that what is at issue is politics, not reform.

    The Greek government *has* presented a "realistic and credible plan" but it isn't being reported on. The statements emerging from the EU finance minsters have been routinely quoted suggesting that Greece is non-cooperative, while the truth is that the demands being made of Greece are unreasonable from any rational perspective. Syriza refuses to proceed upno the current failed trajectory because of the belief that the reform programs are fixing nothing, and Syriza gets chastised in the media as "uncooperative".

    I get that no one wants to commit further funding. But I also get that the US got through the Great Depression via a pro-growth strategy while Europe and its "austerity" focus failed and kept the continent in doldrums, only to end up with Europe following the US QE/pro-growth strategy... albeit years later.

    As for where this ends up, it doesn't end with Greece exiting the Euro or the EMU. And it increasingly is looking likely that capital controls and a soft default are coming. I'm ok with that. There are three ways this can go:

    1) Greece's creditors change direction and make an agreement which will allow Greece to go forward with its pro-growth strategy, release the final tranch of funds from the 2012 restructure which have been frozen since August 2014 and provide access to ancillary funding of the types Greece is requesting so as to facilitate its new programs so that Greece can build its economy, return to growth, and very likely pay off all its debt;

    2) Insist on austerity leading absolutely to an inevitable hard default as the debt burden increases and the economy continues to shrink, and promote this by continuing along the current trajectory of non-agreement to Greece's plans, which will lead to capital controls and Greek default and all implied by same; destroying the EMU as a rational concept and annihilating what remains of the Greek economy, followed by a massive Greek debt haircut of the debt in a restructure, destroying the credibility of the Troika in the process.

    3) Some kind of compromise... allowing Greece to at least start rebuilding its economy as a modern, competitive, 21st century entity.
    Apr 29, 2015. 07:13 PM | Likes Like |Link to Comment
  • Greece to submit draft reform bill [View news story]
    "The government is showing clear signs of submission"

    17741882, I expect the statements out of the EMU will be "no way", "unreasonable", and "not going to happen".

    The problem here is Greece needs a pro-growth agenda which will cost money. No one wants to say it but there, I did.

    To create a new tax bureau from the ground up costs money. To create electronic collection systems and increase the efficiency of the tax collection regime, period, costs money.

    Where is this money going to come from?

    To promote growth and development costs money. Incentives...cost money.

    The bottom line is that Syriza's pro-growth agenda is the exact opposite of everything Greece's creditors have been doing and would also increase Greece's debt burden. All of which is anathema to them. They'd rather crush the country and THEN have it default than fund a pro-growth strategy that would short term increase debt but long term provide Greece with the opportunity to actually pay.

    So there you have it. I said it.
    Apr 29, 2015. 11:07 AM | 2 Likes Like |Link to Comment
  • Greece to submit draft reform bill [View news story]
    quant your comment needs clarification.

    What do you mean by: "looking at Greece from the broader European perspective ... find the the Syriza rhetoric entirely incompatible with anything the currency union was ever supposed to be"

    I was opposed to Greece's entrance to EMU. I stated it loudly to anyone who would listen pre 2001 and suggested from 2001 onwards that things were very wrong. I mention this so you understand that I am not a casual observer of the events in Greece, having investments there predating its EMU entry.

    Syriza is the best thing to happen to Greece in 60 years, and the vast, vast majority of editorializing about it completely and totally ignores everything that has happened in Greece in those 60 years. And Syriza's positions are not unreasonable by any stretch. Anyone who takes a few minutes to read their actual positions would understand where the breakdown in the negotiations is.

    Here is a link to an editorial from Varoufakis himself:

    The problem facing the EMU finance ministers is that they know he's right, he knows he's right, but no one can agree with him because of the *political* implications such agreement would have. The attitude is indeed 'let them eat cake'.
    Apr 29, 2015. 10:59 AM | 1 Like Like |Link to Comment
  • Pentagon: Seized ship not from U.S. [View news story]
    Marshall Islands is tax haven for US and European companies, sounds like fuddy duddy.
    Apr 28, 2015. 11:43 AM | 1 Like Like |Link to Comment
  • Tsipras expects bailout deal to happen by May 9 [View news story]
    The Bloomberg report has some additional details missing from the one linked here.
    Apr 28, 2015. 08:04 AM | Likes Like |Link to Comment
  • Investors exit bullish oil trade [View news story]
    A lot of 'investors' in oil buy it as part of long term commodity allocation strategies. ETF buyers will absolutely buoy oil.
    Apr 27, 2015. 02:42 PM | Likes Like |Link to Comment
  • Eurozone ministers ponder 'Plan B' for Greece [View news story]
    Russia also happens to be Greece largest trading partner (pre-sanctions) and primary source of oil. Greece's relationship with Russia goes back to the 2nd World War, which seems interesting in this context.

    *But* both China and Russia would negotiate from a position of strength, should Greece come hat in hand, and ask for concessions Greece would not likely be willing to offer. Greece would likely default first, and subsequently increase trade with SE Asia and Russia.
    Apr 26, 2015. 09:41 PM | Likes Like |Link to Comment
  • Eurozone ministers ponder 'Plan B' for Greece [View news story]
    Well let me ask you a different way: Lehman was allowed to fail because it supposedly did not pose systemic risk. Is Lehman, in any meaningful way, a deterrent to bad behavior by other investment banks?
    Apr 26, 2015. 09:36 PM | Likes Like |Link to Comment
  • Eurozone ministers ponder 'Plan B' for Greece [View news story]
    The drachma was the facilitator of what you describe as 'the old ways'. Part of Greek citizen interest in the Euro was the fact that it was well known the government was captive to elite interests, and it consistently catered to them to the misfortune of the average citizen. The drachma isn't a golden bullet.

    Meanwhile, a default would haircut a significant amount of debt placing the burden on Greece's lenders, while devastating the private investments made by non Greek entities into Greece since its entry into the EMU, and collapsing European trade with Greece.

    In every meaningful way the drama playing out suits both sides with a resolution. Plenty of threatening on both sides, but all the threats are empty.
    Apr 26, 2015. 07:47 PM | 1 Like Like |Link to Comment
  • Eurozone ministers ponder 'Plan B' for Greece [View news story]
    Thanks Tobias, that clears up the value of your contribution to this discussion.
    Apr 26, 2015. 07:19 PM | 2 Likes Like |Link to Comment
  • Eurozone ministers ponder 'Plan B' for Greece [View news story]
    "the Troika needed to insist on the numbers adding up"

    And the Troika failed. After years of austerity and Troika-determined reform, the Greek economy is smaller, less productive, and further in debt.

    I get the impression you are missing a lot of the details of the types of debt Greece held pre-restructure and post, the value of trade between Greece and its EU partners, and the size of European private sector investment in Greece. The belief that Europe is somehow isolated from Greece and that Greece is an insular economy is horribly erroneous.
    Apr 26, 2015. 07:18 PM | 1 Like Like |Link to Comment
  • Eurozone ministers ponder 'Plan B' for Greece [View news story]
    joliebig your link doesn't help you. You can't be serious.
    Apr 26, 2015. 07:02 PM | Likes Like |Link to Comment
  • Eurozone ministers ponder 'Plan B' for Greece [View news story]
    Why is there moral hazard in being allowed to default and exit (out) yet no moral hazard in being forced to repay your loans (in)?
    Apr 26, 2015. 05:24 PM | 2 Likes Like |Link to Comment
  • Eurozone ministers ponder 'Plan B' for Greece [View news story]
    You should read up on Varoufakis' writings in his pre-minister days.
    Apr 26, 2015. 05:17 PM | 1 Like Like |Link to Comment