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  • Varoufakis promises to quit if Greeks vote for austerity [View news story]
    " So would your Option 3 -- Greece has no credibility, everyone knows they'd be back for more shortly."

    Your comment completely and totally lacks any understanding of Syriza, its policy proposals to the Eurogroup, or its agenda, or for that matter Greece's history.

    Syriza quite explicitly positioned for an end to bailouts and a pro-growth regime, and pretty much anyone credible anywhere agrees that between the past 5 years of crushed growth and the current output gap, a managed default under the terms proposed by Syriza would be effective. It just isn't on the table because the policy agenda doesn't conform to the strictures of the Eurogroup.
    Jul 4, 2015. 10:02 AM | 1 Like Like |Link to Comment
  • Varoufakis promises to quit if Greeks vote for austerity [View news story]
    The referendum is non-binding. "Challenging" the results is unnecessary. He can simply state the vote is too close to be valid.
    As for "flip flopped", I quote, from someone who said it eloquently:

    "The hypocrisy of some of the commentary on Greece is amazing. When the ‘adolescent ideologue’ Mr Tsipras shows a statesman-like maturity in being prepared to compromise in an effort to get a deal, he is accused of inconsistency and not being able to make up his mind. When those who he is negotiating with push him further than he is prepared to go, he is accused of ‘taking Greece to the brink’ by having the temerity to ask the Greek people to choose."

    "Mr Tsipras is accused of failing to grasp that other nations too have democracies, as if the Troika had shown huge respect for democracy by acting as if nothing was changed by Syriza’s election."
    Jul 4, 2015. 09:57 AM | Likes Like |Link to Comment
  • Varoufakis promises to quit if Greeks vote for austerity [View news story]
    The Eurogroup - and primarily Germany - has made it clear that it will not negotiate with a Syriza administration, period.

    The Eurogroup makes its own policy. And it's only policy line today is austerity of a certain type. It is making clear - and this is reflected in Schauble's comments, stance, and positioning - that Eurogroup membership means adherence to Schauble's own particular doctrine of economic policy, with no room for alternative agendas.

    A "no" vote still gives Tsipras options, but none of those are good for the Eurogroup.
    Jul 4, 2015. 09:54 AM | Likes Like |Link to Comment
  • Varoufakis promises to quit if Greeks vote for austerity [View news story]
    " Letting Greece default in a polite way via a 100 year postponement of principal repayments will only encourage other to follow Greece's path."

    The issue now isn't 'letting' Greece do anything. The issue now is that the way the situation has devolved there are very real risks for the Eurozone and its membership.

    Since before 2010 the Eurogroup has failed to get out in front of this. When it was truly meaningless sums and negligible risks. In 2012 Greece held the vast majority of its bonds with local law and could have defaulted unilaterally and would have been in great shape today. Instead, it agreed with its Eurogroup peers to engage in this austerity drive, to help contain any contagion, and to effectively bail out European banks.

    The debt was then moved almost entirely onto the 'official sector', and ringfenced. And today, Greece has no bargaining position. It participated in the fiction of maintaining the Eurozone at all costs and 3 years later after the fallout was contained it is being pushed out. The Eurogroup has shown that maintaining membership at all costs is a fiction, and that it has clear policy agendas which do not take into account the domestic politics or unique agendas and situations of member countries.

    Greece won't be allowed to default in a 'polite way' and the Eurogroup has adopted a very aggressive anti-Greece stance. There are 3 options: 30 years of debt slavery under the auspices of Eurogroup driven austerity programs, Eurozone exit, or a negotiated managed default.

    With option 3 taken off the table by the Eurogroup, the options in Sunday's referendum become much clearer.
    Jul 4, 2015. 09:46 AM | Likes Like |Link to Comment
  • Varoufakis promises to quit if Greeks vote for austerity [View news story]
    The "output gap" is suspected by the OECD to be on the level of 10%. An exit from the Euro would clearly be in Greece's favor, even though Syriza and most Greek people would prefer to avoid it. Let me quote Simon Wren-Lewis, an economics professor at Oxford:

    "The OECD estimate that the output gap in Greece is currently well over 10%. In plain English that means that those currently unemployed could be producing something useful and GDP could easily expand by at least 10% without generating any increase in inflation. (Greek inflation is currently around -2%.) That would not only be in the interests of Greece, but also in the interests of Greece’s creditors. It is a way of achieving the primary surpluses that the Troika wants without inflicting more pain. It is also absolutely undeniable that further austerity would tend to reduce GDP, just as past austerity has done. So everyone can be made better off by giving Greece the breathing space so that its economy can recover. But apparently it is childish to try and negotiate for such an outcome."
    Jul 4, 2015. 09:34 AM | Likes Like |Link to Comment
  • Varoufakis promises to quit if Greeks vote for austerity [View news story]

    "but what was artificial was the liquidity of Greek banking as long as ELA was being increased nearly daily."

    Artificial: The ECB decided to lift the waiver affecting marketable debt instruments issued by Greece on Feb 4, within days of Syriza's electoral win. The waiver allowed those instruments to be used in Eurosystem monetary policy operations despite the fact that they did not fulfil minimum credit rating requirements.

    The ECB then forced Greece into ELA life support, which carries a higher interest rate. The entirety of ELA borrowings reflect pressure placed on Greece to comply with Eurogroup designed austerity.

    The ECB used ELA as a method of forcing political cooperation - outside its mandate, and even though cutting off ELA is only supposed to occur subsequent to insolvency, it was used as a weapon by the ECB to -create- insolvency.

    Greece never needed to be put on ELA life support if the ECB was looking for a real resolution, and ELA cessation created a liquidity crisis which forced a solvency crisis.

    Of the 60b in ELA post-Syriza win, 50b apparently reflects the shift from ECB's MRO to ELA as a result of the ECB declaring Greek debt ineligible as collateral, with only 7b reflecting liquidity needs.

    As for the subsequent increases in ELA, I've made my case that it is primarily money exported from Greece due to its broken balance of trade with Europe, as in, it is European profits from their business operations in the country.

    And yes, I continue to support Tsipras moves.

    The ECB has taken on a very political role in this, effectively having a veto on Eurozone states membership in the currency, via its control of ELA, and its ability to create solvency crises as a result. It has clearly elucidated in this drama that the Euro, far from what it purports to be is a glorified currency peg.

    Take note: this will be a concern in the future in Europe. You are looking at this purely in the short term light of Greece, while it is impacting the structure and foundations of how the Eurozone is built and ordered.

    Had the ECB not had the option of withdrawing ELA, policymakers would have been forced into a negotiated result, which would have resulted in a tighter political union. Instead the ECB is using access to ELA as a method to force Eurogroup policy on member states. The notion of the Eurozone has been clearly made less attractive and the future of the Eurozone less secure.
    Jul 4, 2015. 09:24 AM | 2 Likes Like |Link to Comment
  • Varoufakis promises to quit if Greeks vote for austerity [View news story]
    Have you ever made a single comment that had real information or wasn't completely wrong?

    Since we're making assumptions about each other, you must be a lousy investor. Fun.
    Jul 2, 2015. 12:34 PM | 2 Likes Like |Link to Comment
  • IMF: 2012 Greek bailout didn't work [View news story]
    ...and the debt ratio would continue to be unsustainable into 2030... no typo, 2030.
    Jul 2, 2015. 12:07 PM | 1 Like Like |Link to Comment
  • Varoufakis promises to quit if Greeks vote for austerity [View news story]
    Reality check:

    The liquidity crisis was artificially created by the ECB. The solvency crisis was created by the liquidity crisis, and it all started 6 months ago when the ECB, confronted with a Syriza electoral win, declared Greek collateral unsuitable and force placed Greece on ELA life support.
    Jul 2, 2015. 12:04 PM | 2 Likes Like |Link to Comment
  • Varoufakis promises to quit if Greeks vote for austerity [View news story]
    Can't blame him. If the Greeks choose more austerity over the pro growth platform he is promoting there really isn't much point for him to stay.

    Besides, the economy will just relapse and recycle into another bailout and he'd be better off leaving the country like everyone else.
    Jul 2, 2015. 08:32 AM | 5 Likes Like |Link to Comment
  • Eurozone rejects Greece's bailout extension request [View news story]
    Well, it's more like Eurogroup and Merkel have decided the Syriza administration, democratically elected in a sovereign nation, is not suitable and has decided to have them replaced.

    And it was hardly Tsipras who forced the default.... Syriza took power on a renegotiation platform, and the ECB immediately stopped taking Greek government debt as collateral for loans. As in, it immediately creates pressure on a newly elected government by restricting access to money. Which immediately starts strangling the economy. And simply upped the pressure from there.

    Default occurred as a result of the ECB's decision to end access to ELA. ELA could easily have been extended at least until after the referendum but simply was not. Had the Eurogroup chosen to do so it could also have provided access to 7b of funds that were part of its 2012 restructure. But instead it withheld any of the bailout funds - which were earmarked to pay Troika loans, since August 2014. The ECB asphyxiated the economy and forced a default on loans to itself - and made it look like it was Tsipras - fantastic politicking there.
    Jun 30, 2015. 09:37 PM | 2 Likes Like |Link to Comment
  • Greece bailout expires as deadline passes [View news story]

    Europe is likely well ring fenced from financial fallout, that's not the risk at all. Grexit risk is that a clear path and method of Eurozone exit will be delineated.

    Cyprus gave us the first taste of what happens when a peripheral nation encounters a solvency issue in the Euro area, and Greece has so far followed along where Cyprus led. Next time a debt crisis arises, there will be a clear path to currency exit, and the irrevocability of the Euro will have ended.

    This is why markets are mostly shrugging the Greece events off - financial impact appears to be muted. The political implications are not however.
    Jun 30, 2015. 09:19 PM | 4 Likes Like |Link to Comment
  • Greece bailout expires as deadline passes [View news story]
    I'm sorry, but how do you correlate a 25% contraction in GDP, over 25% unemployment, and a 5 year depression with "Greeks had opportunities to choose a better path but they chose to believe the promises of a bunch of socialists"?

    That the economy needs growth oriented policies is without question, austerity has been debunked everywhere, even in Europe which has now embarked on its own QE program.
    Jun 30, 2015. 09:12 PM | 2 Likes Like |Link to Comment
  • Greece bailout expires as deadline passes [View news story]
    The process doesn't take any longer than in the US with some places taking somewhat longer to report than others.

    Votes in Greece are televised and counted in the same way as in the US....

    I doubt however that Syriza would call elections immediately and that a new election could possibly conclude before the end of summer.
    Jun 30, 2015. 09:07 PM | 1 Like Like |Link to Comment
  • Greece bailout expires as deadline passes [View news story]
    The process of voting in Greece is arcane and tedious, in tandem with an archaic technology. Proof of voting eligibility is the primary reason. In response to your question:

    1) No, they cannot. Merkel and Djoesselboem have pretty clearly made the referendum a precursor to continuation of talks. It is pretty apparent that should Greeks vote YES the intent is to force regime change around that vote. If nothing else, consider it a trial run for the event the Syriza administration actually calls elections.

    2) Greece will have no issue with international monitors should anyone feel the need to do as much. The process of voting however is so strict that I doubt anyone would find it necessary.

    I'd also suggest that with the referendum in play, and the efforts from the Eurogroup side to force the Syriza administration to collapse, so as to pursue negotiations with another government, we may be looking at severe damage to what's left of the economy under capital controls in the timeframe all that will take to play out. But that doesn't seem to be on anyone's agenda so I guess that's that.

    Capital controls will destroy tourism, right in the middle of high season, the 2nd largest source of GDP in the economy.
    Jun 30, 2015. 08:43 PM | 2 Likes Like |Link to Comment