Hi Chris You were up early The European creditors now have the problem that their parliaments and their electorates will not countenance any significant improvement to their offers. The only resolution that will keep the euro enact , and the voters in Europe content would be to redirect the Quantitative easing program to extinguish ALL Europe's public debt instead of issuing it to bond holding banks. This shouldn't be too radical now as the publicity QE has had has shown everyone who's paying attention that though money still doesn't grow on trees, its creation is actually much easier and quicker than any orchardists' production. Cheers David J S
Its for the best, in the short term there will be well austerity, in fact extreme austerity as Greece exits the euro and most probably the EU and defaults, effectively cutting herself off from international credit (for about 5-7 years if argentina and russia are guides), leading to the collapse of all banks and financial intermediation issues. There will probably be hyperinflation as its likely they print money in lieu or tax rises and spending cuts, but there will eventually be recovery and at least they're future is in they're own hands.
It will be interesting to follow the euro, think what would happen to the kiwi dollar if say Masterton defaulted and left our monetary system and adopted theyre own currency - the Masterton Drachma, there would certainly be volatility around our currency - and the euro is a much bigger fish, interesting few months in money market land I think.
The expression "Greek tragedy" resonates. Two thirds of a nation resist the oriental despot that is international finance. Xerxes will not retreat without burning the Parthenon.
Democracy triumphs Chris? You do realize the entire country is about to run out of money. If the ECB doesn't agree to an emergency loan for Greek banks then all those people who voted no are going to find their life savings vanish!
When you don't seem to have much left to lose, hard decisions can seem to be clearer. I found it funny to listen to Matthew Hooton this morning on Radionz. What a sententious lecture. Greece can't get away with behaving like the USA, tax avoidance, QE, manufacturing arms instead of cars. A local currency, pride, might get them through. Or Europe might have to cancel debt, do a Jubilee. USA cities and ports have gone bankrupt, now that sovereignty is being prejudiced by global waves of capital, why shouldn't a sovereign country act as an entity in a business sense and declare themselves insolvent or something. And not be preyed upon by business, without having the advantages that business gives itself of folding as legally allowed.
The impressions of someone who hasn't gone through the business training propaganda machine.
Good for Greece they have stood up to the neighbourhood bullies and won. But the victory is not a good one for them, neither was the "cure".
From all that has been said about the "negotiations" one can see that it was not really negotiations but a demand from the Troika. It's not a "negotiation" when one side says this is our deal take it or leave it. A true negotiation is when each side puts their deal on the table and discuss a compromise that suits both sides.
Another misconception as I understand it, is that Greece can't be "forced" out of the Euro or even the EU, they can do so voluntarily but cannot be forced out.
the banks and finance capital wanted compliance to send a message to anyone else contemplating saying OXI to their rotten system, they have received a rather different message back, one that hopefully resonates around the world–“we’re not gonna take it!”
Money and politics go together: Alistair Young suggests that international credit will not be forthcoming for 7 years. Maybe but I doubt it, it is likely that the vacuum of European and US based finance will be replaced by BRICS finance, the Chinese and Russia and have a lot of worthless US$s in many ways that could well be utilised for political purposes. For example the Russian Navy has no Mediterranean bases, and they are unhappy about the encroachment of NATO up to their borders. Greece from a Russian viewpoint is usefully positioned to both the Balkans and the Middle East. For the Chinese it may be a backdoor into new European markets....there is a lot at stake for the EEC in letting Greece go for the sake of financiers. Expect the money to arrive and the conditions to be sensible.
Reading the reaction from European leaders it would appear that they are divided between the north and south. Merkel has said the result must be respected. What is obvious is that their is a disconnect between sovereign parliaments and Brussels. It would appear that the facade of pan-European democracy has been exposed for what it is, a highly undemocratic project from bankers and bureaucrats. What happens next will be crucial in deciding if Brussels is the servant or the master of sovereign states. The situation urgently calls for a summit of Europes elected leaders to decide that question.
I've been saying this a lot, so maybe I should cut-and-paste. Austerity doesn't work. Actual economists are coming round to the idea that it doesn't work. Even the IMF for god sake now thinks it's an crap idea. Except – just possibly – under certain strict circumstances which don't apply in Greece. At the very least it's a damn sight more complicated than the right seem to think. And as some famous economist said the other day, the results of a no vote will be terrible but so will be the results of a yes vote. Personally I think that there will be some quite negative consequences, particularly wealthy people buying up assets at dirt cheap prices, but they've had eight years of austerity and nothing positive has happened. That's not to say I have a clue as to what they should do. My economics is basic at most. But with greases history of right wing fascist rule, they should be very careful as to what they do.
Basically this referendum was Syriza washing it's hands of the problem. Now, however it goes, they can hide behind the will of the people. Anyway, while we're feeling all democratic, how about a referendum for the tax-payers in the rest of the EU as to whether they should keep putting money into Greek debt? Everyone seems to forget the newer former Warsaw Pact EU states who are not doing much better than Greece (Romania, Slovenia etc) that borrowed heavily or put up to 2% GDP into the last bail out in solidarity with Greece and have now been shafted again.
I.M.F.Bankers gate keepers,don!t look left, don!t lean left and don!turn left.
Corporations,feudal exploiters give us your tax incentives,better give us your tax money and we shall invest.
Good on Greece,lets see how the E.U.Capitulates to the alternative Greek governments proposal of not paying our debt to you!s just a less harsher lash of the cats tail your profits strips from our bones.SIX TAILS NOT NINE.
the Greeks are well aware that whatever way the referendum went they were in for hard times, or austerity if you prefer....that wasnt what it was about. As Victor says, time will tell if it is a victory for Syriza but Im of the opinion its the best chance for the Greeks
The EU is fine on a political level perhaps, but the euro is a really stupid idea. Firstly it gives more power to the more prosperous economies, which means they dictate monetary policy, and it means that countries like Greece cannot devalue their currency in order to spur growth. Because a devalued euro would be a negative for Germany. I think the Brits were perhaps right to stay out of it. And the consensus seems to be that a withdrawal will be bad, but not so bad for so long as staying in.
Chris, Yanis Varoufakis, in standing down as finance minister, said that he will continue to support the government and that "I shall wear the creditor's loathing with pride," which reminds me of the Roosevelt quote you sometimes mention. Apparently some members of the Troika don't want to negotiate with him, and he and Tsipras considered it the right move to make under the circumstances. Varoufakis may be a better asset to have in the back ground than the foreground right now.
Gureilla surgeon smugly assures us that "Austerity does not work". Given the complexity of economies and the open endedness of the question its pretty obvious to anyone with a functioning brainstem that there will be examples of countries where "Austrity does in fact work" and so we cast our eye 1200 miles north of Greece the poster child of failed austerity (I concur its certainly failed in Greece) to Estonia another small country which embraced austerity post 2008 and today:
"Today, Estonia is actually running a budget surplus. Its national debt is 6 percent of GDP. By comparison, Greece’s is 159 percent of GDP. Ours is 102 percent.
Economic growth has been a robust 7.6 percent, the best in the EU. And, although the unemployment rate remains too high, at 11.7 percent, that is down from 19 percent during the worst of the recession."
Im not pushing austerity as a good policy, actually if pushed I'd have to declare myself an anti-austerian, but as someone with many years of training in economics/economic history I have to rail against the brain-dead dogma of loud mouthed ecomomic illiterates and remind them that economics is interesting because for every case which supports an obviously solid theory there is another which debunks it.
Davo Stevens Greece can have her membership of the EU suspended if she violates EU laws by doing things like printing drachmas which is illegal under EU laws. I strongly doubt anyone will be pushing for Greece to leave the EU which would obliterate theyre economy by eliminating a significant trade partner and force greek ex-pats to return home to the moribund economy. Greece will now almost certainly drop the euro as a currency, with the default they have effectively run out of money and will have to pay public sector costs with initially IOU's (drachma in all but name) theyre banks will collapse without money and they will need to be recapitalized with drachmas - so effectively the euro has now started to fragment.
What I think will be interesting is the future of the euro and with it the whole EU project. Imagine if Masterton defaulted and issues theyre own currency, the NZ dollar would suddenly become a questionable currency and the entire country of NZ could be called into question - the south island could secede adopting theyre own currency - chaos on a far smaller scale than the collapse of the EU
Anonymous-Ref.7/7/2015 8.09 I can't see that Masterton printing its own currency is a good analogy for Greece's position. And what you suggest for NZ as a result of Masterton having a local currency is implausible. I've been in Green Dollars, and have found that national currency rules, and in times of recession participants must take a very committed stance to support their local currency. It is essential they commit their time and skills to provide the necessary vitality of enterprise and energy for success and usefulness. The universality and value-measuring of the national currency and the wider variety of professional skills and resources provided by a strong national financial system will tend to prevail over alternative currencies, until that strength is lost then trust and reliance on it open the way to alternatives.
Masterton or any other region or area with a local currency would be an adjunct to a viable national currency until the national financial system was so rorted or skewed that respect for it, or ability to access enough of it, meant that it was no longer a universal trading device.
I don't remember putting in a "smug" emoji, so how you can tell I'm smug from what's written down there I don't know. Perhaps you're a psychic economist. I didn't say it doesn't work in all circumstances. I have said over and over again in various posts that it works under very strict conditions, which don't exist in Greece at the moment. I think that's the consensus of economists, but if you can pull up some evidence to the contrary by all means do it. I await with baited breath as it were. And if 'for every case which supports an obvious solid theory there is another that debunks it.', then your years of studying economics are totally fucking wasted, and there is no such thing as economic illiteracy. Now THAT'S brain-dead.
Yes, there are some circumstances in which austerity has worked to the limited extent of setting government finances in order and thus, possibly, helping lay the ground for subsequent growth.
The question is, though, whether better (and quicker) results might not have been achieved by going down another path which involved less collateral damage to the societies involved.
Another related question is whether such limited successes that austeriac policies have achieved might not have been more due to compliance with current market orthodoxy than with the inherent virtues of the model.
Austerity,oxford dictionaries explanation of that capitalist made up word.The austerities of life in wartime.
The new modern text book flash named economist basic accountant,known to others as numbers men or the more enlightened bean counters,without human compassion just the theory of the numbers,and when their theory of debt owed paid back at interest is not conducive to their numbered theory of accumulation and profit,they re-asses and count their beans AND DEMAND THEIR TERMS of the same beans counted with penalty.
Democracy has finally voted out sanity.
ReplyDeleteWhen you are broke, austerity is *not* an option.
... addendum, as in austerity is not optional: it's the only choice you have, whether you're a bankrupt individual, or a country.
ReplyDeleteHi Chris
ReplyDeleteYou were up early
The European creditors now have the problem that their parliaments and their electorates will not countenance any significant improvement to their offers. The only resolution that will keep the euro enact , and the voters in Europe content would be to redirect the Quantitative easing program to extinguish ALL Europe's public debt instead of issuing it to bond holding banks. This shouldn't be too radical now as the publicity QE has had has shown everyone who's paying attention that though money still doesn't grow on trees, its creation is actually much easier and quicker than any orchardists' production.
Cheers David J S
Its for the best, in the short term there will be well austerity, in fact extreme austerity as Greece exits the euro and most probably the EU and defaults, effectively cutting herself off from international credit (for about 5-7 years if argentina and russia are guides), leading to the collapse of all banks and financial intermediation issues. There will probably be hyperinflation as its likely they print money in lieu or tax rises and spending cuts, but there will eventually be recovery and at least they're future is in they're own hands.
ReplyDeleteIt will be interesting to follow the euro, think what would happen to the kiwi dollar if say Masterton defaulted and left our monetary system and adopted theyre own currency - the Masterton Drachma, there would certainly be volatility around our currency - and the euro is a much bigger fish, interesting few months in money market land I think.
The expression "Greek tragedy" resonates. Two thirds of a nation resist the oriental despot that is international finance. Xerxes will not retreat without burning the Parthenon.
ReplyDeleteDemocracy triumphs Chris? You do realize the entire country is about to run out of money. If the ECB doesn't agree to an emergency loan for Greek banks then all those people who voted no are going to find their life savings vanish!
ReplyDeleteWhen you don't seem to have much left to lose, hard decisions can seem to be clearer. I found it funny to listen to Matthew Hooton this morning on Radionz. What a sententious lecture. Greece can't get away with behaving like the USA, tax avoidance, QE, manufacturing arms instead of cars. A local currency, pride, might get them through. Or Europe might have to cancel debt, do a Jubilee. USA cities and ports have gone bankrupt, now that sovereignty is being prejudiced by global waves of capital, why shouldn't a sovereign country act as an entity in a business sense and declare themselves insolvent or something. And not be preyed upon by business, without having the advantages that business gives itself of folding as legally allowed.
ReplyDeleteThe impressions of someone who hasn't gone through the business training propaganda machine.
Good for Greece they have stood up to the neighbourhood bullies and won. But the victory is not a good one for them, neither was the "cure".
ReplyDeleteFrom all that has been said about the "negotiations" one can see that it was not really negotiations but a demand from the Troika. It's not a "negotiation" when one side says this is our deal take it or leave it. A true negotiation is when each side puts their deal on the table and discuss a compromise that suits both sides.
Another misconception as I understand it, is that Greece can't be "forced" out of the Euro or even the EU, they can do so voluntarily but cannot be forced out.
the banks and finance capital wanted compliance to send a message to anyone else contemplating saying OXI to their rotten system, they have received a rather different message back, one that hopefully resonates around the world–“we’re not gonna take it!”
ReplyDeleteMoney and politics go together: Alistair Young suggests that international credit will not be forthcoming for 7 years. Maybe but I doubt it, it is likely that the vacuum of European and US based finance will be replaced by BRICS finance, the Chinese and Russia and have a lot of worthless US$s in many ways that could well be utilised for political purposes. For example the Russian Navy has no Mediterranean bases, and they are unhappy about the encroachment of NATO up to their borders. Greece from a Russian viewpoint is usefully positioned to both the Balkans and the Middle East. For the Chinese it may be a backdoor into new European markets....there is a lot at stake for the EEC in letting Greece go for the sake of financiers. Expect the money to arrive and the conditions to be sensible.
ReplyDeleteReading the reaction from European leaders it would appear that they are divided between the north and south. Merkel has said the result must be respected. What is obvious is that their is a disconnect between sovereign parliaments and Brussels. It would appear that the facade of pan-European democracy has been exposed for what it is, a highly undemocratic project from bankers and bureaucrats. What happens next will be crucial in deciding if Brussels is the servant or the master of sovereign states. The situation urgently calls for a summit of Europes elected leaders to decide that question.
ReplyDeleteI've been saying this a lot, so maybe I should cut-and-paste. Austerity doesn't work. Actual economists are coming round to the idea that it doesn't work. Even the IMF for god sake now thinks it's an crap idea. Except – just possibly – under certain strict circumstances which don't apply in Greece. At the very least it's a damn sight more complicated than the right seem to think. And as some famous economist said the other day, the results of a no vote will be terrible but so will be the results of a yes vote. Personally I think that there will be some quite negative consequences, particularly wealthy people buying up assets at dirt cheap prices, but they've had eight years of austerity and nothing positive has happened.
ReplyDeleteThat's not to say I have a clue as to what they should do. My economics is basic at most. But with greases history of right wing fascist rule, they should be very careful as to what they do.
ReplyDelete@Mark Hubbard
If austerity is inevitable it will at least be on their own terms rather than someone else's. That's what the Greeks were voting for.
Basically this referendum was Syriza washing it's hands of the problem. Now, however it goes, they can hide behind the will of the people. Anyway, while we're feeling all democratic, how about a referendum for the tax-payers in the rest of the EU as to whether they should keep putting money into Greek debt? Everyone seems to forget the newer former Warsaw Pact EU states who are not doing much better than Greece (Romania, Slovenia etc) that borrowed heavily or put up to 2% GDP into the last bail out in solidarity with Greece and have now been shafted again.
ReplyDeleteMark Hubbard
ReplyDeleteHow wonderfully Freudian!
Time will tell but I suspect Syriza has gambled and won.
ReplyDeleteI.M.F.Bankers gate keepers,don!t look left, don!t lean left and don!turn left.
ReplyDeleteCorporations,feudal exploiters give us your tax incentives,better give us your tax money and we shall invest.
Good on Greece,lets see how the E.U.Capitulates to the alternative Greek governments proposal of not paying our debt to you!s just a less harsher lash of the cats tail your profits strips from our bones.SIX TAILS NOT NINE.
the Greeks are well aware that whatever way the referendum went they were in for hard times, or austerity if you prefer....that wasnt what it was about. As Victor says, time will tell if it is a victory for Syriza but Im of the opinion its the best chance for the Greeks
ReplyDeleteThe EU is fine on a political level perhaps, but the euro is a really stupid idea. Firstly it gives more power to the more prosperous economies, which means they dictate monetary policy, and it means that countries like Greece cannot devalue their currency in order to spur growth. Because a devalued euro would be a negative for Germany. I think the Brits were perhaps right to stay out of it. And the consensus seems to be that a withdrawal will be bad, but not so bad for so long as staying in.
ReplyDeleteChris, Yanis Varoufakis, in standing down as finance minister, said that he will continue to support the government and that "I shall wear the creditor's loathing with pride," which reminds me of the Roosevelt quote you sometimes mention. Apparently some members of the Troika don't want to negotiate with him, and he and Tsipras considered it the right move to make under the circumstances. Varoufakis may be a better asset to have in the back ground than the foreground right now.
ReplyDeletehttp://yanisvaroufakis.eu/2015/07/06/minister-no-more/
Paul Krugman does some arithmetic on Austerity:
ReplyDeletehttp://krugman.blogs.nytimes.com/2015/07/05/austerity-arithmetic/
And the IMF Economists:
http://mobile.reuters.com/article/idUSKCN0PD20120150703?irpc=932
Democracy has finally voted to impose the consequences of lending in an unsustainable manner on the creditors.
ReplyDeleteTime for a haircut!
Gureilla surgeon smugly assures us that "Austerity does not work". Given the complexity of economies and the open endedness of the question its pretty obvious to anyone with a functioning brainstem that there will be examples of countries where "Austrity does in fact work" and so we cast our eye 1200 miles north of Greece the poster child of failed austerity (I concur its certainly failed in Greece) to Estonia another small country which embraced austerity post 2008 and today:
ReplyDelete"Today, Estonia is actually running a budget surplus. Its national debt is 6 percent of GDP. By comparison, Greece’s is 159 percent of GDP. Ours is 102 percent.
Economic growth has been a robust 7.6 percent, the best in the EU. And, although the unemployment rate remains too high, at 11.7 percent, that is down from 19 percent during the worst of the recession."
Im not pushing austerity as a good policy, actually if pushed I'd have to declare myself an anti-austerian, but as someone with many years of training in economics/economic history I have to rail against the brain-dead dogma of loud mouthed ecomomic illiterates and remind them that economics is interesting because for every case which supports an obviously solid theory there is another which debunks it.
Davo Stevens Greece can have her membership of the EU suspended if she violates EU laws by doing things like printing drachmas which is illegal under EU laws. I strongly doubt anyone will be pushing for Greece to leave the EU which would obliterate theyre economy by eliminating a significant trade partner and force greek ex-pats to return home to the moribund economy. Greece will now almost certainly drop the euro as a currency, with the default they have effectively run out of money and will have to pay public sector costs with initially IOU's (drachma in all but name) theyre banks will collapse without money and they will need to be recapitalized with drachmas - so effectively the euro has now started to fragment.
ReplyDeleteWhat I think will be interesting is the future of the euro and with it the whole EU project. Imagine if Masterton defaulted and issues theyre own currency, the NZ dollar would suddenly become a questionable currency and the entire country of NZ could be called into question - the south island could secede adopting theyre own currency - chaos on a far smaller scale than the collapse of the EU
Hi Chris
ReplyDeleteVaroufakis resigns !
Has Little got his invitation off yet?
Cheers D J S
Anonymous-Ref.7/7/2015 8.09
ReplyDeleteI can't see that Masterton printing its own currency is a good analogy for Greece's position. And what you suggest for NZ as a result of Masterton having a local currency is implausible. I've been in Green Dollars, and have found that national currency rules, and in times of recession participants must take a very committed stance to support their local currency. It is essential they commit their time and skills to provide the necessary vitality of enterprise and energy for success and usefulness. The universality and value-measuring of the national currency and the wider variety of professional skills and resources provided by a strong national financial system will tend to prevail over alternative currencies, until that strength is lost then trust and reliance on it open the way to alternatives.
Masterton or any other region or area with a local currency would be an adjunct to a viable national currency until the national financial system was so rorted or skewed that respect for it, or ability to access enough of it, meant that it was no longer a universal trading device.
I don't remember putting in a "smug" emoji, so how you can tell I'm smug from what's written down there I don't know. Perhaps you're a psychic economist. I didn't say it doesn't work in all circumstances. I have said over and over again in various posts that it works under very strict conditions, which don't exist in Greece at the moment. I think that's the consensus of economists, but if you can pull up some evidence to the contrary by all means do it. I await with baited breath as it were. And if 'for every case which supports an obvious solid theory there is another that debunks it.', then your years of studying economics are totally fucking wasted, and there is no such thing as economic illiteracy. Now THAT'S brain-dead.
ReplyDeleteAnonymous@7.59
ReplyDeleteYes, there are some circumstances in which austerity has worked to the limited extent of setting government finances in order and thus, possibly, helping lay the ground for subsequent growth.
The question is, though, whether better (and quicker) results might not have been achieved by going down another path which involved less collateral damage to the societies involved.
Another related question is whether such limited successes that austeriac policies have achieved might not have been more due to compliance with current market orthodoxy than with the inherent virtues of the model.
Austerity,oxford dictionaries explanation of that capitalist made up word.The austerities of life in wartime.
ReplyDeleteThe new modern text book flash named economist basic accountant,known to others as numbers men or the more enlightened bean counters,without human compassion just the theory of the numbers,and when their theory of debt owed paid back at interest is not conducive to their numbered theory of accumulation and profit,they re-asses and count their beans AND DEMAND THEIR TERMS of the same beans counted with penalty.