Someone is going to have to take a very, very serious haircut in return for even some of that.
Presumably also forgiving a huge chunk of debt altogether.
Again, a bit like the 1953 London deal with a broke Germany.
The 1953 London agreement was about war reparations, it wasn’t about loans. The impending 3rd Greek bailout is about sending taxpayer money from a number of Northern European countries to Greece in order to pay for things like salaries for Greek government employees and removing graffiti from Greek government buildings.
If the measures contained in that new proposal are implemented, it is going to be very hard on many of the Greek people. Tsipras and his goverment had promised them that after the referendum that was exactly what would *not *be happening. I am surprised that he apparently managed to gather a large majority for this in the Greek parliament. Maybe they are slowly realizing that there simply is no painless path out of this mess.
Will the European partners accept the proposal? Hard to say. Apart from the question of whether the reforms are “enough” mathematically this also has become somewhat of a trust issue. Will the Greeks actually implement the measures they are now suggesting? In Germany that will be a topic of hot debate, but I expect them to eventually come around, because Angela Merkel does want that deal. However, contrary to popular belief it will not be enough, if the Germans are buying it. Many of the EZ governments will need to obtain a mandate from their parliaments before they can agree to anything - and some of these are taking a tougher stance on Greece than Germany does. If even one of them says “no”, the whole thing might fall apart.
If you got as far as the end of the article title, the last two words are instructive:
My guess is this weekend looks to be about face-saving; German politicians will focus on new austerity, Greek politicians will focus on huge debt write offs. Thus, the public in each will be partially assuaged.
… and of course, the forgiveness of debt already alleviates some of the burden of repayment. Thus the Greeks will be in a similar position to now, but with much lower debt.
Question of calibrating the level of haircut to fit with sustainability.
The Greek government will never pay back a single Cent and there will be no “reforms”. They will manage to extract another, what: 50, 60, 70 billion(?) Euros from the taxpayers of Northern Europe this time and it will probably last them for another 3 years or so, but at some point, the Ponzi scheme will come to an end.
Right, the Germans must be such mugs.
They are indeed. As Varoufakis rightly pointed out in an interview with a French newspaper:
Greece will most definitely pay back some of its debt. They will even start doing so this month.
What you mean to say it that you expect the country to permanently borrow more than they repay so that their overall debt ever increases. That may be so - at least for some time to come. Then again they would not at all be alone in this. (Look at the US total debt.)
The whole point of the ongoing negotiations is not to bring Greek national debt down to zero but to bring the relation of what they need to borrow and what they can repay back to a manageable level.
I wonder if Greece is not one big “underground” economy-maybe the place functions mostly through unreported employment, cash payments, and all kinds of activity conducted off the books. That might explain why things get done without the government knowing it, and why Greece is a big market for luxury cars. The Greeks will resist paying taxes-all right, then impose a wealth tax-see what happens.
France seems to be onboard with a new deal based on Greece’s proposal, so I think it’ll carry through. Germany won’t like to been seen as standing alone, and the moping East European countries will mope more but do nothing (Greece’s Small but Mighty Critics in Eastern Europe Start to Vent), and the Finnish officials which had otherwise been having their knickers in a twist in public, seems to have been orderd to shut up. The number on the table now is 84bn euros to Greece from the taxpayers of the other eurozone countries.
I thought it was coming from the Eurozone Bailout Fund and the IMF. Obviously at some point that was tax money taken from Europeans, but isn’t it money sitting in a bank somewhere? IOW, this bailout doesn’t require raising taxes on the French or German people, right?
A pretty good article describing the current government’s idiotic promises and idiotic negotiating tactics.
Best line: “This isn’t even a Pyrrhic victory for Greece. It’s a Pyrrhic defeat.”
Did I miss the part in there about debt?
As per my last post, one side will talk of austerity and victory, the other will look at the scale of the write off it achieved.
In case people have forgotten, the IMF stated Greece can only do this with debt relief.
That is the whole game here.
This has been reported by a number of news outlets. The plot thickens.
The Finns party joined a three-way centre-right coalition in May but its leader Timi Soini, now foreign minister, has maintained that bailouts in general, and particularly bailouts to Greece, are a “pyramid scheme”.
Given the refusal of the Finns to back any third bailout in a parliamentary vote in Helsinki, liberal finance minister Alexander Stubb reportedly told his euro colleagues he could not agree to a third bailout as applied for by Athens. Government sources contacted in Finland declined to comment on the reports.
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I am not sure - does the decision on Greek bailout have to be unanimous?
Based on my reading of the noted cites:
The Eurogroup finance ministers have to agree unanimously to mandate negotiations.
Once that is achieved (if it is), the European Commission can negotiate with Greece and requires a majority decision to sign off on their end.
Please correct me if this is wrong.
Why did people think the EU and euro was so fragile that the exit of a small member like Greece would have wreaked havoc?
Your question should be in present tense not past tense. The main reason people think the Euro may be fragile is the possible contagion to Italy, Spain etc. Plus, human decision making is not always rational. When you have a herd mentality it’s hard to predict exactly how people and markets will react.
The way the brinkmanship played out surprised me; I thought the EU would blink first but it looks like Greece blinked instead.