Odds Favor a Greece Deal Failure and Defacto Grexit

[marmar]

from Naked Capitalism:


Odds Favor a Greece Deal Failure and Defacto Grexit
Posted on July 15, 2015 by Yves Smith


The odds now favor the tentative deal struck over the weekend to “rescue” Greece, which many have correctly depicted as a brutal economic colonization of Greece by its lenders, coming unraveled. It’s hard to see how Greece could muddle through, given that a sketchy plan attribute to German Finance Minister Wolfgang Schuble over the weekend, that of a five-year temporary Grexit, was so obviously a napkin doodle rather than a plan as to be a negotiating chip and a taunt rather than a serious idea. But the lack of any alternative to the punitive plan that is starting to go pear shaped means that Greece would stumble into a Grexit utterly unprepared, with its banks unable to open at any foreseeable time in the future. That’s a game plan for utter catastrophe. If you think the unplanned Lehman bankruptcy was an unmitigated disaster, a Grexit would make that look like a walk in the park.*

Why does the deal now look to be in such dire shape? Unlike the earlier extended Greece v. everyone else impasse that went on for months, the underlying problem was that the two sides had no bargaining overlap between their positions and were conducting the negotiations in a media fishbowl. That made it impossible to find areas of mutual interest (having the new government improve Greece’s broken tax system, which only taxes the incomes of about 30% of the public, cracking down on oligarchs) and figuring out ways to come up with optical solutions on the issues where they were odds so each side could declare a victory.

The impediments now are what are informally called “too many moving parts”. It’s also one of the reasons that many people make bad calls about the likelihood of something succeeding, like a new venture.

If you ask someone who is starting a business and you ask them, “What are the odds this will work out?” you’ll almost certainly get answers well over 50%. Otherwise, why would they bother? But even if they tell you that it’s a slam dunk and they give you some very persuasive patter as to why the probability of winning is 90%, if you pick apart what has to happen, you can usually quickly ascertain why they’ve made a big overestimation. ................(more)

http://www.nakedcapitalism.com/2015/07/odds-favor-a-greece-deal-failure-and-defacto-grexit.html

[PoliticAverse]

1. Good, cause they need to get their country back. n/t