Do Not Blink, Greece
Alex Andreou . London and Athens . 27 June 2015
The international game of chicken, being played out for the last five years, is reaching its climax. Alexis Tsipras has played a very bad hand extremely well, despite what doomsayers suggest
Greek Prime Minister, Alexis Tsipras, seemed to take the world by surprise last night when he announced that he would move to give a referendum to the Greek people on the debt deal currently on offer by the EU/IMF, so that they could have their say. He made it clear that he was unhappy with the offer, which he described as "unbearable" and "humiliating", and minded to reject it.
Opposition parties in Greece have moved swiftly to condemn the move. These are largely the same people who have been, for weeks, criticising Tsipras for making too many concessions during negotiations and moving towards a deal that they said was terrible.
Some international commentators have, however, noted that Eurogroup discussions are in fact continuing today and that the "team Greece" has suddenly found itself in a position of pulling a rather large ace from its sleeve which nobody thought it had.
What is the truth?
As always, it is somewhere between those two positions. Earlier in the year, I wrote that the EU and especially the IMF had overreached. For shock doctrine to function, one has to leave a majority with something to lose. A tipping point can be reached and, I believe, has in Greece where the vast majority of people sneer at the threat of things like capital controls and savings being wiped out. Quite simply because they have no capital or savings. When that happens, a nation's reaction to humiliation can be unpredictable.
https://www.byline.com/column/11/article/124
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bemildred
(90,061 posts)Re-establishing the connection between responsibility and authority.
Jefferson23
(30,099 posts)geek tragedy
(68,868 posts)Scheduling a referendum such that its outcome is irrelevant is a deeply cynical move.
Tsipras was never going to end austerity measures--physically impossible--but he could have improved the terms of the old deal, declared victory, and put the country on a faster track to prosperity.
bemildred
(90,061 posts)However I think cynical is the only way to go in this dispute.
It will be hard to criticize him for seeking a new mandate, but a mandate for a deal no longer on the table isn't worth much, and yet his butt's still covered, he stays in power for a while if he gets the mandate for rejection, then he did the right thing.
But what is the Troika to do, that's the question, do they wait and pretend to care, do they go instransigent right off on principle, and either way if he gets his mandate, what happens then? Does anybody get paid? How much and when? It's all up in the air.
Very Greek, really.
LuvNewcastle
(16,846 posts)about the demigod who slew the mother hydra. I really want them to pull through this. What they do here might have major consequences for the future.
geek tragedy
(68,868 posts)between Tuesday and July 5--I.e. What are the consequences of default.
Adrahil
(13,340 posts)Time to see if he can deliver on his promises. Glad I'm not in Greece right now.
Jefferson23
(30,099 posts)Until now, every warning about an imminent breakup of the euro has proved wrong. Governments, whatever they said during the election, give in to the demands of the troika; meanwhile, the ECB steps in to calm the markets. This process has held the currency together, but it has also perpetuated deeply destructive austerity — don’t let a few quarters of modest growth in some debtors obscure the immense cost of five years of mass unemployment.
As a political matter, the big losers from this process have been the parties of the center-left, whose acquiescence in harsh austerity — and hence abandonment of whatever they supposedly stood for — does them far more damage than similar policies do to the center-right.
It seems to me that the troika — I think it’s time to stop the pretense that anything changed, and go back to the old name — expected, or at least hoped, that Greece would be a repeat of this story. Either Tsipras would do the usual thing, abandoning much of his coalition and probably being forced into alliance with the center-right, or the Syriza government would fall. And it might yet happen.
But at least as of right now Tsipras seems unwilling to fall on his sword. Instead, faced with a troika ultimatum, he has scheduled a referendum on whether to accept. This is leading to much hand-wringing and declarations that he’s being irresponsible, but he is, in fact, doing the right thing, for two reasons.
First, if it wins the referendum, the Greek government will be empowered by democratic legitimacy, which still, I think, matters in Europe. (And if it doesn’t, we need to know that, too.)
Second, until now Syriza has been in an awkward place politically, with voters both furious at ever-greater demands for austerity and unwilling to leave the euro. It has always been hard to see how these desires could be reconciled; it’s even harder now. The referendum will, in effect, ask voters to choose their priority, and give Tsipras a mandate to do what he must if the troika pushes it all the way.
If you ask me, it has been an act of monstrous folly on the part of the creditor governments and institutions to push it to this point. But they have, and I can’t at all blame Tsipras for turning to the voters, instead of turning on them.
http://krugman.blogs.nytimes.com/2015/06/27/europes-moment-of-truth/?smid=tw-share&_r=1
Spitfire of ATJ
(32,723 posts)Jefferson23
(30,099 posts)Fuckers.
Spitfire of ATJ
(32,723 posts)geek tragedy
(68,868 posts)truth is Greece had no business being in the Eurozone in the first place, it has no business being there now, and it's only remained there because the prospects of it leaving have scared people into inertia-_Eurocrats are afraid of the fallout and contagion, Greeks are worried because no one's ever managed a currency transition like they're going to have to do.
Spitfire of ATJ
(32,723 posts)Europe is really small. The politics were such that countries were going to war every few years out of habit. The EU was sold as a way to end wars by making all of Europe ONE PEOPLE. To take power away from the leaders and give it to the public. That dream was hijacked by the bankers who define the EU as being all about "trade". They told these countries they didn't have the power to stop their greed.
In the case of Greece, they had a right-wing government do the typical crap of tax cuts for the rich with borrowed money and claiming it created prosperity because stocks went up. Then they gave the pensions to Goldman Sachs on the promise that it would make a fortune and were ripped off.
The new government was elected on the promise of saving the pensions even if it means withdrawing from the EU and the big panic now is that other nations might follow Greece and tell the bankers to eat their own loss instead of expecting the citizens to pay for it.
geek tragedy
(68,868 posts)during the Goldman Fraud years. Most of those pension promises were overinflated because they were based on wages that themselves were inflated due to the very same economic practices that caused stock values to go up.
They've already given up the pensions from the Goldman Fraud era.
Also, it's not Goldman Sachs to whom the Greeks owe debt, it's mainly to the people of Germany and France.
Spitfire of ATJ
(32,723 posts)geek tragedy
(68,868 posts)
polly7
(20,582 posts)Jefferson23
(30,099 posts)Bio
Dimitri Lascaris is a partner with the Canadian law firm of Siskinds, where he heads the firm's securities class actions practice. Before joining Siskinds, he practiced securities law in the New York and Paris offices of a major Wall Street law firm. Last year, he was named by Canadian Business magazine as one of the 50 most influential business people in Canada, and was described by the magazine as "the fiercest advocate for shareholder rights" in Canada. He is currently prosecuting numerous securities class actions in Canada, including the Sino-Forest class action, in which his clients just negotiated the largest auditor settlement in Canadian history: a $117 million settlement with the accounting firm Ernst & Young.
Leo Panitch is the Canada Research Chair in Comparative Political Economy and a distinguished research professor of political science at York University in Toronto. He is the author of many books, the most recent of which include UK Deutscher Memorial Prize winner The Making of Global Capitalism: The Political Economy of American Empire and In and Out of Crisis: The Global Financial Meltdown and Left Alternatives. He is also a co-editor of the Socialist Register, whose 2013 volume is entitled The Question of Strategy.
Transcript
Will the Greek Referendum Bring the Troika Back to the Bargaining Table? (1/2)JESSICA DESVARIEUX, PRODUCER, TRNN: Welcome to The Real News Network. I'm Jessica Desvarieux in Baltimore.
Big news coming out of Greece over the weekend. The Greek prime minister announced that the country will be holding a referendum vote on whether to accept the bailout measures offered by international creditors. If the majority of Greeks vote no, that could mean that Greece would potentially leave the Euro and go back to its previous currency, the drachma. The referendum vote is scheduled for July 5, and in light of all this news Greek banks are closed for a week.
Now joining us to give us their take on the issue are our two guests. Joining us from London, Ontario is Dimitri Lascaris. Dimitri is a partner with the Canadian law firm of Siskinds where he heads the firm's securities class actions practice. He's also a board member for The Real News.
Also joining us is Leo Panitch. Leo is a research professor of political science at York University in Toronto, and he's the author of the book The Making of Global Capitalism: The Political Economy of American Empire.
Thank you both for joining us.
LEO PANITCH, PROF. OF POLITICAL SCIENCE, YORK UNIVERSITY: Morning, Jessica.
DIMITRI LASCARIS, SECURITIES CLASS ACTIONS LAWYER, CANADA: Thank you.
DESVARIEUX: So Dimitri, I'll start off with you. Can you just lay out for us specific conditions of this bailout, and who is really being bailed out?
LASCARIS: Well the moneys that would be advanced under this bailout would be used primarily if not exclusively to pay Greece's creditors, which are the IMF, primarily the IMF, the ECB, the European Central Bank, and the other member states of the Eurozone. So this would constitute in effect, if the Greek government accepted it, a continuation of the game of extend and pretend, which is what the Eurozone and the Greek government have been playing for several years, now.
In terms of the main points of the deal that was put on the table by the Troika and the last offer that was put on the table by Greece, they surprisingly are in agreement on what is probably the most fundamental issue, and that is the primary surplus. That's the budgetary result before interest payments on the debt. And the Greek government was prepared to agree to a 1 percent primary budget surplus this year, 2 percent next year, 3 percent in 2017, and 3.5 percent from 2018-2022. those would require very harsh forms of austerity to be imposed on the populace.
But they couldn't come to an agreement because the method by which the Greek government proposed to get to those primary surpluses was not deemed to be credible by the IMF, the ECB and the EC. Specifically some of the things the Greek government wanted to do to which they objected was the Greek government wanted to raise the corporate tax rate from 26 percent to 29 percent. They wanted it only to go up to 28 percent. The Greek government wanted to impose a one-time tax on corporations, I believe it was about 12 percent of net income. The Troika objected to that. And the Greek government wanted not to decrease pension expenditure as much as the Troika wanted, and also did not want to raise VAT, consumption taxes to the degree the Troika wanted.
And the interesting part of all this is that the justification given by the Troika for rejecting the Greek government's approach is that it would hurt the economy. And they wanted to shift the burden from corporations onto consumers and pensioners, because they thought too much burden on corporations would hurt the economy. Which is kind of, to be completely blunt about it, laughable. Because the austerity program has destroyed the economy. If they were so concerned about the preservation of the economy they wouldn't have imposed that program on Greece to begin with.
DESVARIEUX: Well, let's talk about some of the reaction of this referendum vote. We have Chancellor Angela Merkel from Germany coming out saying if the Greek people decide to vote no on this bailout deal that essentially that could mean that Greece will no longer be in the Eurozone.
Leo, can you talk about some real consequences for the majority of Greek people? If they decide to vote no on this referendum, what is that going to mean for them?
PANITCH: Well, first thing you have to understand is that the premise of Syriza, the Syriza government all along, and Varoufakis said this in his speech on the weekend to the European leaders, was that there is no basis under European treaties and European law for Merkel to actually do what she says she would do if the outcome of the referendum went the way that the Syriza government wants it to go, that is, a no vote. There is no basis in law, or under European treaties to exclude somebody from the Euro peremptorily. There is a procedure for kicking people out of the European Union or exiting the European Union, but that's different from the Eurozone.
So in that sense, they are not putting this forward as leaving the Euro. And were they to win this, and I think they will win it with the no vote, I'm almost sure they will, they will expect this to lead to further bargaining.
That said, of course, people will see this as, you know, it wouldn't be the first time that governments didn't adhere to the international treaties they signed. When especially, as Dimitri just said, when who they're defending are the interests of capitalists inside Greece and outside Greece. And if it comes to it they'll break treaties. Nevertheless, that is not what the government's proposing, and it may not--it won't be easy to happen. I think that's important to understand.
I think that the greater concern is not in our out. One poll done last week showed that 40 percent of Greeks now want to be out of the Euro. Others have a lower figure than that. I don't think that's it. I think it's just that the banking system will seize up. And if it were me or you, and nothing to do with whether you support the government or not support the government, you need to be able to survive this week. You would have been trying to take some money out of the ATM this weekend.
DESVARIEUX: Well, I'm going to actually pose that question to you guys. How would you vote, Dimitri? Would you vote no for this referendum?
LASCARIS: I would vote no, and I would vote no with the hope, not the expectation, that the Troika would come back to the table and come to their senses, and that would mean substantially relaxing the austerity demands that they've put to the Greek government. And primarily offering real debt relief, because it's widely acknowledge that Greece's debt is unsustainable, and it's eventually going to default. And in the interim the Greek people are going to suffer greatly the more they try to service this debt. So that would be my hope.
I think the reality is that those concessions will not be forthcoming, and they're going to cut Greece adrift, hopefully offer it some humanitarian aid so that it can get through the banking crisis, and leave it to its own devices. I think that's most likely to be the outcome. But if the choice is between that and continuing the suffocating austerity program, I would unhesitatingly vote no.
DESVARIEUX: Leo, just really quickly, your take. Would you vote no?
PANITCH: Of course. And it's a matter of solidarity with people who are in this chaos of contemporary capitalism trying to offer an alternative way out.
in full: http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=14126
Jefferson23
(30,099 posts)Posted: 06/29/2015 11:48 am EDT Updated: 3 hours ago
Paul Krugman is urging Greeks to vote “no” in a referendum that could determine their country’s future in the European Union.
In a New York Times blog post published Sunday evening, the Nobel Prize-winning economist argued that the July 5 referendum would simply preserve the same dysfunctional austerity regime that has left Greece languishing for five years.
In that case, Krugman said, it would perhaps be better for Greece to leave the euro, reissue the drachma as a currency and simply try to weather the economic tumult that would result.
“Maybe, just maybe, the willingness to leave will inspire a rethink, although probably not,” Krugman wrote. “But even so, devaluation couldn’t create that much more chaos than already exists, and would pave the way for eventual recovery, just as it has in many other times and places.”
Moreover, Krugman pointed out, voting “yes” on such a ballot would have the effect of undermining Greece’s popularly elected government. When the leftist Syriza party was elected in January, it was seen as a strong rejection of the past five years of austerity policies imposed by Greece’s creditors. Now, if Greek voters approve the cost-cutting measures that Syriza negotiators failed to nix from the new bailout plan, it would usurp the mandate on which the party was elected. In a speech Monday that highlighted Europe's strong-arming tactics, Jean-Claude Juncker, the president of the European Commission, tellingly said that voters should "say 'yes' regardless of what the question is," since a "no" vote would "mean that Greece is saying 'no' to Europe."
“The troika clearly did a reverse Corleone -- they made [Greek Prime Minister Alexis] Tsipras an offer he can’t accept, and presumably did this knowingly,” Krugman wrote. “So the ultimatum was, in effect, a move to replace the Greek government. And even if you don’t like Syriza, that has to be disturbing for anyone who believes in European ideals.”
http://www.huffingtonpost.com/2015/06/29/krugman-greek-bailout_n_7687960.html