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[MadScientist]

Greece didn't magically get the ability to borrow money at German levels when they joined the euro. There's no law that requires banks to lend to all euro countries at the same rates.

Yet it was the factual consequence of introducing the Euro, because that meant an independent central bank, who would not depreciate the currency on the lender's expense.

Understand that if the ECB didn't do this, these banks would definitely get haircuts. They don't have the power to force Greece to do anything.

If Greece had defaulted towards the banks, who would have lend Greece any more money to prevent austerity? No one. Even today Greece is not forced into austerity if it could lend money on the capital market. It can't because everybody knows Greece can't pay back its debt.

The morality of the bailout can be discussed, but either way a Greek default would have to be suffered by the creditor's economies. Arguably it was better for Germany and France to pick up the debt, than to watch their banks collapse. And arguably it was also the governments job to watch the financial situations of EU member countries.

I also consider it unethical if one borrows money, spends all of it and then looks his creditor in the eye saying: "Well, you should have known I can't pay back that much money!"

 

[Funky Papa]

I also consider it unethical if one borrows money, spends all of it and then looks his creditor in the eye saying: "Well, you should have known I can't pay back that much money!"

Yet that was exactly what was proposed to a country left with no other options.

Everybody knew that Greece couldn't pay back, yet they pretty much put a pistol to its head. Maybe it's true that third time is the charm and Greece's creditors get some sense instilled into them.

 

[pigeon]

I don't know that it is "revolutionary" since most people know on a basic level that borrowing more than you can afford is a bad thing.

It is revolutionary to suggest that banks are not responsible for performing credit checks and determining what people can afford to borrow. That is how banks work!

If Greece borrowed more than it could pay back, and it was obvious at the time of the loan that Greece wouldn't be able to pay it back, then it was the job of the banker to not make that loan. That's pretty basic.

Yet it was the factual consequence of introducing the Euro, because that meant an independent central bank, who would not depreciate the currency on the lender's expense.

What? No. It is certainly true that adopting the euro means that Greece would not be able to depreciate the currency -- but, again, nothing was forcing banks to lend to Greece on the same terms that Germany got. They had plenty of ability to demand higher coupons as a risk premium, just by not buying Greek bonds at the offered price. They just didn't.

Nothing about the euro changed the ability of banks to discriminate between sovereign borrowers.

If Greece had defaulted towards the banks, who would have lend Greece any more money to prevent austerity? No one. Even today Greece is not forced into austerity if it could lend money on the capital market. It can't because everybody knows Greece can't pay back its debt.

Well, obviously not, because the ECB is about to force them to default. I wouldn't loan to them either.

But that doesn't mean that a controlled default event earlier, where the banks took haircuts, would not have gone better, nor that Greece might not be recovering to some degree now if austerity hadn't destroyed their economy completely.

I also consider it unethical if one borrows money, spends all of it and then looks his creditor in the eye saying: "Well, you should have known I can't pay back that much money!"

But they SHOULD have known. It's literally the creditor's ONLY JOB to know. They are bankers! That's what the banking industry does!

The argument here seems to be that Greece was irresponsible with their money -- like a child. But this was purely predictable and identifiable irresponsibility. If you give a child a gun and they shoot themselves, is it rational to say "well, it's the kid's fault for being so stupid with a dangerous weapon?"

 

[m_dorian]

I also consider it unethical if one borrows money, spends all of it and then looks his creditor in the eye saying: "Well, you should have known I can't pay back that much money!"

I agree with this. I also find unethical if one owes money from a forced war loan and reparations to constantly refuse to pay it back. See how it goes?

 

[Deleted member 231381]

Nah bruh, Spain got this on lock with over a dozen of sovereign defaults since 1500. We've turned this shit into a sport.

WORLD CHAMPIONS, BABY!

All hail bad governance and military adventures conveived in vino veritas.

afaik, I remember reading an article on this saying Philip IV never actually needed to default and the Spanish debts were manageable; Spanish administration was just incredibly bad and incapable of holding back inflation by limiting the New World gold influx so chose to default instead. Spain's defaults were all very small so while you probably win "most individual defaults", I'm not sure you can catch up to France's "fuck this, fuck you, fuck everyone" default on the Ancien Regime and the three-fifths bankruptcy, or Germany's "war? us? noo, that was some other Germans. I blame the Austrians!" default on most of their war loans from all of their wars.

Either way, GB has never defaulted so we reserve the right to judge you snootily.

Spoiler

We did that anyway.

 

[KingSnake]

The situation is very complex even from the banks point of view. Before the crisis investing into government bonds was considered one of the safest investments. If a bank wanted to have a great portfolio it had to lend money to governments practically, as the ratings were depending on it. So there was a double incentive to it: better risk ratings for portfolio and easy money to be made.

However, once a certain level of indebtedness has been reached I consider that the bankers that decided to grant even more loans/buy even more bonds as insane. Even committing an economic crime.

 

[pigeon]

Either way, GB has never defaulted so we reserve the right to judge you snootily.

Spoiler

We did that anyway.

Forming a new country definitely seems like cheating.

 

[Piecake]

It is revolutionary to suggest that banks are not responsible for performing credit checks and determining what people can afford to borrow. That is how banks work!

If Greece borrowed more than it could pay back, and it was obvious at the time of the loan that Greece wouldn't be able to pay it back, then it was the job of the banker to not make that loan. That's pretty basic.



What? No. It is certainly true that adopting the euro means that Greece would not be able to depreciate the currency -- but, again, nothing was forcing banks to lend to Greece on the same terms that Germany got. They had plenty of ability to demand higher coupons as a risk premium, just by not buying Greek bonds at the offered price. They just didn't.

Nothing about the euro changed the ability of banks to discriminate between sovereign borrowers.



Well, obviously not, because the ECB is about to force them to default. I wouldn't loan to them either.

But that doesn't mean that a controlled default event earlier, where the banks took haircuts, would not have gone better, nor that Greece might not be recovering to some degree now if austerity hadn't destroyed their economy completely.



But they SHOULD have known. It's literally the creditor's ONLY JOB to know. They are bankers! That's what the banking industry does!

The argument here seems to be that Greece was irresponsible with their money -- like a child. But this was purely predictable and identifiable irresponsibility. If you give a child a gun and they shoot themselves, is it rational to say "well, it's the kid's fault for being so stupid with a dangerous weapon?"

If this situation has taught us anything, it is that a lot people argue from a position of morality rather than finance or economics, even though we are dealing with a financial and economical issue

 

[Deleted member 231381]

As the saying goes, if you owe a bank £10 then shame on you, if you owe a bank £1,000,000 then shame on them.

 

[SmoothBrain]

Today this loan would amount to 163 billion dollars. Were we to include war reparations, it would be an additional 332 billion.

Wasn't that total? However, I knew this was coming. Those numbers are just one of many estimations and this one specifically is from greece itself. It would need an independent institute to research a realistic value. I won't argue that we have to pay for obvious reasons, but the amount is putting me off.

Edit: because it seems this wasn't funny.

 

[Deleted member 231381]

It's not a very funny joke.

 

[Negotiator]

What's funny is that back in 2009 the Euro was worth $1,50. Now it's barely worth $1,10.

That's a 25% devaluation, which is as much as Greece's GDP drop. Good ol' US has printed a lot more dollars and their currency has appreciated. Their unemployment rate is also very low.

My point is that ECB could have easily printed its way out of this mess, the Euro would be worth more than $1,10 and yet they didn't. Why? Because Germany is inflationphobic.

Instead, they invited the IMF (bad cop role) to force austerity measures upon Greece and now the IMF admits that austerity has been too harsh and their debt is not sustainable! Germany is in a very difficult position right now, since they don't want to admit that. That's what you get for inviting the IMF...

 

[Syriel]

Ah, fuck it, 332 billion, eh? Let's say 500 billion, fucking peanuts on top of our ~2150 billions, Adolfine Merkel will pull us through even this.

And Godwin's law wins again.

This discussion would go much better if we could just make all throwaway references to "Lazy Greeks" and "Nazi Germans" banable.

 

[Funky Papa]

It's time to let the boorish nazi jokes go.

 

[kamorra]

And Godwin's law wins again.

This discussion would go much better if we could just make all throwaway references to "Lazy Greeks" and "Nazi Germans" banable.

yup

 

[Deleted member 231381]

And Godwin's law wins again.

This discussion would go much better if we could just make all throwaway references to "Lazy Greeks" and "Nazi Germans" banable.

Amen.

 

[Rafy]

And Godwin's law wins again.

This discussion would go much better if we could just make all throwaway references to "Lazy Greeks" and "Nazi Germans" banable.

Yes please!

 

[Souldestroyer Reborn]

What's funny is that back in 2009 the Euro was worth $1,50. Now it's barely worth $1,10.

That's a 25% devaluation, which is as much as Greece's GDP drop. Good ol' US has printed a lot more dollars and their currency has appreciated. Their unemployment rate is also very low.

My point is that ECB could have easily printed its way out of this mess, the Euro would be worth more than $1,10 and yet they didn't. Why? Because Germany is inflationphobic.

Instead, they invited the IMF (bad cop role) to force austerity measures upon Greece and now the IMF admits that austerity has been too harsh and their debt is not sustainable! Germany is in a very difficult position right now, since they don't want to admit that. That's what you get for inviting the IMF...

Germany knows that inflation is worse off for them so their attitude is:

Fuck em got mine.

 

[SmoothBrain]

It's not a very funny joke.

And Godwin's law wins again.

This discussion would go much better if we could just make all throwaway references to "Lazy Greeks" and "Nazi Germans" banable.

I'd like to be able to make fun of my own country though

 

[m_dorian]

Ah, fuck it, 332 billion, eh? Let's say 500 billion, fucking peanuts on top of our ~2150 billions, Adolfine Merkel will pull us through even this.
[

No. NO. Not even as a joke.
I am not, even at the slightest implying, that German Government are Nazis. I have a deep respect for the germans and their culture.
I also do not know how much could be the amount owed from the reparations and the war loan. But it is as true to say that it is unethical that Greece's government borrowed beyond their limit, over spent and lied to its people and their creditors about it as it is to, still, not been given the amount owed from WWII.

Edit: It seems that is cleared up.

 

[Theonik]

And Godwin's law wins again.

This discussion would go much better if we could just make all throwaway references to "Lazy Greeks" and "Nazi Germans" banable.

Lazy Germans? Nazi Greeks? Yes/No.
What will we even talk about in these threads if we didn't have a moppet every couple pages or so restart this argument.

 

[pigeon]

Greek incomes, broken into nine tiers, inflation indexed.

 

[Souldestroyer Reborn]

In recent years it has been discovered that in the Mediterranean sea around Greece lies the biggest oil reserve in Europe, one of the biggest in the world, worth more than 10 trillions dollars:

Estimates now are that total offshore oil in Greek waters exceeds 22 billion barrels in the Ionian Sea off western Greece and some 4 billion barrels in the northern Aegean Sea.

Surveys already done that have measured the amount of natural gas estimate it to reach some nine trillion dollars. (just in natural gas)

Greece could go on loaning to repay their debt, as they have the resources to soon inject trillions of dollars in their economy, but certain European countries decided the time is now to act because they want that oil to be in their hands and are using the EU as a bureaucratic and financial instrument to attack Greece.

Notably, the IMF and EU governments, among them Germany, demand instead that Greece sell off its valuable ports and public companies, among them of course, Greek state oil companies, to reduce state debt. Under the best of conditions the asset selloffs would bring the country perhaps €50 billion. Plans call for the Greek state-owned natural gas company, DEPA, to privatize 65% of its shares to reduce debt. Buyers would likely come from outside the country, as few Greek companies are in a position in the crisis to take it.

Those in control of the EU are specifying in their conditions ”to save Greece” that they must privatize all their ports and oil companies, so that the trillions of profit will go to their countries and companies instead of Greece. So the ”saviors of Greece” are actually just criminal north European nations attacking Greece (and all Southern Europe who would benefit from the economic dynamism it would bring to the region) for the sake of their own profit to stay above at any cost, in spite of them being in the same union.

Thoughts on this?

Source: http://www.globalresearch.ca/the-new-mediterranean-oil-and-gas-bonanza/29609

 

[Funky Papa]

Thoughts on this?

Source: http://www.globalresearch.ca/the-new-mediterranean-oil-and-gas-bonanza/29609

Global Research is a garbage source and everything on it should be questioned. The author is also a global warning/peak oil denier and a RT guest.

Shit sundae with bunny droppings on top.

 

[SmoothBrain]

No. NO. Not even as a joke.
I am not, even at the slightest implying, that German Government are Nazis.

Wasn't implying that with my not so funny joke.

I also do not know how much could be the amount owed from the reparations and the war loan. But it is as true to say that it is unethical that Greece's government borrowed beyond their limit, over spent and lied to its people and their creditors about it as it is to, still, not been given the amount owed from WWII.

I agree.

Edit: It seems that is cleared up.

I obviously misjudged the serious nature of this ongoing discussion and it seems like people were offended by my not so funny joke, which is why I removed it. It's sad that this had to be cleared up in the first place.

What will we even talk about in these threads if we didn't have a moppet every couple pages or so restart this argument.

Right?

 

[lazer_bean]

My point is that ECB could have easily printed its way out of this mess, the Euro would be worth more than $1,10 and yet they didn't. Why? Because Germany is inflationphobic.

yes, that's true.
They don't want inflation also because they want unemployment to remain pretty high in Europe. (which pretty much means the same thing anyway)

For example, when the main aim of the Europen Central Bank is to fight inflation, what it actually means is that Europe wants unemployment to remain pretty high. This is making unemployment an institution. See Phillips's curve.

The reason why they want unemployment to be pretty high is that people don't negotiate their salary when there is a high level of unemployment. They want to keep their job at all costs so they don't protest, they don't threaten to quit if they know they can't find work elsewhere.
This keeps salaries low and that's what companies (and therefore governments) want.

Also I'm sure many people will start freaking out when they read the words "print more money". Everyone just goes "inflation! INFLATION !!!" I've said in another thread but (reasonable) inflation doesn't matter. Not to the poor. If wages were linked to inflation then there would be nothing to fear. If you were rich in fiat money then I guess yeah it's not such a good deal. But we must take into account what's good for the greater number, good for most people and that would mean the poor/middle classes

Hey Tapantaola,

Spoiler

I remember talking to you briefly about the crisis in Greece a long time ago on the Naughty Dog Off Topic Forums (definitely not the right place for that lol). I had a different username back then. I'm glad you still have the same opinions/claims as before. And I hope you'll be ok. Also thanks for giving them the finger.

 

[m_dorian]

I obviously misjudged the serious nature of this ongoing discussion and it seems like people were offended by my not so funny joke, which is why I removed it. It's sad that this had to be cleared up in the first place.

It's ok. No worries.

 

[tmarg]

If this situation has taught us anything, it is that a lot people argue from a position of morality rather than finance or economics, even though we are dealing with a financial and economical issue

I think it's more that people argue based on their understanding of personal finance rather than global economics, both because it's a subject that the average person is much more familiar with, and because conservative politicians have been pushing that comparison for decades in order to gather support for social spending cuts.

 

[Negotiator]

Thoughts on this?

Source: http://www.globalresearch.ca/the-new-mediterranean-oil-and-gas-bonanza/29609

If it's true, then Greece should cooperate with Norway to extract those oil/gas reserves.

It goes without saying that Greece should exit both the EU and the Eurozone (just like Norway).

 

[Theonik]

If it's true, then Greece should cooperate with Norway to extract those oil/gas reserves.

It goes without saying that Greece should exit both the EU and the Eurozone (just like Norway).

I look forward to the day where every Greek is a millionaire on virtue of their shares in the oil money.

 

[scamander]

I think a lot of countries (especially the likes of Germany, Austria, UK) have to finally decide once and for all if they really want an unified Europe or not. Because this joke of Europe now (with these stupid antagonisms like North vs. South or West vs. East) is heading nowhere but towards hell. This whole game of "we want to be Europeans but for local votes we are ready to hate on any other weaker country" has to end at some point.

I agree with all of your points; the problem is though, that the eurocrats have mismanaged the EU so severely the last decade, that they couldn't even pull this off right now. The concept was already hard to sell to the North before that, because people would only see the short time effects (additional spending on other countries), as well as the loss of sovereignty, instead of the long term benefits. Now it's worse, because the majority of Europeans don't trust the EU anymore and the European parliament is full of nationalistic, eurosceptic parties, that would try everything in their power to block such an attempt immediately.

It's a huge dilemma that we can't overcome until the European Commission and the members of the parliament start acting in favour of Europe as a whole, instead of solely representing the interests of their own home countries. Only if the EU manages to work together for the greater good in this way, trust among the European population can be rebuild and people will eventually start seeing themselves as Europeans foremost.

I really hope I'll still be around when (if) this day comes.

 

[Steiner_Zi]

Raising taxes maybe? Greeks don't like taxes. Those measures are tame by comparison to what we have in Finland.

Oh really?

For anyone interested in reality, here are some key points from the UN's assessment of the effect of austerity policies in Greece - from 2013.

'Since 2009, the Greek economy has shrank by about 25 per cent - the combined effects of an economic recession and radical cuts in Government spending designed to bring the country’s deficit under control. The austerity measures have resulted in an unprecedented rise in unemployment from 6.6 per cent in May 2008 to 27.2 per cent in January 2013 (according to ELSTAT data).

On the basis of the memorandum signed between the Troika and the Government massive cuts to pensions and other welfare benefits have been made while taxes have been increased. Consecutive cuts have reduced pensions up to 60 per cent (for higher pensions) and between 25-30 per cent for lower ones.
Law 4093 introduced in January 2013 has reduced the total pension income in excess of €1000 per month by 5-15 %, and abolished Christmas and Easter benefits. The retirement age has been increased from 65 to 67 years. The payment of a means-tested rent subsidy was wholly suspended in 2010. In February 2011, a clause was added to the eligibility conditions for large family benefits, requiring 10 years of permanent and continuous residence in Greece which has the effect of excluding large numbers of immigrants.

To date, Greece remains the only country in the Eurozone where a comprehensive social assistance scheme serving as a social safety net of last resort is missing. Unemployment benefits expire after 12 months resulting in the loss of health insurance cover. Due to the rise in long term unemployment, only about 160 000 persons receive these benefits.
...the Government and the Troika have agreed to introduce pilot programmes to extend unemployment benefits. However these payments are limited to 200 euro per month and are significantly below the poverty line .
There has been an estimated 25 per cent increase in the country’s homeless population since 2009 .
Overall public health expenditure in Greece fell from €16.1 billion in 2009 to €12.4 billion in 2012.
Greece has the highest rate of persons below the poverty line in the Eurozone. Approximately 21.3 per cent of its population earn less than 60 per cent of the median income, which defines the conventional poverty line. Adjusted by inflation and using 2009 as the fixed poverty threshold more than one out of three persons (38.0 per cent) had already fallen below the poverty line by 2012. Among the unemployed, the poverty rate is nearly 59.28 per cent. '

http://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=13272&LangID=E

These are just the social costs. So enough with the "the Greeks just want our money to keep their lavish lifestyle" thing when people not living in the country have no idea what's been going on in the last 5 years.

 

[oti]

Care to explain why?

http://m.neogaf.com/showpost.php?p=171096251

 

[shinra-bansho]

And Godwin's law wins again.

This discussion would go much better if we could just make all throwaway references to "Lazy Greeks" and "Nazi Germans" banable.

Yes, it would.

So if your fingers are poised at the ready to type some stereotype or nationalistic nonsense, then I suggest you don't going forward, as all it does is serve to derail any discussion.

 

[oti]

Yes, it would.

So if your fingers are poised at the ready to type some stereotype or nationalistic nonsense, then I suggest you don't going forward, as all it does is serve to derail any discussion.

I should be a mod. I'm a Greek but I was born and raised in Germany. I'm lazy and evil. I'm the link between both worlds. I'm the Avatar.

 

[ElTorro]

One thing that I can't get my head around is why Tsipras and many Greeks think that the referendum has improved their leverage at the negotiation table. Is there any logical argument that supports this supposition?

Things that I've heard so far:

1) "The people have spoken". They have, but that is pretty irrelevant. The Greek people don't have any democratic authority over the governments of the other 18 Eurozone states. These governments answer to their own people. Their mandates differ from that of the Greek government, and they have not changed. Additionally, Tsipras general mandate has not changed at all. He was elected to reject austerity programs, and that's what the referendum, in a more non-technical interpretation, has reaffirmed. Nothing has changed.

2) "He can pressure the creditors with the possibility of a Grexit". Well, no, he can't. He has explicitly claimed during the referendum that a 'no' is not a vote against the Euro, and that such implications made by the creditors are wrong and fear mongering. So the referendum gave him no mandate to initiate a Grexit if his demands remain unanswered. He is still bound by his election promise to keep Greece in the Euro.

So all of that is very unconvincing. In fact, there are good arguments to be made that the referendum actually weakened his position: the 2nd bailout program has expired, so negotiations have to begin at point zero, including time-consuming clearances by the Eurozone's parliaments, many of which are far from certain. Additionally, the negotiators have lost a lot of trust in Tsipras and seriously doubt that he will be able and willing to implement whatever deal could be made. And finally, Greece will run out of money very soon, putting Tsipras under pressure to do anything, including a Grexit. Time is on the creditor's side.

So, why do Greeks think that the referendum has improved their situation at the negotiation table?

 

[hydrophilic attack]

One thing that I can't get my head around is why Tsipras and many Greeks think that the referendum has improved their leverage at the negotiation table. Is there any logical argument that supports this supposition?

Things that I've heard so far:

1) "The people have spoken". They have, but that is pretty irrelevant. The Greek people don't have any democratic authority over the governments of the other 18 Eurozone states. These governments answer to their own people. Their mandates differ from that of the Greek government, and they have not changed. Additionally, Tsipras general mandate has not changed at all. He was elected to reject austerity programs, and that's what the referendum, in a more non-technical interpretation, has reaffirmed. Nothing has changed.

2) "He can pressure the creditors with the possibility of a Grexit". Well, no, he can't. He has explicitly claimed during the referendum that a 'no' is not a vote against the Euro, and that such implications made by the creditors are wrong and fear mongering. So the referendum gave him no mandate to initiate a Grexit if his demands remain unanswered. He is still bound by his election promise to keep Greece in the Euro.

So all of that is very unconvincing. In fact, there are good arguments to be made that the referendum actually weakened his position: the 2nd bailout program has expired, so negotiations have to begin at point zero, including time-consuming clearances by the Eurozone's parliaments, many of which are far from certain. Additionally, the negotiators have lost a lot of trust in Tsipras and seriously doubt that he will be able and willing to implement whatever deal could be made. And finally, Greece will run out of money very soon, putting Tsipras under pressure to do anything, including a Grexit. Time is on the creditor's side.

So, why do Greeks think that the referendum has improved their situation at the negotiation table?

Regarding point 2: The referendum rejected austerity without debt relief. If the creditors only give him two options: a) austerity without debt relief, and b) Grexit, he has a mandate to choose Grexit.

Also, the resounding victory for no, and the overwhelming rejection of austerity has consolidated most Greek political power behind the government. As of the joint statement published today, Tsipras now has the support of the opposition in these negotiations (except KKE and Golden Dawn). This means that creditors can no longer hope for instigating a regime change by putting forth shitty deals they know that the government cannot except.

Both these factors make Grexit a very real possibility. With this referendum result, Greece has shown that they will not back down from the chicken race. It's up to creditors to back down or allow the crash (Grexit) to happen.

 

[Kill3r7]

One thing that I can't get my head around is why Tsipras and many Greeks think that the referendum has improved their leverage at the negotiation table. Is there any logical argument that supports this supposition?

Things that I've heard so far:

1) "The people have spoken". They have, but that is pretty irrelevant. The Greek people don't have any democratic authority over the governments of the other 18 Eurozone states. These governments answer to their own people. Their mandates differ from that of the Greek government, and they have not changed. Additionally, Tsipras general mandate has not changed at all. He was elected to reject austerity programs, and that's what the referendum, in a more non-technical interpretation, has reaffirmed. Nothing has changed.

2) "He can pressure the creditors with the possibility of a Grexit". Well, no, he can't. He has explicitly claimed during the referendum that a 'no' is not a vote against the Euro, and that such implications made by the creditors are wrong and fear mongering. So the referendum gave him no mandate to initiate a Grexit if his demands remain unanswered. He is still bound by his election promise to keep Greece in the Euro.

So all of that is very unconvincing. In fact, there are good arguments to be made that the referendum actually weakened his position: the 2nd bailout program has expired, so negotiations have to begin at point zero, including time-consuming clearances by the Eurozone's parliaments, many of which are far from certain. Additionally, the negotiators have lost a lot of trust in Tsipras and seriously doubt that he will be able and willing to implement whatever deal could be made. And finally, Greece will run out of money very soon, putting Tsipras under pressure to do anything, including a Grexit. Time is on the creditor's side.

So, why do Greeks think that the referendum has improved their situation at the negotiation table?

The referendum made it clear that the Greek people chose default as the way out. If the EU wants to avoid this outcome they need to find a solution that is more appealing to Greece. If not, Greece will default and accept the boot and all the reprocussions that follow.

 

[Yamauchi]

Regarding point 2: The referendum rejected austerity without debt relief. If the creditors only give him two options: a) austerity without debt relief, and b) Grexit, he has a mandate to choose Grexit.

Also, the resounding victory for no, and the overwhelming rejection of austerity has consolidated most Greek political power behind the government. As of the joint statement published today, Tsipras now has the support of the opposition in these negotiations (except KKE and Golden Dawn). This means that creditors can no longer hope for instigating a regime change by putting forth shitty deals they know that the government cannot except.

Both these factors make Grexit a very real possibility. With this referendum result, Greece has shown that they will not back down from the chicken race. It's up to creditors to back down or allow the crash (Grexit) to happen.

The bolded parts are very important to understanding the outcome of this referendum.

 

[Ether_Snake]

So, why do Greeks think that the referendum has improved their situation at the negotiation table?

It sure has made things clearer for everyone, now it's deal or default, period. Greece will be better off with a default and their own currency anyway.

 

[shinra-bansho]

I don't know if I'd necessarily characterise the referendum outcome that way.

The varying promises made during the brief run up to the vote; banks will reopen immediately, we'll have a deal in 24 hours if you vote No, this won't lead to an exit from the monetary union etc, and how hasty the run up to the referendum itself, even the question itself, all muddy what exactly one can take from the answer.

It's very clear that the Greek people do not want more austerity measures, but anyone could have told you that. But I don't think this vote makes clear what they're willing or not willing to do to achieve that.

I am under the impression, although I could be wrong, that a considerable number of people who voted "No" did so under the premise that it would bring about debt relief, end austerity measures and keep them within the Euro, rather than that it would end austere budgets regardless of the consequences.

 

[Coriolanus]

Additionally, the negotiators have lost a lot of trust in Tsipras and seriously doubt that he will be able and willing to implement whatever deal could be made.

You keep repeating this as if they ever had trust in him in the first place.

These are career politicians who were more than happy to cut deals with grotesquely corrupt administrations. Trust was never on the table. To think otherwise is simply naive.

 

[Ether_Snake]

I don't know if I'd necessarily characterise the referendum outcome that way.

The varying promises made during the brief run up to the vote; banks will reopen immediately, we'll have a deal in 24 hours if you vote No, this won't lead to an exit from the monetary union etc, and how hasty the run up to the referendum itself, even the question itself, all muddy what exactly one can take from the answer.

It's very clear that the Greek people do not want more austerity measures, but anyone could have told you that. But I don't think this vote makes clear what they're willing or not willing to do to achieve that.

I am under the impression, although I could be wrong, that a considerable number of people who voted "No" did so under the premise that it would bring about debt relief, end austerity measures and keep them within the Euro, rather than that it would end austere budgets regardless of the consequences.

Everyone knows there's no guarantees of a deal and an exit is possible if the Troika makes no acceptable deal. But the exit will only be of the Euro currency, not the union, they would have to be forced out for that and no one would be stupid enough to actually push for that unless the Troika is stupid enough to try and make an example out of Greece by trying to sabotage them.

 

[wsippel]

It sure has made things clearer for everyone, now it's deal or default, period. Greece will be better off with a default and their own currency anyway.

It was always "deal or default". Now, if you think the referendum changed the terms of a potential deal in Greece's favor, I believe you're firmly mistaken. Greece might have had its moment of low-level democracy, but it's still fucked, and still more fucked than it was just a week ago.

 

[Ether_Snake]

It was always "deal or default". Now, if you think the referendum changed the terms of a potential deal in Greece's favor, I believe you're firmly mistaken. Greece might have had its moment of low-level democracy, but it's still fucked, and still more fucked than it was just a week ago.

I think the government is better positioned to go for a default than before the vote, and of course they shouldn't miss a chance to reach an agreement one last time, but really it's just for the sake of procedures at this point. Otherwise, if they hadn't had the vote, we would have ended up with elections instead of going straight to a default. All of this would have drawn out endlessly.

 

[KHarvey16]

It was always "deal or default". Now, if you think the referendum changed the terms of a potential deal in Greece's favor, I believe you're firmly mistaken. Greece might have had its moment of low-level democracy, but it's still fucked, and still more fucked than it was just a week ago.

The austerity they just rejected would have been much worse for them. Unless a different deal with debt forgiveness is reached, Greece will leave and this will be a better result than the austerity measures that were on the table.

 

[Operations]

The austerity they just rejected would have been much worse for them. Unless a different deal with debt forgiveness is reached, Greece will leave and this will be a better result than the austerity measures that were on the table.

Agreed. Politically, the Troika cannot allow for debt relief or diminished austerity measures without fearing a domino effect and/or backlash from the other countries where these were implemented (Portugal, Spain, Ireland).

Really, a Grexit is the best alternative for everyone. Time to acknowledge the Eurozone project is flawed and get to work on further integration for the remaining members.

 

[Ether_Snake]

Agreed. Politically, the Troika cannot allow for debt relief or diminished austerity measures without fearing a domino effect and/or backlash from the other countries where these were implemented (Portugal, Spain, Ireland).

Really, a Grexit is the best alternative for everyone. Time to acknowledge the Eurozone project is flawed and get to work on further integration for the remaining members.

The thing is any solution that would prevent another country from facing the same outcome will face the same resistance for the same reasons. There's a reason the situation is where it stands now; no one in a position of superiority wants things to change.

Once Greece is out, another will follow. Greece was the first bump in the road, and the option taken has been to push them out of the car. They're still driving the same car in the same direction and there's plenty more bumps to come. The only way the union can be saved (down the line it's not just the Euro but the EU itself), is by not letting Greece exit, because preventing it from exiting would mean implementing the measures needed to safeguard the union itself over the long term.

They don't want to do that though, so it's pretty much going to disintegrate.

By further integration you mean some sort of federal govt or fiscal transfers?

A Greek exit may strength the overall EMU because, like you mentioned they'll try and fix the mistakes of the past and create more cohesion, or at least we all hope. That may be what some members are betting on. Greece exit may help them get what they ultimately want.

All of the arguments that have been used against Greece, especially the cultural attacks, are all ready to be lunched against Spain, Italy, Portugal. Heck Ireland too while we're at it. I say it again, some countries hold nearly puritanical views on the south, on debt, and on their own positions. It reminds me of Apartheid South Africa's line of thinking, just less outspoken.

 

[LJ11]

Agreed. Politically, the Troika cannot allow for debt relief or diminished austerity measures without fearing a domino effect and/or backlash from the other countries where these were implemented (Portugal, Spain, Ireland).

Really, a Grexit is the best alternative for everyone. Time to acknowledge the Eurozone project is flawed and get to work on further integration for the remaining members.

By further integration you mean some sort of federal govt or fiscal transfers?

A Greek exit may strength the overall EMU, because, like you mentioned. they'll try and fix the mistakes of the past and create more cohesion, or at least we all hope. That may be what some members are betting on. Greece exit may help them get what they ultimately want.

Edit: But yeah, what if they do nothing and believe everything is alright. I have no fucking clue. What a mind fuck this whole thing is.

 

[shinra-bansho]

Everyone knows there's no guarantees of a deal and an exit is possible if the Troika makes no acceptable deal.

I'm not sure how that relates to my post, as obviously if there is no deal there is no default.

But to clarify, what I was saying is that one can't draw a conclusive inference (as some are) as to whether the people who voted "No" are actually willing to exit the Euro if it means they will no longer have to accept conditions set by the creditor nations.

What people were told their vote meant, what people are interpreting the outcome to mean, what the realistic and plausible scenarios of the referendum are, do not all align.

As an example, people were told that capital controls would be lifted today, presumably regardless of the outcome of the vote. The realistic scenario in the event of a "No" as has unfolded is that the provision of ELA would remain unchanged or tightened, meaning an extension of capital controls and an increased likelihood of bank insolvency.

As another example, people were told this would strengthen the bargaining hand and/or accelerate a deal being made. It has in fact made an agreement less likely, from my understanding, and any agreement made will actually need to be more severe given the impact of the last week or so's events. The imposition of capital controls brought about by the second bailout lapsing in itself has apparently dramatically increased the necessary size of a third bailout.

---------

Also as it's somewhat related, since it has been mentioned a lot and is apparently part of Greece's new bargaining position in their talks, regarding the recent IMF report on debt sustainability and the need for some form of relief (whether outright or through a more like maturity extension), The Economist wrote an article last week, they argue the current position is a result of the past six months of turmoil, wherein any gains made have evaporated.
http://www.economist.com/blogs/freeexchange/2015/07/imfs-sad-story

They suggest that Greece's debt position would have been projected to fall to 117% GDP in 2020 and 104% GDP in 2022, given the more favorable economic signs at the end of 2014, rather than the now projected 150% GDP in 2020.

At a brief look at the summary of the DSA report, it seems a correct interpretation. So it actually seems kind of strange the Tsipras government has seized on this report as vindication, as while it does say that some form of relief is now necessary, it also attributes this need to recent policy changes and reiterates the need for a return to stalled policy implementation. I'm not sure if anyone has read the full text and could provide some further context.