Support NeoGAF

[oti]

And Greece doesnt want to leave the EU because for some odd reason a lot of people in Greece don't want to do it.

The Euro is an essential part of Europe.
Europe has a very special place in the heart of Greeks since, you know, WITHOUT US YOU'D ALL BE MUNCHING ON NUTS AND BERRIES STILL.

Leaving the Euro is like leaving your family for those people.

Oh wait, you wrote EU. But you meant Eurozone, right? Because leaving the EU would be the worst outcome for all parties involved (and Putin would love it).

 

[Conan-san]

Sorry I blinked, did they seriously turn down the version of the proposals where the Greek PM presented his arse?!

 

[KingSnake]

The Wall Street Journal says it has seen a document prepared by the German finance ministry which proposes a five-year Greek exit from the eurozone as one of two possible options.

According to the newspaper, it was sent by Germany Finance Secretary Thomas Steffen to counterparts from other eurozone countries - but has not been discussed at the Brussels meeting.

I guess that the feedback on that document wasn't a good one, if it's not on the negotiation table.

 

[Melon Husk]

b

Right. Especially France is calling all the shots lately. Don't forget about the other countries that just don't want to support Greece and have, may I say, understandable reasons doing so.

Hollande is weak. He doesn't want to be the guy who did nothing to stop Europe from cracking.

Yay! Let's kick out the Euro's strongest economy. I'm sure that everything would be just fine after that.

Fiscal compact: https://en.wikipedia.org/wiki/European_Fiscal_Compact

Everybody should aim for a budget in balance or a structural deficit of <0.5% GDP. You're basically saying nobody can run a deficit. If deficits have been made illegal how do you compensate? Cut.

Germany runs an export surplus of over 6%.
Who else? No?

It would be better for the smaller nations. It would stop inflicting austerity into the weaker eurozone countries for one (by making them cut themselves).

http://ec.europa.eu/economy_finance/articles/governance/2012-03-14_six_pack_en.htm

Merkel lap dogs in each of those countries

Where's that heart emoticon? Blyth <3
Lap dogs or pigs?

 

[ElTorro]

Sorry I blinked, did they seriously turn down the version of the proposals where the Greek PM presented his arse?!

Well, they have been saying all week that a third bailout program would require stricter conditions than unlocking the remainder of the second bailout program. And last weeks proposals was just about the latter. It's almost like the Greek government is not taking anything they are saying seriously. It's one thing to disagree with them, but it seems to me that they are just flat out ignoring them, just to be surprised by the results afterwards.

 

[Syriel]

It totally was, in early 90's they were naive to think that a coin would survive the economic differences of so many countries

In the early 90's many thought the euro was the first step towards a United States of Europe.

They though the shared currency would get people to think of themselves as Europeans first and eventually there would be political will to join the countries as ond.

That obviously didn't happen.

 

[Keio]

I can't even begin to analyze the scope of my disappointment.

Six wasted months: Greece finally capitulates, only to have the Eurogroup (and if the rumors are true, led by my former countrymen the Finns) piss on them.

So for under 2% of the Eurozone GDP we achieved a slowed down growth that cost more than the entire debt, fucked up one country and deepened the resentment within Europe and gave ammo to all the extremist parties on the continent.

Why? I don't know. To prevent any other policy from prevailing than austerity and keeping every country with economic woes trapped in a monetary union which I up to this date strongly supported?

I am disappoint…

 

[oti]

Daniel Olin @DanielOlin
Finland says NO to #Greece. Fin could be the #Eurogroup country that blocks an agreement source to #yle
9:16 PM - 11 Jul 2015

https://twitter.com/DanielOlin

Anne Gellinek
&#8207;@a_gellinek
Regierungskreise: #Schäuble s #Grexit Plan mit Merkel abgesprochen. Gabriel wisse auch Bescheid... #Griechenland

https://twitter.com/a_gellinek/status/619946134992257025


So, Finland seems to be clearly pro-Grexit, Germany finally admitting they are pro-Grexit. This could get pretty ugly tomorrow.

The ZDF live blog just stopped updating right before the news about the Germany proposed Grexit broke. No update for almost three hours.
http://www.heute.de/liveblog-griechenland-in-der-krise-38900810.html

 

[Conan-san]

It's going to take that long?

 

[PdotMichael]

b

Fiscal compact: https://en.wikipedia.org/wiki/European_Fiscal_Compact

Everybody should aim for a budget in balance or a structural deficit of <0.5% GDP. You're basically saying nobody can run a deficit. If deficits have been made illegal how do you compensate? Cut.

Germany runs an export surplus of over 6%.
Who else? No?

It would be better for the smaller nations. It would stop inflicting austerity into the weaker eurozone countries for one (by making them cut themselves).

http://ec.europa.eu/economy_finance/articles/governance/2012-03-14_six_pack_en.htm



Where's that heart emoticon? Blyth <3
Lap dogs or pigs?

Germany doesn't run a 6% export surplus in the Eurozone. In fact Germany is pretty balanced in that area.

 

[cyberheater]

The Euro is an essential part of Europe.
Europe has a very special place in the heart of Greeks since, you know, WITHOUT US YOU'D ALL BE MUNCHING ON NUTS AND BERRIES STILL.

So this crazy fucked up world we're living in is Greece's fault.

 

[LJ11]

Germany doesn't run a 6% export surplus in the Eurozone. In fact Germany is pretty balanced in that area.

It wasn't that balanced before the storm, 2008. The imbalances created before 08 is what distorted everything. Again, this isn't Germany's fault, it's an EMU issue. Pegs suck.

 

[ElTorro]

So for under 2% of the Eurozone GDP we achieved a slowed down growth that cost more than the entire debt, fucked up one country and deepened the resentment within Europe and gave ammo to all the extremist parties on the continent.

Why? I don't know. To prevent any other policy from prevailing than austerity and keeping every country with economic woes trapped in a monetary union which I up to this date strongly supported?

I've been wondering what the alternative to austerity could have been. When the crisis broke out, Greece's budgetary deficit was completely unsustainable. Additionally, they lost all access to the capital market. What do you do in such a situation?

Let's say that Greece had defaulted right at the beginning and forced the creditors, which at that point in time were banks, to make a debt restructuring deal. Greece would still have had an unsustainable budgetary deficit.

Austerity would have been unavoidable. The degree of austerity would have been debatable, but some form of substantial austerity would have had to been implemented in any case. Hence, the economy would have taken a big hit anyway.

Apart from that, getting out of the crisis would have required successful comprehensive reforms to make the administration more effective and kickstart the economy. It's debatable whether that would have happened with milder forms of austerity. The failure to reform the country doesn't just have to do with a lack of money.

 

[Coriolanus]

The one fun thing about today is seeing that the germans can also act like headless chickens.

Monetary policy across a continent is crazy anyway. The euro is a disaster.

I dunno, man. Australia does ok.

I've been wondering what the alternative to austerity could have been. When the crisis broke out, Greece's budgetary deficit was completely unsustainable. Additionally, they lost all access to the capital market. What do you do in such a situation?

Let's say that Greece had defaulted right at the beginning and forced the creditors, which at that point in time were banks, to make a debt restructuring deal. Greece would still have had an unsustainable budgetary deficit.

Austerity would have been unavoidable. The degree of austerity would have been debatable, but some form of substantial austerity would have had to been implemented in any case. Hence, the economy would have taken a big hit anyway.

Apart from that, getting out of the crisis would have required successful comprehensive reforms to make the administration more effective and kickstart the economy. It's debatable whether that would have happened with milder forms of austerity. The failure to reform the country doesn't just have to do with a lack of money.

You can look at examples in recent history of countries defaulting and see what happens. The only one where things went as bad as in Greece with its adoption of austerity was Zimbabwe, and that place has the same idiot running it for three god damned decades.

 

[Napalm_Frank]

So supposedly according to anon sources of finnish public media the finnish government was in danger of breaking up if they had agreed on Greeces current terms.

Consider me positively surprised if we end up with Grexit after all.

 

[Keio]

I would like to extend a big Fuck You to the "True Finns" party and their disgusting chairman if they cause an uncontrolled Grexit.

For the proponents, how is it expected to go down?

To exit, we would have to create a new currency from scratch. In occupied Iraq, the introduction of new paper money took almost a year, 20 or so Boeing 747s, the mobilisation of the US military’s might, three printing firms and hundreds of trucks. In the absence of such support, Grexit would be the equivalent of announcing a large devaluation more than 18 months in advance: a recipe for liquidating all Greek capital stock and transferring it abroad by any means available.

 

[KingSnake]

BBC Newsnight's Economics Correspondent is all out:

https://twitter.com/DuncanWeldon

This plan is completely insane. " Finnish media reports that Germany, Holland, Finland, Estonia, Lithuania, Slovakia and Slovenia want "temporary" #Grexit"

I mean, it's almost as if it was a deliberate entry into the "worst plan ever" competition.

"Our currency union is irrevocable - except during a crisis when countries might devalue. We'll just assume the markets will ignore that"

 

[PdotMichael]

It wasn't that balanced before the storm, 2008. The imbalances created before 08 is what distorted everything. Again, this isn't Germany's fault, it's an EMU issue. Pegs suck.

The Germany's high export surplus is rather a symptom than the reason for the crisis of the PIGS states.

Unit labor costs increased a lot with the capital inflwo while the productiviy barely improved (Portugal's even decreased), which didn't help the countries on the markets.

 

[Xando]

BBC Newsnight's Economics Correspondent is all out:

https://twitter.com/DuncanWeldon

The real news here is that the plan has actual countries supporting it.

 

[Melon Husk]

Germany doesn't run a 6% export surplus in the Eurozone. In fact Germany is pretty balanced in that area.

Sorry I meant % of GDP.

http://blogs.wsj.com/moneybeat/2015/07/09/why-germanys-record-surplus-isnt-helping-the-eurozone/

The fact is German economy is geared for export, while countries like Italy and Spain are built for domestic consumption. And then there's Greece.

 

[petran79]

And Greece doesnt want to leave the EU because for some odd reason a lot of people in Greece don't want to do it. Cowardly politicians on both sides are destroying Greece. I put more blame on Greece since there is a reason beyond simply saving their own skin - meaning that it would probably be a bad precedent to set - kicking out EU members and all.

When Greece joined the EU, it was dictated that Greece should change into a tourism and services country, dismantling any previous or irrelevant infrastructure. Greece became too corroded and self-complacent unfortunately

 

[oti]

The real news here is that the plan has actual countries supporting it.

The real news here is that Germany comes up with an INSANE proposal and those countries say "yep, let's do eht"

 

[Keio]

I've been wondering what the alternative to austerity could have been. When the crisis broke out, Greece's budgetary deficit was completely unsustainable. Additionally, they lost all access to the capital market. What do you do in such a situation?

Let's say that Greece had defaulted right at the beginning and forced the creditors, which at that point in time were banks, to make a debt restructuring deal. Greece would still have had an unsustainable budgetary deficit.

Austerity would have been unavoidable. The degree of austerity would have been debatable, but some form of substantial austerity would have had to been implemented in any case. Hence, the economy would have taken a big hit anyway.

Apart from that, getting out of the crisis would have required successful comprehensive reforms to make the administration more effective and kickstart the economy. It's debatable whether that would have happened with milder forms of austerity. The failure to reform the country doesn't just have to do with a lack of money.

I think having studied corporate failure the problem of austerity is similar to a corporation trying to save its way out of a crisis, where just cuts cause a death spiral to obsolescence; to balance out aggressive cuts of the non-future performance critical elements and the investment into future business is the hardest one to nail down.

I fully agree that Greece needed many structural reforms: the tax collection system is still unworkable, their client state approach was poor, the pension system unsustainable - but just cutting gave no prospects for the future growth. If you slash aggregate demand as much as they did, I'm not surprised a quarter of their GDP just evaporated.

That's what I find so laughable about the comments of today. Eurogroup asking about the numbers when the IMF projections of 2010 have in no way come true, even after enacting the craziest program of cuts.

 

[Piecake]

The Euro is an essential part of Europe.
Europe has a very special place in the heart of Greeks since, you know, WITHOUT US YOU'D ALL BE MUNCHING ON NUTS AND BERRIES STILL.

Leaving the Euro is like leaving your family for those people.

Oh wait, you wrote EU. But you meant Eurozone, right? Because leaving the EU would be the worst outcome for all parties involved (and Putin would love it).

It is economically stupid for Greece to keep the Euro and will have a VERY hard time recovering if it keeps it. Sentiments are nice, but in this case I think economic concerns far outweigh that.

 

[Coriolanus]

BBC Newsnight's Economics Correspondent is all out:

https://twitter.com/DuncanWeldon

Lawd in heaven, that dude ain't pulling no punches.

It is economically stupid for Greece to keep the Euro and will have a VERY hard time recovering if it keeps it. Sentiments are nice, but in this case I think economic concerns far outweigh that.

he's having a giggle with people conflating EU with EMU, m8.

 

[LJ11]

The Germany's high export surplus is rather a symptom than the reason for the crisis of the PIGS states.

Unit labor costs increased a lot with the capital inflwo while the productiviy barely improved (Portugal's even decreased), which didn't help the countries on the markets.

But when you have trade imbalances capital flows rush in by the fist full by definition, so it distorts everything. It's a chicken or the egg situation. Can't run a trade deficit without a capital account surplus. There's a laundry list of problems, but what it comes down to is that it's a bad idea to peg your currency and lose control of monetary policy.

 

[PdotMichael]

Sorry I meant % of GDP.

http://blogs.wsj.com/moneybeat/2015/07/09/why-germanys-record-surplus-isnt-helping-the-eurozone/

The fact is German economy is geared for export, while countries like Italy and Spain are built for domestic consumption.

You know that Germany doesn't just export to other Euro countries but to countries outside of the Eurozone?

 

[chadskin]

A German Green MP leaked Schäubles "temporary Grexit" paper, server is getting hammered right now though: http://www.sven-giegold.de/wp-conte...it_bundesregierung_non_paper_10_juli_2015.pdf

Comments on the latest Greek proposals

On 9 July 2015 Greece has submitted a list of proposals. These proposals are based on and even fall behind the latest aide memoire that was drafted by the Troika to conclude the review under EFSF. However Greece was not able to conclude the review.
These proposals lack a number of paramount important reform areas to modernize the country, to foster long term economic growth and sustainable development. Among these, labour market reform, reform of public sector, privatisations, banking sector, structural reforms are not sufficient.

This is why these proposals can not build the basis for a completely new, three year ESM program, as requested by Greece. We need a better, a sustainable solution, keeping the IMF on board. There are 2 avenues now:

1. The Greek authorities improve their proposals rapidly and significantly, with full backing by their Parliament. The improvements must rebuild confidence, ensure debt sustainability upfront and the successful implementation of the program - so as to ensure regained market access after completion of the program. Improvements include:
a) transfer of valuable Greek assets of [50 bn] Euros to an external fund like the Institution for Growth in Luxembourg, to be privatized over time and decrease debt; b) capacity-building and de- politizising Greek administrative tasks under hospices of the COM for proper implementation of the program; c) automatic spending cuts in case of missing deficit targets.
In parallel, a set of financing elements would be put together to bridge the time gap until a first disbursement under the enhanced program could be made. This means the existing risk of not concluding a new ESM program should rest with Greece, not with Eurozone countries.

2. In case, debt sustainability and a credible implementation perspective can not be ensured upfront, Greece should be offered swift negotiations on a time-out from the Eurozone, with possible debt restructuring, if necessary, in a Paris Club - like format over at least the next 5 years. Only this way forward could allow for sufficient debt restructuring, which would not be in line with the membership in a monetary union (Art. 125 TFEU).
The time-out solution should be accompanied by supporting Greece as an EU member and the Greek people with growth enhancing, humanitarian and technical assistance over the next years. The time- out solution should also be accompanied by streamlining all pillars of the Economic and Monetary Union and concrete measures to strengthen the governance of the Eurozone.

 

[KingSnake]

Lawd in heaven, that dude ain't pulling no punches.

Yeap:

I mean seriously - I am prepared to accept Grexit *may* be containable. But inventing an exit & re-entry mechanism???

 

[ElTorro]

I fully agree that Greece needed many structural reforms: the tax collection system is still unworkable, their client state approach was poor, the pension system unsustainable - but just cutting gave no prospects for the future growth. If you slash aggregate demand as much as they did, I'm not surprised a quarter of their GDP just evaporated.

The things is that austerity does not automatically stop a government from implementing reforms. I am skeptical whether these two things are related in the case of Greece. You might also say that an healthy economy should not be so dependent on government spending and public employment that it losses a quarter of its GDP when the government has to cut spending. I don't know how other economies would react to similar measures.

 

[Coriolanus]

A German Green MP leaked Schäubles "temporary Grexit" paper, server is getting hammered right now though: http://www.sven-giegold.de/wp-conte...it_bundesregierung_non_paper_10_juli_2015.pdf

That excerpt you quoted looks like something tailor-made to force a dude to pick the second option.

 

[Melon Husk]

You know that Germany doesn't just export to other Euro countries but to countries outside of the Eurozone?

Are you aware your graph only shows Germany - EMU and Germany - World excl. EMU?
In a globalized world you're competing with everyone. It's even worse than I remembered, 7-8 %.

Germany&#8217;s hyper-competitiveness makes it hard for the eurozone&#8217;s other economies to export their way to growth. Instead, they&#8217;re pushed into credit-driven domestic demand. The same mechanism that got them into trouble when the financial crisis hit.

Which is where Greece&#8217;s current problems come in. Greeks borrowed heavily in the years before the financial crisis, prompted by interest rates anchored to a weak Germany economy&#8217;s needs. The Greek economy lost competitiveness, ran up disproportionately big current account deficits&#8211;an astonishing 14% of GDP in 2007. Germany&#8217;s surplus that same year was&#8211;not coincidentally&#8211;just a bit under 7% of GDP.

Then you double down with punishing rules like Fiscal Compact.

 

[Earthstrike]

Today's SMBC is loosely related to this, and pretty funny.

 

[Keio]

The things is that austerity does not automatically stop a government from implementing reforms. I am skeptical whether these two things are related in the case of Greece. You might also say that an healthy economy should not be so dependent on government spending and public employment that it losses a quarter of its GDP when the government has to cut spending. I don't know how other economies would react to similar measures.

I guess everyone agrees on the last point, but it should've been obvious (well it also included tax hikes and other anti-growth measures).

And I think the challenge of reforms is so major that if your mindshare gets spent on cutting, you will not be driving a revival. That's the similar tragedy of CEOs in death-spiraling companies.

I mean look at the Eurozone. We've spend the last 6 months obsessing over under 2 percent of the GDP. Like Obama flipping out over Puerto Rico and not doing anything else. Fuck this.

 

[chadskin]

That excerpt you quoted looks like something tailor-made to force a dude to pick the second option.

Heh, not an excerpt, that's the whole document.

 

[oti]

Jarno Hartikainen @JarnoHa
It is confirmed: Finnish gov't won't accept a new bailout package to #Greece. #Eurogroup
10:07 PM - 11 Jul 2015

https://twitter.com/JarnoHa/status/619961349850931200

 

[KingSnake]

The things is that austerity does not automatically stop a government from implementing reforms. I am skeptical whether these two things are related in the case of Greece. You might also say that an healthy economy should not be so dependent on government spending and public employment that it losses a quarter of its GDP when the government has to cut spending. I don't know how other economies would react to similar measures.

It's not only about government spending. It's also about internal market confidence and the drastic decrease of spending appetite of the population when tough austerity measures are implemented. This big reduction in spending was also observed in the countries deemed as austerity successes, like Estonia and Latvia.

 

[Xando]

@AnnuMarjanen
Can confirm the earlier reports on FI government's mandate: it is very strict, Finland is ready to use veto to resist the Greek 3. programme

https://twitter.com/AnnuMarjanen/status/619960063495639040

So deadlock?

 

[chadskin]

https://twitter.com/JarnoHa/status/619961349850931200

Welp. Guess this is it.

https://twitter.com/JenniferMerode/status/619962484426940416

Or not! The rollercoaster ride continues.

 

[oti]

Jennifer Rankin @JenniferMerode
True Finns can't stop #greece bailout, ESM emergency voting procedure allows decisions to pass with 85% majority.
10:12 PM - 11 Jul 2015

https://twitter.com/JenniferMerode/status/619962484426940416

 

[Xando]

There is always the ESM emergency clause. Problem is germany has to agree otherwise it's blocked.

 

[Azih]

I dunno, man. Australia does ok.

So does the USA. But there is a fiscal and political union there as well.

 

[Coriolanus]

So does the USA. But there is a fiscal and political union there as well.

Obv. I was having a giggle at the continent bit.

 

[KingSnake]

For deciding #Grexit there should also be an unanimity, right? Or no?

 

[Tugatrix]

that temporary exit plan seem like when a kid is punished by going to the room some hours lol

 

[ElTorro]

Heh, not an excerpt, that's the whole document.

Indeed. Here is the entire document as image.

 

[ItWasMeantToBe19]

Some were speculating that Finland's politicians got super pissed about Greece trying to get help from Russia. Is there any truth to that or is it just idle speculation?

 

[PdotMichael]

Are you aware your graph only shows Germany - EMU and Germany - World excl. EMU?
In a globalized world you're competing with everyone. It's even worse than I remembered, 7-8 %.

You realize that it doesn't hurt nother Eurozone countries if Germany creates its export surplus through other countries outside of the Eurozone?

But when you have trade imbalances capital flows rush in by the fist full by definition, so it distorts everything. It's a chicken or the egg situation. Can't run a trade deficit without a capital account surplus. There's a laundry list of problems, but what it comes down to is that it's a bad idea to peg your currency and lose control of monetary policy.

Well, Greece's export deficit was a problem even before they joined the Eurozone. The problem just got worse when they got cheap loans because of the Euro while running an insanly large budget deficit without improving the productivy of the own economy.

 

[Xando]

ESM percentages:

You need 15% to block emergency clause.

 

[Uzzy]

That 'de-politicising administrative tasks', is that basically just saying we want to bypass the Greek government, to ensure any new government can't demand changes?