Varoufakis again with this fake threats. The Troika must be laughing their asses off. He's added 12 years onto their lives.
First it's, "No more austerity and privatizations."
Then, "Oh, we've got to make cuts and privatize the Port of Piraeus."
Followed by, "We won't be able to make the bond payment so we need a deal."
Then, "Okay, here's the money. We'll just take it from pensions."
Now it's, "Don't push us or, we'll default."
"Oops, we were only kidding?"
WTF????
Give me Josephine Witt any day.
The only thing in this world that gives orders is balls!
15 comments:
Mike,
You missed out "We're slimming down our bloated bureaucracy"
Followed a few days later by "We're hiring thousands more bureaucrats".
Hahahaa!!! You're right. Thanks, Ralph.
But they do make a lot of noise.I guess now It doesn't matter any longer since no one is taking them seriously. The reality is though that they can never pay those loans in any realistic scenario. So both sides are dreaming. Let's see how long they can dream away the reality that euro doesn't work as planned. Utopian projects are never dismantled orderly, they collapse. There will have to be a political collapse in order for euro to disappear. It will happen. It might be Le Pen, who knows. Podemos saw Spain leaving euro a while ago but now they seem to be dancing Tsipras's tango too.
And in the end, unlike Josephine Witt, they will use violence.
Yep, headed for system collapse trying to preserve an unworkable system. At a certain point social dysfunction become too great and there is a revolt.
The marxists revolutions taking place in pre-capitalst societies supposedly proved Marx's analysis wrong. Maybe not exactly.
Ultimately this game can continue for as long as the ECB clears the ELA balances.
Only if the ECB pulls the plug will the game stop, at which point Greek Central bank liabilities start to float against the ECB liabilities and you have a new currency.
So it's really all down to whether Draghi has the balls.
Seems to me that the issue is conditions being imposed on access to the ELA, in the case of Greece, the bailout conditions imposing austerity. That's up to the government council and not just Draghi.
http://www.economist.com/blogs/economist-explains/2015/02/economist-explains-5
Tom, there is another way to skin the cat - if Draghi and some other Eurocrats can play along - see this interview of Varoufakis by Joe Stiglitz a week or so ago - look at when Stiglitz ask YV about possible ways out of this mess - the answer may lie with the European Bank for Reconstruction and Development
My sense is that the austerians are committed to shutting any opening that gives Greece a way around the bailout conditions they have imposed.
Tom, in that case, the Euro is really and truly s*#!##d. The end game has to be played out fully. Syriza Government legally cannot unilaterally execute a "Grexit" - it pretty much has to set the stage for being "forced out" or for the Eurocrats to come to their senses!
I assume that Tsipras and Varoufakis's plan is to stand pat on their promise of rejecting austerity (that they know can't work anyway) and coming up with "reasonable" alternatives in that context. In that sense, what we are seeing is political theater turned on the operators of the playbook.
Syriza leaders will appear to be bending over backwards to stay in the EZ. So the eurocrats will either have to compromise with some alternative plan, or else throw them out — or engineer a political solution like a military coup to change the game.
Unknown:Syriza Government legally cannot unilaterally execute a "Grexit" As Lapavitsas & Flassbeck said, this is "nonsense". Not exactly right, but hard to think of a better one word summary. Contrary to what is propagated at a prominent MMT-friendly blog, Phoebus Athanassiou's paper for the ECB - agrees with Lapavitsas & Flassbeck in essence. The legality of Grexit is a purely academic question, for nations do such "illegal" things six times before breakfast every day.
Neil: So it's really all down to whether Draghi has the balls. Unfortunately, before that it is down to whether Syriza understands basic economics enough to force Draghi to show his balls. Or whether it maintains delusions about the empty threat of a forced Grexit - which of course would be a great benefit to Greece.
"Seems to me that the issue is conditions being imposed on access to the ELA"
ELA is the Greek Central bank issuing its own liabilities.
It's never a good idea to rely on the Economist to trot out anything other than the party line.
There is nothing in the treaty that permits any enforcement of a restriction of ELA as far as I can see. There is only a *reporting* requirement.
So when the push comes to the shove somebody has to *authorise* the refusal to clear a transfer from the Greek central bank via TARGET2. And that is Draghi's remit.
There's a huge difference between using nuclear weapons as a threat and deterrent and actually pressing the big red button.
Yes Neil, that's the thing about euro, CAD generated by private sector will always be funded unlike in a fixed exchange rate system. I wonder if there is a way to be figured out how a government can deficit spend through a private bank. :)
when the push comes to the shove somebody has to *authorise* the refusal to clear a transfer from the Greek central bank via TARGET2
That´s 100% correct.
If Draghi refuses to authorize the automatic credit line from the ECB to the Bank of Greece he'd be commiting an illegal action - an expulsion of Greece from the eurozone, not permitted by the Treaties that created the ECB.
Arguably, after such an action all obligations of debt payments in euros by Greece would cease. Said obligations were contracted within the eurozone and wouldn´t be enforceable once the illegal expulsion has produced its effects.
So Greece already has all the instruments it needs to force a reversion of the policies being imposed on her. She just has ignore the ECB's threats and guarantee that Greece's commercial banks keep open the lending to the government in exchange for newly issued T-bills or bonds. The ECB may then protest and threaten but it has no legal powers to expel Greece from the TARGET2 system.
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