Greek Referendum on IMF/Troika deal

[jaichind]

Looks like Grillo plans to be in Greece for the referendum.  No doubt to boast his political profile in Italy especially if the vote is No.

[jaichind]

Greek supreme administrative court will rule on the legality of the bailout referendum Today.

[Torie]

What happens to Greece, and to the Eurozone,  if Greece gets no more cash from its lenders, so it can only spend what it takes in? What I am asking is assuming Greece never pays a dime back of its debt, but gets no more loans, what happens? What percent of its spending at the moment is red ink? I mean at the end of the day, nobody can force Greece to repay anything, but on the other hand, Greece can't force anybody to lend it more money either. So that to me seems the stalemate endgame.

[Antonio the Sixth]

What happens to Greece, and to the Eurozone,  if Greece gets no more cash from its lenders, so it can only spend what it takes in? What I am asking is assuming Greece never pays a dime back of its debt, but gets no more loans, what happens? What percent of its spending at the moment is red ink? I mean at the end of the day, nobody can force Greece to repay anything, but on the other hand, Greece can't force anybody to lend it more money either. So that to me seems the stalemate endgame.

What happens? Greece will have to print money, which means it has to leave the Euro. Officially, no one wants to get there. Unofficially, Schäuble and his fellow austerity hawks seem bent on doing anything in their power to make sure it happens.

[Torie]

What happens to Greece, and to the Eurozone,  if Greece gets no more cash from its lenders, so it can only spend what it takes in? What I am asking is assuming Greece never pays a dime back of its debt, but gets no more loans, what happens? What percent of its spending at the moment is red ink? I mean at the end of the day, nobody can force Greece to repay anything, but on the other hand, Greece can't force anybody to lend it more money either. So that to me seems the stalemate endgame.

What happens? Greece will have to print money, which means it has to leave the Euro. Officially, no one wants to get there. Unofficially, Schäuble and his fellow austerity hawks seem bent on doing anything in their power to make sure it happens.

It's totally impossible for Greece to cut spending enough to balance the cash flow?  Leaving the Eruo would effectively do the same thing, no - just via slashing spending through inflation in real "dollar" terms?

[Torie]

Greek supreme administrative court will rule on the legality of the bailout referendum Today.

The court just ruled it's legal.

[Senator Cris]

Looks like Grillo plans to be in Greece for the referendum.  No doubt to boast his political profile in Italy especially if the vote is No.

It's just fool, like Tsipras and his economy minister.

[Hydera]

What happens to Greece, and to the Eurozone,  if Greece gets no more cash from its lenders, so it can only spend what it takes in? What I am asking is assuming Greece never pays a dime back of its debt, but gets no more loans, what happens? What percent of its spending at the moment is red ink? I mean at the end of the day, nobody can force Greece to repay anything, but on the other hand, Greece can't force anybody to lend it more money either. So that to me seems the stalemate endgame.

Greece leaves the euro and would immanently have to cut most of their expenses to what their tax revenues actually support. The moment its red ink is when its basically no money spent because theres no money at all.

What happens? Greece will have to print money, which means it has to leave the Euro. Officially, no one wants to get there. Unofficially, Schäuble and his fellow austerity hawks seem bent on doing anything in their power to make sure it happens.

lol "austerity hawks". Seriously who's going to give greece money for their spending plans that they should never of increase year by year since joining the euro?

I seriously can't stand people who think austerity is some thing that meanies do and theres an unlimited cache of money waiting for somebody if they just declare "Austerity = Over"

[BundouYMB]

lol "austerity hawks". Seriously who's going to give greece money for their spending plans that they should never of increase year by year since joining the euro?

I seriously can't stand people who think austerity is some thing that meanies do and theres an unlimited cache of money waiting for somebody if they just declare "Austerity = Over"

Can you do me favor? Go find a book and pick it up. Not any book in particular -- any one will do. Did you do it? Good, now open the book. As you might see, books are filled with words, and the purpose of words is to communicate with other people. Why are words necessary? Well, other people may have thoughts or knowledge that you don't have, and for various reasons it might be a good idea to share these thoughts.

I explain this because sadly instead of reading, listening, or looking at something someone has actually said, and then responding with your own thoughts, you have pulled your proverbial pants down in public and invented a fake, stupid, easy to attack delusion for you to then valiantly combat. For the purposes of this conversation, lets call this a "straw man."

The "straw man" you have used is a fictional person, or group of persons, who think that "theres [sic] an unlimited cache of money waiting for somebody if they just declare "Austerity = Over." Unfortunately no one actually expressed this belief.

I understand that by responding to real things that other people have actually said, you (you in particular) might be ill suited to disagreeing with them, because that might require you to research the subject and think about it, which you didn't have to do when attacking your "straw man." This is an unfortunate tic, but with hard work I'm sure you can overcome it. A good way to begin is to start using body parts above the waist area. Like, to pluck a random example out of a hat, your brain.

[ag]

What happens to Greece, and to the Eurozone,  if Greece gets no more cash from its lenders, so it can only spend what it takes in? What I am asking is assuming Greece never pays a dime back of its debt, but gets no more loans, what happens? What percent of its spending at the moment is red ink? I mean at the end of the day, nobody can force Greece to repay anything, but on the other hand, Greece can't force anybody to lend it more money either. So that to me seems the stalemate endgame.

What happens? Greece will have to print money, which means it has to leave the Euro. Officially, no one wants to get there. Unofficially, Schäuble and his fellow austerity hawks seem bent on doing anything in their power to make sure it happens.

It's totally impossible for Greece to cut spending enough to balance the cash flow?  Leaving the Eruo would effectively do the same thing, no - just via slashing spending through inflation in real "dollar" terms?

The problem of Greece is not only spending, but competitivenss. They are simply far too expensive. They either have to deflate (lower costs): which they cannot, really do politically. Or they have to devalue, which they can only do if they leave the euro.

They are already around what is known as "primary surplus" - before debt payments. So, theoretically, they could just default and go on in euro. But in reality this would be simply torture. They would be completely cut off credit. They would still be too expensive. The economy would still be in a horrid depression (cutting the tax revenue further)...

But even that is a mute point. Because what will happen first is that the day that the banks are reopened without an agreement there will be the mother of all runs on the banks.  No Greek will believe for a second that the banks will survive - and they will not. Hence, the only thing they can really do is reopen the banks, while keeping capital severe controls for an indefinite future. But that, really, means that a euro in a Greek bank is not freely convertible into a euro in cash or a euro in a German bank. At that point, even if you continue calling it a euro, it is a different currency, really.  And, of course, such capital controls make running a business very difficult, further depressing the economy.

Should I continue?

[ingemann]

It would be easier to not attack a strawman, if the "anti-austeritists" told us what their alternatives are. It's hard to have a debat with people who have decided their opposition is evil and you don't know what they're thinking as a alternative. What can Greece do instead of austerity, if they also want to stay in the Euro? If the other side doesn't have a coherent alternative, they choose to be strawmen.

[ag]

All your concern about solidarity and justice stops at the Mediterrainean (ok, at the gates of Melilla).

I won't bother to type a reply to your previous post, but I must say that is false. Not all people in Spain and other southern countries is as indifferent to the drama, at the gates of Melilla or at the shores of Lampedusa, as people in other places of Europe*.

So that is really your only objection?

[Velasco]

Greek supreme administrative court will rule on the legality of the bailout referendum Today.

The court just ruled it's legal.

... and Tsipras calls to vote 'No'

http://www.nytimes.com/2015/07/04/world/europe/alexis-tsipras-greece-debt-crisis-referendum.html?ref=world&_r=0

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This is relevant:

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"I.M.F. Says Greece Needs Debt Relief, but Blames Government Lapses"

http://www.nytimes.com/2015/07/03/business/international/international-monetary-fund-greece-debt-report.html

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The report blames the current Greek administration, assuring that "Greece’s economy had reached a point where Athens would have been able to make debt payments in years to come". However, as the article points in a paragraph placed well down, "many economists regarded Greece’s debt as having been unsustainable even before the governing party, Syriza, took office. But the I.M.F. report argues that the debt load was on its way to becoming manageable because of low interest rates and an improving economy".

This is revealing too:

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[Velasco]

All your concern about solidarity and justice stops at the Mediterrainean (ok, at the gates of Melilla).

I won't bother to type a reply to your previous post, but I must say that is false. Not all people in Spain and other southern countries is as indifferent to the drama, at the gates of Melilla or at the shores of Lampedusa, as people in other places of Europe*.

So that is really your only objection?

I have more, ag. You throw many oversimplications and strawmen. It happens that the subject goes a bit off-topic and, unlike you, I don't enjoy trolling very much.

[Torie]

What happens to Greece, and to the Eurozone,  if Greece gets no more cash from its lenders, so it can only spend what it takes in? What I am asking is assuming Greece never pays a dime back of its debt, but gets no more loans, what happens? What percent of its spending at the moment is red ink? I mean at the end of the day, nobody can force Greece to repay anything, but on the other hand, Greece can't force anybody to lend it more money either. So that to me seems the stalemate endgame.

What happens? Greece will have to print money, which means it has to leave the Euro. Officially, no one wants to get there. Unofficially, Schäuble and his fellow austerity hawks seem bent on doing anything in their power to make sure it happens.

It's totally impossible for Greece to cut spending enough to balance the cash flow?  Leaving the Eruo would effectively do the same thing, no - just via slashing spending through inflation in real "dollar" terms?

The problem of Greece is not only spending, but competitivenss. They are simply far too expensive. They either have to deflate (lower costs): which they cannot, really do politically. Or they have to devalue, which they can only do if they leave the euro.

They are already around what is known as "primary surplus" - before debt payments. So, theoretically, they could just default and go on in euro. But in reality this would be simply torture. They would be completely cut off credit. They would still be too expensive. The economy would still be in a horrid depression (cutting the tax revenue further)...

But even that is a mute point. Because what will happen first is that the day that the banks are reopened without an agreement there will be the mother of all runs on the banks.  No Greek will believe for a second that the banks will survive - and they will not. Hence, the only thing they can really do is reopen the banks, while keeping capital severe controls for an indefinite future. But that, really, means that a euro in a Greek bank is not freely convertible into a euro in cash or a euro in a German bank. At that point, even if you continue calling it a euro, it is a different currency, really.  And, of course, such capital controls make running a business very difficult, further depressing the economy.

Should I continue?

No, except that if Greece is too expensive as you put it, and they refuse to just slash wages and all, then they need to do that through inflation to get there, and/or devaluation, which means Grexit, does it not? How else do they get out of the "too expensive" box?. Thanks for telling me that Greece has a "primary surplus," and teaching me a new economic term.

It's "moot" btw.

[BundouYMB]

It would be easier to not attack a strawman, if the "anti-austeritists" told us what their alternatives are. It's hard to have a debat with people who have decided their opposition is evil and you don't know what they're thinking as a alternative. What can Greece do instead of austerity, if they also want to stay in the Euro? If the other side doesn't have a coherent alternative, they choose to be strawmen.

The obsessive harping about whether its "realistic" to stay in the Euro while fulfilling various demands of the government is a straw man, because its not an outcome that either Tsipras or the average Greek expects.

Disregarding whether its "practical" or whatever, by saying Greece wants to stay in the Euro Tsipras is making an important distinction. He is making the distinction that he supports the Euro if not for xyz issues where public opinion if overwhelmingly on the Government's side. This may not be different in practice from turning around and marching out of negotiations saying that Greece is better off with the drachma, but he is making the distinction for political purposes, namely so he can very clearly demonstrate the reasons Greece is being forced out/choosing to leave the Euro (again, xyz issues where public opinion is overwhelmingly on the Governments side) which may very well be terms on which the Greek peoples can accept leaving the Euro.

He has his opinions and he is marketing them, something which (for better or worse) is alien to the sociopathic opposition which is also taking an unpopular position in many ways, but which outright refuses to participate in any debate or defend any of their ideas, and whose position more or less boils down to "do what we say or we will make you suffer in ways that we won't exactly sketch out."

The distinction he is making may not matter or make sense to you, but he isn't doing it for you. He is making that distinction because the Greek people by and large want that distinction to be made, and that's why he keeps winning his political battles and why SYRIZA is sky high in the polls. Because Tsipras and SYRIZA are the ones at least paying lip service to what the Greek people want, and its always been my suspicion that that's really all voters anywhere really want. His (relevant) critics on the other hand seemingly take outright pleasure in mooning the public and totally disregarding public opinion.

Note that this is overall not a note about who is "right" and who is "wrong" but a political point, and one that certain Tsipras critics would be well to heed because the tsundere strategy of saying "we don't care if Greece leaves, no, really" is obviously bankrupt.

[ag]

No, except that if Greece is too expensive as you put it, and they refuse to just slash wages and all, then they need to do that through inflation to get there, and/or devaluation, which means Grexit, does it not? How else do they get out of the "too expensive" box?. Thanks for telling me that Greece has a "primary surplus," and teaching me a new economic term.

It's "moot" btw.

Greece will wind up out of hte euro, most likely. Or else, they will elect something completely neonazibolshevik in the process of trying to deflate, I am afraid. But there is a big difference between a negotiated transition, with debts partially forgiven, with a European comitment to help mitigate the social consequences, borders kept open, etc., etc. - and what is on track for happening right now.

This is why I have long been advocating a negotiated abandonment of the euro in Greece. It is not that it is impossible for Greece to stay in. It is, rather, that in the process the Greek democracy is likely to be destroyed. The current government is, by far, not the worst that could happen - and, I am afraid, it will happen.

[Torie]

No, except that if Greece is too expensive as you put it, and they refuse to just slash wages and all, then they need to do that through inflation to get there, and/or devaluation, which means Grexit, does it not? How else do they get out of the "too expensive" box?. Thanks for telling me that Greece has a "primary surplus," and teaching me a new economic term.

It's "moot" btw.

Greece will wind up out of hte euro, most likely. Or else, they will elect something completely neonazibolshevik in the process of trying to deflate, I am afraid. But there is a big difference between a negotiated transition, with debts partially forgiven, with a European comitment to help mitigate the social consequences, borders kept open, etc., etc. - and what is on track for happening right now.

This is why I have long been advocating a negotiated abandonment of the euro in Greece. It is not that it is impossible for Greece to stay in. It is, rather, that in the process the Greek democracy is likely to be destroyed. The current government is, by far, not the worst that could happen - and, I am afraid, it will happen.

Not that it matters a wit what I think, but your rather depressing little analysis rings true to me. It's tough for democratic governments to slash everyone's income and wages and so forth except perhaps via inflation by Draconian (notice the little Greek derived term I threw in here, just to show off ) amounts in a short period of time. The de jure, along with the de facto, social contract, however imprudent it was to enter in the first place, just needs to be thrown in the trash to get the job done.

Meanwhile I read somewhere that about 500K Greeks have decamped in a relatively short period of time, a big number given its population, presumably mostly the "producer" class, leaving behind an ever higher percentage of the pensioners and so forth, in a sort of downward spiral into the abyss.

[Velasco]

The "straw man" you have used is a fictional person, or group of persons, who think that "theres [sic] an unlimited cache of money waiting for somebody if they just declare "Austerity = Over." Unfortunately no one actually expressed this belief.

I'm afraid that terrible poster is not the only hot head in this thread. Apparently, ag thinks that I'm complaining because manna ceased to flow toward my country and I want that people feel sorry about me, as well accuses me of being ungrateful. Well, no. I don't remember having put in writing such a thing. I truly appreciate the advantages of joining the "club" back in the 80s. I think governments in my country allocated badly the funds with their excessive enthusiasm for infrastructures, but that's another question. But now I feel really sorry for the people who is actually suffering the consequences of misguided policies, in my country and elsewhere in Europe, and not really for myself. I can see the results every day around me. As well, I deplore the current drive of the Continent and fear the place where it's heading towards. I don't blame such drive only, I'm very critic of past and present governments in my country. It's quite deplorable that certain posters interpretate that I'm begging for alms or something, only because of some geographical accident. And the Greeks... they are really much worse than us. However, and despite their pains have been aggravated by certain policies and institutions, we are not entitled to talk in their favour... because some people is going to say... a strawman. Some people should cool down.     

[Torie]

In other news, some economist opine as to how they would vote, with some leading names (on the left mostly), saying they would vote no, with others saying yes. So I guess one cannot easily relegate the "no" voters to the economically illiterate luddite nutter category, or even mere Machiavellian game theorists (the economics minister has been characterized as a game theorist, I guess reading too many political science books on the topic or something). Life is complicated. But in the end, the subsidies cannot go on forever, and Greeks are going to have to work harder and longer for less money, or emigrate, it seems to me. And the fissures of economic union sort of, without political union, are laid bare. Can this complex hybrid structure really work for Europe?

[Angel of Death]

It's very hard to see the Greek people voting no here, because, in the end, fear is the most basal of all instincts.

[jaichind]

This entire crisis might seem like an issue of lack of money.  I tend to think it is lack of will by vested interests in Greece feeling that other sectors in Greece should break the brunt of getting out of the crisis and not themselves.  This entire crisis reminds me of the Crisis of 1644 and the end of the Ming Dynasty.

In early 1644 after years of war with the Manchurian based Ching Dynasty as well drought in Northern China a large rebel army led by Li Zicheng (李自成) defeated all Ming field forces in Northwest China  approached Beijing from the Southwest.

What  Li Zicheng (李自成) might have looked like

 

In Beijing itself Ming Emperor Chongzhen Emperor (崇禎) was running out of options.

Emperor Chongzhen (崇禎)


There were several options.  He could recall the army that was facing off against the Ching Dynasty in Manchuria led by Wu Sangui (吳三桂) to Beijing to augment the Beijing garrison.  He could try to buy off  Li Zicheng's army with a large sum of money.  He could also call a general mobilization of the Beijing population into a miltia army to fight off Li Zicheng's rebel army.  He could also just arrange for his entire government to relocate to Southern China in Nanjing and  try to organize and army there to  come back to defeat Li Zicheng.  

The problem was that all these options had political costs as well financial costs and the imperial treasury was empty.   Chongzhen was actually a very poor manager.  He has a track record of wanting his subordinates to make decisions  took no ownership of problems.  He would then throw his subordinates under the bus after they made critical and necessary decisions but had negative side effect consequences.  So by 1644 there was very little trust between Chongzhen and members of his government.  

Throughout 1644 as Li Zicheng's army approached, Chongzhen would look into each one of these options and then would launch various fund raising campaigns to raise funds for each one of these options.  Almost all these campaigns would ask wealthy members of the government as well merchants to donate money to the imperial treasury to deal wit the Li Zicheng rebellion.  The amount raised was way to small to try out any of these options.

The reason that was that even though there was still plenty of private wealth in Beijing because the Ming regime survived several other crisis in the last few years, especially with an unsuccessful siege  from the armies of the Ching Dynasty of Beijing, everyone just figured somehow this crisis will blow over so why bother giving up personal wealth when it is clear others are not doing so.  Note that Chongzhen himself personally still has huge wealth but was also personally not willing to donate his own money to the imperial treasury pretty much for the same reason.   Chongzhen's own father-in-law who was one of the richest men in Beijing also donated pretty much nothing.

So in the end Li Zicheng's army, who offered to go away for a large sum of money and perplexed why when their offer was turned down no sizable army appeared to oppose them entered the capital in mid 1644.  Chongzhen committed suicide.  Li Zicheng's army then extracted from the various wealthy class  in Beijing sums of money at least ten times the amount that Chongzhen was trying to raise but failed.  So in the end everyone in this game in Beijing lost due to lack of will and trust that everyone will reciprocate in joining forces to fend off the worst outcome.

Oh,  Li Zicheng end up losing as well as Wu Sangui, whose father was a senior member of the Beijing government elite also was robbed off all his wealth by Li Zicheng, joined forces with the Ching Dynasty defeated Li Zhizheng's army and help established the Ching Dynasty as the ruling dynasty of all of China.

[jaichind]

Ipsos poll

Yes/No 44/43
45% believe yes will win vs 33% who say no
92% say will certainly or probably vote

[jaichind]

GPO poll

44.1/43.7 Yes/No

49.7% said the referendum is not about Greece’s membership in the euro, vs 44.7% who said that the plebiscite is indeed about the country’s membership in the currency bloc. 

The second set of number should give the No camp some hope.

[jaichind]

http://www.bloomberg.com/news/articles/2015-07-03/leading-greek-newspapers-urge-yes-vote-in-referendum

Leading Greek Newspapers Urge ‘Yes’ Vote in Referendum