I’ll believe it when I see it

Greece’s Left-wing Syriza government has agreed to draconian austerity terms rejected by the Greek people in a landslide referendum just five days ago, capping one of the most bizarre political episodes of modern times.
The surrender was confirmed by the Greek parliament by 251 votes to 32, with eight abstentions including several senior members of the ruling Syriza party.

I still think they’ll manage Grexit.

“We are preparing to open up branches for normal banking services next week. Capital controls will last for a while but not for as long as in Cyprus. The situation is very fluid but we don’t think we will need a major recapitalisation of the banks,” said the source.
An estimated €40bn of money stashed in “mattresses” should flow back into deposits as confidence returns.

For I really don’t think that will happen.

30 thoughts on “I’ll believe it when I see it”

  1. An estimated €40bn of money stashed in “mattresses” should flow back into deposits as confidence returns.

    For I really don’t think that will happen.

    Sure it will. As confidence returns. Which it probably will, by 2040 or so.

  2. Bloke in Costa Rica

    There’s an appalling level of moral hazard in play here. If, and this is a really big if, Greece really does adhere to the terms of the new austerity package then they might come through it at some point in the not too near future, albeit sadder, poorer and chastened. But they probably won’t, because everything they have been taught by experience to this point indicates they will get away with it. At that point if they are not utterly flattened by the creditor nations then the Euro could unravel in days, because no-one will believe debtor nations will ever be held accountable. Yes, we all hate the Euro, but the way in which it meets its demise is important.

  3. Well, our cash has never returned to The Bank Of Cyprus… Under currency controls we removed the limit (€300) every single day until the account was empty.

    We transfer enough into the account to pay bills and the rest remains in the ‘mattress’…

    Once bitten…

  4. I think you are wrong Tim. No Grexit this time. The only sticking point is the Bundestag vote and I suspect Merkel still has just about enough clout to get that through.

    So the whole fucking shebang will creak on for another few months and blow up again probably next year.

    In the meanwhile Podemos see developments elsewhere as rebel parties try to obtain their own debt relief.

    So the episode is not over and the euro is not yet busted. But it is now quite clearly only a matter of time and probably rather less time than the 1000 years the originators had in mind.

  5. Bloke in North Dorset

    The Greek Parliament has approved Fudge Cake for dessert at tomorrow’s EU conference, all that remains is for the participants to lap it up, they hope.

    If this was about rational economics Greece wouldn’t have joined the EZ.

    All these manoeuvrings have been about the various actors ensuring that they won’t be the ones who got the blame for Grexit. The IMF is now nowhere to be seen and Greece has just passed the poisoned chalice to the EZ. The EZ in turn is trying to suck the rest of the EU in to the blame game to give them some top cover for the doomed project.

    This tragedy has a lot more twists and turns and is unlikely to ever end.

  6. I saw the Greek creep in the EU “debate” or whatever it was where Farage suggested he get out of the euro. Greekboy sat there arse-faced and scowling. It was obvious then that he really had no intention of taking his country back from the EU.

    This has to be one of the biggest climb-downs of all time. All the hassle of referendum and then blank capitulation. How can the present Greek shower survive? Nothing has changed except even more pressure on the Greek in the street.

  7. So the Greek Parliament has just voted to go against the express wishes of the Greek people.

    Meanwhile, Greece’s largest landowner, the Orthodox Church, remains exempt from all taxes. That the troika didn’t insist on scratching through this red line seems to show an astonishing level of incompetence.

  8. With any luck the sticking plaster will come off again just before our own EU vote. I think many here in blighty will seriously think about voting for Brexit. Even the left in recent weeks can see the sham that is the EU. When the left and right are in solidarity over this issue , the europhiles might well get properly rogered.

  9. If Merkel swallows this fudge, she’s going to find herself dethroned sooner or later. The Greeks may have voted to pretend to go with it, but the moment they get a bit of cash, they’ll backtrack and claim it’s too hard. And the cretins in the Commission will back them, because they cannot bear to see their idiotic masterplan disintegrate.

    Eventually, the Euro will collapse, but the longer they keep doing this, the more failed states and extremist parties they will fuel. The EU will start causing wars – probably just civil wars. Which will finally put an end to all the bollox about postwar peace and the EU.

  10. ken

    This is the bit I don’t understand.

    The ECB is signing up to liquidity ‘now’ (presumably?), and the Greeks are making promises ‘for the future’?

    Or am I misreading it…

  11. People everywhere, (me included), have been saying, “At last. The nonsense that is the euro has finally gone belly up. Growth and prosperity can return to the west. Pop the champagne corks! The truth of the maxim ‘What can’t continue, won’t’ has been shown. TANSTAAFL rules!” etc. etc.

    And the bastards have said; “We’ll show you! We will continue to pour your good money after bad.”

    And I think that’s it. That the only reason they’re pressing on with this idiocy is to avoid saying “Sorry mate. You were right, I was wrong. Now let’s get back to some sensible economics.”

  12. PF

    I assume that some form of temporary deal structure must be struck over the weekend to allow the ECB to offer a tiny smidgen more cash via the ELA, basically the status quo ante the referendum.

    In the meantime for the next month or so there will further negotiations on the details for the plan. Not sure about whether the ECB will need a formal ESM agreement before they feel they have enough cover to restore ELA (this will require votes in six national parliaments).

    If the stories are correct, the greek banks require another 14 billion in direct capital infusions. It is possible that one of the conditions will be for a deposit haircut as well. This money also comes from the ESM.

    What is most likely to happen is that Syriza will then go back to reneging on commitments and trying to avoid taking decisions even as they get enough money to pay what they owe to the IMF and what they will owe to the ECB. Cue arguments about payments. The consequent economic uncertainty will lead to a major recession and Greece will find itself in need of ever more money. Even as the Greek banks are given liquidity, they will have to maintain capital controls, which will damage the economy further. Eventually the Germans will say genug, and Tim will be right. But by this point, Merkel will have burnt through all her political capital and she will be replaced before the next election.

  13. Mr Ecks – that was exactly my thought when I saw the video – what a complete cunt Tsipras is. All that for nothing. Utter utter dickhead.

    Cuffleyburgers.

  14. Eventually the Germans will say genug, and Tim will be right. But by this point, Merkel will have burnt through all her political capital and she will be replaced before the next election.

    Angela Merkel has been declared dead more than once, indeed I have similarly underestimated her in the past. While she continues to deliver the national goals of the coalition she will be given flexibility in negotiations with EU partners.

    Yes, the Germans are carrying about 66bn Euros in Greek debt and the duration of these bonds has been extended out to 50-years with the interest being deferred and very low. So the face value of this debt might be 66bn Euros, but the market value is probably < 10% and even then I suspect that only vulture funds would be interested.

  15. Merkel is successful because she is good at kicking the can down the road and stabbing people in the back.

    The problem she faces is that when kicked the can down the road, it’s become bigger and she’s now being urged to kick it down the road with another E70 billion or so. If she says yes, she’s going to find life difficult because it may well unravel and even the SPD have turned tail in the face of the voters (although they are making pro EU noises again this morning). If she says no, then everyone blames her for destroying the Euro – but she can at least say she didnt put in another E70 billion. It’s very difficult for her.

    Because of the Euro fudge, I expect her to say yes and to end up paying for it when the Greeks start playing silly buggers again.

  16. ken

    “What is most likely to happen is that Syriza will then go back to reneging on commitments ”

    Yes, that’s kind of where I was heading… Interesting.

    Though, Tim’s version above would probably sell more tickets…:)

  17. Focussing on the European symbolism for a moment, it was excellent that the French drafted the Greek surrender terms.

  18. “what a complete cunt Tsipras is”: could be. Or maybe the USA said “Do as you’re told or your wife will have a nasty motoring accident”.

  19. I’ve no idea how credible some of these quotes are (from Merkel’s own Alliance MPs)? Lovely comment on Juncker!

    Ralph Brinkhaus, deputy parliamentary leader of Merkel’s Christian Democratic Union, said: “I’m asking myself how seriously I can take these proposals when it was the Greek government that campaigned against them.”

    “On Sunday they were still having a campaign in which they damned everything that they’re now proposing,” he added. “The question is, therefore, will everything be implemented that’s decided on in parliament, or are these just empty promises?”

    Another member of Merkel’s alliance, Hans-Peter Friedrich, told German radio he did not trust the Greek proposals: “Either the Greek government is tricking its own people, or us once again.”

    “Greece needs a fresh start – with its own currency and with the good-hearted help of its European partners,” he said.

    He was also scathing of EU Commission President Jean-Claude Juncker, saying: “You could send him an old newspaper with a signature on it and then he would say: ‘great, great, great. That is a basis from which to work’.”

  20. So, the Greeks string the ECB, etc, along for a few more months, and the ECB, etc are happy to be strung, for it means The European Project (pbui) survives.

    And to think I was starting to believe that econmic reality was finally going to trump the Euro-nuttery.

    Even so, I will continue to advise my expat client in Greece to stock up on cash – with a good stash of sterling or USD in there as well. After all, they can only continue to build the dam so high before the water has to be let through.

  21. What I find utterly incomprehensible is that we are going to go back to yet another round of reductions in pensions and expenditures and tax rises to make up for the deficit caused by a weak economy. We know the fiscal multipliers on this are large, so what does it do to the economy? And will Greece be more competitive at the end of it? A bit, but is the misery worth it?

    What Greece needs is a good dose of Keynesian stimulus. The problem is that the Germans dont want it being used to prop up the existing crazy pension system and the public sector and Syriza want to control the commanding heights of the economy. So, back to the same old insanity.

  22. Keynesian stimulus. That’s where you take a bucket of water from the deep end of the pool and dump it in the shallow end, expecting the level to change.

  23. If it was their money they were proposing to loan Greece, and assuming they were still minded to loan it, common sense dictates that the money would be loaned on a staged basis with short stages and strict KPIs to be met before the next payment would be forthcoming. That way, any backtracking would result in no further payments. But, of course, it is not their money.

  24. Gamecock

    When you have an economy that has 25% unemployment and capacity utilisation running at 80%, dumping money in will work. We can do it the other way with a weaker currency and inflation – but only if the Greeks agree to grexit. And the latter will be very painful. It’s what they should have done back in 2012 – but what they did was destroy their private sector to maintain their public sector/welfare. It’s going to be so much worse now.

    And in this case, we take money from the German pool and dump it into the Greek pool. Which would be good for the Greeks. Not so popular with the Germans though.

    And yes, Keynesianism with bad government leads to Greece in the first place (they stimulated heavily in 2008 – but on all the wrong stuff – after having spent like Gordon Brown – post-2001 version – for 26 years). The Greeks cannot do Keynesianism by themselves now, because they spent it all building up their crap clientelist POS system.

    None of this alters the reality that fiscal stimulus would work. Just that it needs to be spent on things that dont make Greece more dysfunctional. And no, no one trusts Syriza not do that. (or any of the other greek governments of the past thirty years).

    And if anyone believes Syriza are serious about reform:

    http://www.ekathimerini.com/196660/article/ekathimerini/comment/inexplicable-decision

  25. DocBud

    That is how they’ve been doing it up to now. So the last deal had 7 billion left that was due last year, but the greeks had failed to meet to their obligations.

    And even the staging with troika oversight failed to result in serious reform. One of the original demands was that they should legislate away the idiotic arduous professions early retirement. Which they did. But then the last government introduced loopholes –

    http://time.com/3954657/european-leaders-greece-promise-change/

    The problem is that the Greeks have never been serious about tackling the problem. And micromanagement only gets you so far. And every previous deal has been marred by the Greeks effectively reneging, but in new ways. And incrementally, so that it was never quite enough to trigger an outright refusal most of the time. Syriza are not the first Greek government to play this idiotic time wasting game.

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