Greece crisis: Europe on edge over snap election

[TomandJerry]

Greek bailout: Eurogroup talks collapse

This is the second time in five days that a eurogroup meeting has broken up without any progress on Greece.

Onto Greece. Dijsselbloem explains that the eurogroup didn’t get an agreement last Wednesday. Then he and Greek PM Tsipras agreed to start technical work on the bailout, and to examine how Greece could cover the 30% of their bailout programme which they want to abandon.

Today officials reported back.... ministers had a slight sense of disappointment over the work, and that there was “no firm common ground” on what a new programmw would look like.

Then, in today’s meeting.... the general feeling is that the best thing would be for the Greek authorities to seek an extension to its programme, says Dijsselbloem.

We simply need more time to examine Greece’s proposals, so an extension would give us the ability to do that work.

 

[Buzzer]

I'm not surprised the Greeks don't like it, the Eurogroup have offered no concessions and want the Greeks to sign a piece of paper saying that they will honour all their debts in full and that they will continue with the full austerity measures imposed by the Troika. This is a leaked draft of what the Eurogroup want Greece to sign.

This doesn't paint a picture of a Greek delegation having performed brilliantly. This is the Eurogroup calling the Greeks' bluff. This is going to end in tears.

 

[Herr Tubthumper]

I'm not surprised the Greeks don't like it, the Eurogroup have offered no concessions and want the Greeks to sign a piece of paper saying that they will honour all their debts in full and that they will continue with the full austerity measures imposed by the Troika. This is a leaked draft of what the Eurogroup want Greece to sign.

This doesn't paint a picture of a Greek delegation having performed brilliantly. This is the Eurogroup calling the Greeks' bluff. This is going to end in tears.

Which one is this? He was presented with one statement which he was prepared to sign, but it was then withdrawn for some reason? I'm guessing this isn't the one he was prepared to sign.

 

[larus]

This doesn't paint a picture of a Greek delegation having performed brilliantly. This is the Eurogroup calling the Greeks' bluff. This is going to end in tears.

The ramifications if this does end up with a GREXIT are serious for the world economy. The financial amounts involved in Greece aren't the issue; it's the realisation that the Euro is actually an enhanced currency union, which will then be tested on the weaker states. Whatever the final outcome to Greece, there are other challenges this year with elections in Spain and Italy, where anti EU/austerity parties are in the ascendency. The EU is being exposed to be.what many have claimed for a long time; a corrupt, inefficient left-wing project, which will fail as there is no political/fiscal integration which is the only way it can ever be successful.

 

[Buzzer]

Which one is this? He was presented with one statement which he was prepared to sign, but it was then withdrawn for some reason? I'm guessing this isn't the one he was prepared to sign.

Ah, now this is a case of playing to the Greek gallery IMO. Varoufakis is clearly making out that Greece is trying everything to be reasonable but that the Eurogroup are shifting the goalposts. Peter Spiegel of the FT has this to say:

[tweet]567420523865313280[/tweet]

And I note that a very recent opinion poll in Greece has 79% supporting the Greek government stance and 74% believing that Greece will get the deal that they want. My view is that the Greeks are finding it a lot, lot tougher than they imagined and with the Eurogroup refusing even to budge in the slightest on write-offs or on the bailout that this latest stance from Greece is the start of managing extremely high domestic expectations. This Greek government are heading for a major crash unless things swing their way and fast.

Edit - I notice the leaked draft is marked 'preliminary'. There's therefore no reason not to believe this is an earlier draft and not the final one that the Greeks refused to sign and this would be in line with that FT journalist's tweet.

 

[beorhthelm]

Which one is this? He was presented with one statement which he was prepared to sign, but it was then withdrawn for some reason? I'm guessing this isn't the one he was prepared to sign.

as i understand the reports, Varoufakis said he'd sign deal that provided for a delay to loan repayment. that wasnt on offer, just his wish list, presumably trying to give an impression of cooperation when he would inevitably refuse to sign the deal presented.

 

[Buzzer]

And this was the German Finance Minister Herr Schäuble, before talks this morning:

"I feel sorry for the Greek people,” because “they have elected a government that is behaving rather irresponsibly at the moment.”

http://greece.greekreporter.com/201...he-greeks-they-elected-an-irresponsible-govt/

That's an extremely aggressive and polarising comment from one of the, if not the major, players for the Eurogroup. God knows what he thinks of them right now after today's acrimony and drama. Varoufakis was quoted in the New York Times as saying that he will "..desist, whatever the consequences, from deals that are wrong for Greece..."

My highlights, but these two positions have undoubtedly become even more entrenched.

 

[nicko31]

Think the rest of Europe is starting to realise if they lose 16 million people from the EU life will go on. You gotta remember the Greeks did invent the word chaos...

 

[Mellor 3 Ward 4]

Russia might like the idea but it's a non-starter for many reasons.

Russia would love to destabilise the EU, but can't afford to bail the Greeks at the moment.

It was interesting that the first meeting the new Greek foreign Minister had was with his Russian counterpart.

http://www.dw.de/russian-greek-foreign-ministers-close-ranks/a-18249908

 

[BigGully]

I havent really followed this thread, but I have some sympathy with Greek and their fella came across quite well on Newsnight the other week.

Greece has had the late payment letter, then the phone call, then a letter delivered by a bulky looking guy and threat of court action and sanctions, the problem for Germany and the rest of the Eurozone is that they have the taxi running outside ready to zoom to the nearest Official Receivers Office and the power is shifting, the Italians and Spanish our watching closely

 

[cunning fergus]

Ah, now this is a case of playing to the Greek gallery IMO. Varoufakis is clearly making out that Greece is trying everything to be reasonable but that the Eurogroup are shifting the goalposts. Peter Spiegel of the FT has this to say:

[tweet]567420523865313280[/tweet]

And I note that a very recent opinion poll in Greece has 79% supporting the Greek government stance and 74% believing that Greece will get the deal that they want. My view is that the Greeks are finding it a lot, lot tougher than they imagined and with the Eurogroup refusing even to budge in the slightest on write-offs or on the bailout that this latest stance from Greece is the start of managing extremely high domestic expectations. This Greek government are heading for a major crash unless things swing their way and fast.

Edit - I notice the leaked draft is marked 'preliminary'. There's therefore no reason not to believe this is an earlier draft and not the final one that the Greeks refused to sign and this would be in line with that FT journalist's tweet.

It all very well the EU asking the Greeks to stick to the plan that they set out years ago, in the meantime the EU has changed its own plan by rolling out a QE plan to print over a trillion euros. Look at the chaos that caused with the Swiss.

It's a glib point but if I was the Greeks I would be saying to the EU, if you are going to create that much money, create a bit more and pay down some of our debt..........they only owe 350bn.

In any event, this is still great news........all this episode has really proved is that regardless of national democracy we can see who really holds the reins of power, as it was always intended.

The Germans.

 

[TomandJerry]

"The Greek delegation was told in no uncertain terms that talks would recommence only if the country was willing to extend its bailout package, which carries a list of austerity measures that the new left-wing government in Athens has vowed to pare back.

Effectively presenting Greece with an ultimatum, the eurogroup of eurozone finance ministers said Athens had until Friday to agree to maintain the current bailout under the auspices of the European Union, the European Central Bank and the International Monetary Fund – something that Greece has said is unacceptable.

Greece’s finance minister, Yanis Varoufakis, made it clear in the acrimonious discussions in Brussels on Monday that Greece would not accept prolonging the bail out for six months unless the other 18 members of the eurozone agreed to water down the austerity conditions attached to the deal."

 

[beorhthelm]

It's a glib point but if I was the Greeks I would be saying to the EU, if you are going to create that much money, create a bit more and pay down some of our debt..........they only owe 350bn.

but QE doesnt pay down any debt, it just shifts it onto the central bank's books and off the commercial bank, so they can balance their dodgy balance sheets, or or loan to other hopfully more economically productive areas. if they were to start literally printing money for the benefit of Greek public sector workers, it really would cause a bit of an upset in the rest of the eurozone, who'd all want a similar direct sub to their spending. planned QE and Greek debt really arent linked. and the Swiss created their own mess by trying to peg to the falling euro, they simply delayed the inevitable, in one sudden spike rather than over the months it would have occured.

 

[cunning fergus]

but QE doesnt pay down any debt, it just shifts it onto the central bank's books and off the commercial bank, so they can balance their dodgy balance sheets, or or loan to other hopfully more economically productive areas. if they were to start literally printing money for the benefit of Greek public sector workers, it really would cause a bit of an upset in the rest of the eurozone, who'd all want a similar direct sub to their spending. planned QE and Greek debt really arent linked. and the Swiss created their own mess by trying to peg to the falling euro, they simply delayed the inevitable, in one sudden spike rather than over the months it would have occured.

I know, my point was that the EU and Germany in particular never wanted to engage in QE because it was not a policy the ECB thought all EZ states would agree to. The version that the Germans agreed to only has 20% sovereign sharing, which mitigates the effect QE could have if it was EZ consolidated so that weaker EZ countries could leverage off the German balance sheet. Hardly the big bazooka.

The fact remains however that by introducing QE the EZ has changed its political and economic policies to cope with the scale of the crisis engulfing the euro, the fact that QE only kicks the can down the road is by the by.

The Greeks in contrast are being held to an agreement that just is not working, in essence they are being told to pay off their Visa card debt with a new MasterCard whilst their income continues to fall, and has little chance of recovery. The QE will help those EZ banks with exposure to Greek debt (German and French in particular) it's introduction (announced) in the run up to the Greek election was no coincidence. How the Cypriots who had their money stolen must have laughed.

I note your point about the Swiss however they are the victims of the absurd monetary policy of the EU.

 

[Diablo]

Thank god we`re not in Euro.....please god keep Milliband out..

 

[Buzzer]

The difference between the draft the Greeks were happy to sign and the one they took offence at is essentially down to two words: "current programme" according to a very respected economist.

http://www.pieria.co.uk/articles/greece_the_two_words_that_ended_the_eurogroup_meeting

Interestingly she dissects the 'current programme' as follows:

In its 2012 letter to the Eurogroup, the Greek government committed to achieving primary surpluses of 4.5% from 2016 onwards. This was never a credible commitment. Attempting to achieve primary surpluses of such size for an extended period of time would ensure the Greek depression – already longer and deeper than the US Great Depression - continued not for years but for decades, and would probably be unattainable anyway because of that depression. And the collapsing GDP consequent on such austerity would actually increase, not decrease, the debt burden. It’s a vicious spiral which Yanis Varoufakis has described as “debt deflation”.

So, if Greece agrees to the Eurogroup demands then it's f*cked. She goes on:

And the Eurogroup still has too much face to lose. Rather than admit that the current programme is not – and never has been - fit for purpose, it tried to force the new Greek government to commit to it. In effect, the Eurogroup’s draft communique says “Give up your silly ideas of recovery so we can continue to pretend everything is fine”.

The bad guys here are clearly the Eurogroup who want to throw Greece to the wolves. The solution would have to be a Eurogroup climb-down of epic proportions:

But the priority must change from repayment of debt to restoring growth, relieving suffering and supporting the new Greek government as it embarks on the difficult task of radically reforming and strengthening institutions. It will take time to agree a new arrangement, and during that time Greece will need transitional financial support, which as both communiques point out is available under the current programme. For that, it is useful. But as a long-term economic plan, the November 2012 agreement is dead.

Given the comments coming from Berlin, I can't see the Germans effecting a volte-face and suddenly agreeing to Greek demands. There doesn't appear to be much middle ground. I do think Grexit looks more likely now than it did a few weeks back.

 

[Pretty pink fairy]

can we get back to cheap holidays too the islands if they leave
regards
DR

 

[jimhigham]

Thank god we`re not in Euro.....please god keep Milliband out..

Genuine question. Has he said anything at all to suggest that he is interested in our opting into the currency? It seems that our joining the Euro is completely off the table politically speaking. I don't imagine that even the pro-European LibDems are particularly trumpeting signing up to it right now.

 

[TomandJerry]

Over in Athens, Greek prime minister Alexis Tsipras is announcing his nominee for the presidency....and attacking the mistakes of the past at the same time.

Speaking in parliament, Tsipras insisted that Greece can no longer be treated like a colony, or a European pariah .

For the first time, our country has its own voice, which is being heard also in the streets of Europe, he declared....adding that Greece will exit the ‘debt trap” created by its austerity programme.

We may not have solved all our problems in the last three weeks, but Greeks no longer feel humiliated....they feel proud and dignified, he says.Greece is refusing to bow to pressure from its creditors and seek an extension of its bailout programme, without new measures to address its humanitarian crisis and help its economy grow.

Prime minister Alexis Tsipras told MPs a few minutes ago that his government will not be rushed into a deal, and will not be forced to compromise. Instead, it will implement the programme it was elected to deliver.

“There has been a custom that newly elected governments act differently from their pre-election promises. I am saying it again, we are thinking of actually implementing our promises for a change.”

Germany is also holding its line, at a meeting of EU finance ministers in Brussels today. Finance minister Wolfgang Schauble told reporters that Greece must make the next move, saying:

We are not much further than we were. And as we know the situation in Greece is not getting any better.”

“Greece must decide does it want this programme or does it not.

Greece is going ahead with reform measures in defiance of its bailout obligations, with Prime Minister Alexis Tsipras calling Tuesday for parliament to vote on a series of social reform bills at the end of the week.

The vote is scheduled to take place Friday, the same day as a controversial deadline imposed by Greece's eurozone partners at talks that collapsed in Brussels on Monday.

"We will not succumb to psychological blackmail," Tsipras said following a dramatic showdown in Brussels which saw his finance minister reject a deal which hinged on an extension to the country’s bailout program.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_17/02/2015_547369

A Grexit is almost inevitable, in the view of Alastair Winter, chief economist at Daniel Stewart. He writes:

There is probably too much coverage of Greece already but most people including the Eurofederalists (notably Juncker, Draghi, Lagarde) still seem to think that another can-kicking exercise can work somehow. However, whatever fine words may or may not be agreed, any deal will would quickly unravel for two reasons.

1. It is not just a matter of principle or politics for the German Government that Greece sticks to the current programme and pays its debts in full, it is also a legal obligation under the Maastricht Treaty, for which it would have to account for any breach to the constitutional court in Karlsruhe.

2. Greece needs a lot more money both for its banks which are suffering massive deposit withdrawals and for itself as many taxpayers are withholding their dues before even the new government takes a stand on its mandate from voters.

Grexit seems inevitable and all the parties will suffer. Talking this afternoon to my own contacts in Athens, bemused bewilderment and denial are the prevailing sentiments amongst the lunching classes.

 

[Mellor 3 Ward 4]

Having spoken to my friends in both Athens and Crete today, they are all adamant that Merkel will blink first, and Greece will get what they want.

I still think they'll be a fudge, 'compromise if you will' is more likely that Grexit, since according to European law, any Country leaving the Euro also has to leave the EU, and nobody, least of all Greece or Germany wants that.