I spent way too much time the last few days reading news, opinions and analyses about the crisis in Greece, and thought I'd use the opportunity to share some of the pieces and quotes that struck me most.
These are mostly opinion and analytic pieces, as there's little sense to rehash the day-to-day turns of events. I've tried indicating where a piece is more reporting than analysis, though, even if it's not always as easy to distinguish the two. Since I'm a lefty, the emphasis in this selection of pieces and quotes is on criticism of the Eurogroup and the IMF, but there's no lack of criticism of the Syriza government in these pieces too. The links are mostly more analysis than agitation, and are mostly taken from relatively establishmentarian media; there's a separate list to be made of articles from radical and socialist sites. Also, of course, they're just the pieces I happened to come across, I can't imagine how many more good pieces must be out there. Maybe just add them in the comments?
But first, right below the fold, a word about polling:
Polling
Electograph: Overview of opinion polling on the Greferendum
Polls on the Greferendum have shown very different results, and one poll in this overview shows a significant shift after the banks imposed their restrictions on cash withdrawals (from 57/30 for No to a more narrow 46/37). While the No camp seemed originally heading for a clear majority, the first poll with a plurality for Yes has appeared now too.
When checking back in with this overview as it keeps growing, it might be useful to compare how the various pollsters did in the Greek elections earlier this year. I made a spreadsheet back then, and there's a chart in it too.
That's all about the polling in Greece. Polling elsewhere in the EU, especially in Northern and Eastern Europe, looks quite differently. A Dutch poll that was released on June 28, for example, had these nuggets:
- 54% blames mostly Greece, 15% mostly "Europe," and 29% both equally for the current crisis;
- Voters of all parties, from left to right, are more likely to blame Greece than the EU;
- A plurality prefers a Grexit over Greece staying in the Eurozone. The breakdown by party on this question seems to reflect how Euroskeptic each party is more than anything else;
- A large majority of 67% to 26% rejects large-scale debt relief for Greece;
- Only 42% expects a Grexit to negatively affect the Dutch economy, even fewer people expect it to trigger a major economic crisis in the EU;
- Tsipras and Varoufakis are graded 3 or 4 out of 10 by voters of all parties;
- Merkel, Dijsselbloem, Lagarde and Juncker are graded equally badly by the voters of the far-right PVV and the far-left (by Dutch standards) SP, but get grades of between 5 and 7 by the voters of the mainstream parties.
You can interpret this two ways: either the very Greek-unfriendly polling shows that the governments of countries like the Netherlands have little choice but to take a hard line; they would face defeat themselves if they were to give in. Or the same, Greek-unfriendly polling merely reflects the impact of the moralizing and fearmongering rhetorics the government (as well as the media) have pursued throughout this crisis. As @ZihniOzdil noted on Twitter, "Economists like Krugman and Stiglitz are framed as 'radicals' by large parts of the Dutch left. You can imagine what Dutch right looks like."
Backstory
Gillian Tett: A debt to history?
ANALYSIS/OPINION - January 16, Financial Times
For a couple of minutes Friedman then offered a brief review of western financial history, highlighting the unprecedented nature of Europe’s single currency experiment, and offering a description of sovereign and local government defaults in the 20th century. Then, with an edge to his voice, Friedman pointed out that one of the great beneficiaries of debt forgiveness throughout the last century was Germany: on multiple occasions (1924, 1929, 1932 and 1953), the western allies had restructured German debt.
So why couldn’t Germany do the same for others? “There is ample precedent within Europe for both debt relief and debt restructuring . . . There is no economic ground for Germany to be the only European country in modern times to be granted official debt relief on a massive scale and certainly no moral ground either.
“The supposed ability of today’s most heavily indebted European countries to reduce their obligations over time, even in relation to the scale of their economies, is likely yet another fiction,” he continued, warning of political unrest if this situation continued.
James K. Galbraith: Bad Faith. Why Real Debt Relief Is Not On The Table For Greece
Galbraith is a well-known economist and a professor of Public Affairs (as well as the son of John Kenneth Galbraith)
ANALYSIS/OPINION - June 16, The American Prospect
Readers of the financial press may be forgiven for thinking that the negotiations between Greece and Europe have one feckless partner—the new government of Greece—and one responsible partner, a common front of major governments and creditor institutions, high-minded in their pursuit of rational policies and the common European interest. The view from Athens is different. [..]
The original crime in the Greek affair [..] was committed in May 2010, when it became clear that the country was insolvent. At that time, the IMF staff was convinced that Greek debts must be restructured, and that debt relief was not only necessary but also just [..].
Restructuring did not happen. Instead, a trio of Frenchmen—at the IMF, at the European Central Bank and at the Elysée, and backed by Angela Merkel—decided [..] that the largest bailout in history should be directed not to save Greece, but to off-load the exposure of French and German banks onto all the European states, with Germany's taxpayers taking the largest share. [..]
In 2010 Greece had to swallow an austerity program that would be—as Poul Thomson of the IMF promised the IMF Board— “tough, difficult, and painful.” Although the program called for an unprecedented “fiscal adjustment” of 16 percent of GDP, it also predicted that Greece would suffer a fall of GDP on the order of only 5 percent, to be followed by recovery beginning in 2013. Meanwhile the debt-to-GDP ratio would rise to 150 percent by 2013 and decline thereafter. In fact, the fall in Greek GDP was five times as large, the debt-to-GDP ratio today stands above 180 percent. And there has been no recovery at all.
The last eight days
Europe is destroying Greece’s economy for no reason at all
ANALYSIS/OPINION - June 23, Washington Post, Wonkblog
Greece has discovered it has much less leverage than it thought. [..] Part of it is that [Greece's banks are] pretty easy to pressure. [So] Greece gave in. Well, mostly. It's proposing to cut its pensions about half as much as Europe wants — raising contributions and retirement ages, as well as cutting back on early retirement — and then raising taxes to make up for the rest. [..]
The only thing holding up a deal is that Europe thinks this is the wrong kind of austerity. Spending cuts don't seem to be as bad for the economy as tax hikes, so that's what Europe wants Greece to do. On the one hand, this is sound economic advice. But on the other, [in] the eyes of the Greeks, it's as though Europe is telling them to kill their own economy -- and then disapproving of the way they'll do it.
A real question for many economists, however, is why Europe is forcing Greece to do any more austerity at all. [..] In the end, there seems to be only one reason to make Greece do more austerity, and it's hard to see how it makes any sense. That's to try to make it pay back what it owes. Indeed, one European official said that the entire point of this was that they "want to get our money back some day." The problem, though, is it's inconceivable Greece will ever do that. Many feel its debt should have been written down in 2010, but it wasn't because it was "bailed out" to the extent that it was given money to then give to French and German banks. The longer Europe demands this new debt be paid back, the longer Greece's depression will go on.
Jürgen Habermas: Why Angela Merkel Is Wrong On Greece
Habermas is a German sociologist and philosopher
ANALYSIS/OPINION - June 25, Social Europe
Yes, that Habermas - the famous one. Though I wasn't all too impressed by this piece, really.
The weak performance of the Greek government doesn’t alter the fact of a scandal that consists in politicians in Brussels and Berlin refusing to meet their colleagues from Athens as politicians. They indeed do look like politicians but (until last Monday) only spoke in their economic role as creditors. This [..] is intended to give the protracted insolvency of a state the appearance of a non-political, civil court proceeding. [..]
As Troika members, European institutions [coalesce with the IMF] so that politicians [..] can retreat into the role of untouchable agents acting strictly according to the rules of the IMF. This dissipation of politics into market conformity helps to explain the chutzpah with which representatives of the federal German government [..] can deny their political co-responsibility for the disastrous social consequences that they nevertheless took on board as opinion leaders of the European Council through the implementation of the neoliberal austerity programmes.
Branko Milanovic: Three depressing lessons from the Greek debt negotiations
Milanovic is a presidential professor at the CUNY Graduate Center and conducts research at the World Bank about inequality
ANALYSIS/OPINION - June 26, Al Jazeera
The longer the crisis lasts, the more the trust among EU members will fray. [..] This disintegrating process is always accompanied by stereotyping, a popular response to the high politics that take place around the negotiating table. The process of stereotyping in the EU is fairly advanced, with pictures of German Chancellor Angela Merkel in a Nazi posture [and accusations] of laziness and mooching by the Greeks and other southern members further poisoning the atmosphere. The fear and loathing then descends to the popular level. [..] Once they start being used in political discourse, moving from the netherworld of the Internet to discussion in ostensibly respectable quarters, the genie cannot be easily pushed back into the bottle. [..]
The second lesson is the continuation of what François Mitterrand’s France learned in the early 1980s: One cannot pursue an even moderate left-wing policy in a system of global capitalism. Syriza never got a chance to apply any of the leftist policies that it says it favors, because it was busy negotiating with the creditors and because it had no genuine freedom of economic decision-making, since basically all its policies were dictated by the troika. Even if it had a margin for maneuver, it is hard to see how its moderately leftist policies (halt to privatization, higher taxation, greater role for the public sector) could be implemented. Notice that we are talking here not of some radical anti-capitalist program but of just broadly leftist policies that try to limit somewhat the unimpeded invasion of the market and private interest into all social spheres. Such policies are obviously unacceptable not only to the mainstream EU but also to many individual governments, which fear Syriza-like movements in their countries.
Dominique Strauss-Kahn: Greece - On learning from one’s mistakes
By the former head of the IMF (2007-2011)
ANALYSIS/OPINION - June 27
DSK emerges from the shadows - on Slideshare, for some reason - to identify some of his own mistakes and those made by others when he was in charge, back when the first bailout/austerity package for Greece was passed. The most interesting part of his piece however is when he recommends a plan for what should be done now.
My proposal is the following: Greece should get no more new financing from the EU or the IMF but it should get a generous maturity extension and significant nominal debt reduction from the official sector (OSI). Insisting on a frontloaded fiscal adjustment in the current economic environment is both economically and politically irresponsible. Providing more assistance to simply repay existing official creditors is simply inane.
The Eurogroup had committed in November 2012 to take the necessary steps to
ensure Greece’s debt sustainability. Now is the time to deliver on this constructively
ambiguous promise. The IMF should do the same and ensure that all the repayments
due in the coming two years are effectively rolled over or refinanced by the remaining
funds left in the program. I do know the institutional problems raised by this proposal
but they have to be overcome.
This would free Greece from any of its obligations to the official sector in the coming
two years but it would still be faced with a hard budget constraint. Having no access
to markets and receiving no new financing from the EU or the IMF it will have to balance its budget alone. The Greeks will need to make tough fiscal choices but they
would make them on their own. To achieve this, the Government would have to start
collecting taxes and confronting the oligarchy, the vested interests and the deep State
that are sapping its formidable potential. [..]
This is not guaranteed to work. It may still fail if the Greek authorities are too timid or too captured to change but it is worth trying because the alternatives are worse.
Francesco Saraceno: It’s the Politics, Stupid!
Saraceno is an economist at the French Economic Observatory of the Paris Institute of Political Studies, better known as Sciences Po
ANALYSIS/OPINION - June 27, on his own blog
[C]ontrary to what is heard in European circles, most of the concessions came from the Greek government. On retirement age, on the size of budget surplus (yes, the Greek government gave up its intention to stop austerity, and just obtained to soften it), on VAT, on privatizations, we are today much closer to the Troika initial positions than to the initial Greek position. Much closer. [..]
Tsipras had only two red lines it would and it could not cross: Trying to increase taxes on the rich (most notably large corporations), and not agreeing to further cuts to low pensions. if he crossed those lines, he would become virtually indistinguishable from Samaras and from the policies that led Greece to be a broken State.
What the past week made clear is that this, and only this was the objective of the creditors. This has been since the beginning about politics. [..] Austerity and structural reforms need to be the only way to go. Otherwise people could start asking questions; a risk you don’t want to run a few months before Spanish elections.
Nick Malkoutzis: The Greeks deserved better than this
Malkoutzis is Deputy editor of Kathimerini's English edition
ANALYSIS/OPINION - June 27, MacroPolis
Kathimerini, it should be added, is no lefty rag; it's a very establishment newspaper, with a moderately conservative and liberal (in the European sense) orientation.
On Wednesday the institutions (led by the International Monetary Fund) rejected more than half of nearly 8 billion euros in measures that Tsipras had proposed on Monday and replaced them with ones he had turned down a few weeks earlier.
The proposals Tsipras submitted on Monday were the latest in a series of steps that his government took to move closer to creditors’ positions in the hope of sealing a deal. [..]. There can be an argument over the impact of the measures Tsipras proposed, which relied almost exclusively on tax rises. [..] However, the institutions repeatedly rejected Greek proposals for savings from administrative measures and the much-vaunted structural reforms that the troika implored previous governments to implement. This was the result of a serial lack of trust, [..] SYRIZA’s amateur approach and intransigence on the other side of the table. In the end it seems the Greek prime minister was free to pick any measures he wanted, just as long as they were the lenders’ ones. [..]
On a practical level [..], the most disruptive tactic from the lenders’ side has been to systematically herd this government back towards terms that the previous coalition failed to agree to. [..] Apart from lowering primary surplus targets (which is offset by the return of recession since late last year) and an uneasy stand-off on labour market reform, there is not much else to show in terms of concessions. And, for whatever compromises have been made, the lenders have come back with new and politically suicidal demands such as increasing VAT on hotels to 23 percent. Underpinning all this, though, is the denial from the European side to consider any debt relief [..].
Greek bailout extension refused: a panel of leading economists give their verdict
ANALYSIS/OPINION - June 27, The Guardian, Comment Is Free
The interesting part here, in my view, was the contribution by Mariana Mazzucato (a professor in the economics of innovation at Sussex University). Quotes:
Greece did not have a liquidity crisis, but a solvency crisis. The latter was caused by a competitiveness crisis and made worse by the financial crisis. And this kind of crisis cannot be fixed by cuts and more cuts, but only by a serious investment strategy, accompanied by serious – not token – reforms (e.g. to how the state, and hence also taxation, is run) to bring back competitiveness.
The conditions of the bailout therefore should have been conditions that emulate the kind of public sector reform and investment strategy that characterises many of the competitive powerhouses of northern Europe – including Germany. Indeed, Greece should not do what Germany says it does (austerity), but what Germany actually does (invest).
Over the last decade, Germany has invested in all the key areas that not only increase productivity, but also create innovation-led growth. Companies like Siemens are the result of a dynamic public-private eco-system in Germany, with high government spending on science-industry links (Fraunhofer institutes), the existence of a large and strategic public bank (KfW) that provides patient, long-term, committed capital to German businesses, a long run-focused stakeholder type of corporate governance [..], an above-average R&D/GDP ratio [..], investments in vocational training and human capital, and a mission-oriented ‘energiewende’ strategy focused on greening the entire economy.
Imagine the very different types of result we would have witnessed had the negotiations been about stuffing an investment strategy down Greece’s throat, rather than more cuts. “OK, we will bail you out, but reform your country, and kickstart public investments (of the type named above), so that you are ready for the 2020 innovation challenge.” Instead, insisting on the status quo full of more austerity produced an increasingly weaker Greece, more unemployment and more loss of competitiveness.
Barry Eichengreen: Path to Grexit tragedy paved by political incompetence
Eichengreen is Professor of Economics and Political Science at University of California, Berkeley
ANALYSIS/OPINION - June 28, The Conversation
Where I need to mark my views to market, however, is for underestimating the role of politics. In particular, I underestimated the extent of political incompetence – not just of the Greek government but even more so of its creditors. [..]
The three institutions opposed debt restructuring in 2010 when the crisis still could have been resolved at low cost. They continued to resist it in 2015, when a debt write-down was the obvious concession to Mr Tsipras & Company. The cost would have been small. Pretending instead that Greece’s debts could be repaid hardly enhanced their credibility.
Instead, the creditors first calculated the size of the primary budget surpluses that Greece would have to run in order to hypothetically repay its debt. They then required the government to raise taxes and cut spending sufficiently to produce those surpluses. They ignored the fact that, in so doing, they consigned the country to an even deeper depression.
Paul Mason: Greece - did the just Euro die at 4pm?
Mason is Economics editor at Channel 4 News and author of books like
Why It's Kicking Off Everywhere: The New Global Revolutions
ANALYSIS/OPINION - June 28, Medium
The Brussels press corps dutifully reported that the Greeks had “walked out”. But if the Greek account is right, what happened at that moment was the psychological breakpoint of the Euro.
The political willpower had already ebbed. The Greeks haggled over the fiscal details all week but were minded to sign an €8bn austerity package if it could be sold as (a) redistributional and (b) accompanied by a promise to discuss restructuring the debt.
What changed? By Thursday morning it was the lenders’ document that was the basis of discussions with the Greeks allowed to propose amendments. But when the elected ministers of the Eurogroup saw what the EC, IMF and ECB had proposed they rowed back. “We can’t get this through our own parliaments” they said: it’s too soft. [..]
So bleak has Europe become, so lacking in solidarity, that an agreement worked on for weeks, embodying further austerity for the Greeks and further financial solidarity by the rest, could not pass through either side.
US urges Europe, IMF to reach deal to keep Greece in eurozone
NEWS/REPORTING - June 28, Kathimerini
This is nice and all, but if the US considers this so important, did it do something substantive about it itself? Kos user BenjaminDisraeli had some informative critical notes about this.
Treasury Secretary Jack Lew [..] noted it is "important for all parties to continue to work to reach a solution, including a discussion of potential debt relief for Greece," in the run-up to a planned July 5 referendum [..].
Zoe Williams: The moral crusade against Greece must be opposed
ANALYSIS/OPINION - June 28, The Guardian, Comment Is Free
Unfortunately, Sunday’s choice will be between endless austerity and immediate chaos. As comfortable as it is to argue from the sidelines that maybe Grexit in the medium term won’t hurt as much as 30 years’ drag on GDP from swingeing repayments, no sane person wants either. The vision that Syriza swept to power on was that if you spoke truth to the troika plainly and in broad daylight, they would have to acknowledge that austerity was suffocating Greece. They have acknowledged no such thing. [..]
Christine Lagarde [..] was offering not a solution but a narrative: the Greeks were in this situation because they were bad people. [..] The IMF was merely the instrument of a discipline they dearly needed. This line has broadly held – the debtors are presented as morally weaker than the creditors. To give them any concessions would be to reward their laziness and selfishness.
Gene Kerrigan: Greeks, beware of 'adults in the room'
ANALYSIS/OPINION - June 28, Sunday Independent (Ireland)
Compared to the other pieces here, this one is a bit cruder and more rhetorical. He's right, though, at least in my opinion.
The media presents the Greek crisis as an austerity drama ('Is time running out for Greece?'). The picture is one of a stubborn, inexperienced Greek government refusing - for ideological reasons - to accept an austerity programme that will allow it repay its debts.
In the face of this irresponsibility, hardworking IMF and EU officials try desperately to convince the feckless Greeks to see sense. We could have real negotiations, moans Christine Lagarde of the IMF, if only there were "adults in the room".
That's the fairytale. [..] From the beginning, the "adults in the room" have - even by their own standards - made a terrible mess of Greece. In 2010, the Troika ensured that private gamblers would be bailed out - with the private debt passed to the Greek people.
The IMF knew that applying severe austerity would cause the Greek economy to contract, but by a low single figure percentage. It contracted by 26pc. The IMF knew that applying severe austerity would cause unemployment to soar to 15pc. It soared to 25pc.
As Greece fractures, old wounds are reopening
NEWS/REPORTING - June 29, The Guardian, Comment Is Free
Greeks are preparing to vote in a referendum ostensibly on whether to accept the creditors’ latest conditions for extending the country’s bailout. But in these lurching, seasick days, everything is uncertain. Greek banks are closed; the markets are plummeting; Jean-Claude Juncker has declared his love for the Greek people. The bailout programme expires tomorrow; it’s not clear if the offer will even be on the table after that. And assuming we get to this vote on a no-longer-valid document, nobody knows what happens next if the country says no – or yes. [..]
If one thing has held the country together through its five-year descent into hell, it’s been the hope of a solution without rupture [..]. [I]t was still that persistent hope that brought this government to power, on the promise of ending austerity inside the eurozone.
Syriza’s failed attempts to negotiate a compromise, clumsy and flawed as they were, have finally made it clear that the dream was an illusion: no such deal was ever forthcoming. As the last set of Greek proposals were returned like shoddy homework covered in red ink, even centrist commentators began to speculate that the creditors were bent on yet another regime change, or else a Greek exit.
New York Times Editorial: Greece’s Future, and the Euro’s
ANALYSIS/OPINION - June 29, New York Times
[E]ven if the Greeks vote to stay with the euro, the crisis will not be over. Under the policies currently demanded by the eurozone leaders, the Greeks will find their suffering worse and their prospects unchanged, and Mr. Tsipras may well be compelled to call for new national elections.
The power to make things better ultimately lies with the eurozone and the I.M.F. They have already started an unofficial campaign to influence Greek voters to stay with the euro by making public their terms for maintaining the bailout. They would make a far stronger case if they also vowed to do the one thing that would give Greeks a real incentive to stay and to initiate real reforms. That is to start ripping up their i.o.u.s.
Letter of support for Greece
Signed by Etienne Balibar, Immanuel Wallerstein, Slavoj Zizek, Judith Butler, Tariq Ali, former Archbishop of Canterbury Rowan Williams and others.
ANALYSIS/OPINION - June 29, Verso Books blog
They're right: austerity has been disastrous, and accepting the demands of EU and IMF would prolong the suffering. But while calling for a No, they omit doing what some of the other analyses here at least pay lip service to: considering what the effects of the opposite would be. A Yes would lead to more destructive austerity, but what would happen after a No? Would it be any less disastrous? I feel they should at least consider the question; the vote is not just an act of protest and a political gesture, after all, it will have real consequences.
Over the past five years, the EU and the IMF have imposed unprecedented austerity on Greece. It has failed badly. The economy has shrunk by 26%, unemployment has risen to 27%, youth unemployment to 60% and, the debt-to-GDP ratio jumped from 120% to 180%. The economic catastrophe has led to a humanitarian crisis, with more than 3 million people on or below the poverty line.
Against this background, the Greek people elected the Syriza-led government on 25 January with a clear mandate to put an end to austerity. In the ensuing negotiations, the government made it clear that the future of Greece is in the Eurozone and the EU. The lenders, however, insisted on the continuation of their failed recipe, refused to discuss a write down of the debt [..] and finally, on 26 June, issued an ultimatum to Greece by means of a non-negotiable package that would entrench austerity. [..]
In this situation, the government has asked the Greek people to decide the future of the country in a referendum to be held next Sunday. We believe that this ultimatum to the Greek people and democracy should be rejected.
Martin Wolf: How I would vote if I were Greek
Wolf is the chief economics commentator at the Financial Times
ANALYSIS/OPINION - June 30, Financial Times
The FT is not really my kind of newspaper, but Wolf has long been a voice of reason in the neoliberal wilderness. He's still an FT guy and definitely comes down more heavily on Syriza than on the Eurogroup/IMF, when I would balance the criticisms the other way round, but this is definitely worth reading in full.
If I believed Greece could make a success of going it alone, I would surely vote against the programme. But I could not be certain: if Greece could use monetary sovereignty wisely, it would not be in its current state. If I voted in favour of the programme, I would not know whether it was still on offer: the eurozone says it is not, but it might be bluffing. What I would know is that, if Greece voted Yes, it might face years of retrenchment and depression. But that might still be better than post-exit chaos. [..]
The Syriza government has failed to put forward a credible programme of reform that might solve the multiple problems of the Greek economy and polity. [..] It is, in brief, a dreadful government produced by desperate times. Yet the eurozone, too, deserves substantial blame for the outcome. [It] is also the result of blunders committed by the creditors since 2010 and, above all, insistence on bailing out Greece’s foolish private creditors at the expense of the Greek people. [..]
The bailout extension did not offer a plausible exit into recovery: it left too big a debt overhang and, more important, demanded too much short-term austerity. Given the recent backsliding, it seems to demand a move from a primary fiscal balance (before interest) of close to zero this year to a surplus of 3.5 per cent of gross domestic product by 2018. Achieving this outcome might demand fiscal measures that would raise the equivalent of 7 per cent of GDP and shrink the economy by 10 per cent. One does not put an overweight patient on a starvation diet just after a heart attack.
IMF: austerity measures would still leave Greece with unsustainable debt
NEWS/REPORTING - June 30, The Guardian
Greece would face an unsustainable level of debt by 2030 even if it signs up to the full package of tax and spending reforms demanded of it, according to unpublished documents compiled by its three main creditors.
The documents, drawn up by the so-called troika of lenders, support Greece’s argument that it needs substantial debt relief for a lasting economic recovery. They show that, even after 15 years of sustained strong growth, the country would face a level of debt that the International Monetary Fund deems unsustainable. [..]
The documents also throw light on the €35bn investment package that several governments, including Germany’s, have this week pointed out was offered to Greece last week. The second document in the pack of six [..] shows there was less to this offer than suggested by commission president Jean-Claude Juncker and Germany’s vice-chancellor Sigmar Gabriel. The cash on offer is not an ad hoc investment but is actually an EU grant that is regularly available to all member states.
Daniel Alpert: Greece's creditors need a wake-up call
Alpert is managing partner at Westwood Capital
ANALYSIS/OPINION - June 30, CNBC
[I]n the Greek drama, there is blame enough to go around. The economy of Greece is highly inefficient, often corrupt and overly dependent on its public sector to employ and support its people. The willingness of pre-crisis Greek governments to borrow enormous sums to fund that system, and hide a significant portion of its net borrowing from view, is contemptible.
The northern Europeans, on the other hand, were outright enablers of Greek excess. Not only did they aggressively seek to provide loans to Greece during the bubble era [..], but in what can only be seen historically as a panicked response to preserve the euro system, the euro group [..], together with the International Monetary Fund, bailed out European banks and the bond market by socializing Greece's bad debt and placing taxpayers throughout the euro zone at risk of sharing the losses thereon.
Why would the banks and bond buyers of northern Europe have lent money to Greece in the first place? Or, for that matter, to housing speculators in Spain, to banks in Ireland or to the governments of Italy and Portugal?
The answer is that the structure of the incomplete European monetary union gave them strong incentive to do so. [The] euro regime itself encouraged trade-surplus countries such as Germany and the Netherlands to lend to their weaker brethren in order to bolster the peripheral countries' ability to import even more of the surplus nations' production (to the increasing benefit of the latter and the eventual implosion of the former). And they were able to do so in a common currency, without the risk of currency devaluation by borrowers. This was mercantilism writ large and was without precedent in modern economic history [..]. And yet the credit providers expected — and still expect — to get their money back.
Sony Kapoor: Why Greece never got a fair chance
Kapoor is a Senior Visiting Fellow at the London School of Economics (LSE)
ANALYSIS/OPINION - July 1, LSE's blog EUROPP – European Politics and Policy
Another one that's well worth reading in full.
It took many of us – advisers, EU technocrats, American politicians and some academics – several weeks to convince the key-decision makers in Berlin not to [push Greece out of the Eurozone in 2012]. Living through this process was hell not least because economic arguments, financial calculations and political scenarios are not ideal for changing the minds of often-ideological lawyers that form the core of the German financial policymaking community. For them it was less about the economics and more about rules and morality. [..]
It has been estimated that of the money lent to Greece more than three-quarters went into paying off existing creditors and less than 10 per cent in supporting citizens through the shock adjustment. In effect, most of the Greek bailout funds were used to bail out Eurozone banks and other creditors. [..]
With no previous experience of government and ill versed in what passes for diplomacy in the EU, Syriza overplayed what was essentially a very weak hand. [..] On pure economics, Syriza got it mostly right both in terms of the diagnoses of the crisis and on what micro and macro level steps were needed to restore the Greek economy. But its big mistake was to assume that economic arguments could prevail over ideology and realpolitik. Another was its failure to convince its Eurozone counterparts that it would actually deliver on the promises it made. While Syriza could be excused for its naivety, its creditors get no such free pass.
Greece Wanted to Reframe Europe’s Austerity Debate. It Failed.
NEWS/REPORTING - July 1, New York Times, The Upshot
For five years, the simple trade-off offered by the richer European countries and the European Central Bank has been this: If Greece accepts massive austerity — like pension cuts and layoffs of government employees — it can remain in the eurozone with the help of bailouts, with central bank credit extended to Greek banks, and so on. Austerity was the price to be paid for keeping the monetary stability created by the euro currency.
Mr. Tsipras believes — and plenty of American and British economists are sympathetic to this view — that this trade-off was driven by bad economics and had disastrous human consequences. Austerity without debt write-downs created a depression, making the debt burden even harder to handle.
So instead of accepting the basic trade-off that creditors have been offering Greece for five years, with those disastrous results, Mr. Tsipras has tried to create an environment in which European leaders would have to rethink their understanding of the proper trade-offs for Greece. [..] But the effort has failed. [..]
The Greek government was surely hoping that by walking away and calling a referendum, the creditors would rethink their intransigence, fearful of the economic and geopolitical consequences of letting Greece leave the eurozone. If anything, it pushed Germany and France, as well as Spain and Italy, closer together, full of exasperation with the Greeks’ negotiating style and aggressive demands.