Benchmarking the Greece/Eurogroup Bailout Memo and Process

Greece and the Eurozone have entered into what amounts to a letter of intent in the form of a memo released yesterday. It’s important to understand, even as a basis for further negotiations, what this document is and is not. Because this is not a definitive agreement, as in it explicitly states that Greece’s detailed structural reform proposals must be reviewed and approved by “the institutions,” the new name for the Troika, as well as approval by the Eurogroup finance ministers before any funds are released, there is still uncertainty as to how its deliberate ambiguity will be resolved.

General Observations

There is no way of putting a pretty face on this document. It represents a huge climbdown for Syriza. Despite loud promises otherwise, they’ve agreed to take bailout funds, and the top and the close of the memo confirm that the baillout framework is still operative (emphasis ours):

The Eurogroup notes, in the framework of the existing arrangement, the request from the Greek authorities for an extension of the Master Financial Assistance Facility Agreement (MFFA), which is underpinned by a set of commitments. The purpose of the extension is the successful completion of the review on the basis of the conditions in the current arrangement, making best use of the given flexibility which will be considered jointly with the Greek authorities and the institutions…

We remain committed to provide adequate support to Greece until it has regained full market access as long as it honours its commitments within the agreed framework.

Even writers who take a positive view of what Syriza accomplished are under no illusion as to how far short Syriza has fallen relative to its lofty promises. From Paul Mason’s blog:

I asked Dijsselbloem in the press conference: “What do you say to the Greek people, whose democracy you’ve just trashed.” He replied that he did not think that was a very objective question. We’ll have to agree to differ.

There is also language in the memo that looks to authorize the return of the Troika monitors: “In this context, the Greek authorities undertake to make best use of the continued provision of technical assistance.” The Financial Times reads it the same way:

It also leaves the IMF and EU institutions — the European Central Bank and European Commission — in control of evaluating Greece’s economic reform measures and the disbursement of bailout funds, despite Mr Tsipras’ vow to rid Greece of the hated “troika” of bailout monitors.

Mind you, despite the foregoing, it is doubtful that Greece could have done much better, particularly in light of the way the ECB had worked to intensify the already-in-progress bank run and boxed the Greek government in by giving it only a thin increase in the ELA limits. A contact told me the Greek government would have had to impose capital controls over the weekend in the absence of a deal; the Financial Times reported close to the same thing by stating that Greece was on track to hit the limits of the ELA on Tuesday (the day after a long holiday weekend). And let us not forget that the Greek government is also slotted to run out of cash by February 24.

Process Issues

Some commentators have claimed a victory of sorts, in that the negotiations have now been moved out of the Eurogroup and into the Troika’s hands, and thus the fractious Wolfgang Schauble is out of the picture. But this is more complicated than it seems.

On the one hand, the gambit that was devised by Finland, of insisting on a February 28 deadline for the current bailout as a way to pressure Greece, did not work out quite as planned. The intent was to force Greece to submit to the current parameters. Due to Greece’s insistence on negotiating, and the inefficiency and cumbersomeness of doing that in the Eurogroup framework versus the rigid February 28 date, the parameters have been narrowed and the negotiations have been shifted to a smaller group less in the public eye. And the Troika team is likely composed of better negotiators too (politicians and CEOs routinely overestimate their negotiating skills; unless they are in an industry where they do this all the time, they are better letter real pros do the job for them. It also did not help that relations between Varoufakis and Schauble had deteriorated to the point that they could not be in the same room and Djisselbloem, Lagarde, and other officials had to shuttle between them on Friday). So one might argue that Greece being able to negotiate anything at all is a win.

On the other, Greece is not at all out of the Eurogroup woods. One of the key provisions is that Greece submit a list of its detailed structural reform proposals by Monday evening. The Financial Times points out that if that list is deemed to be still too vague or has elements that might be seen as overreaching, the Eurogroup could still come back to mix things up:

The new Greek government is to submit those measures for review to the International Monetary Fund and EU institutions on Monday, and officials said if they were not adequate another eurogroup meeting could be called on Tuesday.

There is another way the deal could go pear shaped. Recall that the extension requires the approval of all the 19 countries represented in the Eurogroup. For Finland and Germany, parliamentary approval is required. The German press is already muttering about the deal and Schauble said he’d have to work to sell it. Now that may simply be talk, but even if the Troika gives the Monday submission a pass, if the Finnish or German press takes a serious dislike to it, there is a possibility of a parliamentary turn-down. Mind you, that’s low odds, say in the 5% range, but that is still awfully high for a tail risk.

In addition, given that the structural reform package is subject to Eurogroup approval, the Troika negotiators are likely to be sensitive to their views. Expect informal consultation between the negotiating group and the key Eurogroup ministries.

A negative for the Greek side is a short negotiating runway. In theory, they have until the end of April to work out a structural reform program that is acceptable to the Troika. But Greece gets no bailout funds until those reforms are approved by the Troika and the Eurogroup. Ekathimerini reported last week that the Greek government runs out of cash on February 24. It might be able to extend that by a few weeks by delaying payments. The need to come up with an acceptable reform package as soon as possible means little to no time for trying to devise clever compromises or work-arounds for issues that the Troika objects to.

Another issue is that the Greek side seems to be taking verbal promises made outside the memo seriously. As with the Moscovici memo, anything that has not been formally agreed to can’t be assumed to be operative. For instance, CEPR (hat tip Kim Kauffman) declares, Greek Bailout Extension Deal Represents a “Significant Retreat” by the European Authorities. Yet their conclusion rests on items not in the memo. For instance:

But the agreement gives Greece fiscal flexibility, lowering previous fiscal surplus constraints. Bloomberg cited a Greek official as saying that tax increases and cuts to pensions were not part of the agreement.

Note that the memo does not in fact lower the surplus targets. It has fudge language: “The institutions will, for the 2015 primary surplus target, take the economic circumstances in 2015 into account.” Any change is for this year only. The target is set to increase from 1.5% now to 3.0% this year (I have not seen any exact language as to how that is supposed to kick in) and 4.5% in 2016. Pretty much everyone who is not part of the diehard austerity camp regards the increases as insane. But on paper, the targets are still in place, with it up to the Troika to determine what if any relief is offered.

Moreover, given that tax receipts are running well below anticipated levels, due apparently to citizens not paying taxes as a result of the Syriza win (?!?), putting Greece already behind the budgetary eight ball, it is not clear what the Troika will do.

And note that the fact that specifics like tax increases and pensions are indeed not part of the agreement does not necessarily mean that they are not on. As Macropolis points out, the Troika has reneged on written commitments to Greece:

On November 27 2012, the Eurogroup agreed to provide further debt relief to Greece once it achieved a primary surplus…

Despite this commitment and even though Greece achieved a primary surplus in 2013, a year ahead of schedule, no measures on further debt relief were offered. The previous government was told at the end of 2013 to wait until the primary surplus was rubber stamped by Eurostat in March. Then, it was told to wait until after the European Parliament elections in May. Then, it was told to wait until after the completion of the troika review that began last September. Greece’s lenders attempted to cover their reluctance with the fig leaf of claims that Greek debt was on a sustainable path.

And there’s more reason to be concerned that promises made verbally might not be observed. Again, remember the process. The initial negotiating team is not the one that will be handling the review of the structural reform proposals. When I’ve been in negotiations, even when one person on a team has been switched (say due to a serious illness), if the new person is senior and the negotiations are not in the final stages, they often revisit issues that had been deemed as settled. Here we have an entire new group coming in, and with set idea from previous experience of what structural reform programs look like and set approaches for evaluating them. Now admittedly a lot of this uncertainty will reduced when we see how the Troika team responds to the Syriza proposals, but I’d urge caution on this front.

Deal Substance

Most commentators have focused on Syriza’s hope of replacing some of the structural reform issues that it views as counterproductive, like fire sale privatizations and pension cuts, with ones it views as positive, such as strengthening unions, increasing the minimum wage, and implementing programs to hire 300,000 people.

If Syriza is able to get the privatizations halted and preserve pensions, those would be seen domestically as meaningful victories. But the Troika and the Eurogroup most of all want Greece to show how it will improve tax collections and make good on its promises of cracking down on the oligarchs. If I were in there shoes, I’d insist on seeing meaningful progress on that front before I relented on the structural reform changes that Syriza wants. We aren’t the only ones to see it that way:

Notice the list of reform priorities, according to the Greek side, per ekathimerini:

The official added that the SYRIZA-led government will unveil reforms for the interim period, giving priority to those where there is common ground with other eurozone members – “meaning curbing tax evasion and corruption, public sector reform and dealing with the humanitarian crisis.”

Notice what seems to be off the list? All of the wage-boosting labor market measures that Syriza promised, like increasing labor bargaining rights and funding more hiring.

And how can Syriza possibly fix a broken tax system (for starters) in four months? They’ve barely been in office, they have no experience governing and have been so busy with the negotiations that they have yet to take effective control of the bureaucracies. The continuing negotiations will cut into scarce time to make changes (as in you can’t make changes until you’ve agreed to them, and having to get them approved by the Troika and then by the Eurogroup makes it harder to get going). Moreover, the tax change that would likely be most convincing to the Troika (as in it would to the most to solve the problem of the high level of use of cash and tax evasion in Greece) would be to increase the VAT and/roor figure out how to reduce avoidance. That might involve mapping information from VAT reporting against business incomes, which would take time to figure out and implement. And how do you deal with businesses that deal only in cash, which appears to be a large part of the problem that tax pros call base erosion?

Admittedly, Varufakis has emphasized that he is not required to increase the VAT, but that would seem to be the fastest way to establish credibility with, as in placate, the Troika.

Yet even if Syriza were to do something as persuasive to the Troika but unpopular to its citizens effectively increase the VAT, say by by making reporting and information analysis far more stringent, it’s unlikely they’d be anywhere further than the advanced planning stages by June. Would that be convincing enough?

Now multiply that issue alone by how many other reforms Syriza is going to promise to implement to improve efficiency and raise revenues.

As noted earlier, another area that could be a win for Syriza is on the fiscal surplus target. But this is less of a victory even if it comes to pass, than most observers assume. The surplus target was widely expected to be negotiated, and most observers also anticipated de facto reductions in the debt through an extension of maturities and a possible further reduction in interest rates. So again, the waffle language in the memo really is not all that meaningful a statement. What matters is the concession that Syriza gets. As reader Alan pointed out:

“They were always expected to be negotiated” just as there would be a negotiation on the debt once Greece achieved a primary surplus (not just expected but an actual agreed commitment). The previous government made a few hints on both those points when they were delivering the “success story” line and they got nothing, just as they expected. If Syriza does get the 1.5% it will be huge and PASOK and ND are terrified about this. This alone will mean something like 20+ bn in the next 4 years.

In sum, it looks very likely that the top priority of the Troika will be to get Syriza to delineate in detail what they intend to do in the way of the 70% of the structural reforms that Varoufakis said that they and his counterparts already agreed to, and only throw a few bones on the humanitarian front out of the other 30% that Varoufakis wants. And if you’ve ever been party to legal agreements, more specific commitments operate to the disadvantage of the party making them.

Moreover, Syriza has already shown a propensity to overpromise and underdeliver. That would be likely to happen independent of what looks like an optimism bias among the leadership team merely by virtue of inexperience, as in underestimating how long it takes to change bureaucracies and design and launch programs.

As I have said, I would be delighted to be wrong, but even if the ambiguities in the memo language all resolve in Syriza’s favor, they have a mammoth task in what is achieving what is set forth in it, and an uphill battle in meeting the Troika’s and the Eurogroup’s reform expectations. I wish them the Greek government the best of luck.

Update 7:30 AM. Some readers charged us with being unduly pessimistic about the deal. Robert Peston at the BBC if anything manages to be more downbeat:

In fact, what was agreed on Friday night guarantees there will be no fresh crisis – no fears of Greece quitting the eurozone – for a full two days.

Because by Monday night, the Syriza government has to submit a preliminary list of proposed economic reforms – which will form the basis of negotiations till the end of April on a new financial settlement for the country.

If the Eurogroup were to reject that preliminary list, well in theory all bets would be off – and we would be back to wondering whether Greece is in or out of the euro.

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  1. JohnB

    Just so I don’t miss anything (I tend to read articles on Greece immediately as they pop up in my RSS reader – great analysis here), could article updates be added to the title in some manner – a bit like how Glenn Greenwald did at Salon, ‘Update I’, ‘Update II’ etc. (haven’t gotten to ready him much since then, so not sure if he still does that).

  2. dr frank

    The Greeks have succeeded in bringing attention and clarity to the unyielding German position. There was no point in continuing talks. The new agreement represents a statement of the status quo. Greece can have a little more money, for a short period of time, provided it conforms to the conditions.

    Bottom line, as I read it in large print: Every new advance, especially any advance of new funds, to Greece will be subject to review. The details of who will decide are not so important. So, yes, there is flexibility and the Greeks can come with their ideas and proposals, and then the Germans will decide.

    I have trouble characterising this as a climb down for the Greeks. It is perhaps a very small victory.

    I don’t think it was unreasonable for the Greeks to say: we want to stay in the Euro and we want to pay back our debts, and the best way to achieve that is to craft a pro-growth, stimulative program. And I can understand how the Germans can say: we want you to stay in the Euro and we want our money back, so keep squeezing.

    I interpret the posture of the Germans as one of a creditor who is aware that its existing loans will not likely be repaid, or perhaps more precisely, that the risk adjusted present value of the repayment stream over a lengthy period is less than the nominal amount owed. Now this unpleasant situation is more or less obvious and the Greeks have been clear about it, but it is not yet possible to state it out loud in Germany, much less take the haircut.

    For a creditor that holds an impaired position, any new disbursement of funds is an additional loss. Under these circumstances, the only remaining rationale for new advances is to pay the costs of liquidation of assets, even at fire-sale prices. I am not writing in support of the German position, only trying to shed some light on it. Seen from this perspective, the Germans might be seen as somewhat generous in extending new funds as agreed.

    Grexit or no, recognition of debt write-downs will be unpalatable and politically fraught. It is an issue that reaches well beyond Greece. Sadly, the suffering of the Greek people while this situation comes slowly to resolution seems to count for nothing.

    It will be interesting to see how Syrza

    1. Cugel

      Rather than getting caught in the details, it’s important to take the bigger picture and realize that this is a political struggle, and not a financial negotiation at all. Given the following facts, is this deal an advance or a retreat along that struggle towards an end to the Neo-liberal economic death-spiral?
      1) Greece is currently in the Great Depression and there’s no New Deal in sight. Instead the Hoover Administration (Troika) is insisting on endless rounds of Austerity that continue to squeeze labor and wages, leading to an endless decline in demand, creating further business losses and further decline.
      2) Now compare that situation with the “Modest Proposal” that Syriza offered: No massive stimulus program, limited cutbacks in the schedule of further layoffs, some tax reform, and worst of all, being forced to run a surplus which would be “negotiated” somewhere between the insane 1.5% and the impossible 4.5% which was baked into the agreement. And even these modest proposals were rejected with contempt by the Troika.

      3) From this, we conclude that from the outset there was in fact no possible solution that Greece could hope to negotiate. At best they might have hoped for some degree of reasonableness and a breathing space in which further reforms (Not the ones proposed by the Troika), might take place. Even this has been denied.

      4) Grexit was always going to be horrifically painful, and the Greek people did not give Syriza a mandate to withdraw.

      So, given all this, what’s the best strategy for Greece? Their ONLY hope is a political strategy of attacking Austerity and pointing out the endless failures of the Troika imposed program, trying to rally public opinion throughout Europe and build solidarity with other countries and eventually build consensus for real reforms that would start to deal with the problems in a rational way.

      What is the political basis for doing this? The Greeks must continue to appear in public as the abused spouse. They must always be the “reasonable” party. They can never give way to calling fascist autocrats fascist autocrats. They have to garner sympathy. And MOST of all they need time. Time in which further Austerity measures will continue to fail, time in which to keep these issues before the financial press, time in which to prepare alternative measures which will ultimately be needed for Greece to exit the Common Market in a controlled fashion – and not because they want to, but because there is simply NO HOPE for solving Greek problems within the market given Euro insistence on failed economic models.

      Viewed in this light, recent developments are essentially a stand-off. On the one hand Syriza has had to back down a LOT from their campaign. On the other the propaganda war is continuing, and Germany is losing that badly. More problems will keep cropping up, and there are no solutions with Austerity. Ultimately Greek society may simply fall utterly apart of course, giving way to Nazism. But, the larger question is “what happens to the rest of Europe?” That remains to be seen.

      1. Jackrabbit

        Did you see Yanis’ end of day (2/20) conference?

        He was most definitely NOT playing the abused spouse or otherwise trying to gain sympathy. He spoke proudly of partnering with the ‘institutions’ to benefit ALL Europeans (was he elected by ALL Europeans or by Greeks?), and saving Greek banking (from the artificial crisis fostered upon it).

        He said nothing of the Greek suffering or unreasonable demands of the ‘institutions’. His accomplishments were merely some “flexibility in the program” so that VAT increases and pension cuts might be avoided (for now), and the required fiscal surplus would be softened in 2015. He appears to have given up on important principles and inconvenient truths that embarrassed the Euro Club, leaving only technical details of implementation.

        He once said that ‘kicking the can’ was unacceptable. But he caved on that and more. Furthermore his willingness to accept relabelling of ‘troika’ to ‘institutions’ for political optics demonstrates mens rea.

        H O P

        1. Cugel

          It isn’t at all about what Varoufakis says. What exactly did you want to hear? “Last time they sent panzers, but this time they sent bankers. We may be forced to accept German occupation today, but someday we will repel these new oppressors just as we did in 1944?” Is that what you want to hear?

          He has to negotiate with these people. You can imagine how well those negotiations starting on Monday would go if he explicitly went out and effectively called the Troika a bunch of bureaucratic thugs, (which is what they are) attacked the agreement, which still must be accepted by the Greek people, and predicted future disaster. You can’t attack people on Sunday in the press on Sunday, and sit down across the table from them on Monday and accomplish anything. And the really tough negotiating still remains to be done.

          It’s for political commentators, and other people across Europe — who will draw the appropriate conclusions without Varoufakis saying a thing. The key for the Greek government is to continue to maintain popular support, and keep trying to make things better for the Greek people. The key internationally is to make the case against Austerity, by pointing to German bullying and the resultant humanitarian disaster – which will only continue to escalate.

          “I want to say a heartfelt thanks to the majority of Greeks who stood by the Greek government … That was our most powerful negotiating weapon,” he said on Saturday. “Greece achieved an important negotiating success in Europe.” — Tsipras

          If they can’t maintain Greek solidarity for the next 4 months, the entire country will probably unravel into chaos and Nazism. This is part of a larger struggle that isn’t about Greece at all.

          Quite frankly, I’m not Greek and I’ve never even been to Greece. I care about this struggle because I care about what happens in the U.S. and the repudiation of neo-liberal trickle-down economics is imperative WORLDWIDE. But, the Greeks have ZERO hope of winning this alone.

          That is exactly my point. Greece cannot be alone. Other countries and other politicians must publicly decide to take a stand with them. It’s absurd to criticize the Greeks for not somehow squaring the circle and forcing the abandonment of deeply cherished neo-liberal governing myths. The mask is ripped off German “reasonableness” and we see them for what they really are – bullies and oppressors who don’t care a fig about people starving in the streets.

          1. Jackrabbit

            I was just disappointed that Yanis didn’t take some time to describe the humanitarian crisis. And the change from Troika to ‘institutions’ seemed like transparent political gaming which is counter to the admirable truth-talking that came before.

            Of course, I hope for the best.

  3. Swedish Lex

    Greece wins the PR match overwhelmingly. Merkel and Schäuble widely detested and this will probably start to have an impact in the coming months. A big change compared to 2010 and 2012 when only “leftists” like NC etc. saw through the Troika BS.
    Being of the views of Germany, German politicians and economists equals being a moron. And nobody wants to be a moron barring i.e. the Baltic States that rely on Germany in relation to Russia and the politicians in Spain and Portugal who prefer selling out Greece rather than admitting that they have been executing foolish policies over the past several years.
    Podemos and like minded in Portugal and Italy (and le Pen in France) are likely to gain from this battle that is increasingly becoming David against Goliath in Lederhosen.

    1. Yves Smith Post author

      I think this is a bit of a premature call. It depends on what Syriza actually tables and gets in the way of reforms and how Greek voters react. Before this deal, they had stunningly high poll numbers. All their political opponents are now on the attack. How much they give back remains to be seen

      If in two months, Syriza’s poll numbers are still ahead of where they were when they came into office, then other anti-austerity groups will feel emboldened to make them a rallying point. But right now Podemos officials are pointedly refusing to mention Syriza even in response to direct questions about them.

      1. Swedish Lex

        Sure, the saga is on-going.
        However big change compared to a few years ago. Conventional wisdom then was that the Germans knew best, always. Now they are increasingly perceived in Europe as sadists.

        1. Swedish Lex

          Mainly thinking of outside Greece, I should add.
          In Greece the people have known for a long time that the Germans are fanatics. This is also gradually becoming the perceived reality outside Greece.

          1. jsn

            German’s aren’t fanatics any more than Americans: like Americans they are subject to particularly effective and integrated propaganda. It is very hard for alternate narratives to breach the confines of those who actively seek them in both systems.

      2. JohnnyGL

        I haven’t followed bloomberg’s coverage too closely over the last few years, but openly mocking German officials for being confrontational and intransigent seems to be a newish thing from what I remember.

        Swedish Lex is onto something. It may not be enough turn the tide much, though.
        Why is Podemos keeping mum on Syriza? They were seen having a presence in Greece all through the Greek election campaign. It seems strange to go silent, now.

        1. susan the other

          It’s counterintuitive, but Podemos and Syriza might be competing for the same thing. Investments from Germany. Not fire sale privatizations, but investments to grow the Greek economy and support Greek democracy. Or Spanish. Over the last few years we have heard Varoufakis repeatedly advocate for an investment bank, the European Investment Bank or IEB, to invest in the future of the EU. The biggest investor on the block is Germany. And could Schaeuble and Merkel be so dumb as to ignore the biggest problem capitalism faces: no good investments for all that cash? Not likely. So it could have even been a bit of theater that Schaeuble sequestered himself and had LeGarde consult with him, err… shuttle written notes and verbal possibilities from the very smart Mr. Varoufakis, so that it didn’t look too obvious. Maybe.

        2. Santi

          Why is Podemos keeping mum on Syriza?

          I think the issue is that they are, above all, concentrated in getting elected now. They are very ambiguous on anything that can loose voters. Much like most of the politics with good PR that I have seen lately, they literally disappear from the scene when blame or guilt is to be dispensed. The situation with Syriza has probably been diagnosed as a contentious issue, and they prefer De Guindos doing stupid things like trying to block the agreement and taking the blame or Margallo (our Foreign Affaris Minister) saying that they could have raised pensions 38% with the money the Greek owe us.

          Right now they can do little to support the negotiation, which is taken at the official layer. Winning power is the best that can be done to support them. Not directly Podemos, which really can’t talk about those things being mostly assembly driven, but Pablo Iglesias, aired a Fort Apache debate about Syriza one week before the elections, and Juan Carlos Monedero did a “En Clave Tuerka”, on the same issue one week earlier. Both debates in Spanish, usually their programs have good quality but I don’t remember having seen those ones.

          BTW, if you can understand Spanish you might enjoy Pablo Iglesias Sunday interviews, a program called “Otra vuelta de Tuerka”. A recent one with Thomas Piketty, for instance.

      3. Kurt Sperry

        From a private forum I enjoy posing to: “Well now I’ve seen everything: Lord Lamont on Newsnight is saying that austerity clearly doesn’t work, that Syriza are right, and that the bailout benefits the banks only.”

        I’m seeing politically engaged people–and particularly from the US and UK–who’ve never questioned austerity and who mere weeks ago were breezily dismissing Syriza as a bunch of feckless radical leftists coming around pretty quickly. I realize this is all anecdotal and not actual hard polling data, but I’d say Syriza’s message is getting some serious traction and especially in the Anglo sphere. The cadre of defenders of austerity appears to be bleeding members and only the conservative northern Europeans you might expect at this point seem to be left staunchly defending the Germans.

        My strong sense is that the political tide is changing quickly away from the austerians right now. It may be an anomaly or a transient phenomena, but the conversation is now such that YV and his arguments have gone in a matter of mere weeks from being dismissed as unserious and fringe to being taken and considered seriously.

        Bankers, financiers and hard line eurocrats may seem seem safely anchored in their positions now, but economics and economists cannot exist forever sheltered from the political winds that blow. Economic policy is in the end always subordinate to political forces, and the austerians are getting routed at the moment in the political debate. And the more hard line and intransigent the austerians are perceived to be by the public at large, the less and less they will be able to steer the political processes. And if the political will backing austerity dissolves, they will lose their grip on the policy levers they require to implement it.

        In spite of Syriza’s recent lumps, I’ve kind of got a good feeling about this longer term.

    2. peter de haan

      Aren’t you holding on to straws? I mean, the results could hardly have been any uglier for Syriza and the Greek people, who already know about the Troika BS for a long time. Syriza made promises that it couldn’t deliver on – full-blown capitulation before its own people. I don’t see the PR victory through this at all, or if it’s even relevant. If anything, it shows that if you challenge the rules of the game, you’ll be punished, despite of electoral wishes. Snowden, Assange and other whistle-blowers score PR wins all the time, and yet they find themselves imprisoned or living as refugees. For the majority of German and Dutch people, the Troika probably scored a major victory (“That’ll teach these lazy spendthrift Greeks. We didn’t cave in!”). Or were you perhaps referring to the “intellectual community” regarding the PR match win?

      1. Swedish Lex

        If I leave the trenches for a moment and take a look at 10.000 feet, that is what I see.

        Some time ago Syriza was portrayed as the truly lunatic left; perceptions across Europe have however changed in the past weeks and months. Assuming this change continues, Germany’s crazy views will become more apparent in the eyes of an increasing number of people.

        The deal yesterday means that Varoufakis & Co will continue to have platforms to communicate from going forward.

        Elections in Spain in December. If we have a Syriza 2 in Spain, things begin to change for real. A continued mess in Greece, could boost Podemos’ chances in Spain……..

        1. Swedish Lex

          From yesterday’s FT:

          “If the Podemos surge carries through to election day, the consequences for Spain — and for Europe at large — would be momentous: the election of a far-left anti-austerity party in Greece has already shaken Europe’s political establishment to the core, forcing leaders in Berlin and Brussels to re-examine some of the most cherished principles of European integration. The triumph of a like-minded force in Spain, the bloc’s fourth-largest economy, would make European politics even less predictable — and could finish off the EU’s carefully crafted system of economic governance for good”

          The FT thusly agrees with your Lex :)

        2. Fair Economist

          If we get SYRIZA 2 in Spain, things change, but it’s hard to see how we get that. Spain has proportional representation *without* a big boost for the leading party so to have a governing coalition you have to be at almost 50% of the vote. Podemos is likely to be the largest party, but they’d have to get about half again as many votes as SYRIZA to rule and that’s a really heavy lift. Right now the polls would suggest a de facto hung parliament, with no stable coalition able to muster 50% or even close to it (e.g, a grand coalition of the traditional two is only 40%). If Podemos gets what SYRIZA did (35-40%), it’s likely a hopelessly hung parliament.

          1. purple

            There’d be a coalition between the two ruling parties if Podemos won a plurality. Podemos isn’t going to be running Spain , ever.

      2. ian

        I’m not sure how much of a PR victory this is for Syriza, but one thing that I’m certain of is that this will generate a huge amount of ill will against Germany.

        1. juliania

          I believe the Greek people are sophisticated enough to know the difference between grass bending in the wind and a rigid sapling snapping in two. The grass will keep on growing after the wind is gone. I think the overwhelming popularity of the new Greek government, because they took a stand upright, unlike other governments which immediately folded after gaining office, (not looking at you, Obama) will make them receptive to the conversation now ongoing between them and their government, and should not diminish their pride in it in any way whatsoever. There will be hardships, and they will, like the Russian people, be proud to make the most of what they have, which is really a lovely place in which to live. They will expect fairness and conversation aplenty from their government, and if they get it they will support it to the nth degree.

          The Germans wanted the Greek finance minister outed; the Greeks will not forget that.

  4. wbgonne

    Wonderful, yeoman work, Yves. I fully concur with your assessment of the deal. To me, the most important immediate questions concern the political fallout for the European Left, in Greece and the other Euro-supplicant nations. If YV’s strategy succeeds in invigorating the Euro-Left and elevating them into power in the distressed countries, achieving a new power bloc to confront the neoliberals, then he may be hailed as a genius. Frankly, I am not optimistic. By my rough count, the score is now: neoliberals 1,375,439, human beings 0. Or put another way, the neoliberals haven’t lost a battle in 40 years. On tbe bright side, a single loss could well be fatal, and the plutocrats know it, which helps explain the neoliberal brutality.

    1. susan the other

      Yes, thank you Yves. And get some R&R this weekend because we want you to start all over again on Monday. If possible. But wbgonne, about the Neoliberals winning every battle of the 20th C. – maybe not. Because irony. “Financial time runs faster than political time.” Since finance just lapped politics it is leaving the neoliberals in the dust. Poetic justice. And if the results of this epic struggle are better politics, well, so be it.

      1. susan the other

        postscript: (Yes, I love to hate the banksters, but I hate the corrupt politicians a thousand times more.) So speaking of irony… Rummy could even have been an accidental oracle. Odyssey Dawn.

    2. hunkerdown

      They can’t win all the time — they need to stage some losses now and again. Classical conditioning works best when rewards are intermittent and unpredictable.

  5. Santi


    …tax receipts are running well below anticipated levels, due apparently to citizens not paying taxes as a result of the Syriza win (?!?)

    There are two factors I can see, judging by what I observe here “on the field” in the battle of Madrid :)
    First, due to contraction following each austerity measure and deflation reducing nominal amounts, projections are never met, and thus every year the taxes come short of the previsions. In Spain they have been fiddling with numbers as they can: in the tax side they “force” law interpretation and put in the books tickets or sanctions that will be later dismissed by courts, they send requests for taxes to businesses long ago closed, and similar measures that fog the government incomes. Year after year we are seeing this going on, and the ball is bigger with time. I’m guessing that the reason why ND made this “miscalculation” of parliamentary arithmetics and forced elections was because they didn’t want to be here discussing the extension. So I don’t think it is more like: “tax receipts forwarded from last year are found not to be valid”

    Second, people is more and more tight, and thus they are late or just don’t pay. If I had to choose between paying the electric bill and the property tax, I would obviously choose heating. Because of this, property tax (I’m told) got bundled with electric bills, so I guess poor people is no longer paying electric bills and will resort to civil disobedience (you can call it in financial terms “extend and pretend” that they can pay in the future).

  6. Brooklin Bridge

    This is a suicide pact between European nations and illustrates that their sense of family and cohesion is on a par with ours; not one of them can stand the idea of another being left behind as a survivor. What’s that the Troika is going to be called now, The Firm? Oh yea, the institutions. How modest, no capitals.

    1. dingusansich

      Right you are. Or to put the rallying cry of the Institutions Formerly Known as the Troika another way: capital, not capitals!

      These institutions are like a thief that says, Your money or your democracy—then takes both.

    2. okie farmer

      Yes, BB.
      “They’ve barely been in office, they have no experience governing and have been so busy with the negotiations that they have yet to take effective control of the bureaucracies.”
      The “institutions” are taking advantage of that without a doubt. Unfortunately Syriza had no time to do anything except “negotiate” as the county was running quickly out of money. No time to start printing drachmas, no time to plan a Greixt, not even enough time to get organized for Troika and Eurogroup meeting.

  7. craazyboy


    Attn: craazyman
    Disposition: Top Secret
    Subject: We Gotta Problem!

    Messrs craazyman,

    It appears [codename] Herr Bratwurst has changed the name of the Troika to The Institutions?!

    You do realize this makes your( I hope by now copyrighted) “Kill The Troika” poem obsolete? Worse yet, “Troika” has 3 syllables and “Institution” has 4, making reworking the poem to suit the present situation on the ground dicey at best. Do you see any way around this possible impasse?

    But anyway, sure seems to me that Herr Bratwurst is trying to push Greece out da ‘zone. He can’t really think Greece will elect a pro German government now, does he? That can’t be.

    I was gonna try and figure out how many olives you have to sell to pay off $315 Billion, but I have to go grocery shopping first to get a fresh jar so I can count how many olives are in there. But it’s gonna be a lot!

    If Golden Dawn understands Money Wave Theory and realizes olives can create drachmas instead, they may get swept into power in a heartbeat at this point.

    1. craazyman

      The Dead

      I sure would be thinking of printing up some drachmas right about now. You can always use the euro for the big stuff — like BMWs and Leica cameras. But you can use the drachma for buying ouzo with your espresso while you look for a jawb. But still, people romanticize the past in Greece, especially if they’re not Greek. It wasn’t wonderful from what I gather, just thinking about being ruled by generals while I plow my field with my donkey. i’d rather be workig a desk jawb and hitting the beach on the weekends! I still remember my conversation with the Spanish anarchist, who works at a place near my office. She’s an arsty type the way Euroleftists are. She rolls her own organic cigarettes and waves her hands in the air when she speaks, her eyes darting left and right.

      She said two years ago nobody in Spain wants to go back to how it was. They don’t romanticize their past. They want to bury like a corpse it in a grave. They want to escape, as James Joyce so aptly wrote of Ireland’s generations of trauma, “the nightmare of history.” The euro was the great liberator, the euro was the awakening, the euro was the dawn and end of the horrible dream — two world wars, civil wars, generals, inflations, conflicts, second class status among the great nations, peasantry and humiliation — the euro was the sun that was to burn every trace of that bad dream, and normal people would walk across the river, as if on water, and take their place as full equals, as “Europeans”.

      That’s a dream that dies so hard it can’t be killed. The euro is Daisy Buchanan and they”re all Gatsby, there in the night looking across the water at the light at the end of Tom Buchanan”s dock. That’s who they are. They are Gatsby. But they don’t quite have Gatsby’s protean skills or his discipline or his regimen”s for self-improvement written on lists that he followed with the discipline of a German. Who does? Gatsby is fiction and these are normal people with human flaws, on both sides there’s normal people. Scheauble, Weidemann, Dieselboom, Professor V, Prime Minister T, all of them. They all think they’re right. They all are right — each in their own context and in their own reality. Can there be a communal reality forged though the projection of consciousness and empathetic perception. That would be the basis for a future. I don’t know. I suspect so, I would predict there will be. But like any birth it’ll be full of screaming and pain. But I think it will happen.

      It’s easy to lose sight, among the detritus of each day’s news, of the elemental energetic psychic structures that animate this entire phenomenon in all it’s surfaces and amplitudes. The structure itself presents no analytical gaurantees, it simply reveals the faultlines of thought that both transcend and underlie each day’s breathless gossip. Those llines are ideas of order and ideas of consciousness and they do have explanatory power, however. They are the things I try to see, even if it makes me seem lazy.

        1. craazyman

          that’s what I’m saying. It’s dead. The poem is dead. It’s over. No mas. Syonara. Au friedesien (spelling?), bye bye, avoire, sortie, 86’d, out the door, see ya!, vale (that’s Latin), period, the end. Poem (b. 2015- died 2015). It was a short life. It burned in the sky. it fell. now it’s just a memory. If you wanna see it, Tyrone Green says it over and over again with feeling and emtion — on Youtube.

          1. craazyboy

            How sad.

            Auf Wiedersehen – it means something like “see ya again” or “see ya later”, so it wouldn’t really apply.

          2. JEHR

            Craazyman, the poem is as Dead as the parrot, no doubt. Too bad but I got a good laugh in all this doom and gloom about the Real Troika. I think every time the word “institutions” is mentioned there should be appended “formerly called the Troika.”

      1. Fair Economist

        I do remember (no idea of the source) somebody saying this was behind Portugal joining the EU. The general feeling was that it would be bad for the economy, but that was well worth it to make sure the military didn’t come to power again. Spain has a similar situation. Now in Greece the depression is so bad – and so far from bottom if they are going to continue to obey the troika – that the tradeoffs may be different. If Greece has to go to a 4.5% budget surplus the youth unemployment rate will be basically 100%. And with the economy so shrunken the government will not be able to afford meaningful relief on that scale, especially not with an insane budget target. Poverty is better than facism, but starvation isn’t.

      2. Chauncey Gardiner

        Appreciated your comment, craazyman… all of it. So hope you’re right, although history suggests a high probability of a less favorable outcome.

        Please never stop writing.

          1. an.on

            tripped, that was pure poetry.
            the cries of a million ghosts across a thousand years echo through those words.

            it’s so easy, especially in these days of instantaneous feedback, to forget that we are still chained to the vicious cycle of a history of constant suffering — perhaps now embedded in our very being so much so that the thought of someone, anyone escaping is but our drug of choice.

            “Pity would be no more
            If we did not make somebody poor,
            And Mercy no more could be
            If all were as happy as we.”

  8. Carlos Fandango

    I wonder how much of the tax evasion is politically motivated and orchestrated by the opposition? Immediate prosecution of key individuals would be desirable. Although, the security and tax services are probably a corrupt cesspool right now

    VAT is generally a regressive taxation, though they can implement it on luxury goods which shouldn’t hurt the poorest Greeks much. Surely it will take a lot more than 4 months to make the regulatory changes and enforcements to make a dent in the tax problem. They should kick off by hiring about 10,000 tax officers… that should provide a net gain on the investment and the Troika enforcers should hardly complain.

  9. steviefinn

    Excellent analysis as always, but very depressing. I can’t imagine how those Greeks at the very, very sharp end will take this – if the picture is as bleak as it seems. Hopefully at the very least this episode will expose the EU for what it really is & maybe Pro- Democracy banners will be added to the anti-austerity ones. I felt the truth of it theoretically, but these events have brought home the reality for me. I still wish Tspirus all the very best in what has become a modern version of Scylla and Charybdis.
    Rather than sitting around waffling about it, I am now going to start the process of mobilising my admittedly feeble forces to fight this, as I feel I owe it to my Grandchildren whose future in Ireland, is also at the mercy of another self serving parcel of rogues, enriching themselves & their cronies with imperial backing.

    1. aletheia33

      good for you!
      your feeble forces will get stronger from fighting.
      hope you will keep us posted on that.

      1. steviefinn

        Probably wont be much to post in terms of myself – I just intend to become a small cog in a wheel that I believe will go places, & if it doesn’t, at least I would have tried to do something with what remains of my life. I am sick to the stomach of these excuses for human beings. whose seemingly sole purpose is to fill an insatiable void where their souls should be with yet more emptiness.

  10. tv

    Unless and until the greeks begin the banking software development and real printing press for a return to the Drachma, they have no real bargaining power.

    Yanis et al can threaten and play (poor) game theory all they want. Without the nuclear option, they lack spine and cannot stand their economic ground. The EU knows this.

    Look no further than this result for all Greece’s bluster and political promises. Once again Greece’s sovereignty/people get sold out. Yet again, they are the EU’s b*tch.

    Iceland remains the only country since 2008 to actually have a pair and act among the dissent from Chicken little threats from Britain and Icelands internal felonious bankers who helped engineer their collapse.

  11. MartyH

    Scoring by an untrained observer:

    Round 1: Germany 2, Greece 2

    Germany got the appearance of a triumph at the cost of a lot of negative PR. Greece got a weakened agreement and four months more time under no worse conditions to continue to search for a solution. Germany kinda won. Greece didn’t come out any worse off other than the political fall-out from not “winning.”

    “Kicking the can” sounds about right on both sides.

  12. George Phillies

    ” all the 19 countries represented in the Eurogroup.”

    That appears to include the Greek Parliament. Syriza’s coalition partner may bail. Syriza may fragment. When back home, the Greek PM may choose to send proposals that the other side cannot possibly accept.

    1. Yves Smith Post author

      Does the Greek parliament have a vote on this? In most countries, it just takes the approval of the government, as in the executive branch, and not the parliament. I’ve never seen Greece listed as one of the countries where approval is needed, and I didn’t see Varoufakis mentioning getting approval as a concern. But you are right if so since 1/3 of the Syriza coalition is more hard core leftist and they could have an internal revolt. And they could lose votes from their more hard-core anti Eurozone coalition partner.

      1. MartyH

        Good question(s). One hopes that even a testy “opposition-partner” will realize it’s early days yet. Failure of Syriza, right now, has to frighten everybody BUT the Greek Oligarchs (who buy time to vanish off-shore) and Golden Dawn.

        My 2¢.

  13. Linda Amick

    I read that 80% of Greeks want to stay in the EU.
    If true, they must comply to the EU rules; like it or not.

  14. Jim Haygood

    ‘The Financial Times reported … that Greece was on track to hit the limits of the ELA on Tuesday (the day after a long holiday weekend).’

    Nothing has changed. Friday’s letter of intent doesn’t produce any bailout cash flow until weeks or months of process are completed.

    Meanwhile, it appears that Greek banks used up their €3 billion ELA increase this past week, and now will be wholly reliant on pledging EFSF bonds to meet any further deposit drain.

    If the Greek state has run out of cash, presumably its promise not to take unilateral actions means that it cannot issue new T-bills to Greek banks to fund itself. Such technical details now become vitally important.

    Are Greek depositors really going to take comfort from a letter of intent, whose success is dependent on Greece receiving an A-plus grade from a rather annoyed teacher on its homework assignment due Monday? I don’t feel good about this.

    1. Ned Ludd

      “…a rather annoyed teacher…”

      You don’t taunt an authority figure if you are unwilling (or unable) to stand up for yourself. Any feint – towards Russia, or a Grexit, or creatively reallocating the 11 billion euros they now have lost control of – will be laughed off because they are all bark and no bite.

      1. Jim Haygood

        So Monday night, a disheveled Yanis V. hands Jeb DieselBoom a 20-page manuscript. Jeb’s eyes widen as he flips through the pages, realizing they contain nothing but the repeated line ‘All work and no play makes Jack a dull boy.’

        Jeb looks up to see a laughing, glassy-eyed Yanis waving a pistol in the air and croaking AMHCARD, AMHCARD (that’s ‘drachma’ spelt backward). Outside, Tsipras begins chopping through the conference room door with a fire ax, as Schaeuble vigorously wheels in reverse toward the back door. The tea hostess screams and faints.

        Later the chaotic scene is characterized in the presser as ‘a candid exchange of views.’

        1. Ned Ludd

          My only revision: “All work and no play makes Yanis a dull boy.” Or Varoufakis could start referring to himself as “Jack”, especially in the third person.

          For the E.U. bathroom doors:


          1. Yves Smith Post author

            Do you know Schauble refuses to be in the same room with Varoufakis after Varoufakis screamed at him that he was a liar? During the Friday negotiations, they were in separate rooms and three people (Djisselbloem, Lagarde, and a third person, I forget whether Sapin or Muscovici) were shuttling between the rooms.

            1. none

              I thought it was Djisselbloem who Varoufakis called a liar and apparently at one point looked like he was about to get into a fistfight with.

              1. Yves Smith Post author

                Well, except it HAS been widely reported, later, that Varoufakis and Schauble were not in the same room and had to have very senior interlocutors run room to room. That is really unheard of and suggests serious bad blood between them.

                Having said that, the article is wrong in describing Varoufakis as physically imposing. I’ve met him. He’s not notably tall or large framed. He’s fit looking, maybe 5’10ish, if anything on the lightweight side for his height.

                1. Nameful

                  Just thought maybe you might want to add, or replace it with, another more recent link :) since the original story in Liberation, fake or not, was about Wednesday, which by now is a long time ago.

                  All I could find about them not being in the same room is this tweet, quoted in several places. Is there a corroboration that I’ve missed?

                2. craazyman

                  Bruce Lee was only 5′ 7″. He could throw a punch so fast a trained martial art black belt could not block it.

                  I’m not making this up. here it is,

                  If anybody clicks on this — and it’s well worth it — you may have to endure a brief commercial and the video company’s little prelude, where they put their logo on the screen for a few seconds. It seems like an eternity, I know. I feel your pain. Youtube is best when it’s instant gratification, not when you have to wait 10 or God Forbid, 15 seconds.

                  Mr. Schaueble is not a young man anymore and Professor V looks like he works out hard. It’s conceivable he’s put hhimself through a martial arts regimen, possibly even watching Bruce Lee films to see how a Master does it. That would be amazing. But I bet he wouldn’t actually strike Mr. Schaueble. I bet he’d halt any blow a few inches before making contact. Just as a demonstration of skill. And leavie it at that. If Hans and Frans see that, they’ll be impressed. It may seem hostile, but in fact, on a manly level, it would be a masterstroke of diplomacy. It would suggest Greek men are capable of extreme discipline, skillfull self control and restraint under unrelennting pressure. This would be very good news in terms of joining fforces with the organization formerly called ‘The Troika’ to pursue slovenly tax cheats who haven’t worked out in decades. It might be a good move and Mr. Schaeuble should welcome it, provided it is understood this is a bonding ritual among men

  15. Ulysses

    “Syriza has already shown a propensity to overpromise and underdeliver. That would be likely to happen independent of what looks like an optimism bias among the leadership team merely by virtue of inexperience, as in underestimating how long it takes to change bureaucracies and design and launch programs.”

    Excellent work as usual, Yves! This point about the optimism bias is very important and applies not only to newly elected politicians and their appointed ministers, but to pretty much anyone, who is rational and decent, in today’s kleptocratic world who wins “a seat at the table.” I have seen far too often the bitter recognition of people who have struggled hard to get in a position to “make a difference” of the limits of their power. Whether in academia, local or national politics, business, or any other field the full realization that the game is rigged comes only when you have made your case for something new– only to find that those benefitting from the status quo will simply refuse to consider anything that might harm their own narrow interests.

    The greedy and power hungry people who rule the world are very clever at co-opting people who want to make things better, and diverting their energies away from effective resistance to kleptocratic rule. When they confront someone who can’t be bought off, they are enraged and will always seek to destroy those who defy them.

    People on the receiving end of this wrath have three choices: 1)absolute rebellion with a high likelihood of defeat, or 2)compromise and maneuver, with at least the chance of perhaps making some small positive changes around the margins. The third choice, surrender and retreat, is probably the most common.

    Human history is so fascinating because there are far more rebels than one might rationally expect. The zeitgeist today is that huge numbers of people are not “buying into” the mythologies of the ruling elites. They would like nothing more than a heroic rebel leader with a great plan to liberate them and make things better. The elites manipulate this desire by supporting divisive, conflicting ideologies that get people fighting each other instead of them.

    Varoufakis should be commended for taking the high road and appealing to people’s better instincts. The sad truth is that more cynical demagogues are likely to take advantage of this crisis, leaving the decent and rational people anxiously awaiting events decided by others.

    1. Carlos Fadango

      Not blaming Syriza for getting carried away. I think the next “radical” party to take office will not show their hand too early after taking office.

      1. juliania

        At the risk of sounding too much like a classicist when the ‘new normal’ is being touted incessantly, I keep returning to the Germans’ perhaps accurate assessment of that final Greek offer as a ‘Trojan horse.’ We might remember that the ancient ruse was devised by Odysseus, whose aim as interpreted by Homer was, after conquering Troy, to get all of his companions safely back home to Greece. That is what The Odyssey is all about.

        It is true that the fickle gods and weakminded shipmates thwart this intent, but it doesn’t make Odysseus any less of a hero nor the poem any less of an immortal epic tale. And Odysseus, that man of many ways, does make it back to his country, his wife, his home.

    2. dingusansich

      That’s a compassionate perspective I largely agree with. I’d add this: In his autobiographical Guardian essay, Varoufakis all but says capitulation is inevitable because a Greek exit from the EU will lead to fascism. In light of that, EU intransigence hardly seems surprising. At best Varoufakis can stall, as Sibiriak notes elsewhere in this thread, and look for political developments elsewhere (e.g., Podemos) or cracks in the austerity coalition that might give Greece better cards to play. But hope is not a plan. It may take a coordinated transnational movement not only to push back credibly against the power of concentrated capital but also to head off the real possibility of chaos that could incite a right-wing coup. A viable Plan B may call for national political movements that can quietly set up cross-border cooperative support amid a deflationary crisis as an alternative to EU financial hegemony. When the neoliberals then find it tougher to divide and conquer, a Varoufakis can finally say, and in good conscience, “Sorry, Maggie, er, Wolfgang, but actually, there is an alternative.” Who knows, Syriza could already be on it. Wouldn’t that be nice …

      1. financial matters

        I think that autobiography does present a plan and one that he seems to be following very well.

        He wants to clearly lay out the inconsistencies and brutality of the current system but similar to Polanyi he thinks the transformation should be gradual so as to be the least disruptive. First stop the austerity and then slowly build a better system.

        The unbridled capitalists have won the ‘freedom’ mantra and that slowly needs to be replaced with one that true ‘freedom’ involves a socially responsible society.

        “”Yet my aim here is to offer a window into my view of a repugnant European capitalism whose implosion, despite its many ills, should be avoided at all costs. It is a confession intended to convince radicals that we have a contradictory mission: to arrest the freefall of European capitalism in order to buy the time we need to formulate its alternative.””

        “”Having failed to couch a critique of capitalism in terms of freedom and rationality, as Marx thought essential, social democracy and the left in general allowed the neoliberals to usurp the mantle of freedom and to win a spectacular triumph in the contest of ideologies.””

        1. tiebie66

          More austerity seems needed. I fully agree with building a better system. But I do not see how building a better system follows from stopping austerity. Stopping austerity too soon will simply lead to a return to “business-as-usual” corruption, cronyism, and perpetuation of institutional bloating (adding 300,000 state employees) and dysfunction. When times were good, there was no sign of SYRIZA; it is austerity that brought it to the fore. Clearly, austerity has the capacity to foster necessary changes that align with democracy and not with corruption, oligarchy, and neo-liberalism. It also carries the danger of fostering authoritarianism – the reason why I’m concerned that appropriate reforms receive so little attention. Tough times forced Iceland to make sensible changes; Greeks do have the creativity to do so within an EMU context.

          First stop the austerity and then slowly build a better system. No, start building a better system NOW, it will alleviate austerity in due time and provide an excellent rationale for SYRIZA to implement far-reaching, necessary reforms.

          1. financial matters

            I think Yanis said it well when he said they need to be austere but not the current austerity. Which I interpret I think similar to you would as smart spending, investment with a purpose other than asset appreciation. Providing useful employment.

            Interestingly I interpret Polanyi as being in support of a job guarantee as well as a BIG.

            When talking about an economic Bill of Rights he said that ‘The list should be headed by the right of the individual to a job under approved conditions, irrespective of his or her political or religious views, or of color and race.’


            ‘Compulsion should never be absolute; the “objector” should be offered a niche to which he can retire, the choice of a “second-best” that leaves him a life to live. Thus will be secured the right to nonconformity as the hallmark of a free society.’

            And he believed in a minimum wage or living wage not set by the market:

            “To take labor out of the market means a transformation as radical as was the establishment of a competitive labor market. but the basic wage itself, are determined outside the market.’

      2. Gerard Pierce


        You are one of the few who seems to have paid attention to his Guardian essay. If I interpret him correctly, he said that overthrowing the Troika does not automatically lead to a left that will arise like a Phoenix from the ashes and make it all better.

        Kind of like in the US – if the Republicans self-destruct, we are stuck with a Democratic Party theat is equally corrupt and venal.

        The fault, dear Brutus, is not in our stars, but in ourselves, that we are underlings.

  16. Sibiriak

    Paul Mason: “The draft does not give Germany everything it wanted. It allows Greece to vary its fiscal target this year – meaning it can run a lower surplus, as yet unspecified. In addition, according to Varoufakis, there is “creative ambiguity” about the surpluses Greece is required to run beyond this year.

    Second it maintains the words Varoufakis proposed on Thursday: that Greece will not rollback old measures or unilateral policies “that would negatively impact fiscal targets, economic recovery or fiscal stability” – however with the addition of the words “as assessed by the institutions”. This clarifies who gets to decide whether the revised Greek programme threatens these things.

    By Monday Greece has to submit a list of measures, in order to get the money to recapitalise its banks, and roll over its loans. Varoufakis spun this at a press conference as something that would be assessed jointly – so effectively the power game between Germany, Greece and everybody in between now continues, but with the IMF – whose methodologies are considerably less doctrinaire than the ECB on what Syriza proposes to do – in the loop.

    In addition, the word “bridge” appears in the agreement. Dijsselbloem indicated that it would be a bridge to any future arrangement – and in that sense, the German opposition to any signal of the possibility of a transition phase was overcome.

    […]The true substance of what’s been agreed will only be decided as the IMF/EU and ECB say yay or nay to each of the Greek measures.

    […]Asked what happens if the IMF/EU do not agree the list Syriza presents on Monday, Varoufakis said, disarmingly, “then we are finished”. But if it can be agreed, there is a massive amount Syriza can do on policies not tied to its fiscal limits…”

    Looks to me like a pretty good opening round for Syriza against a very powerful, aggressive opponent. The fight is far from over.

      1. Carlos Fadango

        Or have the weapons ready and hidden from their opponents. Rest assured the opponents are ruthless and determined, there is no place for faint hearts.

      2. Sibiriak

        When you are up against an opponent who is bigger and more powerful, you don’t look for a knockout in the first round. You drag it out. You keep resisting. You agree, but you don’t completely comply. You accept terms, but interpret things your own way. You make new claims. You open new fronts. You don’t look for the one big punch. You wait. Patiently. For things to change. Slightly in your favor. For the smallest of openings. You keep fighting.

        1. ambrit

          This will work unless you come up against a “bigger and more powerful” opponent who has no scruples and goes for the kill in the first round. Ideologues tend to be like that.

          1. juliania

            Maybe then you call yourself “no man” and strap your companions each one to the belly of the Cyclops’ sheep.

            1. ambrit

              That would work if Odysseus were indeed leaving Polyphemus’ cave for good, but Syriza rejected that course of action from the start. Now all that is left is deciding the order in which the Greek sailors are eaten.
              Calling oneself “no man” may be a clever subterfuge when dealing with the Cyclops, but the present Ithacans would do better to emulate their Hyperborean cousins and chant their names as they run forth into battle.

              1. juliania

                Well, to save the appearances of my quip, if the cyclops is ‘financial domination’ and Greek sovereignty within the EU is ‘home’, it sort of still works for me.

                Sort of.

                1. Ulysses

                  The most important thing is that we live to fight another day. As I said myself– after a big disappointment– a long, long time ago:

                  “They set about reducing me to slavery. They stripped me of my tunic and cloak, and gave me a ragged shirt, all the tattered garments you see before you. At evening we reached the cultivated fields of bright Ithaca. Then they tied me fast to the benched ship with a coil of rope, and went ashore to make a quick meal by the water. But the gods untied the rope, and wrapping myself in the tattered cloak, I slid down the gangplank and breasted the waves, striking out with both hands, till I could leave the water and escape. Then I found a leafy thicket inland, and crouched there. They searched here and there, shouting, but deciding nothing would be gained by prolonging the search, they went back on board the hollow ship. The gods kept me easily concealed, and led me to a good man’s farm, since it seems it’s my fate to stay alive.”

                  Odyssey, XIV


        2. Jkiss

          So strategy is
          Guerrilla warfare, long haul…
          But the guerrillas get a really bad, and declining, standard of living.
          Imo grexxit gets to a better place sooner, particularly since ez will collapse anyway, first out goes thru tough times while ez still stagnant.

        3. Jackrabbit

          You drag it out. You keep resisting. … You wait. Patiently. For things to change. Slightly in your favor. For the smallest of openings. You keep fighting.

          And what of the deceptive 1984-like newspeak to decieve your own people and allies? I didn’t see that in your description of how to fight back.

          Yanis now calls the troika, the ‘institutions’.

      3. ian

        It seems to me like Syriza really has only a couple of cards to play – threatening to leave the EZ or defaulting on the debt. For either to be credible, the Greek people have to understand what the consequences would be and be willing to live with them. Since this wasn’t the case I don’t see how these negotiations could have turned out any differently. It reminded me of an exchange in “The Maltese Falcon”:

        Spade: If you kill me, how are you gonna get the bird? And if I know you can’t afford to kill me, how are you gonna scare me into giving it to you?
        Gutman: Well, sir, there are other means of persuasion besides killing and threatening to kill.
        Spade: Yes, that’s, that’s true. But – they’re none of ’em any good unless the threat of death is behind them – do you see what I mean? If you start something, I’ll make it a matter of your having to kill me or call it off.
        Gutman: (chuckling) That’s an attitude, sir, that calls for the most delicate judgment on both sides. ‘Cause as you know, sir, in the heat of action, men are likely to forget where their best interests lie and that their emotions carry them away.
        Spade: Then the trick from my angle is to make my play strong enough to tie you up, but not make you mad enough to bump me off against your better judgment.

    1. Yves Smith Post author

      I have to disagree with Mason’s reading. It does NOT allow Syriza to vary the target. I have no idea where he got that from. You first will see in the post that it repeatedly reaffirms that the bailout framework is in place.

      This is the memo language regarding the fiscal surplus (emphasis ours):

      The Greek authorities have also committed to ensure the appropriate primary fiscal surpluses or financing proceeds required to guarantee debt sustainability in line with the November 2012 Eurogroup statement. The institutions will, for the 2015 primary surplus target, take the economic circumstances in 2015 into account.

      In other words, they get relief from the 3% target for 2015 ONLY if the Troika decided to give it to them. And as a matter of timing, it looks like that can happen ONLY after Greece has completed its detailed reform list and the Troika and Eurogroup sign off (as in the). Now it does appear unclear as to when the 2015 increase takes effect formally (as in if it’s 1.5% for some part of the year and becomes 3.0% later, the effective rates is clearly lower). And it’s not clear that there is any consensus among those who agree that Greece needs a break from these targets as to what the new target should be. Even supposedly sympathetic Martin Wolf was saying a compromise on the fiscal target should be a still insane 3%, which is no break for 2015 at all.

  17. German native speaker

    Even early this morning, German Euro-haters were out in force – about 90% of the commentariat in Spiegel (mind you, not Bild) saw yesterday’s agreement as a faiure of the German government, They all argue like moralists: ‘don’t throw more of OUR taxes into that bottomless pit called Greece.” They also say that the Greek system is corrupt, and instead of removing their capital to foreign countries, the Greek should pay their taxes. A lot ot the commentaries used similar phrases, and I tend to think they are influenced by the Anti-Euro-Party AfD and the right wing Pegida movement. Merkel /Schaeuble have lied to the Germans re the first three Greece bailouts (“this is the last time and it is without alternative, we do it to save the Euro”) and this is the backlash, in my uneducated opionon.

    On the other hand, during the last week, a lot of economists got airtime in German TV during the last week and spoke out in favor of a debt write off. A lot of the seemingly more informed commentators in Spiegel online agree, or agree to the extent that Greece should finally collect the taxes from its rich.

    I don’t know if it is true, but if has been published in Germany that the average wealth of an average Greek exceeds that of an average German.

    There is a lot of sympathy for the Greeks on NC. Do you all know that Germans had their own austerity measures imposed, social services have been cut significantly through Schroeder and its SPD. In addition, prices for everything doubled after the Euro was introduced, but incomes didn’t – despite all promises from politicians. Many German people argue that their infrastructure is crumbling and the middle class is being sucked dry. The benefit from the Euro that Northern Europe enjoys, as often mentioned here, did not reach the German masses. My own observation is that Germany has been stuck economically and mentally.

    The quality of media reporting including from formerly distinguished publications like Spiegel has been a shame. They attacked the new Greed finance minister due to how he wore his shirt, and I sent them a vicious letter about their attempt at character assassination.

    However, I would appreciate if the commentators on this blog (NC)n would distinguish between the government and refrain from saying “the Germans” — I was born with a German passport, I did not start wars or supported Hitler, I don’t want another collective guilt trip put on me because of Schaeuble and politician Merkel.

    Re Greece, Schaeble of all people should know that it is impossible to walk without functioning legs.

    1. Jim Haygood

      Schaeuble’s habit of expressing his opinion directly, rather than forming a consensus and then letting the Eurogroup speak, is surprising to me. We all know that Germany is the economically dominant member of the EU, but letting others (such as DieselBoom) speak for the group would show some collegiality and avoid making Germany always look like the bad guy.

      It seems like a lack of self-awareness by German leaders — not realizing how they are seen by others. This is equally typical of U.S. leaders as they throw their weight around, assuming that they speak for the developed world.

    2. jsn

      I agree completely: heuristically we conflate people with the systems they were born into and try to vilify the system by vilifying the people. This is deeply counterproductive: Varoufakis greatest success thus far has been to keep focus on the affects on people, but this humanitarianism has no grounds for traction in the US or German propaganda systems where any social solidarity has been demonized as sentimental irresponsibility.

      1. an.on

        it’s demonized precisely because it’s a powerful antidote to the divide-and-conquer propaganda being deployed.

    3. BillC

      … Germans had their own austerity measures imposed, social services have been cut significantly through Schroeder and its SPD.

      … through the Hartz IV accords between the SPD and the unions … precisely the internal devaluation that facilitated Germany’s balance-of-payments problem (too much is as bad as too little, as we now see) and, as you note, impovrished the German working class and infrastructure while enriching the global oligarchy through economic and social “reforms” that incresed income inequality. That’s what the German press should be reminding its readers, at least as much as of a historically poorly-functioning Greek state. And using German taxes to compensate for Greek debt that cannot be repaid (i.e., German and French bank bailouts) is a political choice too. The better choice in an economy with idle labor and capital plant is to put more money in circulation — preferably in the pockets of its citizens, not its banks.

      The entire foundation of German popular opposition to resolving this problem is neoliberal economics, which by now any dispassionate observer can clearly see has at least a few problems. Regular readers of NC know there are well-founded alternative approaches, though Mr. Haygood will remind you (in a much more civil — and humorous — fashion than Mr. Schaüble) that there’s still room for discussion.

      Of course all the same criticisms apply to the USA … and as we usually claim, we did it first. Looks like the EU may be trying to beat us at this game, though.

    4. MarcoPolo

      I have used “the Germans” to mean the German Government. It’s a short-cut and I know the difference. No offense intended. I’ll be more careful about taking that short-cut.

      It’s class war. Only those classes aren’t exactly like we’ve been told. Productive classes, hard-working people, have been put upon by parasites. The parasites are not confined to one nationality.

      1. Kyle

        “It’s class war. Only those classes aren’t exactly like we’ve been told. Productive classes, hard-working people, have been put upon by parasites. The parasites are not confined to one nationality.”

        Would it be accurate to say that these are the ministers in the Church of Austerity?
        Group of Thirty

          1. Kyle

            Yep, even better is this relationship map. Click on the members block and then the individual members to see relationships to various organizations such Pete Peterson’s Institute and Foundation and the Bretton Woods Committee among others. It’s no wonder austerian ideology is rampant across the US and Europe. Also note that the Group of Thirty’s predecessor was the Bellagio Group formed by Fritz Machlup, a co-seminarian of Hayek in the Ludwig Mises private seminars. All thoroughly libertarian. See his link in the above link to the Group of Thirty.

    5. Kyle

      @German native speaker

      Well said. Are you familiar with this? And better yet, do you know any Germans who may be interested in it?

    6. EmilianoZ

      Yes, we’ve probably been too harsh on the Germans in our wave of sympathy for the Greeks. I apologize if I wrote anything conflating the German people with their gov’ment or worse, banks.

      I have also read somewhere that the mean Greek wealth was larger than the mean German wealth. I’m guessing that’s because the Germans are mostly renters while more Greeks own their homes. I’ve also read that rents are still very reasonable in Germany while they have exploded elsewhere. That is an integral part of the problem. German wages can be low because rents are low. But, if for instance you lower the wages in France while rents remain as they are, a lot of people will hardly be able to make ends meet after paying their rents. I have no idea how Germany managed to keep rents low. We wouldn’t have all those problems if it had been the same everywhere.

    7. alex morfesis

      Greeks DO NO HATE GERMANS…we hate the cheeky holy roman empire types who think their secret electoral college vote still counts…nuke kyffhauser !!!

      if Greeks hated Germany so much, would mercedes, audi and VW do so well there ???

      but Greeks are smart enough not to buy a Trabi

      Top Ten ‘Trabi’ Jokes :

      1. When does the Trabant reach its top speed?

      When it’s towed away.

      2. Why is the Trabant the world’s quietest car to drive?

      Because your knees cover your ears.

      3. Customer: “I’d like two windshield wipers for my Trabi.”

      Dealer: “Sounds like a fair trade to me!”

      4. How do you double a Trabant’s value?

      Fill the tank with gas.

      5. How do you measure the acceleration of a Trabant?

      With a calendar.

      6. Why do Trabants have heated rear windows?

      To keep your hands warm while you push.

      7. What do you call a Trabant with brakes?


      8. What goes on pages 4 and 5 of the Trabant user’s manual?

      The local bus schedule.

      9. Why is a Trabant considered the longest car?

      There’s 8 feet of car, followed by 50 feet of smoke.

      10. Why do East-Germans have trouble driving the Trabant?

      Because the wheel keeps pulling toward the west.

      1. Yves Smith Post author

        I know a Romanian who now lives in New York who loved her Trabant and still speaks of it fondly.

        She’d bring the transmission in the house at night in the winter to make sure it would start (this is not as crazy as you think; when I lived in Escanaba, Michigan, we’d plug the car in at night. It had a heater of some sort so the engine block would not freeze). She’d keep it in the front corridor. Her mother argued that the transmission was not a member of the family and could stay in a back room. It nevertheless kept spending nights in the front corridor.

        It would also run on petroleum-based floor cleaners.

    8. Foy

      Hi GNS. I noticed your paragraph: “Do you all know that Germans had their own austerity measures imposed, social services have been cut significantly through Schroeder and its SPD. In addition, prices for everything doubled after the Euro was introduced, but incomes didn’t – despite all promises from politicians. Many German people argue that their infrastructure is crumbling and the middle class is being sucked dry. The benefit from the Euro that Northern Europe enjoys, as often mentioned here, did not reach the German masses”

      I think this goes to the heart of the argument that Professor Michael Pettis raises and one that he mentioned recently in a post on NC, that German internal consumption was (from the start of the Euro) and still is too low, due to a constriction on wages. This generated investment surpluses that HAD to go elsewhere, and naturally they went to the periphery (had to happen with all countries using the same currency), and that was the original cause of the crisis – a balance of payments issue with no way to recycle the inevitable surpluses and deficits.

      The periphery could buy the German export surpluses as the German and French banks loaned them the money (as interest rates were the same everywhere they thought ‘what a deal, haven’t seen these low rates ever!’). So the German corporate/manufacturing sector won very handsomely with exports ‘subsidised’ by low German wages, the German workers didn’t see much of the benefit other than in low unemployment numbers as wages were constrained, and the German and French banks who took the ‘profits and bonuses’ are now saved from their own poor lending mistakes by the Troika imposing austerity to keep zombie loans on the books that would kill them otherwise.

      Pettis has called for Germany to rebalance and by raising internal consumption by increasing the workers share of the pie.

      So it doesn’t surprise me to hear that the average working German isn’t happy with the state of affairs either given their position. And I hear you on differentiating between Troika individuals and the German public, I’m sure commenters here are just abbreviating for simplicity’s sake. Thanks for your post.

    9. Panagiotis Atmatzidis

      I was perplexed by this statement:

      > I don’t know if it is true, but if has been published in Germany that the average wealth of an average Greek exceeds that of an average German.

      No, it’s not true. Not even in 2000-2007 years back. A German has a social welfare level (schools, healthcare, public transports, etc.) that a Greek can only dream for and although we’re taxed for it, we don’t enjoy any of this. That said, Greece needs reform, but from what I hear, Germany needs reforms too…

      The best article on SYRIZA’s win I’ve read since SYR came to power was by Gregory Maniatis on NYTimes In Greece, Focus on Justice.

      On this front, I dare say that the German government actively helped the increase of corruption in Greece more than imposing any kind of control[1][2]. Varoufakis also noted this in the common interview with Schäuble a couple of weeks ago, when he visited Germany. Schäuble quoted Goethe saying that “Every country should take care of his own problem […]” which was nice, but not all that convincing to me.



      1. German native speaker

        Hi, I shared the sentence about ‘the average Greek having more wealth’ as an example of how the MSM throws around these bits and pieces – truthinesses. It seems to me lately that some journalists, esp. formerly ‘liberal’ ones (Zeit und Spiegel), seem to get their paychecks directly from big finance think tanks, also when it comes to reporting on TTIP.
        Good NY Times article.
        And Siemens….seems to have deep coffers….62 million in bribes just for Greece.

    10. john bougearel

      So sad, too bad. Cannot accomodate.

      Collective guilt is what the northern bloc has by association with the Troika, the Instititions, or whatever other euphemistic name you care to call this neoliberal, technocratic unelected regime. As Juncker reminded us all so eloquently last week ” there can be no democratic choice against the European treaties.”

      Without “demos” my kind sir, the Northern bloc is stuck with the sort of collective guilt associated with the Holocaust.

      1. Lambert Strether

        ”there can be no democratic choice against the European treaties.”

        It’s like the EU is a system of government that’s about as functional as the Articles of Confederation. Except without the Articles (everything being accomplished by bureaucratic fiat). Or the Confederation (as we see).

  18. Greenguy

    Syriza has attempted to be what is no longer possible in the 21st century, the era of neoliberalism and the structural crisis of the capitalist world system: an honest Social Democratic party. Their entire attitude towards governing has been an attempt to take the principles of left-Social Democratic reformism seriously: democratic reforms within the structure of the capitalist state and EU, brought forward by principled actors representing the working class and poorer elements of the middle class in a semi-peripheral nation. This is a return to a place where European Social Democratic parties have not been for decades, perhaps not since WWII or immediately afterwards (if that).

    The problem, of course, is that this is no longer possible within the framework of world capitalism. Varoufakis’ piece on “erratic Marxism” shows exactly the problem: a class conscious, realistic party would have admitted the limitations imposed by the troika off the bat and would never have thought reforming the EU was even a remote possibility. Their goal would have been to radicalize the working masses for an exit and actual radical change inside Greece (and out). Instead we got Syriza, who idealistically thought they could reform the EU with bluster and a bad poker hand, slapped in the face by reality. They now get to be a principled, reformist social democratic party enforcing austerity and further disillusioning the working masses.

  19. Greenguy

    Syriza has attempted to be what is no longer possible in the 21st century, the era of neoliberalism and the structural crisis of the capitalist world system: an honest Social Democratic party. Their entire attitude towards governing has been an attempt to take the principles of left-Social Democratic reformism seriously: democratic reforms within the structure of the capitalist state and EU, brought forward by principled actors representing the working class and poorer elements of the middle class in a semi-peripheral nation. This is a return to a place where European Social Democratic parties have not been for decades, perhaps not since WWII or immediately afterwards (if that).

    The problem, of course, is that this is no longer possible within the framework of world capitalism. Varoufakis’ piece on “erratic Marxism” shows exactly the problem: a class conscious, realistic party would have admitted the limitations imposed by the troika off the bat and would never have thought reforming the EU was even a remote possibility. Their goal would have been to radicalize the working masses for an exit and actual radical change inside Greece (and out). Instead we got Syriza, who idealistically thought they could reform the EU with bluster and a bad poker hand, slapped in the face by reality. They now get to be a principled, reformist social democratic party enforcing austerity and further disillusioning the working masses

    1. Ned Ludd

      “Instead we got Syriza, who idealistically thought they could reform the EU with bluster and a bad poker hand…” A good summation of Syriza’s (lack of) negotiating strategy.

      [The] goal [of a class conscious, realistic party] would have been to radicalize the working masses for an exit and actual radical change inside Greece (and out).

      This draws a nice dividing line between a “reformist social democratic party enforcing austerity and further disillusioning the working masses”, versus a left that would actually challenge the ruling elite.

    2. Rosario

      This was touched on by Slavoj Zizek:

      I would argue Capitalism’s marriage to Democracy was arranged without the spark of love, and as Zizek states in the interview, the marriage is soon to split, or already has and friends and family do not yet know it. True democratic process inherently lends itself to a more equitable distribution of resources and services, it has to. What population would willingly submit to exploitation and abuse given an effective voice to modify their economic and political culture? We are seeing a growing disparity and, not surprisingly, an obvious drought of populist representation in macro economic and political decisions.

      1. an.on

        great article by Zizek just pre-election:

        Imagine a vicious teacher who gives to his pupils impossible tasks, and then sadistically jeers when he sees their anxiety and panic. The true goal of lending money to the debtor is not to get the debt reimbursed with a profit, but the indefinite continuation of the debt which keeps the debtor in permanent dependency and subordination.

  20. ltr

    Syriza has lost, Greece has lost, there is the cure in view for the depression and suffering in Greece and the leadership of the Euro Area is content.

  21. Jordan from Croatia

    Regarding the VAT pay enforcement.
    Croatia succesfully implemented strong VAT enforcement within 6 months from arriving at the desicion and another couple months for resisting all around attacks and doomsayers about such practice. Now it was so succesfull that Slovak, Check, Hungary, Slovenia, even Austria is asking for advice on implemetation and copy of such program. It took all public finance inspectors of the country to enforce and close shops for even 1HRK out of order for couple months but it worked. When the state showed that it is serious about doing it, it works faboulosly. Now everybody pays VAT even if they work with cash, even on country markets there is VAT orderly payments now. But such action requiers funds to implement, does Greece can find funds to copy Croatian program of VAT enforcement?

    OK, i might have been wrong about demanded surplus level for Greece in this extension agreement, but it became ambigous.

    1. OIFVet

      What are the VAT rates in Croatia? Are foodstuffs and medicines taxed at a lower rate than consumer products?

      1. giangi75

        25% but I guess there might be reduced rates for foodstuff, medicines and other primary good (hopefully)

      2. Jordan from Croatia

        Yeah, VAT is 25% Crazy idiots raised it whne crisis hit, it vent from 19% in 2008 to 22 to 23 then 22 and now to 25% and then keep crying about worst GDP fall in EU besides Greece and been droping for 12 quarters in row.
        And only recently they figured out that debt in SCFranc is giving problems. The reason croatian recession started is that Swiss Franc denominated debt blew up in 2009 and killed spending which started the deleveraging process and mass debt defaults. They still talk about “structural reforms”. But at least they are not talking about deficits.

        1. Deloss

          I love the regressive VAT (Value Added Tax) about as much as I love the regressive “flat tax” and I’m sorry to see it brought up. If the oligarchs in this country could make it popular (they would have to understand it first), they would certainly use it to replace the graduated income tax. I know it’s in use in Europe, but I’ve been scrolling through three miles of European troubles and we have enough of our own without importing them from the Old Country. I KNOW that was not the suggestion, but the mere appearance of “VAT” makes steam come out of my ears.

          1. OIFVet

            Ditto. Some countries in Europe are a neoliberal wet dream. In BG, there is 20% VAT on everything, including essentials like food and medicine, and 10% flat tax with no standard or personal exemptions. A regressive twofer. The best part is that these were passed by the “socialist” party. Every time progressive taxation gets brought up, the NGO and Western-funded media springs into action, spreading disinformation and hysteria about how the poor would get taxed more. It’s sickening and brutal to watch.

  22. plantman

    Golden Dawn only has to wait until Varoufakis submits his list of reforms in order to expose Syriza as a fraud.
    The reforms will have to be harsh to win eurogroup approval which means that Varoufakis will be seen as intensifying the austerity he promised to end.

    It’s a real Catch 22.
    This is a lose-lose situation for Syriza. They must stop claiming victory and explain what is going on to their supporters.
    The bottom line is that Greece must either accept austerity or leave. There’s no third option. Germany has made that point quite clear.

    Let the people decide. That is the path forward for Syriza, otherwise they will take 100% of the blame for the ongoing depression.

    1. Edna M.

      I also think there is no third option. Many people in the US mention Golden Dawn, probably because Syriza suggested that if Syriza didn’t come to power, Golden Dawn would. This is not the case. There are other parties that advocated withdrawal from the euro. The ones in Parliament who advocated it are the Stalinist Communist Party (KKE) and of course the Hitlerian Golden Dawn, both parties that will never rise much above what they have now in the popular vote. But there are progressive parties outside Parliament (like EPAM or United People’s Front, Antarsya, Plan B, etc) which advocated for an exit as the only way out of the crisis. The people didn’t want to hear. Perhaps now they will listen.

  23. mpr

    Excellent analysis.

    The one point I would make is that when discussing what Greece has given up you have to use the Greek interpretation of the memo, as that is the indication of what they will put on the table Monday. Its possible, maybe even likely, there will be push and pull with the Troika on those terms, but again any ambiguities have to be interpreted in favor of Greece.

    It seems to me that YV has really stuck to the red lines he laid down – no pension cuts, no higher primary surplus etc. I don’t see why he would give that up to the Troika having gotten (somewhat) past the Eurogroup.
    I see the negotiation dynamics as somewhat more favorable to Greece than Yves does, but we shall see.

  24. Fair Economist

    SYRIZA has gotten the 1.5% for this year, because with the language fuzzy, they’re not going to get kicked out for staying at 1.5%. That’s a big win in an relative sense. But I think reader Alan is wrong that ND and PASOK are terrified of this. Keeping the austerity from getting worse means things won’t get as bad; but with 1.5% still in place they won’t get better. I suspect they’ll continue to worsen, just not as fast as they would have with another round of budget cuts. As the US stimulus and the 2010 election show, voters aren’t statisfied with just staving off a worse depression; they want improvements or they’ll punish the party in power, regardless of whether that party is at fault or has done the best possible in a bad situation.

    Tax nonpayment is easy to explain; businesses are hoping to pay taxes in depreciated drachmas rather than Euros.

    1. Robert dudek

      I.think it depends on how successful syriza is in shifting the fiscal burden from poorer greeks onto richer greeks. If they are able to do that, then the majority will feel improvement despite the fiscal surplus.

    2. Yves Smith Post author

      That is not what the memo language says. It says that any change from the target is up to “the institutions”. The ECB is hard line and skeptical of Greece, and I am told the European team for the IMF is not a warm and fuzzy bunch at all. You may wind up being right but this is not at all a given. Some of the reporters who are closer to Greek sources have given what look to be optimistic readings on this issue.

      But I agree completely otherwise. Even with the 1.5% target, this is still very contractionary. This is not going to help Greece out of the ditch. It will only make matters worse, just less quickly than the original plan.

    3. Carlos Fandango

      An objective of the excercise is to force the Greek government to privatise assets so the end buyers, financial institutions, brokers and lawyers can have their rich pickings.

      Are we too naive to believe the terms will be anything else but structured to achieve the prime objectives.

  25. C

    It also did not help that relations between Varoufakis and Schauble had deteriorated to the point that they could not be in the same room and Djisselbloem, Lagarde, and other officials had to shuttle between them on Friday).

    It is telling that the origins of the bad blood is a point where Varoufakis called Djisselbloem a liar which is considered shocking in the “clubby” (term used in link) atmosphere of the meetings. The Greeks are fighting for their lives but to Schauble and Djisselbloem the problem is one of ettiquete.

    In many respects that basic gulf of understanding is the problem and it shows no sign of narrowing.

    1. mpr

      Great. Of course Diesel Boom *is* a liar. It reminds me that YV said he found it surprising that it was considered ‘almost bad manners’ to discuss macroeconomics in the Eurogroup. Yes, shockingly bad manners, because you’re exposing your fellow FM’s as not actually knowing anything about macroeconomics.

  26. M.Black

    Thank you so much, Yves, for your continuing coverage of Greece and for your particularly comprehensive and incisive analysis here. As you note, some have taken you to task for being pessimistic at this juncture in the saga. I, on the other hand, find you positively cheerful (I think I mean “fair”) relative to my own dour disgust with Syriza’s “achievement” in this crisis. But then I have developed zero tolerance for the bullshit of ambitious talkers like Varoufakis and Tsipras.

    And that’s the crux of the problem here, as has been repeatedly pointed out by Ned Ludd and others on this site. You write, “Moreover, Syriza has already shown a propensity to overpromise and underdeliver.” Credibility is no small thing in such matters. Certainly, the thugs across the table from Syriza have nothing to fear from anything Syriza says.

    I really think the game is over, at least with regard to Syriza and for the time being. It’s once again up to the people of Greece to determine how much longer they continue to be austeritized by the thugs.

  27. Jackrabbit

    Syriza/Varoufakis won respect and sympathy based on:

    >> respecting democratic elections and national sovereignty;

    >> the complicity of bankers and govts that regulate them.

    But this agreement seems to nullify such points. This is important because the next stage of negotiation (which is scheduled to conclude by end of April) will be much more difficult now that practical implementation has trumped principle.

    In his news conference Yanis made no mention of such points NOR did he mention the suffering of the Greek people. He spoke only of partnering with the ‘institutions’ to help ALL Europeans and of bank stability. Creditor ‘institutions’ have successfully pushed their view that debts must be paid – with no regard to how they were incurred and little concern for the crippling effects beyond allowing “flexibility in the program” as a means of ensuring repayment.

    With that said, it was Greek oligarchs that bear the greatest blame for this Greek tragedy IMO, and there is no doubt that Greeks need to reform a corrupt system that allowed the oligarchs to screw the people so completely. But reforms will be made difficult if other parties paint Syriza as being an arm of the Troika. In this way, the Toika/’institutions’ hard-line may backfire.

    People around the world would be smart to take note of how crony capitalist oligarchy – aided and abetted by powerful, uncaring neolib foreign collaborators – destroyed countries like Ukraine and Greece.

    H O P

    1. purple

      Respect and sympathy aren’t going to get you anything. Only power and fear will with the types of people SYRIZA is up against.

  28. C

    There is a lot of sympathy for the Greeks on NC. Do you all know that Germans had their own austerity measures imposed, social services have been cut significantly through Schroeder and its SPD. In addition, prices for everything doubled after the Euro was introduced, but incomes didn’t – despite all promises from politicians.

    I had heard about that and I know it was not just the Germans. In fact basically every European I have met has commented in one way or another that the introduction of the Euro caused price inflation and a cut in spending power. However many of them have also found ways to blame the other Europeans for the problem (i.e. Germans blaming Ireland, Spain, and Italy, Italians blaming Germans, etc.)

    Given that the model for a Unified Europe was the last imperial periods when an unelected power class dominated the peasants it does seem like it is going according to plan. In many respects the Brits and the Swiss seem to be getting a better deal from the whole project.

    1. Carla

      The huge cost of living increases imposed one by one on the populations of European countries that joined the euro gave me an inkling that there might be something fishy about this “common currency” even though I had never heard the term “monetary sovereignty” at the time.

      I realized that this new currency which meant I could no longer afford to travel in Europe must, more importantly, be imposing significant hardships on local people. I am profoundly grateful to have enjoyed some wonderful visits before the boom was lowered (and the prices more than doubled): to Spain (twice), Portugal and Madiera, northern Italy, and the Czech Republic. Unfortunately, the people of Europe are, for the time being at least, stuck with this monstrosity.

    2. Rosario

      “Brits and the Swiss seem to be getting a better deal from the whole project”

      I’m fine with being called a conspiracy theorist for saying this, but something tells me the British (and USA) government officials knew the problems with the Euro from the outset and positioned themselves to benefit from the “free market” structure while having an easy exit if “s–t got real”. With the Swiss, it is probably an honest case of rigid tradition, but who knows (tax havens?). Why else would Britain participate in all of the system benefits while maintaining a sovereign currency? Dunno, I tend to think elite power runs deeper than we think.

    3. Carla

      Brits and Swiss getting a better deal — UHM, YEAH. They’re not in the monetary union. They have their own currency and retain monetary sovereignty.

  29. Rosario

    One lesson to be learned from these “negotiations” is make everything political from the outset (this to Podemos). I have a great deal of respect for Varoufakis for his reasoned arguments/positions, even temper and firm resolve but unfortunately he and Syriza didn’t use much of anything else. I was naive enough to think their method would succeed but it is true, to be perfectly reasonable with unreasonable people gets one no where. The Mediterranean countries, without doubt, now know the problem (if they hadn’t before). It is now a matter of gaining enough political support to change the logic of the European economy. Greece began the first steps of the journey.

  30. Jim

    You make some extremely important observations when you note that it appears more and more likely that {Syriza} ” … now get to be a principled, reformist social democratic party enforcing austerity.”

    And you explain how this evolved by arguing that “their entire attitude towards governing has been an attempt to take the principles of left-Social Democratic reformism seriously, democratic reforms within the structure of the capitalist state and EU brought forward by principle actors representing the working class…”

    But what I don’t understand is your apparent optimism about a more traditional Marxist path. Way back at the turn of the 20th century it was realized that Social Democracy and Bismark’s policies had already successfully integrated the labor movement within the logic of corporate capitalism. By 1914 Marxism had become quite marginal and conformist and had it not been for the Russian Revolution–a voluntaristic coup-d”etat contradicting the determinist character of orthodox Marxism–marxist socialism itself may have gone the way of other 19th century philosphies of progress like those of Comte and Spencer.

  31. Pete K.

    “Moreover, Syriza has already shown a propensity to overpromise and underdeliver.”

    They’ve been in office for three weeks!

    The fact that they have gotten anything is a win and will bolster anti-austerity parties around Europe. Now we see how far the Troika is willing to bend. If Greece gets less than 1.5 percent primary surplus and losing 30 percent of the austerity measures then they should not agree and be forced out of the euro zone where their economy will do better. I wonder what Smith and others like M.Black consider the minimal terms they would swallow in order to remain in the euro zone.

    1. Yves Smith Post author

      Huh? They overpromised and underdelivered on things they’ve done in those three weeks and cannot undo. You can renege irretrievably on campaign promises early on, even BEFORE you take the oath of office. Look at Obama, with his hope and change branding, and having Paul Volcker in tow during the campaign, strongly implying that he’d be tough on bank reform. Then on the heels of being elected, in November 2008, he announced that Tim Geithner was his Treasury Secretary pick.

      1. EmilianoZ

        But they did put up a good fight that enthralled us all for a week. Had they done an Obama, Varoufakis, Dieselbloom and Shabby would be best friends by now. The 3 of them would be having a private dinner as we speak at the house of some rich banker friend. Surely the Greek people can see that their leaders tried their best as plainly as we could see that Obama did not.

        1. Jackrabbit

          Then explain the substitution of ‘institutions’ for ‘troika’. Why the newspeak if they simply did the best they could?

  32. Jkiss

    Yanis obediently drops trous, bends over and grabs ankles.
    ‘Dumkopf’, she yells, ‘use hands to spread cheeks!’
    Yanis complies, saying, ‘please, ma’am, a little lubricant’.
    ‘Nein!’ She says. ‘You must learn the natural vay, like our own vorkers!’

      1. JEHR

        Indeed, the article by Petras was well worth reading as it draws together many of the forces that have contributed to Greece’s present dilemma. The financialization of the world is in its final step and the results, either way, won’t be pretty.

  33. BillC

    Thank you, Edna. An extremely on-point lesson, recapping the directly relevant history 1980 to present. If you wonder, “Is it worth reading the whole thing,” scroll first thing to the bottom and take a look at the author’s credentials. It tests my not-yet-dead belief in YV (at least until Monday), but then I believed in Obama and Renzi, too. The former is clearly a traitor, and Renzi hasn’t exactly run to the barricades in this week’s Eurogroup doings. Mr. Petras is surely a better judge of the situation and its leading characters than I, and his view seems to be even more jaundiced than Yves’.

  34. Jackrabbit

    To those who question Yves ‘harsh’ interpretation and want so desperately to believe that the 2/20 Agreement is NOT caving:

    >> Did you see Yanis’ news conference afterwards? (available on Youtube)

    >> Why does Yanis, who had taken a principled stand against can-kicking, now willingly accept the use of ‘institutions’ to replace ‘troika’? Doing so is clearly nothing more than a sly, politically-motivated manipulation. It’s hard to see that as anything but a slap in the face of those who elected Syriza.

    It’ll be interesting to see what is presented on Monday. But Yanis’ I-drank-the-coolaid performance and wordsmithing indicates to me that there will be little to cheer about.

    1. Kathy

      So, I have a question about this. In my exerience (in a completely different field and not very high level), we sometimes came out of a negotiation with strict verbal orders of what we could and couldn’t say. And if we even hinted at the reality of the situation, the deal was off.

      My question is: Is that something that could be happening here? In other words Yanis has to talk “coolaid” or any proposal they make on Monday is automatically rejected. Or, is this something that doesn’t happen in politics? (Because I’ve certainly seen it in other business contexts.)

      1. Jackrabbit

        It wasn’t just the cool-aid talk. It was also his failure to mention the suffering of the Greek people and his use of ‘institutions’. I doubt that the use of ‘institutions’ was something the troika demanded.

        My understanding is that the Troika monitors are hated in Greece and that Syriza had campaigned to remove them from Greece. The monitors will remain but their presence is finessed with a name change.

        ‘Institutions’ = Troika + Greek government. Perhaps a better formulation would’ve been 3+1 (to preserve the integrity of the Greek government)? When the Greek government is an arm of the Troika, who represents the Greek people?

        Yanis says, with pride and much satisfaction, that this deal was good for ALL Europeans. (Was he elected to the European Parliament?) Schauble and the Troika can now say the same. What happened to the notion of respect for Greek democracy and sovereignty? That is revealed as nothing more than a negotiating ploy.

  35. Demeter

    So, more time is good. Making your opposition look like greedy bastards and fools is good. Even more funding, wanted or not, is good. Giving a situation more time to mature, so that your natural allies in other lands rise to your support is good.

    More negotiation is good. Why?

    Time is NOT in Germany’s favor, nor does it support the Troika (I mean, institutions) in their quest for continental domination. Time is like water: the universal solvent, the first cleaning solution.

    It ain’t over, till it’s over–Yogi Berra

  36. C

    Just my 2c. While this is a major step back I don’t see it as a total loss for Syrza. Ultimately they got out-negotiated. Likely that first memo was a dodge to ensure that they would tip their hand. I suspect that is why Varoufakis is calling them liars. I have to agree with others that they have been in office for three weeks and given their position they were only able to take this or totally decimate what remains of the Greek economy. In many respects a play for time and some control is better than nothing.

    Having said that clearly Schable and the Troika are better at playing this game and don’t give a damn about the survival of Greece, ordinary Europeans or perhaps even the Euro itself since engineered bank runs on any member state is bad for the whole. So I’m not sure if Syrza can get much better than time at this point.

    Ultimately as I see it the fact remains that the Greeks are fighting for their lives and the european bankers and their sevants like Merkel couldn’t care less.

  37. C

    As another point it is also worth noting what the standard of “success” is here. Greece stands at 25.8% official unemployment. While the poster children for Eurozone rescues are: Spain (23.8% down from 26.9 in 2013), Italy (12.9% down from 13.3 in 2014) and Ireland (10.5%, down from 11% in 2014.) so clearly that austerity thing really can make a huge dent in unemployment.

    1. Santi

      And don’t forget that Spain has not really done austerity the way Greece has, as it still has a significant primary deficit, actually the biggest in the eurozone currently. Nobody complains because further adjustment would blow the social situation, very much on the verge of collapse. Spain has a very fast and growing inequality. Basically what is happening here is the same that happened in Greece: the rich get richer, and the poor are supposed to pay for the bank rescue. Austerity does not work. During the indignados movement we used to say: “no es una crisis, es una estafa” (It ain’t no crisis, it is a scam)

        1. Santi

          I was there :)

          Podemos is the result of the demands to the people occupying Sol to “present yourselfs to the elections if you want to make a change”. Not everybody agrees with how Podemos is developing, me included, but it is a historical opportunity and I think it will get to govern Spain, like Syriza.

          In short, after the decision to stop occupying, which was an exhausting activity as myself can attest, the movement got into “submarine” mode, in the social movements (social center squatting, anti-eviction and squatting-to-live, anticorruption judicial demands, …)

          One important part of it is changing the narrative. Pablo Iglesias and the Podemos team has been going to TV talk shows and defied the TINA thinking. They changed the neoliberal narrative slowly, and people started to be able to say “no”. This I guess is similar to what happened in Greece…

          1. MarcoPolo

            I was in Santo Domingo on Santo Domingo. Rajoy was there too making a campaign speech. I found myself almost shoulder to shoulder with him. Got pictures!

  38. Richard II

    I feel that there will be no repsonce by Monday night – literraly nothing – now what?
    They did not cover that in Friday night memorandum. It is time for EU to reflect…

    1. Yves Smith Post author

      They did not go to all this trouble to negotiate a deal and then not perform on what they agreed to, or at least attempt to.

      And the Greek banks are out of ELA on Tuesday after a Monday holiday in Greece. The banking system collapses because it is just about 100% certain that the ECB would not authorize an increase in the ELA if Syriza punted on this important task. That would mean a disorderly Grexit, the worst possible scenario for Greece: a long bank holiday (it was two weeks in Cyrpus), nationalization of the banks, a difficult and even more destructive than it had to be conversion to drachma.

      1. Richard II

        But I do not see that anything has been agreed on Friday – except – let’s try to agree on Monday! I do not think anyone in EU will have guts to pull the plug that quickly – then the real negotiation “might” start.

        1. Yves Smith Post author

          No, this is not a talk. Greece is required to submit its proposed list of reforms. “Reforms” are expected to be heavy on things like improving tax collection and reducing corruption

          If Greece punts on the list or it is deemed to be inadequate, the Eurogroup will meet on Tuesday.

          1. none

            I think you’ve mentioned that the tax collection improvements easiest to implement concretely right away are VAT collection, which is for a regressive tax. I even wonder if VAT evasion by corner souvlaki shops etc. works out being an economic stimulus. Syriza wants to collect more taxes from the oligarchy, but no idea how they’re going to do that or if the “institutions” even want for that to happen.

    2. Sibiriak

      The question is: what happens when Greece submits proposals and they are largely rejected? More negotiations?

      1. Yves Smith Post author

        If they are seen as too far out of line, the Eurogroup will meet Tuesday. That would be a very bad outcome, particularly since the Greek banking system is on life support.

        1. mpr

          I don’t disagree, although I don’t expect their list to be obviously inadequate.

          However I think you’re missing that the crisis situation with Greek banks cuts both ways. For example, the ECB’s main concern is to get political cover so it can prevent the crisis. The EC cares about the appearance of European cohesion (it s their whole raison d’être). So while they won’t give the green light ig the list of Greek proposals is obviously a farce, they have strong incentives to respond positively, and perhaps ask for some small adjustments to bolster their credibility. This is what I expect will happen.

    3. Richard II

      Just a small recognition that my prediction was right!
      Nothing was sent by Monday night….drafts do not count as they are just drafts.

  39. C

    According to Europeans that I have met Greece has some longstanding issues with tax collection that need not be regressive. For example, property valuation in Greece is widely believed to be an at-will event. You have to invite the assessors to show up. Therefore noone does especially not the people who put in outdoor pools. If that is true they could correct that without being regressive or creating major capital flight.

  40. Jose

    Ok, Let me translate the article´s interpretations of the eurogroup agreement, as seen trough the eyes fo the creditors:

    “We won. After the last couple weeks watching the Greek government’s proclamations that it would sever the links with the troika, adopt measures contrary to the troika program, end the austerity, renegotiate the public debt (with perpetual bonds and securities linked to growth) and claim lower targets for the budget surplus, we, the 18 of the 19 Ministers of Finance of the euro, won the contest.

    The troika continues. We are extending the existing loan, but under conditions: a review of the troika’s program must be successfully completed. Any flexibility to change the conditions of the current program will be “worked out together” between the Greek authorities and the “institutions” (the new name for the Troika). In our Brussels language, this is a double euphemism – “institutions” are the troika (a word that disappeared from the Eurogroup lexicon) and “working together” has always been the way the troika and we the ministers of the eurogroup, have publicly sold our model of “interaction” with national governments (in Portugal, while in reality the troika undermined the autonomy of the government, it kept saying said that it was the government who decided and implemented the austerity measures).

    Nothing is guaranteed for the future. We, Eurogroup, will give you only three days to submit a list of reform measures based on the current program´s commitments; and it will be the troika who assesses whether the list is convincing and then give (or not) the green light to go ahead.

    In case the list is not approved by the troika We, the Eurogroup, will send you neither the money included in the tranche, nor the repatriation of the European Central Bank´s profits on the Greek bonds.

    The money for the banks is for the banks only. It is not to be spent for other purposes, as you had asked. This is the reason the money will be transfered from the Hellenic Financial Stabilization Fund (HFSF) to the European Financial Stabilisation Fund (the EFSF). It will remain at your disposal, but can only be used after a specific request to be approved by the European Central Bank.

    You, the Greek government, will be able to select some of your austerity measures (“structural reforms” is an euphemism for eternal, tough measures in a particular sector of the economy). We agree with your intention to combat tax evasion and corruption and reform the state, something that should have been done long ago. But beware: our technicians will be looking at how you will do it.

    Your public debt to us is to be paid down to the last cent.

    We got the message, and we realize that you are deeply worried. For 2015 you may come to rely on a relaxation of the primary budget surplus target, which is 3% of GDP. But it will be only a slight easing, courtesy of the troika, and it will not correspond to your “red line” of 1.5% of GDP.

    The troika is and will remain in charge. You, Greek government, will not reverse or change any measures of the adjustment program which have impact on the economy or on public finances – and the entity who evaluates the “impact” is the troika.

    Now we will approve this agreement in our parliaments. And, then, you will have to work really hard. With the troika, that is.

    This agreement shall be implemented. End of story.”

  41. docg

    “The Institutions.” Just the other day I posted an excerpt from Aeschylus’ “The Eumenides” to demonstrate the strange parallel between the events of this classic ancient Greek drama and the drama now unfolding over the fate of modern Greece.

    Having failed to slake their desire for bloody vengeance on Orestes over the murder of his mother, “The Furies angrily threaten vengeance on Athens, but Athene calms them by the offer of a position of honor in the cult of her city. They accept. The ancient Furies are transformed into benevolent spirits. Their name is changed to the Eumenides, or ‘kindly ones,’ to symbolize their new character.”

    So the vengeful Furies of the Troika have been transformed into the kindly “Institutions,” by virtue of a similarly artful compromise. In the play, that does seem to have done the trick, and they are mollified. In real life there seems to have been no transformation at all, just more lipstick on a pig.

    What is it Marx said? the first time as tragedy, the second time as farce.

    1. mpr

      Great. But don’t you think your judgements of the institutions is premature ? They haven’t taken on their new role yet. I think you’ll find they are somewhat more benevolent. At least we can hope.

  42. jmg660

    “..the strong do what they can and the weak suffer what they must.” as recounted by Thucydides. It has been noted that the EU is structurally unstable and has been so from the inception. As bad as the near term may be for Greece, the long term may be worse if they don’t sever ties now. Generally speaking, it does not seem fascism is inevitable should they leave the union. The numbers supporting Golden Dawn are not overwhelming. The larger problem is that the entire global casino capitalist system is in failure mode and large numbers of the affected are realizing it. Protests and movements worldwide are, of course, under reported, especially in the US media where willing shills feed equally willing sheep. In all of this discussion of negotiation and function the significant problem of systemic corruption is overlooked. None can completely escape connection with that system until such time as it is replaced but in this case less may be more for the Greek people.

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