Greece Still Defiant After ECB Mugging

Some brief updates, with more on Monday:

Quite a few pundits appear to be in denial about the aggressiveness of the ECB move towards Greece and what that signifies about the prospects for reaching a deal. The Syriza government insists it is not backing off from the major tenets of its yet-to-be-fully fleshed out proposal. In an interesting shift, some economists, including Frances Coppola in a Financial Times column and the Economist’s Free Exchange blog, risk-sharing ideas that Draghi himself has put forward. However, they miss that the body language of the ECB, having moved to make Greece’s negotiating timeframe as short as possible, is clearly signaling that it is trying to bring Greece to heel and force a deal within the current parameters. That makes it very difficult for new structures to be included in the negotiations.

The strongest implicit message from the ECB was its rejection of deviations from the current deal, such as Greece’s rejection of Troika monitors (the comment in the ECB press release about how “it is currently not possible to assume a successful conclusion of the programme review.”). And even the media stories that took a more conciliatory tone towards the idea of negotiating financial terms took a very stern tone about the importance of structural reforms, as in driving wage rates down, along with the reasons to doubt Syriza’s promise that it can crack down on oligarchs and improve tax collection. The issue of “structural reforms” is a major outtrade, since Syriza is committed to higher, not lower wages, and having the government engage in direct hiring to reduce unemployment levels. So the message remains loud and clear: despite lip service to the idea of favoring growth over austerity, the most that Syriza might get is austerity lite.

The Greece population is showing strong support of Syriza. Since when have you ever heard of pro-government rallies? Hat tip Δημήτρης:


And the rally in Athens does not appear to be based on a fuzzy-headed notion that Syriza has good odds of prevailing against the Troika. As the BBC’s Paul Mason wrote late Wednesday evening:

My social media feeds, and those of people I follow, are now reflecting Greek sentiment changing towards euro exit. The total lack of transparency (who voted? why?) and the right time melodrama from a central bank have made people wake up uncertain about what their central bank is trying to do.

There is a deluded view among some financial analysts that the Greek government is in the process of doing a giant u-turn, and will end up obeying Brussels and Frankfurt to the letter, as its predecessor did.

As I have repeatedly blogged, on the basis of well authoritative briefings, the Greek radical left party Syriza does not want to be in power unless it can make significant reforms to the welfare, pension and privatisation programme imposed by 2012.

As everybody stares over the abyss it’s worth spelling out what that is: not immediate euro exit. If the ECB triggers a bank run in Greece, the government would likely resort to capital controls and seek bilateral funding outside the euro system. The Greek constitution also allows it simply to hand power back to the shattered, pro-Brussels centrist parties and let them self-destruct some more.

Mason points out that despite the ECB intent to bring matters to a head quickly and force a Syriza capitulation, that is simply not in the cards. That is consistent with Varoufakis’ short e-mail to us last night. There is also the interesting question of how brutal the Troika might become if Syriza manages to loosen the ECB’s choke chain and stymies it for longer than the Eurocrats thought possible. Frances Coppola, based on her reading Varoufakis’ tweets, is of the view that the ECB would not push Greece over the brink by revoking the Greek central bank’s access to the Emergency Lending Assistance program, or ELA. But it did do that, both to Cyprus and Ireland. The ECB’s actions so far have been remarkably bloody-minded, shocking quite a few seasoned Eurozone mavens. I’m not sure anything can now be ruled out. With the public showing strong support of the government, the odds of a Grexit, something that I had discounted as possible but not terribly likely, now is higher odds. While a compromise on the financial terms might still be achievable, Syriza and its financial lords and masters are 180 degrees apart over the need to end the humanitarian crisis in Greece.

The comments of Eurozone leaders seem similarly disconnected from the implicit stance of the two sides. Consider these extracts from a short article in ekathimerini:

Greece will be able to reach agreement with its European partners and any turmoil poses little risk for Spain where the government is poised to raise its growth forecasts, Spanish Economy Minister Luis de Guindos said….

But in an interview for the Reuters eurozone Summit on Thursday, he said he was convinced a deal with Athens could be struck as long as it met eurozone rules, and that a Greek exit from the euro was not an option.

Um, where has he been this last week? The whole point of Varoufakis’ tour is to try to change the shape of the table, and that includes changing the terms of current bailouts. Now it may be that want de Guindos means by “eurozone rules” is more accommodative than it sounds to me, but he mentioned it twice, making it sound like a hard boundary in his mind. And how can he rule out a Grexit entirely? What if the Greeks were to start printing drachmas as a contingency? How would the Troika react to prudent measures in the case of worse-case outcomes, given what various observers, such our own Jim Haygood to Peter Dorman, see as an incompetent or malicious effort by the ECB to make the Greek bank run worse? The bigger Greece’s use of the ELA, the more it becomes a sticking point with Germany.

In the meantime, the Greek government continues to defy the Eurozone elite. This is almost a very high stakes version of Optor strategies, to show how bizarrely defensive the Eurocrats’ responses are to what amount to pinpricks. From ekathimerini:

Prime Minister Alexis Tsipras and Russian President Vladimir Putin on Thursday agreed to boost bilateral ties in a telephone conversation during which the latter invited the new Greek premier to an event in Moscow in May to mark the victory over Nazism.

The two men agreed to boost cooperation in the economy and energy, tourism, culture and transport sectors. They also agreed on the need to “secure peace and stability in Ukraine,” according to a statement from Tsipras’s office. Putin expressed satisfaction at Greece’s stance at a recent summit in Brussels where Greek Foreign Minister Nikos Kotzias conveyed concerns over the prospect of additional sanctions against Russia over Ukraine. Sources rebuffed rumors about financial support for Greece from Russia, noting that the government was looking toward its European partners for support. The two men also discussed the possible creation of a pipeline to carry natural gas from Russia to Europe via Turkey and Greece.

Now before you get excited, this means perilously little. Remember, Greece agreed to join the rest of the EU in extending sanctions against Russia. This is a statement at most of “It would be nice to be friendlier when EU/Russia relations come out of the deep freeze.”

But here is the funny part. The story continues with an astonishingly intrusive act by the NATO minders:

Meanwhile Defense Minister Panos Kammenos responded to comments by his German peer Ursula von der Leyen, according to which Greece was jeopardizing its position in NATO with its stance vis-a-vis Russia.

Here Germany and Europe still imports a ton of Russian energy, despite the deep freeze otherwise, and some businessmen have spoken out against the sanctions. And let’s get real here. It isn’t simply that Greece is a member of NATO. The US has an important naval base in Crete. With the US on site in Greece, it’s not going anywhere any time soon.

Here is the Greek response:

Kammenos called her comments “unacceptable and extortionate,” noting “Greece was always on the side of the Allies when they pushed back German occupation troops.”

As much as the cards remain stacked against the Greeks, this show of spine is refreshing. Let’s hope they can keep their resolve as the European officialdom tries to grind them down.

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  1. aletheia33

    go YV!

    from Guardian live blog, 8:20 a.m. EST:

    “Greece: We don’t agree to deal based on old programme
    Newsflash from Athens: Yanis Varoufakis has no intention of agreeing to anything based on the old bailout programme, at next Wednesday’s eurogroup [they asked greece to submit a proposal for them to consider at this meeting on greece].
    So says a government official, drawing the battle lines ahead of the extraordinary meeting.



  2. Petey

    Greece’s trump card here, one which is missed by many focusing on similar national economic squeezes in the past, is that the EU is, and has always been a political project over a economic project.

    The tremendous amount of ongoing institutional momentum behind maintaining/extending the EU, which extends to wanting to keep Greece in the Eurozone, gives Greece leverage beyond what might be apparent on the surface.

    And in analyzing Syriza’s strategy, it’s really worth taking a look at Varoufakis’ A Modest Proposal. Importantly, that title is not chosen at random. The implicit message is that we’re willing to bend over backwards to be reasonable, in return for minimal reasonableness in exchange. Or more bluntly put:

    You fine European gentlemen can continue to eat some of our delicious babies. You just have to stop dropping barrel-bombs on our cities.

    Think of how absurdly conciliatory Syriza’s bid is: even though we should be running massive deficits, we’ll continue to run a primary surplus, just not a crazy 4.5% primary surplus. (It’s the Keynesianism of the weak.) And we’ll take on our oligarchs too; all we ask is that we get to budget our own damn budget within the constraints of that primary surplus.

    It’s so damn reasonable that it causes tremendous political problems for the EU if it’s rejected. A Modest Proposal, indeed.

    And if such a deal is struck, it really does provide genuine and not insignificant relief for the Greek people, even if it’s nowhere near enough to be truly correct. And it will significantly bolster Syriza politically at home.

    Plus, given that EU economic matters are, when you get down to brass tacks, political matters, it sets a number of political precedents that will apply both to Greece, and the other non-creditor nations going forward.

    – Troika memorandums are not written in stone.
    – Keynesian countercyclical policy is not verboten. (That one is the biggie.)
    – How to budget during emergencies is a sovereign matter.

    And, as has always been the case in the history of the EU, small precedents have a way of getting built upon…

    (Of course, even Syriza’s absurd reasonableness could be denied. But if it is, it could well bring about brighter outcomes than the status quo on a number of fronts.)

    1. Yves Smith Post author

      Agreed, Syriza is being eminently reasonable by any standards of economic and social policy. But much of the Eurozone elite is locked ideologically into a distorted moralistic “borrowers are bad and must be held to account” frame, and even worse, in the case of the Northern bloc, they’ve sold their populations on what amounts to a belief system. It might as well be witch burning. Plus you’ve got that too many people have invested too many years of their careers in designing and implementing and overseeing austerity, and they can’t admit to themselves that they’ve been (to change metaphors) selling economic snake oil. Look at how long it took doctors to accept that ulcers are the result of a bacteria. Even now, there is a substantial minority who still treats ulcers as a result of stress and an overly acid diet.

      1. Ned Ludd

        There is also the example of the miasma theory: early 19th century doctors believed that infectious diseases were spread by noxious gases emitted from decaying organic matter, such as corpses. Doctors refused to believe that infectious disease could be spread through physical contact or from drinking water from a source that lacked a foul odor.

        The Ghost Map chronicles how John Snow fought to convince people that cholera was spread through contaminated water from the popular Broad Street pump, and not through miasma.

    2. Brooklin Bridge

      Very well put. The biggest problem in this, as always, is the criminally complicit media which is able to swallow all oxygen on an international scale and the “witch hunt” mindset that people have been sold on as Yves points out.

      But you are right. This injustice is hard even for the media to hide. People are catching on to the fact that they have been royally (and I mean Royally) had.

    3. /L

      And we’ll take on our oligarchs too
      Bad move, haven’t they got it yet, EU isn’t an organization for the people of Europe it’s designed to benefit the capitalists. It’s theire freedom of movement that is protected. The people’s of EUrope is to be locked in to the states the only crossboarder thing for people is for the poor an unemployed to act as crossboarder wage dumping. Democratically there is noting crossboarder, EU have done zero for crossboarder people’s cooperation, e.g. I can’t join people in Greece, Spain, Germany etc and vote for a progressive agenda.

  3. zapster


    You cannot placate an abuser. You cannot make them “understand if I just explain it the right way.” You cannot ever be ‘good enough’ for an abuser. All you can do is leave them.

    The scary part is they’ve got NATO all worked up and spoiling for the fight that Putin has so cleverly managed to deny them for so long. And with the levels of complete and utter disdain we’re seeing up those snooty nostrils, it’s not much of a stretch to imagine them going in to “get terrorists.”

    I hope Greece can find a safe house..

    1. Doug Terpstra

      An apt analogy, the Troika as bully abuser. Appeasement doesn’t work, period, and in a peculiar dynamic, invariably worsens the abuse. The abused partner must leave or eliminate the tormenter. That may be Syriza’s game strategy here, carefully documenting the injuries for the public record before finally, reluctantly exiting a toxic and unsalvageable relationship.

      I loved Kammenos’s retort about pushing back the German occupation. Ouch!!! Pitch perfect!

      1. timbers

        “Appeasement doesn’t work, period, and in a peculiar dynamic, invariably worsens the abuse. The abused partner must leave or eliminate the tormenter.”


        1. Code Name D

          And yet what other option do they have? This is how the ECB has maneuvered the whole thing, eliminating all options save “the inevitable solution.” Even an exit seems unlikely given the time scale at this point.

          An old saying comes to mind. The possibility of death arrives with fear. The certainty of death arrives with resolve.

          Syriza is making himself into a political marter. He has to know that the ECB will not budge, so its best to be as strait as possible. Make them expose their true face. In this way he might build up a stronger political backing at home, and maybe even picking up some other allies who are in the same boat. France must be watching this very closely, keeping their heads down.

          Ceaser was sounded by allies and admirers – until he suddenly wasn’t. The ECB is currently surrounded by allies and admirers. How long will it be before they aren’t.

    2. timbers

      “You cannot placate an abuser. You cannot make them “understand if I just explain it the right way.” You cannot ever be ‘good enough’ for an abuser. All you can do is leave them.”

      Yes. t’s obvious.

  4. Brooklin Bridge

    Wow! If they continue like this, they will become a proxy for the fight against what all elite subsidiaries of big finance and business, that is, governments, are doing to their people; grinding them down to squeeze out every last penny and change their status to serfs as a thank you.

    It’s a noble fight and it’s hard to miss the the fact that it is coming from the (at least one of the) cradle(s) of democracy.

    As much as the cards remain stacked against the Greeks, this show of spine is refreshing. Let’s hope they can keep their resolve as the European officialdom tries to grind them down.

    Fragile indeed, but deeply deserving of admiration and support.

    1. readerOfTeaLeaves

      Agree with the notion that the Greeks are acting admirably.
      What I find most fascinating is the Syriza frankness: “We’re broke. This is **not** a problem of liquidity.”
      It’s gutsy and refreshing to see a government admit that things are truly dreadful.

      Unfortunately, I think that Yves’s assessment is spot-on: it is human nature to defend your own years of hard work if you are a Eurocrat. The Greeks are in this sense more courageous than the Troika, which appears to be determined to perpetuate delusion. The Troika is dragging this out, and it’s fascinating to see how determined (i.e., desperate) the EU is to shut down this attempt by the Greeks to expose the fraudulent economic structures to the light of day.

      The Greeks, by confronting reality and wanting to (finally) deal with it, are showing courage.
      That’s always admirable, and one reason that I think many of us are following this larger ‘story’ is because it is so heartening to see people conduct themselves with the kind of integrity that it appears Syriza’s cabinet is exhibiting. Honesty is often tough, and in being honest about such difficult realities, the Greeks are showing admirable courage. I suspect that is why so many of us are watching with great interest.

      1. Brooklin Bridge

        The Troika and Germany are killing people. It’s more than simply habit that keeps them on an insanely destructive course; it’s guilt. It’s, “How dare you draw back the curtain on my behavior?, I’ll demolish you…”

        Your assessment on Syriza’s cabinet and their behavior is spot on. Showing such spine is rare and talking so transparently about it (without being threatening to boot) is even more rare. That’s exactly why I for one am rooting so hard for them. But they are also a proxy. They are what I wish Warren and Sanders and Kucinich were; what Obama was supposed to be.

        I imagine such comparisons are so much more poignant in Spain, Italy and France, and to me the potential horror of what is unfolding is that Greece becomes the sacrificial lamb so that those country/states can wake up and take action.

  5. Me

    Greece needs a lot more solidarity from the people of Europe beyond Podemos. If people aren’t happy with the policies of the ECB, the EC and the IMF then they need to be more vocal in their support of Syriza. Is that happening in many places?

    1. /L

      I don’t think so, here in Sweden people are feed by the media tube about the lazy corrupt overpaid Greek that get a lavish pension at early age.

    2. /L

      [I hate my iPad 3 totally wrecked by iOS8, especially Safari.]

      What goes for left in Sweden the neo-social-democracy haven’t said nothing about Greece, like treading on thin ice. The first thing it did in EU as new gov. in September was to endorse the German austurety line. If Germany is the big trade surplus nation it’s Swedens little brother on per capita. When Swedish banks had theire moment in balticum 2008 Sweden pushed the German line and EU and IMF was there to wring Latvia to the “right” path, don’t abondon the peg.

    3. Alejandro

      “Greece needs a lot more solidarity from the people of Europe beyond Podemos.”

      Not just the people of europe, but people everywhere that recognize this struggle for what it is- The manifested effects of neo-liberalism…the appropriated power of creditors to enslave…a relatively recent mutation of class warfare…the claimed right to suck the life out of the weak to maintain an unmerited and unjustifiable privilege.

      1. readerOfTeaLeaves

        Indeed, the more I watch this play out, the more I realize that I need to re-read David Graber’s “Debt: The First 5,000 Years”.

        1. Me

          A new Internationale needs to be organized and a real economic alternative developed that can attract broad sections of the left and working people. Workers across the world have to have a much better understanding of these issues, how fights in other countries like impact them and to stick together. There isn’t much of that here in the US. As of now, it seems like it is Syriza vs. the world and it shouldn’t be that way. A lot of people agree with Syriza and oppose the banks and their corrupt politicians. The media and those in power need to see that solidarity and to feel a immense pressure to change policies. I don’t see how that happens however until a coherent alternative is developed and organized around on a mass level. Just my opinion.

        2. lyman alpha blob

          The Troika would do well to read that as well, especially the part regarding the rationale for debt jubilee. Those who cannot pay will not pay. They escape to the hinterlands to avoid becoming enslaved. When enough debt refugees gather, at some point they realize there is enough critical mass to go back home and knock some heads to get back what was taken from them. The Troika would do well to try a little ‘saving the capitalists from themselves’ if they don’t want to see the whole system crumble.

          1. MyLessThanPrimeBeef

            We could use a global debt jubilee for developing nations, not just Greece.

            And it would nice to go after London oligarch money from Greece and have an audit of how corrupt and wasteful previous elites-captured Greek governments have been.

            “Governments and oligarchs come and go, but the people are always there to pick up the pieces, to bear the unbearable burden.”

            1. Code Name D

              Ah, but debt must be held by the poor is the wealth is to be held by the rich. They don’t even want Greece to pay off the debt, let alone have it forgiven.

  6. John Day

    In the I-Ching there is a flip-side to every hexagram, so “threat” is also “opportunity”.
    The threat seen by vested finance, within a crumbling paradigm, is fundamentally the threat of the crumbling of the paradigm. Vested finance sees the threat to their vested position as being primary.
    The opportunity which Greece, particularly Finance Minister Varoufakis, presents, is to restructure the paradigm, which can avoid catastrophic collapse, possibly for the first time in human experience.

    1. Saddam Smith

      Agreed, but they don’t yet appear to realize how deeply the paradigm needs to change to accommodate the reality that economic growth cannot last forever. It’s possible that a nation state cannot effect sufficiently deep change, because it is embedded in its interdependencies with other nation stars (both economic and political) such that a change of that depth would make it a pariah, and cut it off from the rest of a world that would still be dancing to the shrill Perpetual Growth tune.

        1. John Day

          Yes, agreed, getting widespread agreement to change the rules of the game is a tall order for the master of game theory, Yanis Varoufakis. I hope he is able to pull it off. It isn’t happening in this round of the game, and the time on the clock keeps getting reset shorter and shorter.
          Greece is establishing it’s bona-fides in game theory in this round (I think).

  7. steelhead23

    What I find interesting here is that Tsipras and Varoufakis are reaching the status of ‘the adults in the room’ while the eurocrats are well on their way to sounding like 3 year olds. One wonders if these arrogant assholes even notice.

  8. Ned Ludd

    “Greece was always on the side of the Allies when they pushed back German occupation troops.”

    The Allies, of course, included Russia; while Germany is the once and current hostile power, working to destroy Greece. The framing is smart; it reflects Kammenos’ animosity towards Germany and desire to seek aid from Russia.

    Under their leader Panos Kammenos, who defected from the centre-right New Democracy party to form Anel at the height of the crisis in February 2012, the group has proved to be rabidly nationalistic in foreign affairs.

    The politician is particularly virulent on the issue of the need to reclaim war reparations that he argues were never properly dealt with after the Nazis’ brutal occupation of the country.

    From April 7, 2012, in The Economist: “Panos Kammenos, a former ND deputy who opposes austerity and admires Mr Putin, says Greece should turn to Russia if, as expected, it needs yet another bail-out.”

    1. Doug Terpstra

      It seems to confirm some wisdom in Syriza’s alliance with the “far” right rather than the pseudo-left now representative of Europe. Appointing an ANEL member like Kammenos to defense shows commitment to a muscular defense, carrying a big stick behind a soft voice. Perhaps all that ill-advised debt for weapons purchases will prove useful. I do hope Syriza ultimately has firm control of its military and police, however, because the CIA always works first to corrupt and co-opt that in its regime change formula. Syriza must take security very seriously, because TPTB will not hesitate to use violence if “negotiations” don’t go their way, i.e. unconditional surrender.

      1. Dan Allen

        The appointment of Kammenos is actually to show Europe what the next Greek PM will be like if it doesn’t cut a deal with Syriza. and that is highly destabilizing.

        Conversely, Varoufakis was chosen because he is moderate, unlike the economists looking over his shoulder in the ministry, and that includes Costas Lapavitsas from the London School of Economics, who advises Grexit. The are hard liners in Syriza who are unlike Varoufakis and Tsipras.

        Tsipras appointed his cabinet for maximal effect.

      2. hemeantwell

        Agreed. One thing to reconsider in this connection is the extent to which Syriza, especially by giving its policies a very plausible nationalist line, is draining the neo-Nazi swamp. Golden Dawn did well in a situation of paralysis. With the major parties turning into Troika lap dogs, Golden Dawn could maximize the potential of its hallucinatory blather against immigrants, offering supporters a chance to discharge their frustrations against the helpless when nothing else seemed possible. Now they will just look like splitters, undermining national solidarity in the face of the only party to stand up to the Germans. True, if Syriza falters Golden Dawn may get some wind back and, more worryingly, they might get support from Greek capital in the same way that Hitler got support from German capital to fend off a left threat. But, for now, I’d guess they are increasingly stuck in the bleachers.

        1. hemeantwell

          I’d add that for those familiar with left political history, the failure of the German Social Democrats and the Communists to unite against Hitler was a world-historical error. Although the situation is different in important respects, the behavior of the Greek Communist Party right now is sickeningly reminiscent.

          1. readerOfTeaLeaves

            Just to expand on your point, IIRC from my Modern European History courses, the Junkers (the wealthy, aristocratic Prussians in what later became East Germany) thought they could control Hitler. Fatal error.

            1. NotTimothyGeithner

              In a sense, the Junkers applauded the war and fostered the myth of World War I betrayal. The war plans predate Hitler. They may have not been up for the Holocaust, but they were for Hitler until the Soviets broke their advance.

              The out of control Hitler is a narrative that serves the purpose of not sending a bunch of crooks to Nuremberg.

      3. Tsigante

        ANEL (Independent Greeks) is not “far right” using either a fascist yardstick or neo-liberal economic one. It is a slightly goofy patriotic national (God and Country) party that has been anti-austerity from the beginning and which consistently supported SYRIZA’s economic and anti-corruption positions in parliament from 2012 onward. Those prosing about Far Left / Far Right and questioning the coalition somehow manage to overlook the Elephant-in-the-Room: the 30 month consistency of their shared position re Troika, re Austerity re Oligarchs and Greece’s long term welfare.

        Meanwhile, writing from Greece, am glad to see that the SYRIZA government’s determination is no longer under question on this website. There is no question of backing down: Greece has acquiesced for 6 years at huge, utterly meaningless destructive cost and the most recent ‘reforms’ being demanded are only set to worsen our already terrible, ridiculous and totally unnecessary condition. For example, in return for Scheuble’s unwanted loan – that the corrupt previous government also fought to refuse – minimum wage is set to be immediately cut 20% to 416€/m (before taxes), ditto pensions, alongside other demands. This in a country where food, goods and services are MORE expensive than in the U.S.

        In terms of Greece, the battle underway is not about petty local political power (up until now, rent-seeking) but the fate of the country – both inside and out. In terms of the EU, the very reasonable request Greece is making to its “partners” is putting on the table front and centre the legitimacy and future of the European Project. This may not be apparent to protected northern populations – as mentioned above – but is being watched closely by the rest.

  9. Petey

    “But much of the Eurozone elite is locked ideologically into a distorted moralistic “borrowers are bad and must be held to account” frame, and even worse, in the case of the Northern bloc, they’ve sold their populations on what amounts to a belief system. It might as well be witch burning. Plus you’ve got that too many people have invested too many years of their careers in designing and implementing and overseeing austerity, and they can’t admit to themselves that they’ve been (to change metaphors) selling economic snake oil.”

    Entirely agreed. But we now have the “an unstoppable force meets an immovable object” situation, hence all the brinksmanship. And I see the split in the ECB as an opening wedge into the concept that the immovable object may well be subject to broader EU-wide political imperatives.

    Greece, by it’s absurd reasonableness is doing all it can to marshall all the broader EU political forces who aren’t part of the dead-enders, and those political forces may well end up trumping the dead-enders.

    And if not, here are some excellent late contributions to the thread supporting my continual assertion that Varoufakis is fully willing to go Grexit if the dead-enders do triumph over the wider EU political forces.

    1. MarcoPolo

      Greece, by it’s absurd reasonableness is doing all it can to marshall all the broader EU political forces who aren’t part of the dead-enders, and those political forces may well end up trumping the dead-enders.

      Finally somebody gets that. It’s a struggle of ideologies. Syriza will find support. But you’re wrong about the willingness to go, or threaten Grexit. Syriza’s support must come from the very people they owe money to. Threatening exit doesn’t work to that. But anybody objective can see that continued austerity means Greece eventually defaults (sticking those they owe money to with the bill anyway). So, they have an incentive to change the terms now. On the other hand, those that would be their allies have all been wedded to this failed policy too and have no incentive to admit their failure. Syriza will get no help from Spain until the Rajoy govt. is gone (8 months).

      And I believe you’re wrong too (below) about daylight between Draghi and the Germans. Tedesco maccihato. The only good thing that can be said about Draghi is Trichet.

      Even if Syriza were to fail this genie is out of the bottle. In Europe it’s 1968 all over again. It’s an epic struggle. It won’t be decided by the end of February. But the writing is on the wall for those who can read it. That being somehow more difficult from the less enlightened perspective of the north.

      1. kristiina

        The situation in Finland is as strange as anywhere else. No political party expresses sympathy for Greece. Does that relflect what people feel? Nobody knows, or cares. EU has been steadily sinking in popularity, now they just don’t do polls anymore. Propaganda lies so thick all over that knowing what really is going on is well nigh impossible. There will be elections here in April. None of the major parties have dared to even whisper any scepticism towards eu, although that would probably be a real hit among the voters. We’d need Syriza here, too.

  10. aletheia33

    the US has spoken, Greece must come to heel, and GS predicts with confidence (as tweeted below by greek financial journalist):

    ”Efthimia Efthimiou @EfiEfthimiou
    Goldman Sachs expects #Greece to remain in the Euro area although only after a period of potentially intense political tension”

    so, what is TPTB/US plan (already in place) to hogtie tsipras, varoufakis, and the greek people? i do not believe they will go gently to suicide. and the outrage simmering in europe could ignite with the right fuel. US does not fear right wing but fears the left pathologically (unable to perceive the reasonable position of syriza). so, dirty tricks in the offing, seems awfully likely.

    but what dirty tricks? what kind of coup can be legitimized effectively enough by the media to quell just enough of the outrage to keep the status quo in place enough longer? and/or what thousand cuts can be quietly carried out to bleed greece into submission?

    . . . is the world situation coming to a head? here in the US the lovers of violence have come into greater dominance this month. to date, historically, nationalism has worked every time to divert peoples from labor solidarity across national lines. will it work this time? i think we are going to find out.

    1. MyLessThanPrimeBeef

      We can very easily help Greece.

      We can build the world’s most expensive embassy right there in Athens, injecting billions into their economy with local labor and local materials.

      And we can prepay now.

      1. timbers

        Maybe we could relocate the boondoggle embassy we built in Iraq to Greece? Does Greece even have enough open land for an embassy that size?

        1. 1 Kings

          There is a very nice piece of property hovering over the city. It’s mostly just ruins anyway. Just buldoze it and get to building.

  11. Gee

    Two basic conditions needed to go Grexit :

    1) It absolutely must look unambiguous that Germany forced the exit, while Greece made perfectly reasonable rationales for compromise that would have allowed for continued eurozone membership
    2) the people have to have their general mindset swayed that they see the eurozone project as something they do NOT want to be a part of, either because of the unworkable nature of the project, or because of the evil that is perpetrated upon the weaker members in the name of the greater good of the project which in fact, is the greater good of the strong members (Germans, Dutch …ie the banking powers)

    In order to achieve the two conditions, as YV and YVes well know, you need time. Hence the Greek push to extend the deliberations in any way. There is a major PR battle that must be won in order for the history of this event to be written (hopefully) the way the Greeks would like.

    For now, YV does not want eurozone ejection because it would be preferable at all to want it later. So, what he wants, and what the Greeks want, isnt a fixed thing. The important point, no matter how this plays out, is getting more of the world to understand what is really happening here, and just how evil and all powerful the banking cabal has become, and what they will stoop to in order to remain supreme and growing power.

    1. Eureka Springs

      I’m just a country boy, but mention of the lack of audit/specifics of the so-called Greek debt earlier this week after all this time strikes me as a feature, not a bug. The posts and discussions here really help me yet I can’t help but wonder if much of the Greek/Euro people are not also easily confused. I mean if this is really a shell game… where people of Greece are being held hostage for derivatives, old Goldman games, German and Dutch banks and such it’s time to name names (human and corporate and government) and be very succinct, very clear about it. Not in half econo neolib speak. Stop talking to them all of the time on their terms, in their terminology… use plain talk. That the “debts” responsibility belong there rather than rather than a burden on Greek people. Seems to me like the Greek people never really borrowed or benefited from it… or the vast majority of it sans bribes, carrots and trickle down effect all of which couldn’t total a very small percentage of the hundreds of billions total(s) batted around. Why can’t blogs (and their discussions) like this give people like me very clear verbal/factual ammunition after so many years of discussing it.

      This is a hostage crisis.. who are the perps, where is their hideout? All of their ill-gotten gains since entering the EU should be obliterated, not perpetuated, no?

      Hopefully European people are doing much better in this area.

  12. mpr

    Good analysis. The Germany and the ECB are still the first two stages of grief. They are still telling themselves that they are prepared to allow a Grexit. But this will change quickly once markets start to panic and there is a run on other periphery countries – that is if it gets that far.

    BTW, can’t Germany be overruled if there is enough consensus over a renegotiation in the result of the Eurogroup ?

  13. Petey

    “The Germany and the ECB are still the first two stages of grief. “

    I think it’s been proved over the last couple of years that there is some daylight between Draghi and Germany. In the case of Greece, Draghi is playing his cards close to his vest, and it remains to be seen how he’ll play the endgame.

    “BTW, can’t Germany be overruled if there is enough consensus over a renegotiation in the result of the Eurogroup?”

    The Eurogroup is one point of leverage. But the ECB is another point of leverage, which may be more important. Beyond Draghi’s potential maneuvering, this week’s
    ECB split on Greece demonstrates the small cracks developing in the dam. (As always, you can plug FT stories into Google News to read…)

    1. mpr

      Thanks for the FT link.

      I think Draghi’s main concern is to avoid appearing overtly political. He wants the ECB to appear to be acting in a technocratic manner. But since doing something which would force Grexit, like pulling ELA, is prima facie a political act, he won’t do it unless there is broad agreement in Europe that they should force Grexit.

      But there will never be such agreement. They will always be trying to negotiate, and it would be stupid not to take the Greek offer – 1.5% of GDP in debt payments – structured somehow – vs nothing plus, the financial dislocation due to contagion plus losses via the Target 2 system. I think the main danger of the European side not caving actually comes from institutional incompetence – if they just can’t solve the game theory problem at the institutional level, and get to ‘yes’.

    2. Yves Smith Post author

      There has been daylight between Draghi and Germany ONLY in how much fancy footwork the ECB does to save Mr. Market. such as on doing QE. Draghi and Germany had had verbal disagreements (starting late last year) on whether to prioritize austerity v. growth. Here is one short summary:

      The Chief of the European Central Bank, Mario Draghi, has set forth a three-part strategy to help the euro area. The plan is known as “Draghinomics.” The plan includes:ome in

      1. Monetary stimulus from the European Central Bank, or ECB
      2. Added government spending from countries that can afford it
      3. Pro-business reforms to cut bureaucracy and make economies more productive

      However, Draghi, in his role as a central banker only controls the monetary pillar.

      In general, this list is perverse. On 1. , we know from the US that QE only boosts asset prices and either did not do much to help the economy or (more likely) made it worse by widening income inequality and reducing income on investments. Experts have said QE will do even less in Europe due to the structure of the funding markets (in the US, much more securitization, which means pushing rates on traded instruments lower in theory does more to lower borrowing costs for consumers and small businesses).

      On 2., you need more spending in the countries that are doing the worst. This “only good pupils get to spend” has no macroeconomic foundation.

      And in 3., the bit about “improving productivity” means lowering wage rates (on the assumption that everyone can export more, which is a logical fallacy). And reducing bureaucracy = reducing government headcount, which is again contractionary.

      So the big bone of contention is where Draghi can act, on 1.

      On 2. Germany and Draghi may differ around the margin, but they both see Greece as a bad pupil, so there is no space between them there. And they agree on 3. The ECB is clearly very unhappy that Greece is bucking their structural reforms and proposing increasing wage rates (among other things).

      1. Matt Pappalardo

        The EU is the entity most in need of radical reforms. It’s tragic, but Germany/the Northern Bloc apparently wants to pretend that the economic problems plaguing Greece (and some other Southern European states) have practically nothing to do with the flawed design/implementation of the currency union. In addition to this, we also shouldn’t neglect the enormous role the Troika’s bailout agenda has played in undermining growth. Yanis Varoufakis appears to have a detailed understanding of the primary economic/political issues threatening the legitimacy of EU institutions among disparate national populations. It’s highly plausible that the EU elites feel threatened by Syriza’s commitment to reforms of a radically different variety as well. After all, their power will ultimately crumble if newcomers (e.g., Syriza & Podemos) are successful in promoting an alternative model of politics in Europe.

        Tsipras’/Syriza’s proposals have yet to be fleshed out, but they certainly sound reasonable and modest. If the ECB and/or other major players (i.e., Germany) completely reject Syriza’s sensible policy suggestions, it will certainly call into question the EU’s future viability. Can these technocratic elites accept left-wing political power, or robust democratic accountability? Fortunately, I imagine those are questions we’ll have answered in the near future.

  14. D. Galanis

    Thanks for the much needed solidarity Yves. Greek people hope that they shall overcome. They have a dream: to end austerity and build a better country.

      1. Ulysses

        Μην αφήνετε τα καθάρματα που άλεσμα κάτω !! (Probably hilariously wrong– it’s from Google Translate!)

  15. JustAnObserver

    And now we know how Mr Draghi got his (at this point irrelevant) QE … by agreeing Germany’s demand to destroy Greece if/when Syriza was elected to government.

    The bailout terms, Troika, maturities, interest rates are all just smoke & mirrors. Its a political fight to the death over the right of the Greek people to choose their own leaders. Its this that will be the question in the almost inevitable referendum on continued Euro membership.

  16. MyLessThanPrimeBeef

    ‘And even the media stories that took a more conciliatory tone towards the idea of negotiating financial terms took a very stern tone about the importance of structural reforms, as in driving wage rates down, along with the reasons to doubt Syriza’s promise that it can crack down on oligarchs and improve tax collection.

    Cracking down on the oligarchs.

    That will also require cooperation from London, New York, Zurich, and a few other places to return their loot to the Greek people.

    A brief review of recent Greek history:

    1. Some squid spewing jet black ink, creating smoke screens for the oligarchs captured Greek government to enter the Ero-zone.

    2. Enormous sized projects were erected, as money streamed in like red blood cells in a human body, lining the pockets of the oligarchs and their captured government.

    3. Once crisis started, looted money was safely moved abroad to various global financial safe houses.

    If they don’t want to write the debt off, then go after the people who actually took the money – the globe trotting oligarchs and previous corrupt governments of Greece.

    1. Doug Terpstra

      Agreed, repatriating the loot is critical to rebooting the economy and paying debts. I hope Syriza also has controls in place to prevent current capital flight by oligarchs.

      1. MyLessThanPrimeBeef

        I might add that the MSM is doing a fantastic job of rear-guarding for the oligarchs so that all of us are fixated on the on-going drama between the new for-the-people government of Greece and the Troika.

        Shouting heard on megaphones outside: “End austerity.” “Don’t end austerity.”

        Inside, the patron quietly inquires: “How is that quaint Chelsea townhouse? That’s all?”

  17. Working Class Nero

    Economic ideas are not going to determine the outcome of this power stuggle between Greece and Germany; the main problem here is political. All over the Eurozone, be they Socialist or Liberal/Conservative, pro-EU governments have imposed austerity on their populations at great political cost. And as the great American union leader Samuel Gompers used to say, you have to “reward your friends and punish your enemies”. And so this is what the deciders — EU/Germany — are going to do. SYRIZA can have the greatest economic ideas in the world but if in implementing them they are going to make EU/Germany’s political lackeys in other struggling European countries look stupid, then they will never be seriously considered. If even the best ideas in the world are seen as threatening to the power interests of the center, they do not have a chance. Within a centralized power structure, innovative ideas are rejected if they threaten the power of the status quo.

    Starting with Montesquieu, many commentators have since pointed out that Europe’s great strength was its political fragmentation. This becomes clear if we compare China and Europe after the year 1400. China had already developed the printing press, gunpowder and long distance shipping while Europe was more or less still in the Dark Ages. But because China was a single political unit dominated by an oppressive, despotic, and heavily burdensome elite it never took advantage of these inventions since they were seen as threats to status quo power. Divided Europe, on the other hand, was living in a Darwinian primordial-state stew where disperse elites were competing with each other. It was only because of this decentralization that new ideas, the same that were seen as a threat by the Chinese elite, were seen as opportunities to some Europeans to use as tools in fighting other Europeans. In this laboratory-of-power setting new innovations could be tried out – and if they turn out to be successful – would be adopted by all the others in an effort to keep up. This is how Europe evolved a power potential strong enough to dominate the rest of the world. In contrast, the centralized Chinese Empire limped in into the 20th century only to finally collapse in no small part due to humiliation brought on by the Europeans.

    With the rise of mechanized total war, Europe’s endemic power struggles crossed the threshold from allowing constructive innovation into assuring destructive annihilation with the two World Wars, and as a result, the EU was created as a way to diminish this destructive competition.

    But in tamping down internal competition and by tacking too far in the direction of political centralization, we are seeing the rise of German despotism and the destruction of innovative ideas at the altar of preserving status quo power relations.

    So if SYRIZA and the Greeks have good economic ideas, the only way they will ever be implemented is if Greece goes off on its own and attempts them. There is no chance in hell that SYRIZA can present any doomsday scenario large enough to get the Germans to stab in the back all those mainstream parties around Europe who have been fighting the jihad of austerity in the name of the German Caliphate. If Greece goes on its own and is successful, other countries will imitate, but only those countries that are bold enough to break out of the straight jacket that the EU/Germany has placed them in.

    1. EmilianoZ

      Very insightful as usual. When you have something good, there’s always a trade-off with something bad. It’s almost like some kinda Heisenberg uncertainty principle. You wanna minimize war, you gotta increase sclerosis.

    2. gordon

      “Starting with Montesquieu…”

      I’m pretty sure that Gibbon somewhere remarks how oppressive the unitary government of the Roman Empire was if you got on the wrong side of it. There was nowhere to run. But in the balance-of-power Europe of Gibbon’s own day it was easy to slip over the nearest border and continue to do what you were doing.

    3. Rosario

      Glad to see someone else sees the world the same way. Markets are all political, the economic numbers give measure to the political dogma.

    4. Saddam Smith

      Those are pertinent observations. It is my suspicion that nation states are the wrong format to implement sufficiently radical change to address the end of economic growth. It is the worst kind of Utopianism to believe humanity can grow economically in perpetuity. Further, cooperating European city states would work miracles of qualitative growth.

  18. Petey

    “I think Draghi’s main concern is to avoid appearing overtly political. He wants the ECB to appear to be acting in a technocratic manner. But since doing something which would force Grexit, like pulling ELA, is prima facie a political act, he won’t do it unless there is broad agreement in Europe that they should force Grexit.”

    Exactamundo. This is why I find the Krugman/Coppola theory so plausible: Draghi was siding with Germany and its Quislings on a (minor) point before siding with Greece on the (major) ELA decision. And even then, he faced serious pro-Greek pushback from within the ECB!

    “But there will never be such (political) agreement (to force Grexit). They will always be trying to negotiate, and it would be stupid not to take the Greek offer – 1.5% of GDP in debt payments – structured somehow – vs nothing plus, the financial dislocation due to contagion plus losses via the Target 2 system. I think the main danger of the European side not caving actually comes from institutional incompetence”

    Exactamundo, again. Syriza is making the EU an offer it can’t refuse. (Rationally, at least.)

    And yes, the way it would all go down the tubes is by sheer institutional incompetence. Unfortunately, ever since Bismarck was fired, unified Germany has shown remarkable consistency in pretty much always making insane strategic decisions. Fortunately, if I’m correct about the immense longstanding institutional pressure for the political mission to protect and defend the EU, Germany and its Quislings may well not have the final word here, even if they do maintain their insanity…

  19. dbk

    Thanks (again) for the update, this one was very good indeed.
    I spent a couple hours this morning reading a long-form piece by Michael Pettis on creditwritedowns, “Syriza and the French Indemnity of 1871-1873”, which for some reason got me wondering about whether the Greek team is ultimately playing for much bigger stakes – alteration of the basic structure of the EMU to address its fundamental (and apparently fatal) flaw. Just a random fantasy … anyway, Pettis (who thinks Varoufakis is proceeding appropriately) addresses the issue of massive surpluses, what countries do with them, what happens to the “beneficiaries” of these surpluses, and why what has happened in the Eurozone is standard stuff, historically (with the French indemnity payment of 1871-1873 as his example).
    It looks like the Germans think the Greeks are playing brinksmanship from a position of weakness — which they are, of course — and that they think it’s just a matter of time until the weaker side blinks. That’s a problem, because it simply won’t. The degree to which this party was prepared to assume power is unprecedented in modern Greek politics. I even am wondering whether there’s a contingency plan-in-waiting should ELA be cut off, with third-nation CBs already lined up to provide short-term liquidity.

  20. Oregoncharles

    ” the odds of a Grexit, something that I had discounted as possible but not terribly likely, now is higher odds.”

    A game of chicken, as I said before. With the real hands hidden (sorry about the mixed metaphor.)

    Since economists I respect (and there aren’t very many) say that Greece would ultimately be better off out of the Euro, I see the ECB’s hardball as ultimately positive. Still, they’re living in a house of cards, (ANOTHER metaphor?). Despite the many denials, especially from Germany, if one goes, more will go, and the whole thing shrinks, at best, or tumbles down, at worst. At which point the bankers at the ECB don’t have jobs.

    Interesting times.

    1. MyLessThanPrimeBeef

      If this is what we are seeing with ‘One Europe, One Central Bank,’ there isn’t much to look forward to to ‘One World, One Central Bank.’

      There will always, with many nations and many central banks, be a need for one empire and one ‘global reserve currency,’ not to benefit the weaker nations in times of need like now, nor the weaker classes desperate for help, but to print as much as possible for the empire’s advantages and the elites.

  21. Oregoncharles

    ” “Greece was always on the side of the Allies when they pushed back German occupation troops.””

    The unkindest cut of all. This is one of the endgames: Germany against the countries that suffered Nazi occupation. Merkel could be in real trouble – she just can’t be in that position. European memories are famously longer than American, and Greece is here trying to revive them.

    Then there are those 90 billion (or so) Euros that Germany extorted from Greece under the occupation, and never paid back. World Court, perhaps?

    1. Tsigantes

      Greece has no need to revive memories – the fact is that these memories, across Europe, have never gone away.

  22. Alejandro

    I have to say that I have a great amount of respect and admiration for German scientists and philosophers. However, that said, the presupposition in this recent nationalistic posturing is that savings can grow exponentially and forever without the need to reckon with debt capacity. This belief may be sincere but it’s delusional nonetheless. “Frugality” infers savings but exceeded debt limit leads to deprivation. Deprivation tolerance may vary but the upper limit is still death. “Frugality” never considers the uncomfortable, much less the unbearable. The math of compounding interest should make it obvious that even with all the power in the universe at the debt collectors command, eventually the amount of debt becomes so absurd that even the most deluded must conclude its impossibility. David Graeber, gives a long form presentation on the history of debt as morality and the abuse of creditors-as-moralizers. Which leads me to conclude that any honest rationalizing of austerity must recognize, albeit unspoken, that the promises proffered (assuming they’re sincere) depend on measured die-offs (LS’s rule#2 of NL), all to perpetuate the myth that all debts CAN and must be paid. From my POV default is not so much a policy “decision” but more of a recognition of the overwhelming assertion of limits. If we survive, future historians will teach about “austerity” under the category of “WTF were they thinking?”

    1. Moneta

      We fail to differentiate between goods and services. Frugality is a virtue in terms of material goods but a vice in terms of services. There is a limit to resources but no limit to the help we can give each other as long as we have shelter and food.

      If austerity focused on controlling our materialism instead of destroying out social structures, that would already be a plus.

      Every time, we think of stimulating the economy, we start with the shovel needy projects…. focusing on more material consumption when most of the time our crises revolve around the distribution of resources in the first place!

      We should be investing in more services… researchers, philosophers, nurses, educators, writers, artists, etc. Giving more money to those who do not currently own the hard assets… this is what would lead to redistribution!

  23. Jim Haygood

    S&P, in downgrading Greece from B to B- today (below BBB is junk), picks up the ‘provoked bank run’ theme:

    In this case, [S&P’s] deviation [from publication restrictions] has been caused by the European Central Bank’s decision to lift the waiver on the eligibility of Greek government and government-guaranteed bonds in Eurosystem operations.

    A prolongation of talks with official creditors could lead to further pressure on financial stability in the form of deposit withdrawals and, in a worst-case scenario, the imposition of capital controls and a loss of access to lender-of-last-resort financing, potentially resulting in Greece’s exclusion from the Economic and Monetary Union.

    Did they mention drought, plague and earthquakes? No, that’s for the next downgrade memo. Any Greek depositor who isn’t scared sh*tless now just isn’t paying attention. And the circumstantial evidence is stacking up:

    The Bundesbank’s latest Target2 report showed that 54 billion euros were transferred to Germany last month, the largest amount since September 2011 and March 2012.

    Greece’s outflows have been rising since the middle of last year, with its liabilities reaching €49.3 billion in December. Detailed data on Greece’s balance for January are not available yet.

    ‘Not available yet’? Important people probably don’t want it to be available. Why ruin the peeps’ weekend with bad news? One can certainly infer from the numbers on the German receiving end — not to mention Swiss inflows, which aren’t part of Target 2 — that Greece’s Target2 balance is lifting off like a Saturn V rocket, amidst bright flashes and a thunderous rumble.

    1. MyLessThanPrimeBeef

      The lucky ones can send their money to Germany, Switzerland, England and America.

      Housing recovery in London…again?

      1. Tsigantes

        Hardly! The London housing market was already bought out by Greek buyers at an earlier stage. The depositers left in Greek banks are the 70% normal folk without – after 6 years of this – any money beyond month to month living expenses.

  24. Andrea1

    Some important events at the ECB, not reported in the media.

    They just recently changed their voting mechanism. It’s difficult to explain shortly (and I haven’t found a link that does the job…) Basically, the argument is that there are too many voters at the ECB, these have to be reduced. So a ‘turning mechanism’ was set up.

    The Board of Govs. retain their vote all the time, but the others share, month by month, an exclusion of voting rights. This is figured out by classing the voting entities into 3 groups, and on the face of it it seems fair. (Note, the principle of one member-one vote is now broken.)

    Now, the ECB voting rights in Jan. 2015.

    See here, “Rotation of voting rights in the Governing Council” – ECB.

    Permanent voters (see top of the list), none excluded, they vote permanently

    Second tier (Gp 1) is excluded:

    Gov. of the Bank of Spain.

    Group 2, excluded:

    Gov. of Eesti Pank (Estonia)

    Gov. of the Central bank of Ireland

    Gov of the Central Bank of Greece

    Doesn’t that seem very strange and sorta convenient?

    I’m not in finance, hopefully others can get a better grip of this.

  25. cassiodorus

    As long as the neoliberals have a monopoly upon the world’s political power, any amount of legislative and economic stupid will sail through without opposition. In that regard, it’s good to see that Grexit is now trending upward.

  26. gordon

    RE historical analogies, the forced deflation in Greece reminds me of the forced German deflation under Bruening in the early 1930s (?) as a result of pressure from Germany’s creditors of those days. What goes around…?

    1. MyLessThanPrimeBeef

      The abused child grows up to become an abuser.

      And those just out of one set of infallibility and omnipotence become advocates for another set of infallibility and omnipotence.

      1. Syzygy

        It is the other way around:

        The abuser was an abused child.

        I think it is important to say that there are many, many more abused children who do not grow up to be an abuser.

  27. Petey

    “Some important events at the ECB, not reported in the media. They just recently changed their voting mechanism. It’s difficult to explain … Now, the ECB voting rights in Jan. 2015…”

    Dunno if this voting mechanism is something new as of 1/2015 or not, but according to this FT piece, this voting mechanism may well have been the difference maker in this week’s ‘unpleasant surprise’ for Greece that had substantial ECB opposition.

    Again, dunno what it all means, but it sure is interesting.

    (But methinks one thing it all does mean is that Draghi doesn’t have a majority for cutting off ELA, even if he wants to, which the Krugman/Coppola theory says he doesn’t want.)

  28. Rosario

    This may be a fascinating development in the history of politics if Syriza “chooses” to exit the Euro (rather than being forced). Not necessarily because of its uniqueness, but rather, because of their frank, reasonable approach to the problem (and, I hope, potential solution). Something that has impressed me since their being elected to power. Historically, honesty in politics was paid for with blood, maybe they will show that blood’s due need not be paid to progress?

    I’m one to argue that politics only occupies two realms, progressive and reactionary, and Syriza presents a uniquely, fully progressive platform in their apparent unwillingness to hold fast to an ideological purity (a fault of too many on the so-called right and left and what I call reactionary) and an acknowledgment that change is inevitable therefore it must be accommodated and accounted for (what Varoufakis has either implied or explicitly stated on numerous occasions). I’m skeptical and critical still, but this could be a new species of politics as yet unheard of, as much as I dislike saying it too soon, a true post-neoliberal progressive politics, rather than its many bastardizations.

    1. cassiodorus

      “Progressive” is ambiguous today. “Progressive” can also be reactionary, depending upon how the “progress” in the word “progressive” is measured. If “progress” means more free trade agreements, more prisons, and more tuition hikes, then it’s reactionary.

      The point of “ideological purity” is to have principles to uphold. The point of disagreeing with “ideological purity,” on the other hand, is to criticize the “ideologically pure” for having principles when one could alternately take the high road and criticize the ideological principles upon which the “ideologically pure” take their stands.

  29. Sanctuary

    Dignity is really the operative word and I don’t think most are understanding the true weight of it in this crisis. The reason I believe Syriza will go through with Grexit is its use of this word and principle. Much like the 1973 Yom Kippur War, many simply don’t believe that Syriza will go through with something that will likely not succeed or at least not pull off smoothly. Many believed the Arab armies would not attack Israel because they didn’t have the appropriate weapons, tools, forces to win. However, no one understood that they would attack precisely for the reason of honor, another word for dignity. Dignity is an irrational, emotional thing. While each side, Greece and ECB, has a rationally arrived at negotiating position each one also has an irrational attachment to their position. For the Greeks it is dignity, for the ECB it is a more abstract fear of “moral hazard”. In such a contest, I think the need to have dignity is a much more galvanizing and fortifying force than is fear of moral hazard. This is why you’re seeing protests in support of the government and why you’re likely to see the Syriza government refuse to meet the Feb 16 deadline they’ve now been given. Making this a fight about dignity was a master stroke by Syriza, not an accident. No one wants to live without dignity and people are willing to endure tremendous sacrifices to keep it or reattain it. The ECB did the worst thing it could have done by ending the waiver and demanding Greek compliance by the 16th. It is now making Greece feel the need to prove a point about respecting dignity.

    1. Moneta

      To me the situation looks like parents who have just sent their child to his bedroom with no dinner, cut off all activities for the next year, plus increased the number of chores and all this with no inkling that maybe the child will flee through the bedroom window and end up shattering their world.

      1. Calgacus

        Moneta, it is more like this:
        Germany – the creditors, the ECB, the Eurocrats have lost their minds. They hallucinate they are the parents of someone actually older than them- Greece. They tie Greece to a chair and beat it bloody screaming: “Why don’t you do your chores, why don’t you do your chores?” Greece’s, Syriza’s answer – is to go along with these dangerous maniacs. Greece says ” I will do my chores, fine. I will pay my debt. But how can I do my chores if I am tied to a chair?” [In austerity]
        For Greece’s debt is probably not unpayable, unsustainable in reality. Syriza is trying to do the mature, moral thing – debt, money, finance is about morality, moral relations. But Germany etc won’t allow Greece to pay its debt. The creditors proffer “easy” terms, loans extended forever – as long as Greece sits in the chair and beats itself, undergoes austerity, solely for the Eurocracy’s amusement. It is not about debt, but degradation. “The Child” Greece most certainly “felt guilty” – felt in debt – which is why Syriza has been rejecting debt restructurings, being treated like a child, for years, and is trying to stay in the Euro- on grown-up terms.

  30. kristiina

    Oh, man, in the news this morning, as I was mucking the stables: Erkki Liikanen, the finnsh representative in ECB, declares: We had no other alternative than do this to Greece. With this exact same motto he destroyed Finnish economy in the nineties as he was finance minster during what here is still called the great recession. Finnish establishment chose to save the banks and throw the humans under the truck. The economy has never really recovered. Oh, correct that, the humans never really recovered. Austerity, full time, was administered on the people. Hearing that no alternative- rhethoric trick again just really turns my blood sour. I trust Greece has opportunity to choose differently now. The abuser, indeed, has been abused as a child. Syriza and Greece may be small, but being the only adults in the room does make a big difference.

    As many have argued before, it seems likely those who only know the steps of austerity dance will keep dancing that, even when the music has changed. It is getting clearer and clearer that the best way forward would be for Greece to resign from euro. EU cannot accommodate for new ideas, it is simply a shrine for well paid bureaucrats and banks. Anything EU does has to serve these purposes, so changing course will always be just to serve these purposes. What Syriza suggests may make all the sense in the world but that virus of politics serving people is probably the worst nightmare of EU.

    So I think it is extremely important the leaders of Syriza be really, really careful around women and machines. If married, stick to the wife for sake of safety. And if not, then, I don’t know what, maybe have several independent observers in the room always to monitor that sex is practiced voluntarily. And have food cooked by mommy only. We are living in a time when planes fall off the skies mysteriously and cars just explode, snipers are celebrated as heroes, cancer spreads like a virus…And yet, fear is the greatest enemy.

  31. Moneta

    Hmmm… Gen-X in action. Since when was Gen-X taken seriously?

    For decades, many of us have pretended to think optimistically like the older generation that can not be named, but deep down we grew up with the gut feeling that there would be nothing left for us by the time we got old.

    It makes for a very different worldview.

    1. Calgacus

      The boomers were victims, not really perpetrators of nonsense economics that destroyed the middle class. The solution for anyone of whatever generation, boomer, Gen-X is to just sit down and do the arithmetic, the accounting, the economics, the philosophy slowly & correctly. A whole country – Greece is doing this right now. With luck they will teach the Germans to grow up. The Germans might try reading their own invaluable (worldly) philosophers too- Fichte, Hegel, Marx and others who follow in that tradition. If you don’t think about things slowly, it is really easy to get things completely backwards, to believe and say nonsense.

      That worldview is the problem, the cause, not the result; it infected the Boomer generation.The belief that “there would be nothing left for us” – that economics is about allocating scarce, limited resources is the problem. That Germany & Greece, the Boomers & the GenXers are fighting it out – where?, when? – about some limited pie, of which there might be nothing left for one or the other. It is not that at all – It can be that – but almost never is.

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