BBC: ECB to Stop Emergency Support of Greek Banks on Monday; Bank Holiday Likely

The ECB has decided to lower the boom on Greece.

As we’ve mentioned, the ECB was well outside the intended use of the program that has served as the backstop to the Greek banking system, the Emergency Liquidity Assistance program. As its name suggests, the ELA was meant to provide support only for solvent banks, and then only for short-term liquidity crunches (this is why the ELA has to be re-approved every two weeks, but the voting rules favor continuation, since it takes a two-thirds vote of the current voting members to cut off the ELA).

The ECB has continued to deem the Greek banks as solvent when they clearly weren’t. The presumed justification was that Greek banks had run up huge tabs on the ELA in the 2012 debt restructuring (the so-called second bailout) and had weaned itself off it after the refinancing was in place and contagion fears in the Eurozone had receded. The ECB was clearly uncomfortable with the continued credit extension and kept the increases to the bare minimum necessary to keep the Greek banks afloat. This practice was coupled with the ECB also apparently stoking the bank run by publicizing information about the sorry state of the Greek banks, while during the financial crisis, it kept detrimental information under wraps. The ECB might have been trying to force the Greek government to request permission to impose capital controls, which would have been damaging to the economy and thus could have hurt the Greek government’s support. It appears that the ECB was trying to throw a spanner in the works, but far short of what they were capable of doing. The past ECB moves look to have been a shot across the Greek bow that the government either did not understand or chose to ignore.

But remember the critical fact: that the ELA support was premised on the idea that Greece and the creditors might come to a deal and Greece would get its bailout money. Once that matter was settled, the 2012 case showed that the cash that had been pulled out of the banks came back and the ELA use plummeted.So as long as negotiations were underway, the ECB was duty bound to keep extending ELA support. In fact, we’ve suspected that that was the biggest reason Greece kept the talks going despite the overwhelming evidence that they were going nowhere.

The European officials have interpreted the announcement of the Greek referendum on July 5 as tantamount to the termination of negotiations. As the Guardian reported:

Saturday night’s eurogroup meeting said the governments “stand ready to do whatever is necessary to ensure financial stability of the euro area”. Their meeting was the fifth to be held in 10 days. The decision to end the bailout, shunning the Greek requests to extend the rescue until after the national referendum, means that Greece is likely to go bust.

“Greece ended the negotiations unilaterally. There is no basis for further negotiations,” said Wolfgang Schäuble, the hawkish German finance minister. “I don’t see any possibility for doing anything. On Tuesday the programme ends.”

Jeroen Dijsselbloem, the Dutch finance minister who chaired the meeting in Brussels, said with his referendum decision Tsipras had “closed the door” for talks with the creditors.

The Greek government, astonishingly, appears not to have considered the possibility that the Eurozone nations would not extend the bailout, let alone the ramifications. We stated that the odds were in fact high that the request would be rejected, given the very late hour, the lack of any advanced warning, and the unpopularity in many nations, most importantly Germany, of cutting Greece slack, particularly given that they had ample opportunity to schedule a referendum prior to the bailout expiration. From the Financial Times:

Mr Tsipras stunned his nation and its international creditors by announcing the referendum, arguing only the Greek people should decide how to respond to what he called the creditors’ ultimatum. He urged a rejection at the polls, but two eurozone officials said Mr Varoufakis predicted a “yes” vote in the plebiscite during the eurogroup meeting.

Negotiators for the creditors had been preparing to present a new compromise offer to the Greek authorities that, according to one EU diplomat, included “lots of things they could sell”. But Mr Tsipras’s move dashed hopes of striking a deal at Saturday’s meeting, meaning there will be no programme in place when Greek voters go to the polls to offer a verdict on the creditors’ proposal…

In the clearest sign yet that eurozone officials are anticipating significant economic upheaval in Greece, Mr Dijsselbloem said “the situation in Greece will deteriorate very rapidly” without a bailout agreement in place.

At a post-meeting news conference, Mr Varoufakis appeared taken aback that his colleagues had cut off talks and allowed the programme to expire, saying he had anticipated negotiating up until the referendum vote so that his government could eventually campaign in favour of the deal.

It is hard to reconcile Tsipras’ defiant remarks (he and Syriza officials said they would campaign for a “no” vote) with Varoufakis’ claim that the government wanted to continue negotiations with the hope of securing a package that they could recommend. It appears that the Greek side thought that the Greek referendum would be seen as a powerful countermove and would force eleventh-hours concessions from the creditor side. As we’ve said repeatedly, it has been evident for some time that the lenders are not afraid of a default, nor are they swayed by Greek opinion (Tsipras has had approval ratings as high as 80%). Thus the Greek gambit looks to have been a serious miscalculation.

Bloomberg reports that the team that was working on the negotiations in Brussels was in the dark:

No one was more surprised about Greek Prime Minister Alexis Tsipras calling a referendum than his team of negotiators in Brussels.

Shortly before midnight on Friday in the Belgian capital, the Greeks and representatives of the European Union and International Monetary Fund, tucked away in the EU Commission’s Charlemagne building, learned via Twitter that their efforts were in vain, according to an EU official….

Up until that moment, the mood on both sides had been fairly positive, the official said. They were reaching agreement on a joint proposal to be presented to a meeting of finance ministry officials set for the next morning.

Since negotiations have broken down, the ECB has a great deal of difficulty arguing that it continues extending ELA support, particularly since powerful hardliners like Bundesbank president Jens Weidmann have been pressing for some time to restrict ELA advances. The bailout will not be extended, Greece will lose the opportunity to get €7.2 billion in bailout funds, and an arrearage on the €1,6 IMF payment due June 30 and a default on the ECB payment of €3.5 billion due July 20 is certain.

The well-connected Robert Peston of the BBC tells us that the ECB will act on Monday which will virtually force Greece to impose a bank holiday. From the BBC:

The European Central Bank is expected to end emergency lending to Greece’s banks on Sunday, the BBC understands.

The country’s banks depend on the ECB’s Emergency Liquidity Assistance (ELA). Its governing council is meeting later.

Greece will probably have to “announce a bank holiday on Monday, pending the introduction of capital controls”, a source told the BBC’s Robert Peston…

Austria’s Finance Minister Hans Jorg Schelling said a Greek exit from the euro now “appears almost inevitable”.

This report is clearly from a single source, but Peston would not run the story unless he thought his interlocutor had a good reading on how this was likely to play out. If this contact’s take pans out, a bank holiday will be a major blow, particularly coming at the start of the peak tourist season. As Nathan Tankus observed in a post earlier this month:

Two years ago in Cyprus, an emergency bank holiday was declared and capital controls installed. The bank holiday only lasted for twelve days yet supply chains started drying up instantly. An ex-Cyprus central bank governor told the Guardian:

Supplies of food are being exhausted and there are cases of raw materials like iron and timber being held up in customs because importers don’t have the cash to pay for them … No one expected, myself included, that the EU, ECB md IMF, would behave like this. Cyprus has been treated very badly … Where is the solidarity principle that is supposed to underline Europe?

Even 6 months later after the banks had reopened and capital controls were loosened, businesses were still having trouble getting basic supplies. This happened because their working capital was largely frozen and/or written down in the bail-in, or they had made payments but their suppliers were frozen because their own working capital had been largely frozen and/or written down. It is important to emphasize that their nearly two-week bank holiday was only to resolve insolvent institutions, not to build or significantly modify the payments system. Cyprus experienced a storm. It is not an exaggeration to say that freezing the Greek payments system would be like a financial hurricane and this one certainly looks to be a category five.

We will know soon enough if the ECB takes the drastic move that Peston’s contact suggests. But even if they do not take in on Monday, I had thought it was very likely that they’d end or restrict ELA support no later than June 30, when Greece goes into arrearage with the IMF. And even if Greece decided only to impose capital controls, they’d likely need to be stringent, and thus would also badly crimp business activity.

Despite the belief of some readers that the Eurocrats would find a way to finesse the June 30 deadline, consistent with their past “extend and pretend” practices, we’d warned this was a hard deadline and would be very difficult to circumvent, particularly given the lack of good will on the side that would need to find the fix, that of the lenders. The endgame of the Greek negotiations is under way.

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    1. Yves Smith Post author

      Yes, but both can be true. If a major motivation was to strengthen Syriza’s hand (as many readers have argued), a bank holiday or even just capital controls aren’t a plus.

      1. IsabelPS

        I find it hard to believe that Tsipras didn’t know that his move would trigger this chain of events. But I do believe that, at this point in time, his main concern is how to break the negotiations, regardless of the consequences. I will quote a PT journalist (rightwing but very clearheaded and outspoken) because I think she puts it well:
        “Tsipras never had political conditions to negotiate an agreement [as his mandate back at home was to break the creditors]. And he never managed to create them. Now he is looking for conditions to break off the negotiations.”
        From your links:
        “At a post-meeting news conference, Mr Varoufakis appeared taken aback that his colleagues had cut off talks and allowed the programme to expire, saying he had anticipated negotiating up until the referendum vote so that his government could eventually campaign in favour of the deal.”
        If this is true (I didn’t watch all the press conference) it seems terribly likely that Tsipras expects the yes to win, which will give him an opportunity to exit with his reputation and political life fairly whole.
        Alternatively, if the result is no, it would give him indeed a good justification to take Greece out of the euro.
        In any case, this can’t possibly be about having the Greek people have their say about a proposal that is already off the table. And Tsipras knew it was because the debate on Parliament was postponed to start after the end of the Eurogroup meeting (I can look for links if necessary).

        1. vlade

          This is all predicated on the idea that what Greece does matters. It doesn’t. The ball is almost entirely in other people’s world (which may be why Tsipras did what he did, but that’s ultimately still internal).

          If ECB will cut ELA, be it Mon or Tue, Greece is out of EUR (and possibly EU), or it bows to creditors with at best some small face-saving measures (which, to be honest, I suspect they will not be willing to give, and prefer a new election with a new government).

          Greeks had nukes at one point (2012, when large swathes of the debt was in private hands). But since then, most EU believes they are not really nukes anymore, and if so, it may be just a one small one – but they know that THEY have nukes. And they just flipped open the switch cover.

          1. Calgacus

            Vlade, Yves: Hope you don’t mind a response from me continuing the now closed thread.

            Federal states gave up some of their sovereignty to the Union, or do you wish to dispute that? The whole point of the thing is that the EU is not a unitary state as the USA became under the Constitution, or even arguably the Articles of Confederation. If it were, Greece would not be having these problems. I said nothing about EU law vs national law. Of course any treaty can be seen as a cession of sovereignty. The question is how much, how irrevocable. All experts – e.g. Phoebus Athanassiou – in the ECB’s corner! – agree that the EU treaties are not irrevocable the way the USA is, that if any state said – G’bye – there is no penalty that the EU could impose. No US Civil War redux.

            But you build a straw man, for sovereignty is not the same as being subject to international law (ignoring at the moment that international law is only as strong as any real punitive action can be, so for a whole host of things really irrelevant)

            I have not built a straw man – note that Yves said I was “absolutely incorrect” not attacking a straw man, a position she does not hold. The problem is that Yves’ position is so outre that it could seem to be a straw man to a new observer. International law being irrelevant is not a serious position, and is held by nobody. Generally speaking, “subject of international law” means sovereign state, the classical meaning. Real exceptions are modern – international organizations like the UN, and date to the ICJ’s decision to recognize the UN’s international legal personality shortly after its foundation.

            If you followed the discussion between Yves and me: Yves has said things like international law was abandoned by Greece when it signed the EU treaties, and that EU law supersedes fundamental international law – the UN Charter above all. And she has said that the EU treaties explicitly say such things!

            They of course do not. They explicitly say the opposite. I have quoted them and many authorities for my position, including Phoebus Athanassiou’s paper, held up by many as the ECB “last word” on the issue, but apparently, not read. Yves has not quoted one authority, one article of any treaty for these positions, because as I said, they are held nowhere outside this blog.

            1. vlade

              I did not follow the whole discussion, and the gist of it to me was whether Greece did or did not cede some sovreignty when in EU. The answer to that is clear, it did.

              Yes, it can recoup it, but only by leaving EU – and that resort is so wide as to be open to just about anyone. I’d argue that if (say) California had a clear, unbiased referendum in which 90% of the population voted to secede, it would secede (over a time), regardless of what US Constitution says at this time. Once upon a time USC could be read as supporting slavery (or rather not allowing to meddle with any property rights, even in human beings). That changed – so it would change if states did not want federation anymore – I doubt we’d get ACW2 these days.

              Of course, it’s easier for Greece than Cal, since EU has, at least theoretically, exit mechanism, but tha’ts less of apoint that Greece ceded some sovreignty and would have to take active action to take it back.

              I don’t really see how international law comes into it (and again, any law is only as strong as enforcement, which is why violations of international law are so common that I’d really hesitate to call it a law, more like a set of intentions).

              1. sid_finster

                I would summarize the entire corpus of public international law as follows: might makes right.

        2. Yves Smith Post author

          Except, as we pointed out would happen, and is happening, by going into arrearage with the IMF, Greece is going down the path of leaving the euro. If his intention really was as you described it, he should have taken this action weeks ago, or at least a week ago, before the bailout expired. Remember that Tsipras did not tell the other side of his move in advance either, not even a half-day heads up to the principals. This was clearly not a cooperative move and was interpreted as such. If he did it when no bailout date and no payment date was looming, he could say, “Look, the polls are contradictory, I need a much more clear reading on public will. Even Schauble suggested we have a referendum.” That would have left open the possibility he’d return to the negotiation table, and the ECB’s posture seemed to be as long as there might be a bailout, they’d keep the ELA going.

          By doing this when the bailout is guaranteed to expire (as in he can’t pretend not to know about the required Parliamentary approvals and the difficulty in those countries in getting a pro-Greece vote). So he will go into arrearage with the IMF and default on the ECB on July 20 whether or not he gets public approval. That is why I’ve been so critical of this move and have called this “democracy theater”. He’s made a decision while pretending not to and giving a phony referendum (as in why have a vote when he’s already taken action?)

          1. gemini33

            The thing is, it’s hard to take a deal to your country via referendum if the deal keeps changing. I read that the creditors claimed they were going to tweak it yet again but didn’t bother to reveal the changes after Tsipris announced the referendum. You’d want to take the best possible deal to referendum.

            I’m not clear on what the people railing on Tsipris think he was trying to do or what sinister motives he has (he’d go to these extreme lengths for his political career?). If, as some here are deducing, it seems likely the Greek people will/would have vote/d “yes” to take the deal, it seems really foolish to risk blowing up the Eurozone for a 5 day delay. At least that’s how it looks to me. Plus, it seems like Tsipris & Varoufakis have already made a lot of “more pain” concessions in the deal and they’re not that far apart.

            I think you’re right that there’s a lot of theater going on though (on both sides).

            1. Lambert Strether

              Again, if you don’t want to hold a referendum where the deal changes, announcing the referendum at 1AM and scheduling for after the existing deal is about to expire seems like a suboptimal strategy.

              In addition, politicians often go to extreme lengths to preserve their political careers. Look at Clinton in the Lewinsky matter, or Nixon and the Watergate tapes. I’m sure many, many other examples can be adduced.

            2. Yves Smith Post author

              Recall when the creditors submitted their first proposal? The five page document roughly three weeks ago? If you read carefully, they made it clear this was not just “here’s our counter to your offer”. It was “here is the framework under which a deal has to be done” as in Greece had flexibility re details but it had to conform to those parameters.

              The two sides have done a terrible job of listening to each other, but indeed, the creditors, as they idd with the February Eurogroup memo, meant what they wrote. They got Greece to accept the primary surplus targets in that later memo (and we described them as draconian) and they insisted on and have stuck with the 1% of GDP pension cuts.

              That document was also clearly written.

              Tsipras could have called the creditors and told them he needed to have citizen input, and he therefore planned to submit that as the basis for the referendum. If the lenders had NOT meant that to be their list of their red lines (and it sure as hell has operated like one), they would have backed down or modified it. He had other junctures, but that is the most obvious recent one, and still well before the bailout deadline.

          2. J

            How does this action differ from Papandreou’s call for referendum that you wrote about in November 2011?

            1. J

              Also, sorry if I’m way behind on this but they’re (Hollande and Merkel) now talking debt relief for Greece? Edit: Ah, sorry these are anonymous reports.

  1. Clive

    If Peston is the source of this information, it has very high levels of credibility and almost certainly comes from either the Bank of England or the UK Government Treasury. Peston is the go-to journalist for officialdom wanting to leak material — often due to infighting internally in government over whether the public should or shouldn’t be informed of specific events which will have broad public impact (there’s a well documented history of this).

    The UK government is fully signed up to the “we want our money back” (loaned to Greece through the IMF) school of thought and makes very little secret of the fact that it doesn’t give a stuff about Greece. This was always the mentality during the coalition government in the UK — with the conservative party in a majority government, attitudes will only have become hardened. Christine Lagarde probably doesn’t either bother asking what the UK’s vote will be in IMF decision making, she’ll know the answer without having to enquire. Of course, in the UK establishment, it is the BoE and, to a lesser extent, the Treasury who will have to work their way through the resulting problems hence I suspect the desire in some factions in these institutions to try and tip the wink to the British public (via Peston).

    1. Yves Smith Post author

      Yes, if you read the full BBC story, Peston is cited three times, so his sources appear to be the major, but perhaps not sole, basis for the story.

      1. Jabawocky

        I see the BBC’s take on this has changed, but in so doing they reveal their true intentions. This is classic BBC in full propaganda mode. This sort of coverage will be familiar to every Scot as the way the BBC covered the independence referendum. The aim is to write a negative scaremongering story that leads to accentuation of the bank run. Headline should be scary! Facts need not get in the way. The story has now changed from Peston’s factually flawed headline to one which is equally negative, but now not based on any real premise, as the detail of the story admits. There is no evidence an increase in ela is required, yet the fact it is not raised should be SCARY! Shows why Brits are losing faith with the BBC as a source of ‘news’.

        1. Lambert Strether

          I read the story; it doesn’t seem out-of-band for scary. (I’m not anything about SNP coverage, only this story).

          I think most NC readers accept en passant the idea that any source has motives. So I don’t see why the “true intentions” of the BBC, whatever they may be, are germane.

          Finally, if indeed there is and has been a bank run in Greece, surely that is what the ELA would protect against?

          1. Jabawocky

            This is getting off topic but the issue here is not the source but the journalism. If only the source is politically motivated the results do not look like his piece.

        2. Yves Smith Post author


          They’ve rewritten the story a bit to reflect the ECB having made a decision.

          What may not be clear to you is that not increasing the ELA in the midst of the ongoing bank run is as destructive to the Greek banking system as ending it. Functionally, they produce the same result. albeit on a bit different time frame (as in ending the ELA would produce an immediate result, while not increasing it gets you there in short order). The deposits have been leaving at a high volume since the negotiations became more even fraught and the run accelerated due to the announcement of the referendum.

          1. Jabawocky

            You miss my point, which is not about whether the ELA ceiling will turn out to be critical, which i agree is a key issue. My point is that the article is written in the manner the BBC uses when the journalist is deliberately taking a line for political reasons. This means it is a politically motivated opinion piece dressed as news. The news changes, the opinion is the same. If it is politically motivated then the source of that motivation is of interest.

            1. reprobate

              Maybe I’m dense, but I don’t see what you see. Peston had a scoop. The ECB ending or putting a cap on the ELA is going to accelerate the bank run. I don’t see how the BBC reporting on this the way it did overegg that pudding. What exactly is “scaremongering” here? A banking holiday or capital controls are legitimately concerning, and those are pretty much certain to happen as a result of the ECB action.

        3. Yves Smith Post author

          This part is sad:

          I even saw two people depositing money, claiming this was the conscientious thing to do. One of them tried to convince others not to withdraw their cash.

          I hope they can afford the loss. Greek banks are deeply insolvent. It’s just stunning that the Eurozone pretends to be a modern economy and does not have a minimum level of deposit insurance (at least till 2016), even after the financial crisis.

            1. Yves Smith Post author

              No, that is not effective yet. I had read previously from what I dimly recall as an MSM source that it isn’t effective till 2016. Someone just tweeted July 4, which is bizarre and therefore I assume it is 2016, but I need to check. That’s the problem with the Web, even if you read something, it may be off in a key detail

                1. Lambert Strether

                  IsabelPS, I see the link but I’m confused because I’m almost I’ve seen something about deposit insurance kicking in this July going by in the Niagara of Twitter info. Could it be EU-wide, as opposed to individual country insurance?

              1. IsabelPS

                I thought I had replied to you, but as it doesn’t show up and I don’t want to annoy your spam filter, I will not repeat myself. But check “deposit insurance” in wikipedia and you will have all the dates for the European Union (mostly end of 2008). It certainly works in Belgium and Portugal, where I had bank accounts, and I’m sure it worked in Cyprus although the press rarely mentioned it.

                1. RGC

                  Most, if not all countries have their own plan, usually at least 100,000 Euros. There no system-wide plan yet, although one has been proposed.

                  1. Nathan Tankus

                    I can completely understand the confusion. Most things in the European Union are designed to actively obfuscate reality. These are called deposit insurance schemes but that is a legal lie. In the United States the FDIC is Federal (its right in the name). The EU imposes a requirement that each country “insure” their deposits (as you point out this was ratcheted up to 100,000 euros) but it provides no financing for this. The last statistic I saw (which I can only verify from 3 years ago) is that the Greek deposit insurance fund has a paltry 3 billion dollars in it. In short there is no current backstop for Greek depositors unless the Troika decides to do some emergency financing which, i don’t know about you, I’m pessimistic about happening to say the least. This is why they are talking about implementing a European wide deposit insurance union but that isn’t supposed to come until next year at the earliest and who knows if that will really happen and to what extent it will be universal among current Eurozone members. relevant links below.




                    1. IsabelPS

                      Thank you, it all makes sense. And the Vox article is very clear and explains well the problem. Also what happened in Cyprus, in a way that a finance illiterate person like me understands.

                    2. John Smith

                      “When a business fails, its creditors must take their losses, otherwise no market economy would function effectively. If the creditors of banks do not take losses when banks fail then banks will take on too much risk. There are two reasons why it may be desirable to protect small depositors, however.

                      1) The ‘widows and orphans’ argument that small and financially unsophisticated investors should be protected; and

                      2) The efficiency argument that It is inefficient for large numbers of small-deposit holders to devote resources toward assessing the health of complex financial institutions.” from

                      Isn’t there a third reason? That depositors have no real option (physical cash and the mattress or a safety deposit box is no real option) to private banks for the storage of and transactions with their “money?”

  2. Nick

    So basically, the inmates are now in control of the asylum. I’m guessing Greece’s large military will come in handy in what follows.

    1. Sally

      Nick is our Neo liberal, neo conservative propagandist. Essentially the gist of everything he posts can be summed up as USA USA USA. Y*A*W*N

      Nothing he says you couldn’t get from 5 minutes watching Fox News. It’s not very intelligent or original. But hey, it keeps the banking elites happy.

    2. Yves Smith Post author

      Alex Morfiesis, who I believe is dual passport and spends a lot of time in Greece, begs to differ:

      as to junta…keep dreaming…no chance in hell that works in europe anymore…last ones who tried ended up with yeltsin and putin…too many cellphone cameras in the world today…

  3. Kalori

    As it happened – Yanis Varoufakis’ intervention during the 27th June 2015 Eurogroup Meeting
    Posted on June 28, 2015 by yanisv

    “The Eurogroup Meeting of 27th June 2015 will not go down as a proud moment in Europe’s history. Ministers turned down the Greek government’s request that the Greek people should be granted a single week during which to deliver a Yes or No answer to the institutions’ proposals – proposals crucial for Greece’s future in the Eurozone. The very idea that a government would consult its people on a problematic proposal put to it by the institutions was treated with incomprehension and often with disdain bordering on contempt. I was even asked: “How do you expect common people to understand such complex issues?”. Indeed, democracy did not have a good day in yesterday’s Eurogroup meeting! But nor did European institutions. After our request was rejected, the Eurogroup President broke with the convention of unanimity (issuing a statement without my consent) and even took the dubious decision to convene a follow up meeting without the Greek minister, ostensibly to discuss the “next steps”.

    Can democracy and a monetary union coexist? Or must one give way? This is the pivotal question that the Eurogroup has decided to answer by placing democracy in the too-hard basket…”
    Read on here:

    1. MyLessThanPrimeBeef

      I believe the proper democratic procedure would also imply that Tsipras have the Greek people, and not their parliament, vote on his own proposals as well, not just the creditors.

      No proposals should be exempt from direct People Power…in any country…Finland, Portugal or any involved nations.

      1. Alejandro

        Maybe it’s time to come to terms with “democracy” being a mirage and any glimmer of it being “real” has proven to be not up to the challenge of finance capitalism being its antithetical nemesis. This seems to be the case not just in Europe, eg, “fast-track” theatrics is also a current case study…however if this is the presupposition in the pervasive narrative, then how should it be countered?

        1. Left in Wisconsin

          There is no one thing called “democracy”. If there was, and you conclude it is a mirage, then how do we achieve something different and better? I would argue it is our current system of nation-specific, elite-representative government that has been captured. But the democracy part isn’t the problem. Indeed, it’s the only constraint. What we need are governments that are more democratic (yes, I know majority democracy has its problems).

          The parallels with fast-track are instructive. If we could call issue-specific US-wide referendums, trade deals would never pass and we would have the national industrial policy we so urgently need (which is not at all to say all problems would be instantly solved). But under our “capital is represented but working people not so much” system of representative government, you can see why that will never happen will be strenuously resisted TSTL.

          I would be curious to know how the Greek referendum would go if all Europeans instead of just Greeks could express a view – or better yet if compassionate forces in the Euro Parliament could force a Euro-wide referendum on a humane alternative to troika suffering. Given the national eyes through which we are all taught to see the world, maybe most Europeans would tell the Greeks to eat more dirt. But it would be instructive to see.

          And in the grand scheme of things, it seems that democratic governance schemes with frequent resort to referenda on big issues, both national and trans-national, are perhaps our best bet for developing new governance structures that can push back against capture by parasitic financial elites.

          1. MaroonBulldog

            “… democractic governance schemes with frequent resort to referenda on big issues …”
            = California, the first para-fascist state–i. Maybe California is not captured by parasitic financial elites, but it is a one party state captured by some kind of parasitic elites. (Correctional Peace Officers Association is one of the captors). And initiative and referendum measures depend on enormous campaign funding, too.

            Wisconisin is not quite what California is. Yet. But it will be. Politically speaking.

  4. Sam Adams

    Nobody knows what will happen when Greece goes tits up. Time to get out of the bordello fast.
    I see the CRS more prominently since Friday.

  5. Larry

    It’s a different kind of war, but it does demonstrate that a united Europe is never possible. National differences are still quite steep and old prejudices will not die. A flawed currency union has allowed Germany to take dominion over the continent once again and to toss weaker states against the rocks. I feel truly sorry for the Greek people and hope that this event and what comes will wake up the leaders in other countries to what the end game of towing the troika line is.

    1. MyLessThanPrimeBeef

      A democratically united Europe may be difficult but if we could pull it off, it would give hope to other unity nations that were united ‘undemocratically’ – for example, the subjugation of natives in many South American nations that were united by force, maybe the conquest of the Ezo people in the north of Honshu by the Yamato race to ‘unite Japan,’ or the defeat (centuries past) of the Tibetans to unite China, the united Turkey with its Kurdish subjects, etc..

      In fact, you can probably name more examples than I can.

      Still, many lives were spared (at that time) when Genghis Khan didn’t conquer all of Europe and keep it together for a few centuries.

  6. Norman

    Why doesn’t Greece default and get it over with? It could save a lot of trouble going forward. In fact, it should have been done in the very beginning. Granted the various banks loaned their depositors money to Greece in the run up to this-what ever one calls it-but it’s the banks fault or the fault of the regulators who allowed this to happen in the first place. Easy money, the “bane” for those who receive and then have to pay back, especially when it becomes a non-starter. It’s too bad that the so-called brains haven’t the common sense their god gave them, to realize that when the trough is empty, it’s empty. Corrupt Capitalism, in need for a major overhaul to rid itself of the cancer that’s eating it alive. As with all “Grand Screws” directed toward the unwashed, it takes more than it’s fair share down with it-as in the innocent, except the ones who caused the cancer. That old saying, “money is the root of all evil”, rings true in this case. Oh well, life will go on.

      1. MaroonBulldog

        One translation has it: “the love of money is the root of all kinds of evil”–that version says a lot to me.

    1. Code Name D

      One would think so, but I suspect its not that simple. Every now and then I see a story where the old Nazi party rears its ugly head, or some other radical right wing organization. If Greece defaults, it would likely send the people into depression unlike any that had been seen before.

      We all know most people in the US are living from pay check to pay check. This translates to likely having no more than a few days or weeks worth of supply because fulfilling immediate needs is all that can be afforded. Now imagine the US dollar simply disappearing from the landscape. The people would become real desperate really quickly.

      We already saw this happen with the last Greek bank holiday. If it happens again, under a default umbrella, they just might turn to the extreme right wing for answers. And the rest will be history repeating itself.

      Its an extreme scenario, but this can not be far from there thinking.

      1. Lambert Strether

        “imagine the US dollar simply disappearing from the landscape”

        And the trucks stop. And food disappears from the shelves in a week or so, and in the winter, fuel from the fuel tanks.

    2. Yves Smith Post author

      Um, this is defaulting. That’s why we wrote the post we wrote yesterday that was so critical of Tsipras. Tsipras is/was pretending to give voters a choice when he would go into arrearage with the IMF and the odds that the lenders would extend the bailout (particularly with him doing this as a surprise move) were nil. He was making the decision to default while pretending not to. He could have had the referendum earlier, before the bailout expired and before Greece hit a payment it could not meet without getting the bailout funds. That would have given Greek citizens a real say.

      While as we said a while back, a default within the Eurozone might have been possible (particularly if Greece still have a primary surplus), the relations between Greece and the lenders are so poor that Greece is unlikely to get any help beyond the very bare minimum to preserve optics, like “humanitarian support” to make sure the drug imports are at least at the level they are now (and the level they are at now has hospitals in shortage) and perhaps a facility to provide for loans for petroleum imports (Greece has refineries).

      1. EmilianoZ

        It is plausible that Tsiras didn’t call a referendum earlier because he thought his proposals with equivalent measures (equivalent to cutting pensions) would be accepted. We all thought they would until for some reason they were rejected. Tsiras seemed genuinely surprised and hurt by that. And this happened only some days ago.

  7. Dino Reno

    Varoufakis said this will be the end of the Eurozone. All its flaws are now exposed. I’m never comfortable when politicians or bureaucrats ask history to judge them as his statement implies. That always means bring on the pain.

    1. Code Name D

      Ah but they have faith. Cutting Greece off will probably not end the Euro-zone. No, that will happen when another country falls to fill Greece’s spot as the banksters perpetual whipping boy. Remember the so called PIGGS. That will end the Euro zone.

    2. MyLessThanPrimeBeef

      Sorry, I disagree.

      The end of Eurozone happened when the banks got bailed out and all those European governments, rich and poor, assumed all their bad loans.

    3. Lambert Strether

      Where did Varoufakis say that? I just looked at his latest (link recommended elsewhere on thread) and found this:

      To those who instruct us to phrase the referendum question as a euro-drachma dilemma, my answer is crystal clear: European Treaties make provisions for an exit from the EU. They do not make any provisions for an exit from the Eurozone. With good reason, of course, as the indivisibility of our Monetary Union is part of its raison d’ etre. To ask us to phrase the referendum question as a choice involving exit from the Eurozone is to ask us to violate EU Treaties and EU Law. I suggest to anyone who wants us, or anyone else, to hold a referendum on EMU membership to recommend a change in the Treaties.

      Doesn’t sound like the end of the EZ to me.

  8. Demeter

    How dare Greece act like a sovereign nation!

    It’s the end of the Eurozone, if the Germans would but face the facts they have ignored for a decade or more. Their little game of “Let’s Pretend” is over. The ones who end up in the ditch will not be Greeks, who have been there for far too long, but the Austerians who pushed their luck.

    A mass exit will ensue. In 4 to 5 years, there will be no Eurozone.

    1. Lambert Strether

      Well, Greece knew or should have known it was signing away substantial portions of its sovereignty when it joined. In particular, it gave up its rights as a sovereign currency issuer, which means it can’t devalue its way out of the current crisis.

      1. vteodorescu


        You make the mistake that Bill Black always warns against in his campaign to not confuse banks/organizations with the guys running it and who are enriching themselves via control fraud.

        The guys who signed on the dotted line to join the euro knew full well what it implies, but they probably had a few deals going that would enrich themselves and their election fund donors.

        Control fraud. At governmental level. Shock! :)

    2. Yves Smith Post author

      The EU and EZ treaties make clear that the signatories are ceding certain aspects of national sovereignty to EU/EZ institutions.

      1. Calgacus

        And all experts, case law, custom and treaties confirm that this cession is controlled by, must be interpreted by other and/or higher international law and is revocable if a member state is determined to do so. See also my reply to Vlade above.

        The people who signed the Delphi Declaration know what they are talking about, and my hopes rose another notch as soon as I saw this.

        We denounce the illegal and unacceptable agreements successive Greek governments have been obliged, under threat and blackmail, to sign, in violation of all European treaties, of the Charter of UN and of the Greek constitution.

        The law, even the EU law is on Greece’s side, not the Euroclowns. The oracle must have told some of the Delphi people to actually read the treaties, not deception spouted by the Euroclowns which have fooled so many. Sure, they’re bad treaties – we’re seeing that now. But they are controlled by millennia of international law and a great and good treaty – the UN Charter. The cunning of reason, the invisible hand put a great deal of bomfog (Brotherhood of Man under the Fatherhood of God) into the Euro treaties. More than enough to make this clause of the Delphi Declaration the clear and simple truth.

        1. Yves Smith Post author

          Please show me how the Greek government was “obliged, under threat and blackmail” to sign the Maastrict Treaty and its amendments, the most recent being the Lisbon Treaty, which are the instruments under which it ceded, voluntarily and with clear disclosure, certain aspects of national sovereignity to EU/Eurozone institutions.

    1. gemini33

      They’ll pull the plugs on the Greek banks.
      They won’t pull the plug on the Greek banks.
      What the heck?

      1. Yves Smith Post author

        This is functionally equivalent to pulling the plug on Greek banks given the ongoing bank run, but with better optics for those who don’t understand how the ELA works.

        1. Nathan Tankus

          Lets return to the basics. for a bank to clear payments with another bank or with banks in other countries they need settlement balances. many greek banks are having trouble borrowing on the interbank loan market because those loans are unsecured and people are rightly worried about solvency ie not being paid back. In the united states when the interbank loan market froze up the Fed put trillions of dollars in guarantees into place. The ECB has not done that. Instead they’ve been keeping banks shut out of the interbank loan market afloat by lending settlement balances to them directly in a program called Emergency Liquidity assistance. By leaving the ceiling place they insure that when lending hits the ceiling, no more settlement balances will be lent and payments will start to stop. This is effectively ending ELA except the timing works out a little differently and it looks better to those who don’t understand monetary policy operations. It also makes getting the Bank of Greece officials abandon the ECB more difficult because “at any moment” they could reinstate ELA and taking direction from the government would be seen as a needless violation of TFEU

          1. Chris in Paris

            So it’s a bit like a brown out. You can’t put that much strain on the (banking) grid without blowing out substations. This whole thing is pathetic and frightening.

  9. Richard Smith

    ECB Press Release reads a little differently, but the heat is on, all the same:

    “Given the current circumstances, the Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday (26 June 2015).

    The Governing Council stands ready to reconsider its decision.”

  10. IsabelPS

    From the Guardian live feed, the statement of the ECB:

    “The Governing Council of the European Central Bank today welcomed the commitment by ministers from euro area Member States to take all necessary measures to further improve the resilience of euro area economies and to stand ready to take decisive steps to strengthen Economic and Monetary Union.

    Following the decision by the Greek authorities to hold a referendum and the non-prolongation of the EU adjustment programme for Greece, the Governing Council declared it will work closely with the Bank of Greece to maintain financial stability.

    Given the current circumstances, the Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday (26 June 2015).

    The Governing Council stands ready to reconsider its decision.”

  11. Jabawocky

    Bizarrely the BBC is now running both stories side by side. The BBC usually sides with vested interests so maybe they thought it necessary to seed a bit of panic in Greece this weekend.

    1. Yves Smith Post author

      See my comment earlier. Not increasing the ELA is functionally equivalent to pulling the plug on the Greek banks. They have this cute “reconsider its decision” language to refer to the fact that in theory the bailout has not yet expired and the negotiations could resume.

  12. gemini33

    I’m still not inclined to believe the US will allow this to come crashing down if there’s a risk that Greece will end up turning to the BRICS. Too much geopolitical importance, especially given the drums of major war are beating in several places in its vicinity, plus the plans for gas pipelines to come thru Greece into Europe (from both Russia/Turkey and Israel).

    1. ambrit

      I wouldn’t put it past the heirs of the Dulles brothers to “allow” a small war between Greece and Turkey to ‘spontaneously’ break out. (For extra ‘cynic’ points, to ‘protect’ the gas pipeline?)

      1. alex morfesis

        greece and turkey have never and will never be at war with each other…period end of story…

          1. alex morfesis

            Cyrus Greece and Turkia

            just a slight bit of possible fact ( I wasn’t there, so I don’t “know” anything)

            by the time the Greek Junta had decided to support a coup against Makarios and try to take advantage of the confusion going on in the Nixon White House, it was spent and was having a hard time adjusting to the new price of oil.

            Its Gladio hopes to lead a wave of right wing dictatorships was dying. Italy was not going to join in with Spain and Greece for a southern european flank of jackboots. Franco was ill and his sidekick, Admiral Blanco was taken out on December 20, 1973. His replacement gave a speech in February 1974 which spelled the official end to the Falangist control of the economy and political life but the Butcher of Malaga was not through as he had Puig garroted a month later, which led to the purported revolts of FRAP (which we find out later had been infiltrated by government provocateurs) in May 1974 following the execution of Puig.

            The Greek Junta was already by its end a junta within a junta. Ioannidis had pushed out Papadopoulos and had decided to let go of the trappings of the “good soldier” and was just lashing out at anyone who did not bow down in front of Ceasar.

            Nixon had removed Agnew in part thinking Spiro might be deep throat, but also in response to the positions Agnew was taking with the Arab Israeli war that broke out in October 1973, and the economic impact the oil embargo was having on the US and global economies.

            Onasis was going crazy after the loss of his son, Alex, in early 1973 and was active, or at least allowed his airline to be used to supply support resources to the Greek Coup in Cyprus which removed Makarios from power on July 15, 1974. By the time Makarios bounced his way to the UN Security Council meeting in New York on July 19, 1974, the Greek Juntas Cypriot clowns had appointed Nikos Simpson, the Butcher of Omorphita as head of government in Cyprus. Simpson not only gathered up Makarios supporters, he started rounding up Turks, and as the Turks had seen Simpson unilaterally kill Makarios’ people and knew what he had done to Turks in December of 1963…

            everyone knew what might be coming next.

            On July 20, 1974, the day after Makarios called on the UN Security Council to restore his nations freedom, Turkey moved into Cyprus and removed the clowns tied to the Junta.

            A few days later, the Greek Junta folded from lack of support both at home and across the globe. Greece was now rid of the Military jackboots. A few days later, Nixon resigned the Presidency of the United States.

            There were maybe a few special forces types actual “Greek Troops” in Cyprus during that two week skirmish, but there was no direct conflict with Turkia, and there never will be.

            as a side note, there are many from the junta who will still today suggest Dr. K pulled a double cross ( ala saddam and glaspie )…

            I don’t know, I wasn’t there…

            1. alex morfesis

              just a small clarification (in case someone wants to get nitpickidie)…just as happens often when some oligarch (at least then) sells to the government his “shares”, I would argue Ari still had control of Olympic thru his cronies…

            2. ambrit

              Thanks for the history lesson. I guess it all depends on which Greek government we’re talking about.
              I didn’t know that Onassis was involved in the Greek Cypriot coup attempt.
              Reinforcing the “might makes right” argument, after Makarios returned, the Turks kept the northern third of the island and sent 150,000 Turkish settlers there, even though the “legal” reason for the Turkish intervention was no longer extant. Some Turkish troops are still there.
              So, this entire unpleasant history is nothing more than an example of ethnic rivalries? (Being a hybrid Anglo American, I won’t even broach the subject of the Sovereign Bases.)
              For once, it looks like the military establishments are being more rational than the civilian establishments.

              1. alex morfesis

                hush now…you will wake up the children…

                sovereign military bases…nobody noticed..hush…long island (the part attached to new york city and its two suburban counties) has 7.5 million people on it…Cyprus, with more than twice the space has plenty of room for the queens minions…

              2. John


                Alex’s history lesson is a lie. And highly insulting to Greeks and people who were there.

                Simpson not only gathered up Makarios supporters, he started rounding up Turks, and as the Turks had seen Simpson unilaterally kill Makarios’ people and knew what he had done to Turks in December of 1963…

                On July 20, 1974, the day after Makarios called on the UN Security Council to restore his nations freedom, Turkey moved into Cyprus and removed the clowns tied to the Junta.

                These are not true in the least.

                I’ll give you a quote from someone who was there

                This is laughable, to say the least. The key reason was that the dictators called for general mobilization. This resulted in a total dilution of their control of the army –as many cashiered senior officers were called to active duty-. The rest is history: the army marched into Athens and restored democracy. At the same time, Makarios was restored in his position in Cyprus and the coup leaders were arrested. All these events were concluded by July 24, 1974.

                However, the Turkish troops remained on the island. Greece and Turkey started negotiations in Switzerland. Secretly, the Turks landed more troops and while negotiations were still ongoing, the Turks attacked on August 14; it was then that they captured about 35% of the island. It was this attack also that resulted in the heaviest casualties. So, the key point is that the 2nd Turkish assault happened after democracy was restored both in Greece and Cyprus, when not a single Turk suffered anything and while negotiations were ongoing!!! So much for good faith.

                1. alex morfesis

                  and oswald shot jfk

                  and dresden too… don’t forget what was done at dresden…


                  you actually make my point for me…

                  Cyprus is not a GREEK COLONY…but Greeks think it is…

                  and if you use Wikipedia as your basis for arguments…oh well…

                  bring on the dancing girls, tonight my friends, for your
                  entertainment, we have famous international singer….

                  (sorry my cousins used to own molfetas night club)

                  cyprus is a third rail issue for certain GREEKS…

                  but cyprus is not greece and cypriots do not want
                  AND NEVER WANTED
                  union with greece…

                  1. John Jones

                    you actually make my point for me…
                    Cyprus is not a GREEK COLONY…but Greeks think it is…

                    Who said it was a Greek colony. But if you think it is not Greek well than neither was Crete and other Greek islands, the Peloponnese and any other Greek populated area.

                    As for the people never wanted enosis they wanted it and wanted it even in the 1800S

                    A quote from William Mallinson a historian and former British diplomat.

                    “the Ottomans hanged Archbishop Kyprianos and several other bishops and laymen shortly after the outbreak of the Greek War of Independence, and then indulged in a massacre. Thereafter, and despite the British being less brutal than the Ottoman Turks, enosis was clearly on the agenda, particularly from the 1890s, when the British Colonial Office began to discuss it in its correspondence (see Sources for the History of Cyprus, Vol. XI, edited by Reed Coughlan, Greece and Cyprus Research Centre, New York, 2004):”

                    Why don’t you get his book and read it or maybe contact him and tell him what you told me and give him a laugh.
                    Cyprus: A Modern History

                    and if you use Wikipedia as your basis for arguments…oh well…

                    And if you look under Bibliography and Notes you will see the sources sited from actual historians and
                    the peer-reviewed International Association of Genocide Scholars.

                    but cyprus is not greece and cypriots do not want
                    AND NEVER WANTED
                    union with greece…

                    Yes they did. They wanted it from the 1890s onwards as you can see above. You are again wrong on this as well. And it is very telling someone claiming to be Greek to not know any of what I have said.

                    The only point made is when it comes to Greece and Cyprus you know nothing about them.

                    1. alex morfesis

                      your serbian diction is showing…

                      intl association of making sure we have something to talk about beyond armenia…oh please…quoting everyone except an actual cypriot…

                      hate is easy…peace is difficult

                      may you live in interesting times

                    2. John Jones


                      You can keep on avoiding what I write and not address anything. I already quoted a person who was there in the war.

                      I find it difficult to believe that you have never seen a news report of missing and killed Greek-Cypriots. Or that they wanted enosis. You can bury your head in the sand if you like. Apparently historians are a myth to you. I don’t remember you showing me any Cypriots. But if you did find me ones that deny anything I write would that still invalidate a historians work?

                      Further more if you want to ask Greek-Cypriots go to William Mallinson’s page and ask the ones that you see there or you can ask him to put you in contact with any number of them and ask them all you want. See if what I say is wrong.

                      you can from his page link to a group called
                      Go there and tell them they have a Serbian diction. It’s up to you. But I am sure you are comfortable in your denials.

                      What you want is for Greek-Cypriots and Greeks to forget what was ever done to them and bow to Turkey.
                      The only people I see saying that are Turkish nationalists.

                      Here is a Cypriot professor talking about dead and missing Cypriots(both Greek and Turkish)something you already denied.

                      hate is easy…peace is difficult
                      Yes and it starts with accepting the truth of events. Victims don’t stop hating if they get no form of justice and people trying to insult them by burying the truth.

                    3. John Jones

                      intl association of making sure we have something to talk about beyond armenia…

                      How nice of you to compare the suffering of Greeks to “something to talk about beyond Armenia”. You pretend to call yourself Greek and care about them all the while spitting it their faces especially the genocide victims and their families and you have the audacity to talk of peace and pretend not to be a racist.

        1. Chris in Paris

          Alex, what about the Greco-Turkish war immediately after WWI — the Asia Minor Catastrophe/Turkish War of Independence? Was that not a war between Greece and Turkey?

          1. alex morfesis

            you mean british and french intervention to steal the oil from the turks with the help of mister 5 percent ?

              1. alex morfesis

                ataturk and metaxas both knew what was going on…they were secret budz…

                when ataturk died (was murdered) on christalnacht, metaxas knew the only person on this planet who could (or would) help him fight the germans, was gone…

          2. alex morfesis

            and wars from a million years ago do not count…last I checked, France and Germany have killed a few of their own peoples since that oil removal intervention/diversion you are mentioning…

            the world has changed a bit since then…the top two luxury auto brands in Israel are BMW and Mercedes…

            that which you mention is a few million years ago in the modern sense…

            1. ambrit

              The sales of luxury German autos in Israel is a shame. That and the Dolphin II subs, with their nuclear armed cruise missiles. (Subs from Germany, nukes from Israel.)
              My Dad was bombed out of his house in London during the Blitz. Until the day he died he would never knowingly buy anything made in Germany. “They tried to kill me when I was a kid,” he would say. “Why should I reward them for that now?”
              As for your, “a few million years ago” argument; I know Native American people, Choctaw and Cherokee, who are still pissed off about how Great Great Great Great Grandfather and Mother were cheated and degraded by the White Man, back in the 1800’s. A communities memories can last for a very long time.

              1. MyLessThanPrimeBeef

                I think it’s only right and virtuous for the Anglo-Saxons to return the Elgin Marbles to Greece.

                Set a good example for those Teutonic barbarians.

                No reparation, just the marbles.

                1. alex morfesis

                  as to the marbles…it is my understanding the marbles could have been home years ago…BUT in a typical example of how greeks can find a way to make sure the drama is never over…there is this little(ok she is not so little) petty plutonomist (who has maybe changed her last name recently to Peristeri…looks like the same person) named Delaporta who basically said no deal…

                  my understanding of the deal was simple…Greece has no real marine archeology programs. This Delaporta (Director of underwater antiquites) constantly helps foreign archaeologist enjoy use of Greece as a field school and does not insist on training any greeks to do the work themselves. The British Museum offered to create a program to train greek archaeologists to be able to dive on the tens of thousands of wrecks and in return wanted a rotating set of exhibits to replace the space that would now be empty in the museum with the return of the marbles…they basically wanted first crack at display of what was found…she basically said forget it…she and her other clueless associates at the “cultural ministry” also insisted for years you could not take photos of antiquities to be published without her approval…which she never would give (except for micro circulation academic archaeology publications) which explains why so many greek tourism books seem to have pictures from before the jet age…

                  museums are a business…they drive tourism…meaning hotel room bookings…the acropolis complex setting is a very badly designed museum…it is not user friendly…it is an example of soviet planning at its finest…

                  1. alex morfesis

                    a good reason not to return the marbles just yet


                    unless that was just some piece used as a prop for
                    a photo op (and even if it was she should be using gloves), here is that Delaporta plutonomist improperly handling a marine artifact that has been pulled out of the water but not been cured and stabilized by electrolysis

              2. German native speaker

                Yes, and I spoke with someone in Laos (Luang Prabang – remember, near the Plain of Jars), whose 12 year old brother was killed when some Americans walked by their little house and simply shot the boy through the fence, for no apparent reason.

                1. alex morfesis

                  and you think I loved westmoreland ? what have I ever said that would make you think I would ever even begin to think about letting the evil of westmoreland and taylor pass as acceptable ?

              3. alex morfesis

                if you think I am going to defend custer…???

                forget but never forgive is my mantra…

                my point was only about the myth of the actual conflicts between hellenes and the turkoman…and

            2. John Jones

              The difference with Germany and Turkey is Germany has admitted to its genocides. Turkey has not. And tell the person or the family that has survived one of the genocides and ethnic cleanings of Turkey and Cyprus that it happened a million years ago and it doesn’t matter. You really are very out of touch with the Greek cultural conscience.

              1. alex morfesis

                that and a couple of invasions of france…

                most greeks will try to get you to believe that it was TURKEY who invaded cyprus…what part of having Sampson as the head of state in the coup in Cyprus does not resonate….bring me the Cypriot whose family WAS KILLED by the Turkish military action…not moved south…and then took over the home of a turk who was moved north…

                Greeks like to complain about things that never were…most greeks have no clue they are waving a german flag when they wave that blue and white thing…

                the filiki eteria for those few who even know it existed, has been pronounced as the great heroic uprising…forgetting to mention they were really ottoman plutocrats who were being edged out and decided to roll the dice before they lost all their power…

                to the victor go the history books…

                I have had my share of Cypriot refugee friends in New York City…they don’t spout out jingoistic nonsense…not one real Cypriot has ever disagreed with what I have said about what actually happened in Cyprus…

                Greeks like to cover up for the failure of the keystone kops in 74…and spout out nonsense about what “the cypriots” should think…

                you must have had some relative working PR for westmoreland aftter tet…

                1. John Jones

                  most greeks will try to get you to believe that it was TURKEY who invaded cyprus…what part of having Sampson as the head of state in the coup in Cyprus does not resonate….bring me the Cypriot whose family WAS KILLED by the Turkish military action…not moved south…and then took over the home of a turk who was moved north…

                  Which was used as an excuse after the fact Makarios was restored.
                  Turkey did invade Cyprus or did you miss the still 40000 Turkish Troops that are still there plus the settlers.

                  Further more the 80 percent Greek Cypriots wanted union with Greece like every other Greek island and land that rejoined after independence from the ottomans. But Britain and America couldn’t have that. That some Greek dictator that no Greek wanted besides the small typical right wing fascists that was an American Puppet decided to go remove Makarios was not a civilians fault. But he was there for Makarios not the Turkish-Cypriots. If he had a problem with the Turks why did he leave all the Turks in Thrace who are still there? Specifically after the Greeks were cleansed out of Istanbul in the 1955 pogroms?

                  Why don’t you go look up the numbers of dead and missing Greeks in Cyprus in U.N papers.

                  Once you have done that go to the International Association of Genocide Scholars and tell them no Greeks were killed and removed from Asia Minor.

                  I have had my share of Cypriot refugee friends in New York City…they don’t spout out jingoistic nonsense…not one real Cypriot has ever disagreed with what I have said about what actually happened in Cyprus…

                  No you don’t Alex. You might fool posters who are not Greek here. But not me. You apparently think one is a jingoistic when they defend their people against lies and genocides and ethnic cleansing they have faced.

                  Heaven forbid a Greek actual knows what happened to his own family.

                  you must have had some relative working PR for westmoreland aftter tet…
                  And you work for a Turkish nationalist think tank.

                  I suggest you enroll in a history class.

                  1. alex morfesis

                    I am sure the turkish think tank you suggest I might work for would be pleased with my ramblings about the Turkish Government recognizing the Greek Orthodox Church as a nation (vis a vis the vatican in rome) and turning over Halki Island to the Church Nation, changing the name of Istanbul back to Byzantium and cleaving a part of that city from the Patriarchie to the water front as sovereign Orthodox territory, and throwing in Ayia Sofia along with the package…

                    I am sure my “turkish” backers would be quite pleased with me and my thoughts…

                    1. John Jones

                      Considering the crap you spew against Greeks that I only see come from Turkish nationalists I think they would be very happy with you.

            3. Lexington

              Funny, it seems like only yesterday that people were suggesting Greece should demand reparations from Germany for a war that ended 70 years ago, and moreover one in which Greece technically wasn’t even a victor.

              So 70 years is fair game, but 93 years is way over the line? How exactly are these determinations made? Does the abuse of history to forward various self interested agendas enter into it at all?

              Also I’ve always been curious – if Germany paid Greece reparations, wouldn’t that set a precedent for Turkey demanding reparations for the Greek invasion of 1919-1922 in which the Greeks attempted to take advantage of the collapse of the Ottoman empire to invade and annex a large part of Anatolia?

              Just curious.

              1. Yves Smith Post author

                I do not know what others were suggesting, but the legal case I have mentioned more than once is not for “reparations,” which is generally for damage suffered in war. It is for a narrow claim, that of money looted from the Greek central bank by Germany during the war that I infer was supposed to be repaid but never was. Legal scholars opine that Greece has a good case.

              2. John Jones

                As Yves points out it was about the forced loan taken from Greece. The reparations for the war are separate issue from the forced loan. They both were also not just brought up now 70 years later. They were brought up by successive Greek governments to German governments after WW2.

                The Greco-Turkish wars were a different case than the German invasion and occupation.

                It wasn’t called Turkey. The Greeks were still living in Anatolia and that is what was contested. Greeks that were there before the Turks so I don’t know how it was a Greek invasion. They wanted independence the same way the rest of Greece had it.

                Whether this was a right move or not and how the war was carried out is another story. But the genocide of the Greeks in Anatolia started in 1913 and life under the Turks before that. Saying the Greeks invaded Anatolia is like saying Native Americans invaded America to fight against the Europeans. What were Greeks supposed to do just stand there while this was happening?

                So I fail to see how Turkey would be asking for reparations after wiping out the Greeks and Greek culture from Anatolia. Are Greeks also supposed to give reparations to Turkey for gaining independence on the Greek mainland as well?

      1. gemini33

        A lot of very smart people are not paying enough attention to what’s going on in Eastern Europe with NATO, or the power struggle between the US and Germany (re Russia and Ukraine).

        1. nick

          Power struggle between US and Germany? You’re dreaming man, they’re on the same page.

          1. gemini33

            Maybe it’s more accurate to say NATO rather than US. I always thought there was no appreciable difference until I learned more about it in recent years. There is most definitely a power struggle between NATO and Germany right now. See the Minsk agreement negotiations, for one example. See Germany’s eventual pushback and reaction to Breedlove’s public comments, for another. And there’s a constant tension to try to get Germany to pay more money to NATO’s budget. Germany and France are very worried that NATO will start a war in their backyard that will turn into a very large war. There are many other details but the overarching one is the desire to prevent Germany and Russia to become too closely associated in a business and a political sense.

    2. Lambert Strether

      I could believe anything. In addition to its many other flaws, the American national security establishment is grotesquely incompetent at anything other than feathering its own nest and logrolling.

    3. Yves Smith Post author

      The Administration threw Greece under the bus in February:

      Obama’s remarks at the G-7 clearly put the onus on Greece to compromise. Contacts who speak to people at Treasury say that privately Obama has been very unsympathetic to Greece. Even with Putin as the Administration’s Enemy Number One, the Administration’s body language for months has been that they aren’t worried about Greece’s flirtations with Russia.

      1. gemini33

        Well I hope you’re right. Our foreign policy in Eastern Europe doesn’t always seem to line up with what Obama signals that he wants. I really don’t understand why other than the fact that non-govt entities are heavily involved. But they don’t control the US Treasury.

      2. gemini33

        I respect your knowledge, sources & opinion but I can’t ignore what I’ve observed having closely watched what’s happened in Eastern Europe, Russia (and Germany + France) for almost two years (and much longer if you count the NATO expansion). My money is on US jumping through hoops to prevent Grexit with geopolitical possibly trumping the financial.

        I’m not sure how relevant this new WSJ article is because I think Lew has been saying similar things for awhile but the last paragraph about “debt relief” might be new? I’m not sure if he’s talking about more extensions, etc. or actual writedowns.

        Treasury’s Lew Urges Officials To Keep Seeking Greece Deal
        Mr. Lew reiterated that any solution requires Greece adopting “difficult measures to reach a pragmatic compromise with its creditors.”

        But the Treasury Secretary also said he told IMF Managing Director Christine Lagarde, German Finance Minister Wolfgang Schaeuble and French Finance Michel Sapin that it is “important for all parties to continue to work to reach a solution.”

        That includes “a discussion of potential debt relief for Greece” ahead of the referendum.

      3. Oldeguy

        Thank you gemini, I saw the same report and if it means a major debt haircut being part of the hoped for renewed discussions, it would mean both a major victory for Tsipras and light at the end of the tunnel for the suffering Greek population.
        I certainly do not believe that this stems from any humanitarian concern on the part of the Obama administration ( it has been obvious, to me at least, for years that Obama is a front man for the Banksters ) but rather it may stem from undisclosed systemic risk from derivative holdings.
        The strong suspicion that such a hidden danger exists may explain both Mr. Tsipras’ otherwise inexplicable boldness in pushing this down to the wire and beyond and the Obama admin.’s freshly expressed concern.
        Wall Street hoisted on its own petard ?

        1. Yves Smith Post author

          This is a misconstruction of what I said. I was responding to a person who suggested that the Administration would intervene on behalf of Greece. The Administration made it views, that Greece needed to make most of the concessions, clear back in February and made its not-friendly-to-Greece stance even clearer in the G-7. We said from the outset that Greece would never prevail on its own, that its only hope was to secure the support of the US and the European left (and the latter needed to show up in a big way). Neither happened.

          We never never suggested that the US was the driver’s seat, but it has the ability to exert a fair bit of pressure behind the scenes.

    4. Lexington

      I’m still not inclined to believe the US will allow this to come crashing down if there’s a risk that Greece will end up turning to the BRICS.

      The US “will allow”? Like the US has any say in the matter at all? The US has no real leverage here, which is why Obama has said almost nothing. A while back he essayed some anodyne comment about giving Greece a fair shake and was no doubt told mêle-toi de tes affaires in no uncertain terms by the EU, advice he has wisely taken to heart. Of course, if American taxpayers were willing to relieve the EU of the expense of financing Greece’s debt there might be some basis for a conversation. Short of that no one in Europe cares what America thinks.

      I know that’s hard for many Americans to wrap their heads around.

      It’s is like those Hollywood movies in which CIA officers boss around foreign law enforcement agencies and behave in foreign countries like they run the place and American audiences don’t blink an eye because they assume this actually reflects America’s relationship with the rest of the world.

      1. Yves Smith Post author

        I suggest you look at the actions of the Greek government. It’s at odds with the picture you present.

        When Greece threatened to oppose sanctions on Russia, soon after the new coalition came it, it got a big-time dressing down from Nato and backed down pronto. The recent flirtation with Russia has been led by the energy minister, who if my memory serves me right, is from ANEL and has strong ties to Russia. and he’s been regularly swatted down by Varoufakis and more recently by the foreign minister. In other words, the loud pro-Russia faction does not have the support of other key ministers. And as a Syriza sympathizer recently explained in a Real News Network interview, the recent Tsipras meeting with Putin was a pro-forma affair at an annual international showcase for St. Petersburg. He made it clear it was far less important than most commentators wanted to make it out to be (and he himself has been to this very same event in past years).

  13. ambrit

    Putting aside the suffering that the Greek people will be enduring for the next few years, what is the “contagion trail” here? To whom are the proto defaulted funds owed?
    The IMF money comes from assessments against the member governments. So far, so good. I assume these governments have plans in the back files for dealing with a big shortfall like this. (The IMF is engaged on many fronts, so, I assume the Greek denominated risk is not catastrophic to it.) Since most of the IMF member states are still sovereign nations, in the worst case scenario, they can “create” the needed funds somehow.
    Is the ECB in a similar situation? By the nature of that beastie, the member ‘states’ of the ECB are constrained by the Euro mechanism itself. The worst case scenario for them truly is a worst case. The core states of the ECB are running trade surpluses. The rest, supposedly, are not. Thus, the financial and by induction, political repercussions of an ECB ‘haircut’ will have a disproportionately damaging effect on the ‘weaker’ peripheral ECB states. Is this why such stalwart defenders of the ‘polis’ like Spain and Ireland have been taking such an aggressive stand against Greece’s position?
    The ball is now squarely in Germanys court. We have been characterizing Germany as the Hegemon in Europe. Will the Bundesbank call for the ‘creation’ of fresh funds to ‘make whole’ the German banks, and leave the rest of the member states central banks to twist in the wind? Will Germany now fully shoulder it’s supposed responsibilities as “Greatest among equals” and make the other Euromembers’ banks whole as well?
    This is the defining moment for Germany as well as Greece.

    1. The Insider

      As Yves indicated elsewhere, the ECB will likely limit the short-term damage to the banking system by treating Greek debt as performing up until the moment that payment on each particular series is missed. That means that banks won’t have to write down the debt for some time, which will limit the short-term banking contagion.

      What it will do, however, is cast a shadow over the entire Euro zone, as market participants will know perfectly well that there is dry rot in the infrastructure due to unrealized bad debts. So while the banking system may not be impacted, I suspect the currency will, and the current trend of Euro weakness against dollar strength will continue – with seriously negative ramifications for those (including many large European corporations) who make money in Euros and make debt payments in dollars.

      1. Yves Smith Post author

        Wolfgang Munchau said a few years back that the only thing that might save the Eurozone in its current form was a Euro at between 60 and 80 cents on the dollar. But we all know the US and China would not tolerate that, or at least not for very long.

        Are there many corps, as opposed to banks, that have mismatched dollar funding?

        1. The Insider

          @Yves, good question, and I wish I had a more firm answer. The eurobond market is substantial, but I don’t have any reliable figures on where the exposure lies. Just poking around the Luxembourg exchange where a lot of the eurobond issuances are traded, while most of the eurobond issuers are sovereigns or based in developing markets, there’s still considerable European corporate exposure – most of it banking (DB, Credit Ag, CS, etc.), but also some general corporate exposure (TelecomItalia, a few others).

          I suspect the super-cheap euro borrowing rates have encouraged local borrowing by European corporations, but there are still some significant dollar liabilities out there. And as long as petroleum stays cheap, it won’t be a pressure point, but if it should rise at the same time that the euro falls, that could be trouble as well.

      2. Kurt Sperry

        My possibly faulty recollection is that the Euro fell vs. the USD after the Swiss pulled their peg in January and after a bottom in March, it has crawled back up through a lot of what looks like short cycle volatility. I know there’s no rational basis for it, but if the Euro drops below parity with the USD for any length of time it will begin to feel like the bottom is falling away.

        Germany* wants a weak Euro, right?

        *or people acting in the role of Germany

  14. bh2

    A handful of Greeks once bravely resisted inevitable defeat for a principle they regarded as superior to their own immediate fate.

    When promised that arrows flying down on them would darken the sun, they replied “then we shall fight in the shade!”

    The Greeks once again fight in the shade for preservation of the most fundamental of western democratic values: self-determination by the people themselves. And people of other nations will likely take notice.

      1. bh2

        I’m predicting there will be a vote, which is what actually counts.

        The event itself is a sharp jab at the soft underbelly of the pompous eurocracy which (rightly) regards all direct democratic action as a direct existential threat to their precious dream of soft conquest.

        And they are quite right about that. Godspeed to the Greeks.

        1. Alphonse Elric

          The Greeks at Thermopylae lost because, though they had good ground, Ephialtes betrayed them to the Persians by telling them a mountain path behind the Greek lines.

          Today’s Greeks were betrayed by their leaders who chose bad ground, and led them into combat without telling them that’s where they were going. Calling for direct democratic action after it’s too late for people to make the choice you claim to be offering is a threat to MY precious dream of direct democratic action.

  15. Aufklaerer

    Call me crazy, but my money is still on Merkel & Juncker doing anything in their might to keep Greece in the Euro. The Euro is Germany’s vehicle to dominance in Europe, why would they give that away? The cost of bailing out Greece again (and again and again) is a trifle when compared with the benefits of the Euro for Germany. Their problem is a right-wing media and “Euro-Skeptical” intelligentsia in Germany that tells the German electorate that “lazy Greeks” are “leeching” on the “industrious” Northern Europeans.

    I think that is why Jean-Claude Juncker made this public:

    ‘If we were to accept, if Greece were to accept, if others were to accept, that Greece could leave the solidarity and prosperity that is the eurozone, we would put ourselves at risk because some, notably in the Anglo Saxon world, would try everything to deconstruct the euro area piece by piece, little by little,’

    (Daily Mail)

    Instead of German taxpayers vs Greek “leeches”, the conflict becomes European solidarity vs Anglo-Saxon financial capitalists, and there’s no doubt in my mind German voters from left to right would love to rebuke the banksters.

    Having said that, I have no idea how they get rid of Schäuble (Dijsselbloem et al are just minions), but he serves at the pleasure of the Chancellor, and Ms Merkel has political capital to spend…

    1. Blue Meme

      Yes, the German economy has massively benefitted from exporting goods priced on a relatively weak Euro relative to what would be a much stronger Deutschmark. A rational big-picture German would find a way to prevent a Grexit.

      A petty, myopic banker-type German, however, would likely focus on moralistic lesson-teaching, thereby sawing off the branch on which he sits. And because even a myope will understand that a Grexit cannot be allowed to metastasize into a Spaexit and a Porxit and an Itexit, the lesson will be unspeakably harsh, even as Germany crashes earthward.

      1. MyLessThanPrimeBeef

        Empire building takes patience…especially one that will take on the Anglo-Saxon order, which itself preserved the union, with force, in the 19th century, and in the subsequent centuries, has dominated the world.

        By contrast, Scheauble and the others are pursuing via non-violent means (whatever that means, I always think non-violence can be more deadly) to preserve their union.

    2. Lambert Strether

      Thank you for the qualifications “Call me crazy, but my money is still on….” and “I think that is why…”, with evidence.

      Speculation fairly stated is a lot less incendiary than flat declarative statements without evidence.

      Not sure I agree, mostly because I’m not sure how much political capital Merkel has. She also needs a counter-party who is, in her mind, trustworthy.

      1. gemini33

        A financial counter-party or a political counter-party? Or I guess, one might be likely to be both.

    1. bh2

      Varoufakis: “We are committed democrats.”

      As the elitist EU bureaucrats plainly are not, never have been, and never will be. It’s strictly alien to their political DNA. Their persistent agenda to usurp democratic governance is steadily being exposed across Europe.

      This blunder may prove to be their Minsky moment. One can only hope.

      1. MyLessThanPrimeBeef

        Is he an accidental, committed democrat or a planned one?

        What I mean is, did he plan all along to submit Tsipras’s various proposals during the months of negotiating with each other, and/or those from the creditors to a referendum at the end of all their meetings and conferences, because the matter (whatever the proposals) is too important?

        If so, did he inform the other side and did they all agree to such an arrangement, say, back in February or March?

      2. Yves Smith Post author

        With all due respect, I don’t see how one can take the position that it is consistent with democracy to offer citizens a vote on a dead letter, as in a memorandum that has expired. And if you try to argue, “well this is really a vote on the Eurozone,” that too is made moot by the fact that letting the bailout expire before the vote assures an arrearage with the IMF and a default on the ECB on July 20. That puts Greek on a very hard to avert path to a Grexit. So please explain to me how this referendum offers Greek voters a say.

        1. larry

          While the referendum may be a bit of a sham, it is “consistent” with the democratic process. It looks to me as if this is a gambit to show the Greek people that whatever they decide, the Troika will screw them over. It may also be an attempt to raise the Greek numbers for exiting. It does offer them a say, but not necessarily one that will take them anywhere but out, which is a nominal kind of result. The referendum may also be intended to show, not just the Greeks but others, that the government did all it could. This could be enough to keep them in power and prevent a return to the subservient type of government that there was previously.

          No one is saying any of this, of course. But they seem to me to be reasonable interpretations of what the government may be up to. A difficulty with this is, as NC has pointed out a number of times, is the Greek government’s inconsistency, which initially many of us put down to inexperience. While that may have been true at first, surely, it isn’t any longer.

          1. Lambert Strether

            “if this is a gambit to show the Greek people that whatever they decide, the Troika will screw them over.”

            If the Greeks didn’t already know that, that’s a complete and utter dereliction of duty by the Tsipras government. If not, it should have formed part of the curriculum from day one. More excuse-making.

        2. Left in Wisconsin

          Yves, are you saying that if this vote had happened a week ago, or the troika would simply agreed to hit the pause button for a week or two, the vote would be legit? But, for more or less technical reasons, now it isn’t?

          1. MaroonBulldog

            Can’t presume to answer for Yves, but I can give my own opinion. I seem to recall a small procedural matter of needing unanimous consent from all 18 other members of the Eurozone in order to grant an extension of time to finish the bailout nations, and, in a few countries, it would take a vote in parliament to furnish the necessary consent. The three institutions comprised in the troika, (IMF, ECB, ESF) did not have authority to grant the extension. That is not ust a technical reason. It has a much broader significance. It make a big difference.

            This explains why Tsipras could not have asked for an extension of time before announcing the referendum. If he had asked for the extension, the impossibility of getting it would have been pointed out, and he could gain no PR points by pursuing it. This way, he can say he “tried”, and some of the people he is trying to convince will believe him, or say they do.

            The big difference is, if the vote had happened a week ago, it might not have been a fraud. Or a futility If it happens now, well, it is going to be a futility, and some might see it has a deception as well.

            The vote now is not legit, and the reasons are not more or less technical.

            1. Left in Wisconsin

              I guess I am unconvinced. We all know that legal hurdles can’t be overcome except that, whenever powerful interests need them to be, they are.

              1. gemini33

                For a recent example of legal hurdles that can magically be overcome, see IMF bailout of Ukraine (it broke many of IMF’s rules so they just fudged things).

              2. Alphonse Elric

                I don’t think it’s about a legal hurdle at all (it’s not 100% clear the referendum is constitutional, but that’s a separate story).

                The referendum does not mean what Syriza says it means. A “No” vote, with relations with the creditors in tatters, greatly increases the chances of Grexit, which Syriza denies, and would have been much less true of a referendum in e.g. May.

              3. MaroonBulldog

                After Tsipras got parliament to authorize the referendum, he had Varoufakis request an extension from the Troika. After, not before. And a response was gathered from all 18 member states other than Greece. They all said no. (It didn’t require a vote in any member state to deny an extension, only to grant one, so it seems). So even if they “could have found a way to grant an extension,” they adverted to the possibility and declined.

                The vote is not legit. The question being referred is whether Greece should accept an offer that has expired or been withdrawn, “yes” or “no”. Voting “yes” would be a futile act–Greece has no power to accept an offer that has expired or been withdrawn.

        3. I.D.

          Yves: the referendum is a way to expose how much creditor nations and the Davos “technocrats” despise democracy: it would cost the creditor nations very little to postpone default by a week, compared to the costs of a disorderly grexit to both Greece and the rest of Europe.

          If default happens before the referendum it will happen only because the creditor nations want to force a default

          1. Lambert Strether

            “it would cost the creditor nations very little…” It would have cost Greece very little to hold the referendum early enough so that no postponement would have been accepted.

            Unless, of course, the entire “negotiation” process was a Noble Lie intended to “teach a lesson” to the long-suffering Greek people. Seriously, the Greeks are dealing with banksters. What do we know about them now that we didn’t know in January, when Syriza took power? And if the Greek people were as ignorant of the realities as the latest excuse (“mass pedagogy”) implies, Syriza are certainly terrible teachers. If you want to teach people about a trainwreck, it’s sufficient to teach them; you don’t need to usher them into the train, and then crash it.

            1. I.D.

              My point was that regardless where the “blame” lies, at this stage the only entity that can postpone catastrophe cheaply are the creditor nations: by waiting a few days for the referendum.

              If it’s a Greek ploy then it will be spent by Sunday and cannot be used again.

              So it is pretty telling that despite all the assurances by creditor nations that they conducted negotiations in good faith, they are unwilling to do this small step (to wait 6 more days with the proxy payment of 1.5b € to their own banks: Greek people will see none of that money) and are willing to inflict incalculable suffering on the Greek people…

        4. bh2

          Sovereignty is never a “dead letter” until conquered from without. Meantime, the Greeks are exercising their sovereignty as a nation.

          What they will decide is whether to drink one poison potion vs. another. They will choose whichever one they judge to be least fatal in the long term.

          If they choose to default and then successfully recover over time, it is the EU which becomes the dead letter. Because others will notice.

          1. Lambert Strether

            Oh. Last I checked Greece gave up its right to a sovereign currency to join the Eurozone, so they can’t devalue themselves out of their crashed economy. So I would say that portion of their sovereignty — and the all essential one, right now — is very much a dead letter.

    2. Jabawocky

      Thanks orb inking this. the institutions are already using Peston to threaten Greece. I fear there is no way this referendum will be allowed to proceed with ‘tranquility’ as Varoufakis hopes.

      1. Lambert Strether

        “Orb inking” … Ah, cellphone-ese for “for linking.” Now I feel better.

        * * *

        If the Syriza leadership wanted a referendum to proceed tranquilly, announcing it at 1AM right when the bailouts were about to end seems like a suboptimal approach.

        1. Jabawocky

          Agreed on the timing issue. What is interesting though is the EU insisting this is an in out of the euro/eu issues, while Varoufakis is at pains to point out that Euro exit is illegal.

  16. financial matters

    Looks like this leak was another attempt to accentuate the bank run.

    Nice to see Mariana Mazzucato weigh in (with a nod via twitter by Steve Keen as being spot on) to the effect that there is a more positive way forward for Greece.

    “The failure to reach an agreement in Greece is because, from the start, the diagnosis has been wrong. So in the end, the patient got sicker – and now wants to stop being treated.

    Instead, insisting on the status quo full of more austerity produced an increasingly weaker Greece, more unemployment and more loss of competitiveness. Now alone, the only hope is that Varoufakis’ insistence on a European-wide investment programme will at least find a national solution. Perhaps it can begin with Greece forming a development bank like the KfW, and use it to kickstart the kind of long-term investment strategy that should have been part of this ‘pact’ from the start. Oh, and Italy’s competitiveness is just as bad. So if Grexit now happens— and Europe does not finally get a proper doctor in the room – get ready for Itexit over the next year.”

    1. sd

      Ok, dark humor. It would be fun to see Greece do a full on Kickstarter campaign….and succeed.

  17. Michael

    To me, this feels like what happens after 2 months of staring the abyss in the face — people lose the sharpness of their analysis. The humans who’ve been trying to hold things together desperately need time to recharge their bodies and minds, whatever else happens.

  18. The Insider

    In retrospect, Syriza’s mistake was a simple one: they didn’t have a plan. For all of Varoufakis’s vaunted game theory expertise, they simply didn’t have a coherent strategy going in (in fairness to the man, Varoufakis himself may have had a plan but simply ended up getting overridden by the other Greek political leadership). All of the talk of not having a “Plan B” misses the fact that they didn’t really have a “Plan A”.

    In looking at their situation, it’s easy to be sympathetic – what exactly could be done in their situation? Accepting creditor demands would not be a sustainable approach – the creditors were interested in extracting the maximum in debt repayments possible without any regard for the Greek economy, and sooner or later there would be a point where the creditors would want more and Greece would not have more to give. At some point, there would need to be an end to the round of demands and concessions.

    I think Greece’s best strategy would have been a variant on the age-old “saying ‘nice doggie’ while reaching for a rock” approach. That would have looked something like short-term acquiescence to the creditors’ demands while (very quietly) lining up alternative currency and banking systems, with particular attention to trade financing. Not an easy or attractive route, but arguably preferable to staying in long-term servitude toward the creditors, and certainly preferable to the current disaster.

    1. Alphonse Elric

      We may soon know what sort of “very quiet” preparations the Greek government has been making, but I’m guessing not much. As discussed here before, the necessary preparations are hard to do in the dark.

      Syriza’s position was weak, but they did have strategic alternatives. Yves suggested back in January that Syriza use more explicitly the threat of default in negotiations. There would have been a much better hope of default without Grexit if they’d adopted that approach.

    2. gemini33

      This might be a dumb question and advance apologies if it is — are Tsipris and Varoufakis on the same page? During the past couple days, it wasn’t apparent to me that they are.

      1. Alphonse Elric

        We know Varoufakis doesn’t disagree strongly enough with Tsipras to resign. Beyond that, I think it’s kind of guesswork. Their public statements and actions seem to align pretty closely to me, but I haven’t read everything they’ve said recently.

  19. dla

    Major lurker here looking for an answer. :) Not an expert on any of this, so please explain to me why I’m wrong, but isn’t it possible that the referendum move is a ploy to get the IMF out of the negotiating room? If the Greeks default on Tuesday, isn’t it the case that the IMF statutes prohibit it to be part of a new bailout? It seems that last week’s proposal by the Greeks, which was received positively by Holland’s etc., was shot down in Track Changes by the IMF, so one could understand why Tsipras would feel that he would have a stronger position if he could extend the negotiations til after an IMF default.

    I’m not saying this is a viable move on Tsipras’ part, and he might have severely overestimated the creditors willingness to keep negotiations going (although the EC and the French seem to be trying now to get Greece back to the table), not to mention the risk of ELA being killed and capital controls being implemented, but I find it a more attractive explanation than either the “Tsipras is a lying crook” or the “Tsipras is heroically sacrificing his nation on the altar of the Left’s Glorious Future” narratives (although there is probably an element of truth in both). It might be a bad strategy, but at least it’s a strategy, and it fits well with the fact that Tsipras has consistently tried to move the negotiations to a political level.

    Or what am I missing?

    1. Alphonse Elric

      No expert either, but IIRC some of the other agreements are conditional on the status of the IMF loan, so defaulting on the IMF damages the other relationships pretty severely.

      If there was some way to convince the ECB to buy out the IMF loan (which seems unlikely to me), I think Tsipras would have needed to negotiate that before the IMF default

    2. MaroonBulldog

      The bailout negotiations are negotiation stage 1. Writing down the Greek debts was supposed to be negotiation stage 2. Defaulting on payments owed to the IMF does not make the debt go away, nor does it avoid the need to negotiatget those debts to the IMF written down along with the others. Among the institutions/Troika, the IMF is the one most in favor of writing down Greek debt. Antagonizing the IMF is a strategy with great risks, great potential cost for a debtor Greece in need of a write off.

      I’m not saying Tsipras didn’t deliberately do it. I’m just saying, if he did, I don’t understand.

  20. alex morfesis

    ford tells nyc “drop dead”

    this too shall pass…

    there are always solutions when people want them…dr strangluvauble can shoot himself in the foot to prove he has bullets in his gun because a “madman” gave him the ability to feel no pain there…

    this is the german finance ministers LTCM moment.
    Will he rise up to the occasion or prove to the history books that he is a tired old politician, too stuck in his ways to come up with a simple solution…

    as “financial matters” touches on above a bit, germany taps euros from many different ways to keep the german economy flowing…including its KfW development type “bank”…

    finance minister schaeuble could kill 12 birds with one stone…it won’t happen…but with that…his speech…

    “We in Germany have prospered the most in Europe since the dark days of the second world war. The German people have been blessed with a sequence of events which has gotten us to this moment. The sacrifices the German people have accepted have allowed us to find ourselves at this juncture. Germany is strong and will remain strong. Our grandchildren will ask one day why we made the decisions we made and will make this year. We can not fall backwards and need to insure the battleship is well armed and supplied. But a battleship need not run over a small fishing boat just to save a few liters of fuel.

    Greece is unique in our discussion of the “peripheral” nations in Europe.
    Spain, Italy, Ireland and Portugal were basically not effected by the military actions of Germany, whereby Greece was not only terribly effected by the angry response to their refusal to surrender quietly, even after the war they were further victimized by the actions of Stalin and Churchill behind closed doors.

    The Greek people have not much had a reasonable chance at peace and prosperity.

    There is no question we in Germany turned a blind eye to the small handful of political families who abused their opportunities and created the mess the current Greek government is trying to solve. Most of the “lazy greeks with phony pensions” we talk about in Germany are really political cronies of those political families. When we complain in Germany about this situation we are not talking about the honest yia yia and papou trying to help their grandchildren survive this mess…

    Mind you I have huge problems with how the current government is approaching this situation, but must honestly accept THEY did not create this mess and my opposition to their tactics and thought processes should not get in the way of helping the Greek population that just wants a reasonable chance at success.

    With that in mind, we have gathered together the top 200 publicly traded German companies. We are blessed
    to have one of the most robust financial systems in the world and access to the most modern financial tools. As such, these fine and responsible members of our German economic family have agreed to contribute free trading shares of their companies to the tune of 65 billion euros, which although representing only 5 percent of their capitalization, will have the needed impact in creating a KfW type development bank for Greece.
    The terms will be fairly easy, what I will call the three fifteens…fifteen percent ownership…fifteen percent of the cash flow…fifteen percent of the profits.

    Although some will attempt to call this reparations, these are easy loans, not free money. Systems will be put in place to insure the funds are not made to vanish into the pockets of the same old fools who created this mess for the Greek people.
    What is correct is that although the German people as a whole do not owe anyone anything, the German nation needs to acknowledge many German corporations prospered from the pain and devastation of the military actions of the German dictatorship during the second world war.”

    pom-poms for schaeuble….we can always dream the children will start acting like adults…the children on both sides…
    oh and will someone in Europe call out samaras for trying to stage the fall of the govt…he had his chance and he dropped the ball…

  21. craazyman

    this quatrain from Nostradamus is pretty foreboding. I wonder if he means Professor V. here:

    Quatrains – Century V

    By the shaven head a very bad choice will come to be made,
    Overburdened he will not pass the gate:
    He will speak with such great fury and rage,
    That to fire and blood he will consign the entire sex.

    The child of the great one not by his birth,
    He will subjugate the high Apennine mountains:
    He will cause all those of the balance to tremble,
    And from the Pyrenees to Mont Cenis.

    I’m not sure what the reference to “entire sex” although since people call nations “she” for some reason maybe it’s all of Europe. I also don’t quite know how to interpret the first line of 61. It doesn’t seem to have anything to do with anything. It might be there just for confusion’s sake. But the rest of it, it looks pretty bad.

    For some reason though I think they’ll pull something out at the last minute. They always do. If they don’t, I’ll be pretty surprised, regardless of what Nostradamus says. I’d even bet on it. But not much, only $10. I’ve already lost so much money betting on Doom & Gloom I’m cautious about making any forecasts and then betting on them. It’s over for me. Nevertheless, if I was still a betting man I’d be long Greek stocks right now.

    1. MyLessThanPrimeBeef

      With freedom of movement in the EU (progress!), the exodus from the dusty bowl of Greece to the Californias of Europe will continue.

      “Welcome to our melting pot Northern European country. We offer upward mobility for those starting at the basement – remember, if you start at the very top, you can’t go up anymore and so, it’s best you avoid that and start as low as possible. Our official policy is we will not take advantage of you the way Americans do with their Latin American immigrants.”

  22. mpr

    This is a remarkable display of blaming the victim by Yves.

    First it seems an agreement with the institutions was quite close, but that there was a retrade following Thursday’s Europgroup see

    So, it was not obviously crazy to try for a deal until the last minute. Having a referendum earlier also has its downside. A ‘Yes’ vote would have arguably undermined their negotiating leverage, while a ‘No’ vote would have undermined their ability to compromise.

    More broadly, this is the problem when you’re in a losing contest. It always looks like the choices made were a mistake, but different choices would have just lead to losing slightly differently.

    You can say (as Yves has) ‘they should have imposed capital controls earlier’. But this would have lead to immediate economic damage and possible Euro ejection, with the reasonable argument that they should have tried a negotiation.

    All in all, the Greek government strategy of trying to find an accommodation based on rational arguments was not an unreasonable try. The main criticism is that they were too naive about the good will of their negotiating partners – e.g they kept paying the IMF. But, in fairness, the IMF’s behavior has been pretty astonishing, as in institutionally suicidal.

    1. MyLessThanPrimeBeef

      From the link:

      “By posing the question: do you accept the deal offered by the creditors, Alexis…”

      If that’s the question on the referendum (last week, today or next week – there has always been at any given time, a deal or some sort from the creditors during that time), there is no negotiation leverage to be undermined after a Yes vote (negotiations done – take this deal or not take this deal), and no more compromises to be made after a No vote (negotiations done – take this deal or not take this deal).

      Perhaps there is a reason for the timing that we are not aware of, but I am not sure it has anything to do with negotiation leverage or ability to compromise (they don’t make sense, at least to me), as analyzed in the above paragraph.

      I also wonder if Juncker was thinking of something like this link when he said what was quoted above (by Aufklaerer) about the Anglo-Saxon world.

  23. east
    European Commission – Press release
    Information from the European Commission on the latest draft proposals in the context of negotiations with Greece
    Brussels, 28 June 2015

    In the interest of transparency and for the information of the Greek people, the European Commission is publishing the latest proposals agreed among the three institutions (European Commission, European Central Bank and International Monetary Fund), which take into account the proposals of the Greek authorities of 8, 14, 22 and 25 June 2015 as well as the talks at political and technical level throughout the week.
    Discussions on this text were ongoing with the Greek authorities on Friday night in view of the Eurogroup of 27 June 2015.
    The understanding of all parties involved was that this Eurogroup meeting should achieve a comprehensive deal for Greece, one that would have included not just the measures to be jointly agreed, but would also have addressed future financing needs and the sustainability of the Greek debt.
    It also included support for a Commission-led package for a new start for jobs and growth in Greece, boosting recovery of and investment in the real economy, which was discussed and endorsed by the College of Commissioners on Wednesday 24 June 2015.
    However, neither this latest version of the document, nor an outline of a comprehensive deal could be formally finalised and presented to the Eurogroup due to the unilateral decision of the Greek authorities to abandon the process on the evening of 26 June 2015.
    List of prior actions – version of 26 June 20 00.pdf

    If you download the PDF file, you will notice that it has on each page the mention
    “(26 June 20h00) List which takes account of proposals of the Greek authorities received on 8, 14, 22 and 25 June”

    but when you look up the metadata, the document was created “28 June 03:29 PM by Microsoft Word 10.0″, with author’s name missing.

    So it couldn’t be what was on the table on Friday 26 June, when the alleged abandoning took place.

    1. IsabelPS

      The document was obviously created today. It puts together the proposals on the table, to be released to the general public, namely the general Greek public. (I have never heard of such a thing. They must be mightily pissed off at what they (and I) perceive as a sleight of hand, taking the Greek public as shield. If that is what people call democracy…)

  24. NotSoSure

    Either way, even if let’s say they go back to the negotiating table, there’s at least some variation to previous negotiations. Let’s get this over with and move on to Portugal at least or Italy/France. It’s getting boring.


    Personally i think the analysis of this blog (as many other commentators) has been wrong about Tsipras and Varoufakis from the beginning and about the negotiations.

    The whole analysis was based on the premises that both sides were acting rationally trying to maximise some economic outcome, especially on the Greek side, notably that the Tsipras was ready to bent over and do whatever it takes – to make that next pension payment.

    and raid his own pensions fund he did, apparently crossing red lines and make promises to the IMF he did many times. But did he meant them ? i mean even when he made those pension payments, he was about to get 10 times more money, and win a few months.

    Tsipras and Varoufakis are politicians, ideologues, and whether or not the Greeks fully support them, my take is that they wanted Grexit from the start (UNLESS big concessions from IMF) and the way the negotiations were going against that objective, the *REAL* goal, as opposed to theater was to make those negotiations fail, and put the blame on the ECB.

    Its about giving a fresh new start and hope to Greece, even if it means an economic Hiroshima in between. Its about say *FUCK* to EU neo-liberalism. It is finally also about *STUFFING* once and for good the ECB, IMF for all the money they lent them and went into (some) Greek pockets.

    NEVER forget this was (so far) the biggest HEIST in history. We need not a German word but a Greek word for it.

    1. MyLessThanPrimeBeef

      If this is the case that “they wanted Grexit from the start (UNLESS big concessions from IMF),” then, to me, it seems that they should have used it openly from the start and who knows, they might have gotten that big concession by now.

      If this is the case that “(i)ts about giving a fresh new start and hope to Greece, even if it means an economic Hiroshima in between,” then, I believe they should have dropped that economic Hiroshima months ago.

      Maybe I am wrong, but that’s how I see it.

    2. Lambert Strether

      If true, why drag it out? Why not slam on capital controls pronto and get out, while you’ve still got money in the bank? Why not do the “Oxi” thing months ago? (Yes, I realize they didn’t run on that, but FDR ran on a balanced budget in 1932. Sometimes leaders need to lead.)

      1. FG RIDEAU


        i have no knowledge if its true, its just my uninformed opinion.

        but if i could develop my hypothesis a bit.

        Syriza could have dragged for so long for a mix of reasons:
        – they didn’t grasp the whole situation at the beginning
        – there was internal dissent

        when the Greek govt made up their decision, they decided
        – to game the ELA
        – to put their OWN money away…
        – to play the blame game and manage to sell/tell a story to the Greek public who wouldnt necessarily approve their politics.

        i believe the decision was already taken back around April at the latest.

        I agree with Yves that the referendum is a political trick and Greece will have already defaulted. (tomorrow and the latest IMF payment looks like a default, sounds like a default, and smells like a default already to me anyway). With the capital controls and bank holiday, it seems now the inferno machine is on and there is no way back.

        However, i disagree with her. its not out of incompetence. its totally what Tsipras wanted. hes an ideologue, happy to take the gamble. He didn’t come to the negotiating table in good faith, -only perhaps in the first few weeks.

        From here, I see things going downhill for the whole EZ. When Greek citizens get their bank accounts Cyprused, Italians and Spanish know they are next in line and will take the appropriate measures….The chain reaction has started.


    about those Greek banks failing:
    as said another blogger, at least the ongoing bank run means some Greeks (hopefully the wiser of the little people as well) could pull out some hard cash in time, well as much as they could, since the ELA has been stretched to the maximum, and well thats still a few more tens of billions that the Greeks managed to get out from the system before bankruptcy.. multiples of the *NET* effect of the next so called 15bn in aid which was only a facial amount, after deducting for IMF and ECB upcoming repayments .

    The simple truth is the maths didn’t work anymore, the kicked can finally hit the wall, and there was so little left inside it that the Greek govt decided it was better to stop it and make history.

    Debt which can’t be repaid, won’t. Major defaults are going to happen in other major Western countries in the next decade. Think Japan.

    1. MyLessThanPrimeBeef

      Debt that can’t be paid.

      It’s a simple matter of time.

      Time heals all wounds, for one. And as long as a nation lives or exists (over successive governments) she will pay.

      From 2010:

      On Oct. 3, 2010, Germany finally paid off all its debt from World War One.

      Nations are not persons. Persons don’t have 90 years to pay off a debt, except some exceptional creditworthy persons who might borrow at the age of 20, and finally pay it off at the 110th birthday.

      “No debt relief for you barbaric Huns.”

  27. supermundane

    Reading Varoufakis’ statement published on his site I note the following:

    Some worry that a Yes vote would be a vote of no confidence in our government (as we shall be recommending a No vote), in which case we cannot promise to the Eurogroup that we shall be in a position to sign and implement the agreement with the institutions. This is not so. We are committed democrats. If the people gives us a clear instruction to sign up on the institutions’ proposals, we shall do whatever it takes to do so – even if it means a reconfigured government.

    Is the strategy of the referendum (perhaps one of many depending on the outcome) to provide cover for the centrists in Syriza to unshackle themselves from the sizable block of left-eurosceptics in the party as well as ANEL and form a coalition with other parties including PASOK, ND and To Potami especially given that a Yes vote is likely?

    Syriza taken as a whole is more eurosceptic than the population and the government’s position (led by Varoufakis and Tsipras) is that they will do everything possible to keep Greece in the Eurozone. Does this include having a mandate to form a coalition of unity with pro-Euro groups within the parliament even if it means splitting their own party?

  28. VietnamVet

    Much like 101 years ago when the lights went out across Europe; there is nothing rational about the Greek default. It is another irrational outbreak of human emotions; “us versus them” along the fault lines of civilizations. In this case the West against Greek Orthodox. For far less money than will be lost from the collapse of the Euro, the Germans could have invested in Greece and make government tax reform the cornerstone of a turnaround; but no. “This is ours. They are Greeks”.

    1. MyLessThanPrimeBeef

      Not just the Germans.

      Finland, Spain, Portugal, Ireland, Slovakia and other countries (some even more hardline than the Deutsch) have to go along as well.

      And the German corporations do want to invest in Greece…via privatization. So, the Greeks are perhaps cautious of how they invest.

      The most cost effectively way, preferred by empires everywhere, and has been proven over the years in various field conditions, is to buy off local politicians, if these bad guys are really, seriously interested in undermining Greek democracy. And we shall soon see if there is a covert operation going on presently.

  29. Joe Emersberger

    Yves you said

    With all due respect, I don’t see how one can take the position that it is consistent with democracy to offer citizens a vote on a dead letter, as in a memorandum that has expired. And if you try to argue, “well this is really a vote on the Eurozone,” that too is made moot by the fact that letting the bailout expire before the vote assures an arrearage with the IMF and a default on the ECB on July 20. That puts Greek on a very hard to avert path to a Grexit. So please explain to me how this referendum offers Greek voters a say.

    The upcoming vote matters immensely.
    Come on, Would you , if you were a Greek, advise people to boycott the vote because it was a “scam”? Would you tell them it is meaningless, makes no difference at all, whether you vote “yes” or no”?

    If so, I’d love to hear why.

    If not, then i think you have to concede that, whatever your criticisms, this vote is democratically empowering to Greeks and is very far from risk-free for Syriza..

      1. Joe Emersberger

        And so, if you were a Greek, you’d advise people to boycott the vote because it was a “scam”?

        Or you’d them it is meaningless, makes no difference at all, whether they vote “yes” or no”?

        1. Joe Emersberger

          and by the way, the Greek government firmly endorses a “no” vote. A no vote is therefore a clear endorsement of the government’s performance in negotiations. A yes vote is the opposite.

          Yeah if I’m Greek I’d really like a chance to weigh in on that with my vote.

          1. Lambert Strether

            That’s just the point. If Door #1 is “endorse the government” an Door #2 is “do not endorse the government (whatever that means), there’s no discussion of what the implications of the choice are.

            It’s like I’m voting for a state bond issue. Normally, the choices would be:

            [ ] [ ] “Do you support the state bond issue to borrow a million dollars for roads?”

            but under your theory I’m getting a vote like:

            [ ] [ ] “Do you support Governor [of your state]?”

            Now, one might object that in fact the ballot is about the two referenced documents, but they (so far as I know) are not going to be distributed or even summarized along with the ballot, and in any case are in complex financielese. So that places a huge burden on the voter to figure out the implications, and that dumps a task on the voter the government should do.

            I just don’t see how the voters can be making an informed decision based on that ballot (and informed consent, or the lack of it, is a hot button with me, which is why the formulation in your comment really irritates me.)

            1. Joe Emerbeger

              The Syriza government has been involved in very intense high stakes negotiations for months which has been the 1rst , 2nd and 3rd priority. No secret, and not comparable to a situation where the is absolutely no impending default, bank run etc.. and people are vaguely asked “do you support the governor?”.

              Syriza’s been trying to get the their EU overlords to at least ease up on the austerity, let them transfer the burdens away from the poor, and get some debt relief. No Secret.

              Does the public want them to keep fighting for that or fold? If they want the government to keep fighting they’ll vote “no”.

              Of there are many uncertainties and technicalities but the public is faced with very clear, meaningful vote. It will strongly impact events. Disagree with you guys calling it a “sham” and I doubt, if you were Greek, that you would boycott the “sham”..

              1. Yves Smith Post author

                With all due respect, you’ve been misled by Syriza’s rhetoric. This is one of the reasons I’ve been so hard on them.

                It is inaccurate to suggest that Syriza has actually been taking negotiating positions that are against austerity. Yanis Varoufaks volunteered early on that Greece would always run primary surpluses. He is a good enough economist to know that that is tantamount to continuing austerity.

                The ruling coalition also signed the Eurogroup memo which very clearly reaffirmed the memorandum and also said that they would submit reform proposals to the Troika, which would then be approved by the Eurogroup. They then spent months trying to renegotiate the shape of the table and drive negotiations to the “political” level, which didn’t help them. You can’t negotiate with a party who stance is defiance and who says one things in meeting with European official and then repudiates when they get back to Greece and go before the media. That posture produced the harshest possible reaction from the other side. I had people who were close to Syriza and reading the German press insisting for months that a deal would get done, that there were possible compromises. These are older, seasoned people. Now a deal in fact may not have been possible, that was my reading from the very outset. But to a person, I had sources who were the antithesis of starry eyed who loudly insisted otherwise. And it’s Greek citizens who are going to suffer horribly if there is a Grexit, which now seems very probable. If you think things are bad in Greece now, which they are, you have no idea how bad they can and probably will get.

                A leader is responsible for the care of his people. It was reckless and irresponsible for the new coalition to get into a fight, which is what they quickly escalated this into, without apparently considering worst-case scenarios and what they would cost. The saying is if you strike a king, you must kill him. That was just not going to happen here. Italy or France could defy the Eurocrats, and most importantly, the ECB. But Greece?

            2. MaroonBulldog

              The very fact of a referendum is itself deceptive–the opposite of informative–since a yes vote would purport to instruct the government to accept an offer that has been withdrawn, in order to avert a default that will have already come to pass. Let’s see if this silly referendum actually takes place, and what the world makes of it.

        2. Alphonse Elric

          I think KKE, the Greek communist party, encourages a ‘no’ vote as a rejection of the proposed creditor’s deal AND the Greek government’s position. So a ‘no’ vote is not a clear endorsement of Syriza.

          At this point, a “No” vote probably means Grexit and/or the collapse of the Greek banks, and a “Yes” vote probably means crawling back to the creditors and taking whatever they’ll give.

          So it’s not meaningless, but it’s not particularly empowering either. If I were a Greek, I would not encourage people to boycott the vote. But the vote doesn’t do what Syriza claims it does, and so I think “sham” is accurate.

          1. Joe Emersberger

            The KKE got 5% of the vote in the last election – and they just voted, in parliament, against even holding a referendum. Hard to see how what they say is particularly coherent or relevant, just based on all that alone.

            Whether the referendum will serve to empower the Greek people at all relative to their vicious EU overlords is an open question. I certainly hope so.

            It does – quite appropriately – ask the Greek public for a meaningful evaluation of their own government’s performance and chosen direction in the negotiations. That’s nothing to sneer at..

      2. RGC

        If you and Yves want comments as you say you do, I would advise you to soften your tone with those who disagree with you. It won’t be good for you, even if you are 100% right about everything, if no one is reading any longer. I want this site to succeed. I enjoy it very much and I almost always agree with your position. Take my observation as you will.

          1. Nathan Tankus

            I understand what you guys are saying but Yves and Lambert are squeezed on time and the comments on the (nearly daily) Greek posts have been an absolute torrent with things repeated from past posts that had already been responded to multiple times. It’s very difficult to rerespond and rerespond without being curt or sometimes outright dismissive. If people want longer and more courteous responses than they should donate money to that effect.

            1. RGC

              Yves and Lambert are not some anonymous poster. They are the face of the site. They should be the adults in the room. If the passion is too much they could go anonymous.

              A person is more motivated to post when they disagree – their ignorant opinion doesn’t always have to be refuted. Don’t discourage their having their say, no one is always right.

              And number of posters has an effect regarding revenue.

              1. Yves Smith Post author

                Your recommendation that we create is sock puppets is denied. We regard honest argumentation as one of our guiding principles.

                And as far as revenue is concerned, the site would make more money if we had no comments at all and spent the considerable time we spend on comments in moderation and piping up in the comments section proper on generating more posts. Ad revenues are a function of pageviews. People are busy. They almost certainly have only so much time to spend on the Web, including on NC. The time they spend reading lots of comments on a single post enhances the image they have of the site (we hope) but it comes at the expense of them reading more posts here. For instance, when Lambert added Water Cooler, our pageviews went up, as we anticipated.

                1. RGC

                  From your response I can see that you have trouble differentiating between honest argumentation and belligerence. If you are ok with alienating potential allies, that’s clearly your choice. I was trying to help but I’ll shut up now. Good luck to you.

              2. Lambert Strether

                In fact, one of the distinctive competences of NC is that its comment section is not full of ignorant unrefuted opinions, and some might regard maintaining that as an excellent mark of adulthood; and there are plenty of other sites on the internet that supply ignorant unrefuted opinions, should readers wish that.

                I’m not clear why you equate never harshing the mellow with adult status. Writers like William Lloyd Garrison or (say) Jonathan Swift, or any of today’s satirists would disagree. My advice is to “take what you like, and leave the rest.”

    1. MyLessThanPrimeBeef

      I know, in the US, it would have been more empowering democratically if, in 2012, people had more than two major elites-approved candidates to choose from.

      “I would like another major viable (not to become a wasted vote) option….real, viable option.”

      More austerity or leave the euro have been the same 2 choices for many years.

      Could Syriza have brought home better options for its work since being elected?

  30. gemini33

    On the other hand, if he had held the referendum before the deadlines, it would be much harder to financially terrorize the Greek public, so that really wrecks my argument. Nevermind.

  31. Kurt Sperry

    Has the US got its own Greece now?

    From the NYT:

    Puerto Rico’s Governor Says Island’s Debts Are ‘Not Payable’
    Sunday, June 28, 2015 9:01 PM EDT
    Puerto Rico’s governor, saying he needs to pull the island out of a “death spiral,” has concluded that the commonwealth cannot pay its roughly $72 billion in debts, an admission that will probably have wide-reaching financial repercussions.
    The governor, Alejandro García Padilla, and senior members of his staff said in an interview last week that they would probably seek significant concessions from as many as all of the island’s creditors, which could include deferring some debt payments for as long as five years or extending the timetable for repayment.”

  32. Freddo

    Of course, the last Greek leader to warn the troika he wanted to have a referendum was Papandreou. That worked well!

  33. ChrisPacific

    While there’s an argument to be made that becoming a failed state now and beginning the long rebuilding process is better than becoming a failed state several years down the track once there are no more Greek assets to strip, I’m not sure that this particular timing is a good one for Greece.

    A lot depends on whether the rest of the world chooses compassion or schadenfreude as a response. Will other nations consider Greece a victim and pitch in with relief efforts to help them out, or will they point fingers self-righteously and say: this is what happens if you don’t pay your debts? That was always going to depend on the outcome of the PR battle, which Tsipras seems to have badly misplayed. I think much of Europe earnestly believes right now that the Greeks need to burn for their own good, and the good of the Eurozone. That’s an ominous climate of world opinion in which to be beginning this particular journey.

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