Creditors Offered Bailout Extension Till March 2016 if Greece Agreed to Pension and Labor Reforms

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As we’ve said, Greece’s creditors are continuing to demand that Greece give in on the two key sticking points in negotiations, that of pension and labor market “reform”. Given that Tripras has continued (if anything even more loudly via his Le Monde op ed and Parliament speech last week) to insist that he is not crossing his red lines, it’s hard to know what to make of the creditor offer.

Are they really not hearing Tsipras, or is this an effort to carry forward the Eurocrats’ narrative that they’ve tried everything? Plus Tsipras may have interpreted this offer as a sign of creditor weakness, emboldening him and Varoufakis to hold firm. We have separately pointed out that anything beyond small and/or cosmetic concessions on pensions would be a difficult sell to all of the 18 Eurozone nations that have to approve a deal, and this concession from the creditors even less conceivable the later the political sausage-making process starts.

Notice the timing. This proposal was made last week. It thus was presumably included in what Tsipras characterized as “absurd” creditor demands in his fiery speech to Parliament last Friday. It has thus not just been rejected but rejected with vehemence. Note also that the Tsipras’ interlocutors were acting as an intermediaries, and brokers are known for suggesting ideas they hope they can sell to their principals. The report stresses that it was not clear whether Juncker and Djisselbloem could deliver on this offer even if Greece had been game.

From the Wall Street Journal:

Greece’s international creditors have suggested extending the country’s bailout program until the end of March 2016, but disagreements over the conditions attached to the continued support and what would happen afterward risk undermining that plan, three people familiar with the negotiations said Monday…

“What we offered would mean that Greece is fully financed until March 2016,” said one person, referring to a meeting last week between European Commission President Jean-Claude Juncker, Greek Prime Minister Alexis Tsipras and Jeroen Dijsselbloem, the Dutch finance minister who represents eurozone governments in the talks.

At that meeting, Messrs. Juncker and Dijsselbloem offered the extension and the extra funding in return for Greece implementing policy overhauls as well as pension cuts and tax increases, the people said. But Mr. Tsipras rejected those terms as “unacceptable.”

Failure to reach a deal on the conditions attached to new aid now risks undermining the deal offered at Wednesday’s meeting, one of the people said. “Every additional day of capital outflows [from Greece’s banks] means less money can be taken from the [bank recapitalization fund and used to repay debt] and instead has to be used to stabilize the banks,” this person said.

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  1. C

    Greece’s international creditors have suggested extending the country’s bailout program until the end of March 2016…

    Perhaps it is just me but it seems like a bad plan to commit to a deep sustained multi-year savaging restructuring of pensions and labor markets in exchange for one year of funding. For Syrza that would mean a total capitulation and certain electoral and economic doom only to, at best, have to beg for more next year.

    For the Eurozone it seems like a stupid waste of cash as it will neither solve the problem nor does it get anyone out of this mess. In effect they have been desperately trying to make Say’s Law hold true in Greece already and it has failed. Do they really think that one more payday loan will turn gravity around?

  2. smedley

    Just read a second-hand tweet that has vourafakis saying that running a surplus is a “question of dignity” and I was hoping one of you tweet-peeps could confirm. Was he referring to that of the Greek dumpster-diving community or to the parents having difficulty feeding their kids? And did he actually say that?

  3. chris maas

    “If Greece agrees to Pension and Labor Reforms”.

    I wonder why any time we’re about to do something to screw over working people or poor people, we call them “Reforms”. Isn’t the proper term “Pension and Labor Cuts”?

    1. RUKidding

      Thanks. You say what I am thinking, too. It’s all this nicey-nice language, which essentially is about hitting the proles where it hurts: pension & labor cuts.

      Although I skim through all of the plentiful info re Greece, I’m still too ignorant to comment with any true insight or acumen. Just seems to me, though, that one of the big goals is to cut the wages and pensions of Greek citizens. Is this accurate?

      I realize that’s quite simplistic, though.

      1. Sanctuary

        Yes, but they like to refer to wage and pension cuts with the euphemisms “internal devaluation” and “competitiveness.”

    2. Vince in MN

      It depends on who is asking for the changes. In the case of Greece, the elites, who indeed desire to cut pensions wages, etc, call them “reforms”. A flip side example would be here in the US of A where there is a movement to increase regulation of the banks. That is called “reform”. Of course, the elites in that case call it “Hitler”. It really all depends on which side of the table you are sitting.

    3. RUKidding

      Sort of like a Doctor saying: now this isn’t going to hurt!

      When socking it to the peons, we usually hear talk about “reforms.”

      I do scan through the info re Greece. I am ignorant, however, and have no clue what should be done. Just seems like the “average citizen” ends up taking the hit every time.

    4. Yves Smith Post author

      That is why I keep putting the word in quotes, to say I don’t buy the label. I do the same for the term “free markets” which is an oxymoron and for financial services industry “innovation”.

      The reason I still use that term is that that is the one the creditors and therefore the MSM uses. This story is already hard enough to keep straight with all the twists and turns. I want to help readers understand what is going on. Using pet nomenclature, as appealing as that is, does not help.

      I have in earlier posts often said that the labor “reforms” are meant to reduce labor bargaining power and hence wages, while the Greek government’s reform proposals aim to raise wages and employment levels.

      1. LifeIsLikeABeanstalk

        Agree and appreciate the consistency of terms. It makes it much easier for me to turn others on to NC. And it helps me in formulating my own takes in discussions with others if I don’t have to read through insult and invective. There is a lot of smelly stuff going on that easily lends itself to polemics and values driven words or statements – but that cheapens the dialog and probably significantly impacts the potential reach of the piece. You’re doing fine.

  4. frosty zoom

    yeah, reformed into yachts and mansions and trips to mars and plastic surgery and mithril toilet seats.

    don’t they say the greeks invented democracy? rather fitting it should go there to die.

  5. Sanctuary

    It sounds like the same lie they told the Greeks in 2012 when they told them if they committed to all of this “restructuring” there would be some debt relief. They conveniently forgot about that part after the “reforms” were pushed through. I see this as a sign of weakness and increasing desperation on the part of the so called creditors. It’s toxic for Syriza politically but beyond that, Tsipras cannot afford to agree to it because after carrying things this far he cannot give the “creditors” breathing space to come up with far more disadvantageous terms to Greece in that one year interim. That’s what happened after the 1st and 2nd bailouts and why we’re talking about sovereign defaults instead of private French and German bank insolvencies. No, no, because of continued Euro-intransigence Tsipras can only continue on his current path all the way to the end.

    1. Yves Smith Post author

      Agreed. At this point, Tsipras has really lashed himself to the mast regarding the big red lines of pensions and wages. The only way I could see him changing his position is if there were to be a big fall in polls for support for him and Syriza. That might happen when the government starts paying workers and pensioners in scrip and if tourist visits are down due to concerns over the risk of being there when capital controls were imposed. But that would take months, and this drama is going to see some sort of state change over the coming weeks.

  6. Oldeguy

    Is there a “gap” between Greek and German retirement ages and benefits ?
    Sorry to be asking a question that most commentators here would already know the answer to, but the “middlemen” for this offer might well know the “Red Line” that Ms. Merkel herself cannot cross with the German electorate.

    1. Yves Smith Post author

      Yes, Germans retire at 67 and Greeks retire at 65. From what I can tell, Greece is more generous regarding provisions for early retirement than other EU countries. although Greece has indicated it is willing to tighten up early retirement (I haven’t seen enough details to know for sure, but the press reporting suggests the Greek effort is to go after only the worst instance, that they’d still be more generous on that score than many other countries. Since I don’t have the details, I can’t be sure).

      Greece has the highest % of pension payments relative to GDP of any Eurozone, and perhaps also EU country. They aren’t as as lavish as that indicates since the population is aged. They look to be more middle of the road once you allow for that. See this post:

      However, if you read the comments, the argument made is that the real abuses occur in the under 65 population. The analysis in the post is limited to the over 65 population. And readers argued at NC that since incomes in Greece are below the Eurozone average, pensions should be correspondingly lower. So knowing where things stand in “real” terms is fraught. It’s particularly hard since Greece has over 130 pension programs (one thing the government agrees they need to fix).

      Greece’s average salary per month is less than half of of Germany’s but when you look at the bar chart in the WSJ story, you can see that the German pension payments per person over 65 are not double those of Greece. Of course, one can point out that this means German pensions are too low, not that Greece’s are too high.

      A counterargument of sorts comes in another WSJ story today, effectively that the early retirement gimmies stand in place of unemployment insurance. The problem is even so, it’s hard to net out what part would make for a bona fide substitute, since unemployment insurance isn’t set up to be a permanent source of income to those who are in their working years:

      Yet creditors argue that successive Greek governments opted for the low-hanging fruit of tax hikes rather than implementing difficult overhauls of the civil service and pensions. These taxes fell on a narrow base—the value-added-tax system, for example, comprises at least six different rates and multiple exemptions—unsurprisingly leading to high levels of public resistance. At the same time, governments used the unreformed pension system to compensate for the lack of a modern social-security system, transferring many redundant civil servants into early retirement. That not only left large parts of the civil service with serious capacity shortages but did little to alleviate the burden on the public finances.

      1. Oldeguy

        Wow ! You’re one of my heroes- I certainly wasn’t expecting a personal reply much less one as obviously as thorough and painstaking. Thank you very much.

        1. JTMcPhee

          …any gee, if wages, and pensions that are what a who!e lot of people live on when they are too broken down and used up to “go to work” any more, are “reformed,” how the —- will the nation (another question- markable notion?) ever achieve a Primary Surplus/Trade Surplus/whatever econo-accounting force-fit fantasy one wants to invoke? “Consumers” can’t consume if they got no money, cant deposit in banks, can’t even consider mortgage or rent debt, can’t go into debt to buy cars or I crap…

          Discounting the horrors of hardscrabble, living under the bridge poverty, suicide, lost generations, continued corruption, that military monkey that’s still riding the Greek people’s back, to zero, of course, no time value there…

          Repudiate! απαρνούμαι!

        2. Yves Smith Post author

          That is a very helpful bit of information. I try to read broadly on Greece but I can still miss important details.

          That is the simple reason I have been saying for months I don’t see how there can be a deal. Tsipras said he would not relent on pensions. He’s doubled down, between his Le Monde op ed and his speech last Friday. But it’s risking political suicide in some countries (as in most) to let Greece continue to have its pension system continue without having serious cuts made. I don’t see how this circle gets squared. I don’t see many, if any, pols willing to risk their careers for the sake of saving the Eurozone (even assuming a default were to morph into a Grexit).

          1. Ishmael

            Yves – I had to go look myself. My recollection was at the age of 55 for Greece so it was good I took a minute to look it up. Interesting the first person mentioned was a hairdresser and they get to retire at 50. I believe I had read that article when it first came out and it was stuck in my mind.

            The big thing that people have to remember is labor arbitrage. It is happening world wide and a country can not operate in a vacuum. Secondly, people are living longer (even in Greece). You can not expect to work 30 years and be retired for 35 plus.

            Besides, I have known lots of people who retire and die a year or two afterwards. They just go to seed with nothing to work on. People are not disciplined enough after working in an organization all their lives to keep active.

          2. Oldeguy

            Could be this is a major turning point where a choice must be made among 1) Preserving National Sovereignty , 2 ) The “Rule Of Law” ( i.e.
            Debtors can be compelled to make reasonable adjustments to repay at least a portion of their Debts, and 3 ) Electoral Democracy.
            A possible way of cutting the Gordian Knot here is to 1 ) Declare Greek National Bankruptcy, 2 ) suspend self government in Greece during a period of “receivership” , 3) have a supra-National entity or coalition of such draw up a realistic long term plan spreading the pain, but with a genuine hope of long term stability, 4 ) return to Greek self government ( and continence of same ) dependent on acceptance of and adherence to the Plan.
            Ugly, but doable ?

            1. Ishmael

              Sounds pretty similar to the past when the military junta took over. Unfortunately, the people wanted democracy in Greece, the junta after amazingly enough leading the country into a fairly strong economy gave in and the democratically elected government ran the country into the crapper! Most of the past governments after the junta were some form of socialists.

        3. paulmeli

          ” …the EU is paying for the retirement of Greek citizens.”

          This statement is an inaccurate (much worse than that but I’m trying to be polite) depiction of the flow of funds. The European Central Bank loans money to Euro countries by creating it from thin air. It doesn’t “cost’ anything, unless you believe that it will cause inflation. But inflation is a normal consequence of growth. When have we ever had prosperity without inflation, which currently is at it’s lowest level since WWII?

          Surplus countries (Germany) are net acquiring Euros from Greece and other deficit countries…this cannot be construed, no matter how perverted a circular argument one makes, as a “cost’. The funds do not come from the surplus countries taxes or savings. It’s income.

          But then, it is impossible for the economies of the Eurozone to grow if the money supply isn’t grown, either by the ECB ‘printing’ it (making loans) or acquisition of funds through unbalanced trade.

          In any case, inflation is preferable to deflation and as it has approached zero (which it is doing if you look at a long-term chart of CPI) things seem to have gotten progressively worse.

          The perception by Germans and other chicken littles of the Eurozone that they are “paying” for Greece’ excesses is borne of ignorance, and has little if anything to add to the discussion. It’s fear of a ‘boogeyman’ that doesn’t exist, akin to a religious belief.

          That it does enter the discussion as a legitimate argument is sad indeed, another indication that we are living in a fact-free fantasy world of propaganda and outright untruths, a world in which man has been around “for at least 5000 years”, vaccinations are evil and climate change is a hoax.

          1. salvo

            The perception by Germans and other chicken littles of the Eurozone that they are “paying” for Greece’ excesses is borne of ignorance, and has little if anything to add to the discussion. It’s fear of a ‘boogeyman’ that doesn’t exist, akin to a religious belief.

            unfortunately, there are a lot of people who not only believe this propaganda but fiercely want to believe it, exactly as it provides them with the boogeyman they desperately need to direct their rage at, being too coward to confront their true oppressors.

          2. Ishmael

            Paulmeli – The reason you site above is exactly the reason that Greeks want to stay on the Euro. The Greek political elites have robbed the Greek people blind over the periods prior to joining the Euro through constant devaluation of the Drachma. This devaluation either comes about by the process you described above or outright money printing.

            I just about cracked a rib reading your comment saying that this is not the EU paying for the Greek retirement. The constantly creating of loans is a form of devaluation which impacts everyone equally. Germany right now is running a surplus so their currency is being devalued to pay for Greeces deficits. Devaluation is a form of a tax.

            Since you want to be polite I will not say what I real think but that this is just one of the most non-sensical statements I have ever read “In any case, inflation is preferable to deflation and as it has approached zero (which it is doing if you look at a long-term chart of CPI) things seem to have gotten progressively worse.” This is only true when you have the elites stealing everybody else blind in the EU.

            Here is the final test of your statement. Greece could exit from the EU and follow the exact policy that you are talking about. Why don’t they. Because it would be an economic disaster. So why do you think it would be a disaster for Greece and not the EU. The EU is much bigger and has a much better brand loyalty (aka Germany) that Greece but given enough time it will be exactly the same disaster for the EU (probably already has been and that is why their economy is stalled) than it would be for Greece.

            You ask this question, “When have we ever had prosperity without inflation, which currently is at it’s lowest level since WWII?” The most prosperous period in US history was after the civil war and before WW1. Guess what, no inflation! Inflation is a mirage of prosperity! Once again this is why the Greek people want to stay on the Euro. They want a stable currency not constantly being devalued like a banana republic.

            1. Oldeguy

              Bigger threat ,by far, than MERS or Ebola. Naked Capitalism in daily doses is an effective treatment.

        4. pascal

          thing is, there s no other concrete working social safety net in greece other than pensions, who by the way are rather low. what seeems to have been missed by the greek gvt is the opportunity, as mentionned in another more recent post by Yves, to pass a law that would swap “out of euro norm” pensions schemes to a more credictor acceptable minimum living standard allocation and the like, or more generally to align up all social standards to the euro average or a little below. Now the real reason according to Varoufakis is that the creditors *forbid* them to legiferate or else they would stop negiotating. A very telling account (in french ), here:

      2. hemeantwell

        Of course, one can point out that this means German pensions are too low, not that Greece’s are too high.

        Right. The core of Lapavitsas’ argument in his “Against the Troika” is that the German capital-labor accord to limit wages — aka “wage dumping” — has, since 2000, given Germany a growing trade advantage over other EMU members. In this respect, for Germans to indulge in Greek-bashing over pensions is another instance of making a virtue out of one’s own exploitation, at least as far as most German workers are concerned. I imagine this is why the SPD has shown little solidarity with the Greeks, while Das Linke has been sharply critical of the distortions in the EMU related to wage-dumping.

        (I’d recommend the book. Very clear, left-Keynesian, 5 bucks for the epub at Verso.)

        1. Yves Smith Post author

          Look, I am not disagreeing, In fact, this is part of the reason for my dim view of the job Syriza has done. Lapavitsas has made the case. Tsipras and Varoufakis don’t even have to do intellectual heavy lifting, they could just build on Lapavitsas’ arguments. But have they done ANY messaging of this sort, why the Greek pensions are not unreasonable and the problem is that Europe’s elites have been squeezing workers, with pensions as a prime example, and the result is economic stagnation all across Europe? I sure haven’t seen any sign.

          1. H. Alexander Ivey

            Just to jump shift here, it was the betrayal of his elitist upbringing (his class) that made FDR great, and why they hate him to this day. But the “betrayal” saved them, and saved the lower class (white) groups as well. Hence it saved America.

            Tsipras and Varoufakis’ refusal to attack the elistist core of the problem is a good question why.

        2. buffalo cyclist

          Germany’s trade surplus is largely due to its co-determination law, which makes it difficult for corporations to off-shore production. Sweden, which has a weaker co-determination law, also has a trade surplus.

          1. BillC

            If it can be verified and quantified, this is an extremely important talking point! I was briefly long ago a Betriebsrat member in a small IT consultancy, but this fact still eluded me. So, even though Hartz IV rolled back past gains by labor and suppressed future ones, it apparently did not remove a substantial impediment to offshoring. Has anyone attempted to quantify how many jobs that may have prevented from leaving Germany over the last 30 years … and how much aggregate annual demand those jobs produce?

          2. Tsigantes

            That’s curious because most of the German white goods and appliances on the market are made in PCR. Furthermore, the German Federation of Industry 2012 policy for Greece was to create SEZs here with repatriated-to-the-EU factories.

      3. salvo

        well, the German pensions are certainly too low, because of the so-called reforms, German Retirement Savings Act 2001(Altersvermögensgesetz 2001), which changed the formula to calculate the current pension value to include a ‘Riester-factor’ and a ‘sustainability factor’. The goal was to cap the increase of the premium for the statutory pension insurance at 20% (2020) and 22% (2030) respectively. The true goal was to privatize a portion of public pension funds (to the benefit of private capital) and to limit the non-wage labour costs since the employer fund the half of the statutory pension insurance premium. The goal of those so-called reforms has been to reduce the pension level (before taxes) from 53% in 2000 to 43% in 2030. There is an ongoing discussion in germany about the growing mass poverty in old age. The growing poverty level among old-age people additionally is aggravated by the precarisation of the working conditions, more and more people are forced to work on temporary contracts, in temporary employment, leading to a much lower degree of collective agreements coverage.

      4. IsabelPS

        On Greek pensions, from December 2014 and the previous Labor Minister:

        “In the public sector, 7.91% of pensioners retire between the ages of 26 and 50, 23.64% between 51 and 55, and 43.53% between 56 and 61. In IKA, 4.44% of pensioners retire between the ages of 26 and 50, 12.83% retire between 51 and 55, and 58.61% retire between 56 and 61. Meanwhile, in the so-called healthy funds, 91.6% of people retire before the national retirement age limit,” Vroutsis said.

  7. Sibiriak

    Do neoliberal “reforms” lead to growth? Elites claim they do.

    “There was unanimity of opinion in the room that it was important for Greece and their partners to chart a way forward that builds on crucial structural reforms” and returns to growth, White House spokesman Josh Earnest told reporters.

    * * *
    Merkel cites the recovery in Ireland, and the progress in Cyprus, as proof that reform measures pushed by Greece’s lenders can work. She also points to Ukraine, which faces extremely taxing structural reforms in return for its IMF bailout.


    Yep, Ukraine. Ukraine! Inspiring example!

  8. guest

    Assuming that these “reforms” were politically possible for Tsipras, how extreme would they have to be to to be more than symbolic gestures? Could they lead Greece out of insolvency? Why bother with them if only to ‘extend and pretend’? Is there any hope that the creditors will get around to dealing with Greece’s unpayable debt?

    1. Yves Smith Post author

      Haha, this is another outtrade!

      The Greeks from the beginning have been pushing for a more permanent big deal, with all the issues on the table. The lenders clearly nixed that with the Eurogroup memo in February, in which they got Greece to agree to negotiating structural reforms first to get the so-called out bailout money (the 7.2 billion euros that goes away as a potential source of money to Greece unless that deal is extended beyond June 30).

      The problem is that the Greeks didn’t understand what seemed really clear to me on reading the memo in February (see the post for details: The Greeks thought the memo had plenty of what they called “constructive ambiguity” meaning nothing had really been resolved. I read it as being very clear in reaffirming the current structural reforms, which the Greeks hate and Syriza promised to repudiate, as the basis for negotiations and also set forth a really clear negotiating process, that the Trokia had to approve the Greek reforms, and then the Eurogroup. Greece has wasted months trying to change the process by running to various political leaders, most important Merkel and Hollande, to negotiate on a “political” level. The problem is that the enforcers, the IMF and ECB are part of the mix regardless, and only the IMF has the depth of staff and expertise to handle the nitty-gritty work of vetting the Greek proposals. And the politicians have repeatedly tried telling Greece that, that they really do have to handle most of the issues at the technical level.

      The media as well as my sources have consistently said the creditors are willing to give Greece more breaks on the debt. It is not well reported that despite the huge principal amount of debt that Greece carries, that the economic value is way lower due to previous restructurings that lowered interest rates and extended maturities. Consider: if you had gotten a mortgage for 15 years at 5.5%, and the bank restructured it to a 1% interest rate, no interest payments due at all till 2020, and the maturity was now 40 years, it’s worth much less in market terms (and is correspondingly cheaper to you) even if the principal amount of the loan is still unchanged at $150,000. That is pretty much what has already happened with Greece’s official debt (private debt was already restructured even more).

      I have had some people who early on said, “oh if maturities on debt are extended, that will work.” I’m not sure even if the talks get that far, that enough maturity extension can be done to make the math work. Will Germans accept an extension to 100 years, for instance? And the economic relief of extending maturities is much less in a super low interest rate environment.

      1. Robert Dudek

        How about drop the interest rate down to 0 percent with a 70 year maturity and let the Greeks go full blown Keynesian. Surely that will be the best possible result for everyone.

      2. generic

        I think one of the key points in the Greeks accepting the Memo was that they thought that would lead to a rollback of the ECB decision. Tsipras stated in one of his interviews that he had a verbal agreement from Draghi on this. Of course what was written in the memo was that the ECB is independent. A bit hard to swallow that they believed a verbal agreement is worth the paper it isn’t printed on but I tentatively do. Getting the exception back would have made fund disbursal much less important, no matter what the process for that was.

        One note on Greek pensions: How much sense does it even make to compare pension outlets as share of GDP of Germany and Greece? Greece is deeply depressed while Germany is doing sorta OK. Seems like the problem austerity is supposed to solve here was to some extent caused by the same.

      3. RabidGandhi

        The math would not work in 500 years if they insist on squelching growth with primary surpluses.

        I know it’s not exactly the same situation, but Argentina– by switching to growth/internal demand– was pretty much able to dictate the terms of its own debt payments with the Paris Club because you are a 10x better negotiator when your back is not up against a fiscal wall.

        And even the holdouts/vultures with whom we havent settled are pretty insignificant now and can be dealt with on our terms without IMF diktats. For example, in the ultimate worst-case scenario having to pay full value to all holdouts would be USD 16 billion: a daunting feat in 2001, but now that’s not even half of BCRA reserves (USD 35bn). Growth makes all the difference.

        In that regard, what ever happened to the talk of linking Greece’s debt payments to its growth? I was under the impression that this was going to be one of Varoufakis’ points in the negotiations: let us get back to growing the economy then we’ll pay you back.

  9. Oldeguy

    Do the “Reforms” called for use German retirement age and Labor Law as a standard ?

    1. Yves Smith Post author

      Never say it’s over until it is over BUT, based on a summary of key dates in the FT today, it appears the 14th is really pushing it as a drop dead date (Germany would need to convene an emergency session of the Bundestag to go later) and the 18th is the event horizon. The creditors not only need to get Parliamentary approvals but they also will require Greece to pass legislation. That also means there is a tail risk even if a deal is agreed of MPs in some country refusing to go along or using procedural tricks to delay passage beyond the June 30 date.

      1. madisolation

        I read an interesting article by Phil Butler. He wrote that Tsipras said last Saturday:

        “I could not imagine that the politicians–if not the technocrats–would believe that after five years of devastating austerity under the Memorandum, there would be a single Greek MP that would vote in favor of repealing the EKAS (Pensioners’ Social Solidarity Benefit) for low income pensioners and for increasing VAT by 10% on electricity.”

        Butler wrote that Russia has taken steps to integrate Greece into the New Development Bank as early as this month. Phil Butler also wrote:

        Tsipras is facing a tough call on whether to accept the Russian invitation to join the BRICS bank, but fear of another financial disaster for Greece, and a loss of the people’s support, may tell the tale for the Greek leader.

  10. alex morfesis

    the treaty of Versailles was less stressful on the german economy than the plan the Karamanlis/Papandreou gang accepted and which the “institutions” are so happy to continue extending….


    at the end of the day it is beginning to really feel as though the folks in Syriza did not really expect to win
    the election and had not vetted how to get ahead of the curve…one too many of them seem to act like the people who jump up and down behind a MSM broadcaster and start calling their friends to see them hopping around on TV…

    look ma, they made me assistant deputy minister of saying things…

    instead of wasting time asking the hall monitor to give you a pass to allow you to go use the bathroom,
    energy should have been used to diversify imports

    India for pharmaceuticals…south korea and china for vehicles…china for buses and indonesia, pakistan and turkey for trucks

    olive oil globally purports to have some type of shortage…growth globally in the last 7 years has come totally from the USA…greece is producing 30% less olive oil today than it did in 2004…just getting back up to that number would be a 50% increase in greek production…

    talking to AM Best to see what it would take to get Investment grade ratings for title insurance companies to enter the market once the damned Klimatologio is properly vetted (and not by declaration…urgh)…

    the day in day out of rebuilding an economy that has been carved up by oligarchs who are proud graduates of the Mugabe and papa doc school of international conversion…

    pension reductions and wage reductions will matter not if there is no forward plan, either way…forget europe, they have declared greece a gary indiana zone. the sooner greece accepts that they will never be more than bridesmaids, the sooner they can get on with finding happiness…

    set June 28th as the deadline…in or out…you either put a ring on the finger or its off to the hamptons for the summer…

    1. Ishmael


      I have not researched the olive oil situation, but a few years ago I had a conversation with the CEO of the largest producer of olive oil in the US and the company is owned by a family in Spain. He told me that Greek olive oil is very low quality. So this might be a matter of demand versus supply. I am not quite sure but I would say this is an attribute of some of structural reforms being pushed by the EU. Many of the products that once were mainstays of the Greek economy just do not meet current world standards, but in the past in the past few years the Greek people were protected by the lavish funds tossed to it by the EU. That has ended. Greece and its people need a rethinking of their whole economy. This is difficult and they are resisting. They want to go back to the way things were when they joined the EU and money flowed freely from the north to the south. Those times are ended and they need to realize that. The skittle crapping unicorn was a mirage.

      1. goingnowhereslowly

        Um, did the CEO also tell you that his grandmother’s cookies were better than your grandmother’s cookies? I’ve had some perfectly lovely Greek olive oil, as well as some wonderful oil from Spain, France, and Italy (and North and South America). It’s a complicated world market that I only know as a reasonably informed cook and consumer. For example, I have read that a lot of olive oil from Italy is diluted with cheaper oils from North Africa. I have also read that because of the difficulty of forming businesses in Greece, a lot of Greek olive oil leaves the country in bulk containers to be blended and bottled elsewhere and isn’t ultimately identified as Greek. Reforming (without scare quotes) bureaucratic processes to make business formation easier could lead to more Greek oil being bottled locally and thus to Greece realizing more of the market value of this iconic product.

        Like wine, olive oil is sold at a range of grades, price points and qualities and it is subject to all kinds of fiddling and poor handling at various points on the supply chain. (It seems like every year or two there is some big scandal involving adulterated wine in France.) I have no doubt that there is some truly awful Greek olive oil out there, but to say that all Greek olive oil is of low quality compared to the other Mediterranean producers is ridiculous.

        1. Ishmael

          Ahh yeah, I think I know their are different grades of olive oil (but nothing such in wine since I have been involved in the wine business as well as high grade food business). Olive oil is ranked at Extra virgin downward but really there is no true definition of what Extra Virgin means and much of the processing of olive oil in countries like Greece leaves contaminates in it such as pressing the oil between burlap bags (the old way of doing things). In fact the big point that the US business has been pushing for is legitimate measureable standards of olive oil grading and the EU has been resisting this. Also, if you look at the quote above it is saying that Greece is producing 30% less. That is no measurement of what is bottled in Greece and also includes what is shipped in bulk containers. In fact this CEO explained to me that much of the Greek olive oil is shipped in bulk containers but very little of it makes it to the high end market because of quality issues.

          Now please there is nothing on a bottle of wine that says the grade. It might say what area it is produced and/or the type of grape that is used but not the quality. You can get a bottle of mediocre wine in Bordeaux or Napa same as you are to get a great bottle. But yes once and a while adulteration of wine has occurred. This has happened in both Italy and Austria.

      2. Tsigantes

        a few years ago I had a conversation with the CEO of the largest producer of olive oil in the US and the company is owned by a family in Spain. He told me that Greek olive oil is very low quality

        Ha ha, good try Ishmael.

    2. Tsigantes

      Olive oil exports are up 35%. Also several other niche market products. All financed out of private funds since it has been impossible to get a loan from a Greek bank for 3 years now. One reason why so many healthy businesses have gone to the wall, especially in the export sector.

  11. daniel

    Hi all,

    Salaries and pensions are not only about “dignity”. It is also a question of contributions vs retribution.

    When it comes Greek pensions, I’d be glad that someone pays a FINANCIAL view (actuarial indeed) on the level of contributions made to the pension funds by the current cohorts of pensioners, and possibly more importantly, the ones to come in the next 10 years.

    Pensions should be funded. I understand that some do not like the idea. But it makes sense to a few of us. Especially when the state does not print the money used as a payment.

    1. financial matters

      That’s a good point. I’d like to see pensions as a duty for the state. Maybe even as important as protecting the banking system.

      Private pensions are too easily raided. Even with currency issuers though they have a hard time providing benefits to people as opposed to corporations.

      Ideally this would be a fiscal unity type position where the ECB decided to print some Euros for the public benefit. Establish a unified pension program that would provide old age security as well as increased demand and a lowering of inequality.

  12. Santi

    Just yesterday the IMF told Spain to further into “reforms”; in particular they want to increase layoff flexibility and reduce the number of products subject to reduced VAT: i.e. to squeeze labor by increasing cost of life and decreasing work stability in a country with the highest temporality ratio and the second highest unemployment in Europe…

    I guess the main reason why Greece is pushed to the abyss is because they want to enforce the good old TINA for us…

    I think they are misreading the situation, and they will get a surprise in Spain, no matter what they do with the Greek people.

    1. RabidGandhi

      I wouldn’t feel so special about Mme Lagarde preaching TINA to you: she does it to everybody, regardless of the venue. Ironically (or not) a couple of weeks ago she was in São Paulo telling Dilma Rousseff that if she did not increase her already brutal austerity regime in Brazil then no one would ever want to invest in the country. The punch line? Just two days previous Chinese premier Li Keqiang was in Brazil too, signing a USD 50 bn investment agreement.

      1. Tsigantes

        The IMF will soon be quickly running out of road both over Greece & Ukraine. Not pretty.

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