G-7 Throws Greece Under the Bus

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Some observers thought that Greece might get a break in the G-7 summit this weekend. The assumption that the US would be worried that a default and possible Grexit would lead to much greater Russian influence on a strategically-located country, and the US would thus push the Troika to make more concessions to Greece.

That dream has failed to materialize. While the G-7 has one more day to run, the statements coming out of it already signal that the assembled nations (U.S., Canada, Germany, France, Japan, Italy and the U.K) are backing the creditor position. This should come as no surprise. The Obama administration changed its position in February from pushing the lenders to come up with more pro-growth policies (meaning give relief to Greece) to stressing that Greece needed to “find a constructive path forward in partnership with Europe and the IMF to build on the foundation that exists.” That was code for “The structural reforms are in place and you need to work from them.”

The Obama administration has again come down on the side of pressing Greece to implement structural reforms, and depicts this as a view shared by all G-7 participants. From Bloomberg:

U.S. President Barack Obama put concerns over the deadlock onto the agenda of a G-7 summit hosted by Chancellor Angela Merkel in southern Germany on Sunday. Canadian Prime Minister Stephen Harper “emphasized the importance of addressing the Greek debt crisis,” according to a statement released by his office after a working session on the world economy.

“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.

The Tsipras speech to the Greek parliament last Friday has also thrown off what little momentum the negotiations had developed. From the Financial Times:

Jean-Claude Juncker, European Commission president, strongly rebuked Alexis Tsipras for his strident dismissal of a new bailout offer from Greece’s creditors and suggested the prime minister had misled his MPs about the nature of the closed-door negotiations…

“I don’t have a personal problem with Alexis Tsipras; quite to the contrary,” Mr Juncker said…“He was my friend, he is my friend. But frankly, in order to maintain it, he has to observe some minimal rules.”…

Mr Juncker also said he had been promised a new counterproposal from Mr Tsipras since the pair met in Brussels on Wednesday and did not want to renew talks until he had received the plan.

Eurozone officials have suggested talks involving Mr Juncker and Mr Tsipras, which could also include Angela Merkel, German chancellor, and François Hollande, French president, may resume on Wednesday, when all four are due in Brussels for a summit with Latin American leaders.

But Mr Juncker said he was cautious about such a timetable if Athens did not present a new way forward.

“I would be surprised if I didn’t have any further discussions with Mr Tsipras, but I would like to have the Greek proposal,” Mr Juncker said. “I would like to have time to study it in detail.”

Mr Juncker’s refusal to renew talks with Athens returns the bailout negotiations to a position of stalemate that he and the leaders of Greece’s two other bailout monitors — the International Monetary Fund and the European Central Bank — thought they had broken through just a week ago.

The New York Times added a few tidbits:

World leaders on Sunday increased the pressure on Europe to resolve the crisis over Greek debt, hours after one of the chief European negotiators expressed exasperation with the way the Greek leader was handling the talks…

Mr. Juncker said he wanted Greece to remain in the euro currency zone but could not “pull a rabbit out of the hat.”…

Mr. Juncker said testily that he was still waiting for Greek proposals to counter an offer rejected by Mr. Tsipras last week…

After Mr. Juncker’s tart remarks and a reminder from Martin Schulz, the German who heads the European Parliament, that an agreement was needed, Greek officials reiterated that there was still no acceptable solution on the table.

Similarly, Merkel effectively contradicted Tsipras’ claim in a speech to the Greek Parliament last Friday that a deal was near. From Bloomberg:

“All of us were of the opinion that a whole lot of work still lies ahead,” Merkel said in an interview from the summit at Schloss Elmau broadcast on ARD television. “We want to make every possible effort, but we aren’t there yet.”

And there was a clear message that Greece needs to relent on its refusal to “reform” pensions. Again from Bloomberg:

Underscoring the pressure on Greece to commit to reforms undertaken elsewhere, Italian Prime Minister Matteo Renzi said it was “unthinkable” that Italians should help pay for a Greek pensions system more generous than their own.

“In other words, the Tsipras government also needs to pass the reforms: reform of the pension system, reforms to stop tax evasion, reform of the tax system,” Renzi told reporters at Schloss Elmau. “There is full agreement at the G-7 that everything must be done in order to avoid Greece exiting the euro, but also that Greek citizens, actually the Greek government, must be the first to send a signal.”

The Financial Times reports that a French official said the lenders are willing to throw Greece some bones on the pension front, by allowing Greece to maintain pensions for poorer retirees. However, the government would need to come up with €800 million more in spending reductions to make up for the budget shortfall that would result.*

Note also that neither Renzi nor Merkel sound anywhere near as eager as Obama’s spokesman did about the need to get a deal done.

As we’ve said for months, there is no solution space on the issue of pensions. This has become an enormously visible issue in the Eurozone lender countries, and their leaders would have to spend an a considerable amount of political capital to support the Greek position, even if they were willing to do that. And in the countries where parliamentary approval is required to release bailout funds, it’s not clear the ruling coalitions could muster the votes, particularly given the late date. There’s not enough time to do the weeks of messaging needed to soften opinion.

Having said that, I’d like to know how anyone pushes Greece absent giving bribes (aka relenting) given that Tsipras has deeply committed himself to his position between his Le Monde op ed and his speech last Friday, plus by being boxed in by the Left Platform. If Tsipras tries snap elections, the Left Platform MPs have threatened to bolt and form a new party. Tsipras would need them to form a new coalition. The new party would have more freedom of action and visibility outside Syriza.

Moreover, Tsipras can create an easy excuse for a default by calling elections, either snap elections or more likely a referendum. He could argue, as he has weakly threatened before, that at such an important juncture he can proceed only in accordance with voter wishes. Given the normal minimum times for elections, everything would still be in play by June 30, the IMF default date.

In other words, huffing at Greece isn’t going to work any more than Greece huffing at the creditors has, unless the problem is that Greece still believed, despite plenty of evidence to the contrary, that the US and/or the UK would pressure the creditors to relent (Cameron has made very unhappy noises about Grexit risks).

Now Greece may believe that, push come to shove, the creditors will extend the bailout beyond its expiration date of June 30. That means all Eurozone lender nations need to consent, and in some nations, including Germany, parliamentary approval is required. That means arm-twisting would need to start as soon as possible, since voters aren’t keen about giving Greece any breaks. And to make this even more difficult to achieve, the German Bundestag has a recess the week of June 22.

Moreover, no deal by June 30, even with an extension of the bailout, means an IMF default, although an IMF default is not a bright white line like a private sector default (again, this is all murky due to the lack of precedents, but it appears that Lagarde does not report the default to the IMF board for 30 days, and certain consequences kick in only then). If Greece is still negotiating, the creditors might be able to fudge loss recognition.

But the banking system run will accelerate (bank withdrawals were €700 million on Friday, a level guaranteed to alarm the ECB). Given how long the impasse has gone on, the hardening positions of both sides, Tsipras perversely poisoning relationships with the few allies he as on the creditors side, and the ECB’s position becoming even more uncomfortable, it’s not clear than anything would be gained even if all 18 nations that would need to approve a bailout extension could be persuaded to go along.

So the message is clear: Greece needs to show some real movement in its position in order for the bailout funds to be released. It’s hard to see how that happens.

* Note that the New York Times has a broader statement, and from Juncker, which would seem to give it more clout: “In fact, Mr. Juncker said, he had stressed that a cut in pensions could be negotiable if Greece offered alternative savings.” However, given the firm statement from Renzi that Italian voters could not be expected to support Greece having more generous pensions than they do, it seems pretty clear that Greece is still expected to make substantial reductions in pensions.

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  1. James Levy

    Yves, perhaps I’m being obtuse here but I can never wrap my head around this conundrum: “structural reforms” drive down demand, yet under Capitalism demand is always the issue. I understand how banks only care about getting their money back with interest. But national governments need to think about things like employment and production and the costs of social evils like increased illness and crime due to poverty. Banks might or might not need austerity, but nations need growth.

    Are we to assume that the governments of every one of the G-7 have been captured by Finance Capital? Or, is it just these particular politicians who are the pawns of the financial sector? Or am I missing something? Since we no longer believe that drawing blood from a sick person makes them better, I don’t see how we can make the same bland assumption about nations–or are the people in charge just that stupid?

    1. Steve H.

      “Go Die. That being Rule 2 of Neoliberalism.”

      or, as someone else said:

      ‘ “Stick a tube in the helpless body, extract rent” is a business model for bodies of all ages.’

      1. Yves Smith Post author

        “Stick a tube” is from Lambert. He’ll be pleased you remember that one.

        There’s also craazyman’s formula:

        “If slavery is where market wages clear, then who are we to judge?”

    2. Disturbed Voter

      “An unexamined life isn’t worth living” … life is like an iceberg, a life that is unexamined has many questionable assumptions beneath the water line that can sink you.

      Pythagoreanism aka equation kabuki, has achieved after 2500 years … its reductio ad absurdum … turns out it is a dystopia … particularly since people still don’t understand the exponential function.

      But your humanism is noted and appreciated ;-)

    3. Yves Smith Post author

      Greece never has paid much attention to the structure of its economy. Its governments have been in the business of serving their clienteles.

      Mainstream economics is neoclassical, which means pretty much neoliberal. Neoclassical economists believe every problem can be solved by price. To them, unemployment means wages are too high, since they believe the equilibrium state for an economy is at full employment.

      1. Cugel

        Once again, I can’t see how this lasts beyond the end of June without default. Can Tsipras really get the left wing of his party to agree to the pension demands? If so, will the public support them? If there was any way to rally public support for continued endless Austerity, PASOK would already have done it and Syriza would never have won election in the first place.

        Syriza can only default or suffer the same fate as PASOK, a total loss of public support.

        There is no more negotiating to do. As for the U.S. Obama is really in Europe to shore up German support for the U.S. stand against Russia, so of course he’s not going to be raising side issues like Greece and causing German irritation at the same time that he’s trying to re-forge an important strategic partnership.

        That’s why you’re seeing the rhetoric about “the parties need to come to an agreement” when only 1 party is negotiating.

      2. susan the other

        If we shifted that to: every problem can be solved by value we’d be in business…

    4. H. Alexander Ivey

      To re-phrase what everyone was saying, it ain’t just about economics, son. It’s really about the social, political, AND economic forces in the society involved.

    5. NotTimothyGeithner

      The politicians at the G-7 are weak too.

      -Merkel leads a grand coalition with her own political party’s support dependent on female voters who usually vote center-left crossing over to support a woman. (As a heads up, the kind of people shallow enough to vote for Hillary because she is a woman already vote Team Blue. Snowe and Washington won in Maine because they will cross right.). At some point, everyone will look out for their own careers and the next government. She isn’t dynamic enough to lead in this environment.
      -Hollande and Obama are barely literate losers who are largely reactionary.
      -Cameron won but is very unpopular and is publicly threatening members of his party who oppose the EU as well as dealing with the end of financial prosperity. Also he’s a genuinely terrible human being.
      -Harper is gone in December with seismic shifts with potential for an NDP win.
      -Japan and Abe are what they are and won’t shake the boat abroad.
      -Italy is what it is. A PIIGS country stuck in the EU with an interconnected Somalia across the water, and publicly opposes Obama on Russia.

      The end result is a waste of money because none of these people have the public support to drive change. They don’t want to look like they failed, so they will call for what would have happened if there was no meeting and high five each other in public.

      1. JEHR

        “Harper is gone in December [actually October 19] with seismic shifts with potential for an NDP win.”

        We can only hope that that is true. But there are three parties and the leaders are neck in neck which means, if the vote is reflected by the leaders, there will be a three-way division of the votes. The NDP and the Liberals do not like each other and won’t form a coalition against the Cons, so we will be left with either a conservative majority (just barely) or a conservative minority. Harper is doing everything he can to get re-elected including bribing the electorate with money and promises and even changing the Elections Act to benefit his party.

        I have been thinking about my fellow Canadians and I really hope that they see the thrust of Harper’s rule towards the breaking down of all our democratic principles, so that they will pick one of the alternative parties, but which one? I would not bet on that being successful either. The NDP is an unknown as a federal party and the leader of the Liberals does not have the experience he needs (like Obama!)

        We thus teeter on the brink of failure of the public trust in politics.

    6. paulmeli

      The conventional wisdom is that there is no way out…TINA. Over history, conventional wisdom has had a poor track record.

      Bill Mitchell from today’s blog post:

      “Shift in private spending certainly lead to job losses but the persistent of these job losses is all down to inadequate net government spending.”

      “I remain convinced that Greece should exit the Eurozone immediately, redenominate all debts in their new currency, and introduce a Job Guarantee along with other stimulatory measures.”

    7. Doug Terpstra

      Bloodletting is a perfect analogy for neoliberalism’s cure for Greece, along with electroshock therapy and lobotomy, all in concert. The beauty of it is that the operation can be declared a success even if the patient dies. Bloodletting killed more people than recovered in spite of it, including America’s first president, but incredibly, it was considered legitimate and widely-practiced for over 2,000 years! Slavery was similarly persistent, staunchly defended by the most pious and respectable intellectuals. Let’s hope the similarly inconceivable ignorance of today’s phlebotomist economists does not last so long.

      Unfortunately, as Paulmeli notes, conventional wisdom has a poor track record, and such Ignorance is exasperatngly persistent, especially among igNobel laureates, in direct proportion to their salaries, I suspect. Must be those ivy-league blinders, pricey and exquisitely-crafted.

  2. craazyman

    Looks like its Hanz and Franz time for Greece. Haven’t you guys gotten board out of your minds yet talking about Greece? It’s almost unbearable. It like watching episode 45 of a soap opera where there’s no evolutionn of characters and no coherent plot. It’s a mind coma.

    Hanz and Franz will PUMP GREECE UP! But Greece has to work out to get pumped up. You can’t sit in a cafe with a cigarette and an ouzo at 11 a.m. with a “thumbs-up” at a camera. That’s a picture that gets on the front page of Joyman papers. You can’t look like a flabby Girly Man hanging out with friends while Joymans are grim faced and working on an assembly line ma,king submarines armed with laser guided missles and machines used in incomprensible industrial processes that underly modern civilization. What a joke.

    let’s face it. It was always gonna come to this, years of haggling and discussions that stop at the raised fist of a cigarette smoking ouzo man sitting in a cafe at 11 a.m. already getting drunk. He probably has a hairy chest too and maybe a hairy flabby belly.

    He needs to work out. Either he works out or it’s back to the drachma. Or more likely, they’ll kick the can another half year or year and sweep evreything under the rug rendering any sort of quantitative analysis as an exercise in irrelevant algebra. If somebodys doing math they might as well make it interesting. Addition ad substraction isn’t very interesting. Something more interesting here might be wave form analysis and if you can define and model the phenomenon of interest as wave equations you can see where non-linear additivities overwhelm addition and subtraction in jump and algebra regime changes. Of course, some people would say that just Ouija Board foo-foo stuff. They’d have a point.

  3. JTMcPhee

    We are all, us ordinary people, so grimly jostling and elbowing each other in the Death Race To The Bottom…

    Russian peasant fable: Aleksandr is in the nobleman’s woods, seeking fire wood for his family. He uproots a little rotted tree, finds a curious ancient jar in the roots, and opens it, hoping for gold or silver or gems. Instead, a wizened djinn pops out. “I guess I should be grateful you have freed me from that imprisonment,” it said. “So I will grant you one wish. But I will also give your neighbor twice what you wish for.” Alexandr thought long and hard, about getting a trove of gold or a beautiful and chaste and compaisant wife, but to bless his neighbor with twice what he would gain? He would still be tied to his little coarse life, under the rule of a heedless and grasping nobleman.

    The djinn paced impatiently, eager to be off and gathering wealth and doing mischief in the world after being pent up all those years. Alexsandr remembered the many mostly imagined slights and insults from his neighbor, and his neighbor’s undeserved comforts of a better garden plot and a roof that did not leak.

    Alexsandr’s mind crystallized in an instant: “O djinn, make me blind in one eye!”

    1. MyLessThanPrimeBeef

      The story teller likely has a boyar neighbor who makes $100K a year, but has not met any lords from Moskova making billions.

    1. Yves Smith Post author

      Since I read it through Google Translate (which as you can imagine really butchers languages like German) I couldn’t infer much re tone and therefore wasn’t clear as to whether this article was meant to carry official water for Greece, as in use Merkel’s relationship with Tsipras as a device for telling some of the Greek side of the story, or a mild smear piece, meant to depict Merkel as losing her normally firm sense of realpolitik out of personal sympathy for Tsipras. I gather it came off as more of the latter than the former.

  4. No one in particular

    One aspect ignored in all the brinkmanship – whilst the bailout guys might be willing to fudge another “extend and pretend”, their technical abiltiy to do so is limited without booking losses, i.e. making the paying public aware of the state of things. As Martin Schulz alluded to in a TV show (Illner) last week, one major aspect is “Greek responsibiltiy towards it’s creditors, because a Grexit would derail any reform effort in e.g. Italy, if they would have to officially recognise eur 40bn losses from their share of the bailout package”. This was tantamount to saying, “there is no headroom to recognise losses re Greece”. And that is excluding losses from Target 115bn, ELA 80bn plus (and counting), SMP 37bn, and else…..in case of Grexit.

    1. JTMcPhee

      So what is on the other side of all those transactions that add up to the “losses” the PTB don’t want to recognize?

      What did all those billions and trillions of bit-recorded “wealth” transfers, presumably papered too, signed by “representatives” on behalf of whole nations, what did those wealth transfers and debt creations provide, produce, promote?

      Do I have it right that the vast, vast majority of all that “money” we are so fearful of its evaporating back into the notional fictional randomness from which it apparently sprang, just went from one bankster pocket to another, with a “debt” being assigned to a “helpless body with a tube stuck in it?”

      Do ordinary people have any worth, however one wants to define that, in “the System” of corruption and consumption? Does their pain and distress count for zero in the calculus of “Greatness?”

      The PTB have the “war option,” like “Seven Days In May,” to keep us mopes ultimately in line. But at what point do us ordinary people stiffen up enough to say “ENOUGH!” and that we ain’t going to pay off on markers that our “betters” laid down in their shell games and casino wagers? Is there “enough” to provide a genteel sufficiency, a basic Maslow need package, to the most of us? Enough wisdom and consensus in the ranks to share it around instead of clambering with our golf shoes and loggers’ boots to stand on another’s shoulders to keep our nose above the rising water?

      Student loans, IMF payments, Monsanto seed contracts, payday and car title and tax refund anticipation loans and credit card and war toy funding and on and on and on… I’m sure there are bigger and more trenchant examples of unrecoverable “debt” that don’t just pop to mind…

      No one dares look Jubilee in the eye and say it’s not time, not time yet, the time is not yet, not yet… “I’ve got mine, me and my Elite pals, so f__k you all, I’m immunized by impunity from all consequence, not obligations of governance, I’ll either buy my technological way out of death, move to “Elysium,'” live out my perfect pleasure-seeking little life in maximized titillation and comfort and die and then be immune, completely, to any consequence or retribution or restitution…Jubilee? No effing way!”

      Why is that, again?

      1. tegnost

        They’re only hypothetical greeks, when they’re rehypothicated we’ll all be greeks

      2. Linus Huber

        Why is that, again?

        Because we (most of us) are being infantilised by and made dependent on the government, conditioned to accept any lie that justifies the status quo, unable to connect the dots and to organize ourselves as we grew fat and lazy, besotted by too much sugar, salt and booze in front of mind zombifying tv program …

  5. Dan Allen

    I have said this multiple times before in this space but the lack of good translation forces people to get their news from only one source. Junker’s claim that Tsipras told Parliament that the deal was “take it or leave it” or that the deal was an example of Juncker backtracking or that the deal was singular and not the composite of 3 institutions is simply not true. As I heard it in the Greek, Tsipras emphasized that they had been closer to a deal than ever before prior to Tuesday and that he was optimistic about further negotiations. He also underlined that the deal offered was the product of deliberations among 3 institutions, not the EC solely. In other words, Tsipras said the exact opposite of what Juncker claimed he had said. So the idea that Tsipras alienated Juncker is confusing.

    If Juncker is angry, it has more to do with Tsipras’ rejection, and characterization of the deal as troika backtracking (not Juncker) and absurd. AS well, Junckers claim about the lack of a Greek counter proposal is absolutely head scratching since Greece sent a 46 page document in Wed. Compounding the confusion, Martin Schulz at the EC, Germany’s Sigmar Gabriel, and the Belgian FM all presented the deal as absolute, an ultimatum, contradicting Junckers claims.

    1. JEHR

      Imagine what Adventures Alice would have in this Wonderland! All the components are there: The whole thing is either a Caucus-Race or a Stupid Mad Tea Party where the Troika fall asleep and the Greeks keep telling their riddles and stories to no avail. The Party has gone on longer than anyone might have imagined.

    2. Yves Smith Post author

      No, the Greek proposal went in Monday evening, NOT Wednesday, BEFORE the Troika sent its proposal. Per the Associated Press last week:

      Tsipras said the proposal, was submitted Monday night to the European Central Bank, International Monetary Fund and European Commission, the EU’s executive.


      The Troika is insisting negotiations take place based on their doc, not Greece’s. This is very significant from a negotiating perspective since they saying goes, “He who controls the document controls the deal.” The original negotiation framework set up in the Eurogroup memo that Greece signed in February at least had Greece controlling the document. They were to send in detailed structural reforms to be reviewed and negotiated by Greece. The Troika complained that they never got documents with sufficient detail (as in too much 50,000 foot narrative for them to estimate fiscal impact) and on the few topics on which they would get detail (after pressing) it came in in bits and pieces (as opposed to an updated single master document) which made for an administrative mess.

      To move things forward (or assign blame, depending on your view of things), the creditors huddled and it was leaked they were going to present their version to Greece. ONLY then did the Greek government rouse itself to submit a full detailed draft barely BEFORE the Trokia submitted theirs, apparently to make the claim that it was untrue that Greece has not submitted a full proposal. Well, it was as of when the creditors started drafting.

      Juncker is saying Greece has to respond to the creditors’ later proposal.

      And if you have been following the European press, there have been multiple incidents that have come to light where the EC was out on its own, making proposals NOT authorized by the IMF or the ECB. The first was the Moscovici memo, which led to a blowup in the Eurogroup negotiations in February, in which Varoufakis was understandably blindsided, since it did not occur to him as a newbie that someone who was not authorized to negotiate would nevertheless try negotiating with him. This is a second incident:


      And Tsipras has repeatedly shown himself to be an unreliable reporter. He keeps saying a deal is near when the creditors politely, and lately more forcefully disagree, and a comparison of the two proposals (see our post over the weekend) shows they are indeed far apart. He’s also way too often gone to have meetings with senior Europeans, made conciliatory remarks right after then, and effectively repudiated what he said in whole or in part when he got back to Greece.

      I hate to say it, but you’ve shown that Greek sources are even more badly propagandized than the Europe ex Greek ones.

      1. brazza

        I read the sequence of events precisely as Dan Allen describes them, and can as easily conclude that the press chose to run with a dubiously accurate Juncker statement … where by dubious I mean the sources as much as the presumed author. Juncker is an expendable asset within the context of the negotiations, that’s why he was chosen to meet with Tsip (his job was to slap Tsip’s ass, look friendly to the cameras, and present the creditor’s position). Juncker’s response was important from the creditor’s POV only to respond to the Tsipras’ Friday night parliamentary address and regain momentum no matter what. The major battle being fought here is in terms of European public opinion … and the Greek boys are gaining a worrying lot of supporters with their Zapata-like approach. This is not over by a long shot.

        1. Yves Smith Post author

          Huh? The timetable is the timetable.

          Greece submitted a proposal on Monday. The creditors rejected it, see:


          The Europeans submitted their proposal AFTERWARDS. That makes the European version the most current.

          Moreover Tsipras had told Junkcer he’d submit a new, as in second proposal, on Thursday evening, which was to serve as the basis for a meeting set with Juncker on Friday AM. Tsipras did not provide the memo then (the Greek government is reportedly working on it now and about to table it) and cancelled the meeting with Juncker. He went to Greece and gave his Parliamentary speech last Friday instead.


          So Tsipras agreed to submit a proposal in response to the creditors’s proposal, which is now the most recent offer, and is still going to do that, after a great deal of melodrama.

          You are entitled to your own opinion, but not your own set of facts. The sequence of events that you and Dan are trying to present is not what happened.

          1. brazza

            I’m not arguing with the timetable, Eve, but I find the analysis you extrapolate from it suspect in that it seems more conjecture than fact – it reveals a bias I certainly don’t share. As you say, I am entitled to my opinion, but as the one who shapes the discourse here, yours is more influential. What comes across is that your understanding of creditor frustration at dealing with the uninitiated Greeks’ lack of finesse and procedural clarity, trumps the principles at stake. Having said that, I continue to appreciate your constant vigilance on this really important story, and your ability through NC to catalyze stirring participation from a spectrum of opinion.

      2. Alan

        1) The speech was broadcast live and I watched it. Juncker is lying and counting on the fact that most people would not compare his statements to the actual Tsipras speech or be called on it (he was, of course, right and I am shocked, shocked I tell ya!). That’s all there is to it. People keep on trusting the usual sources even though I explained again and again how the Brussels media machine works.

        2) The 47 page document begun being written a couple weeks earlier to in effect put in writing what had already been agreed to at the technical negotiations to a) speed things up and b) avoid the usual backpedaling and moving of goalposts. It was submitted Monday with a few modifications. We now know the GG also submitted a separate 5-page proposal on debt restructuring.

        3) Then, on Wednesday, what Juncker did was present new and much tougher conditions as a new creditor plan that ignored all previous negotiations. An easy proof of this is that it was only 5 pages (!). Quite odd that after 4 months all they had to present was 5 (!) pages. Of course nobody noticed that. It was in essence the new creditor position as agreed in the Berlin creditor summit a few days earlier. In effect, a reset.

        Here is the document. I would urge everyone to read it and see what we are talking about here. It’s just 5 pages. You don’t need Peter Spiegel or Bloomberg to “translate” it to you, it’s in English for god’s sake and only 5 pages.

        4) Tsipras was dumbfounded and shocked, and so was Tsakalotos and Varoufakis. So Tsipras decided to go to the Greek parliament to try to box in the opposition parties, in effect pushing them to take a stand on this new creditor ‘offer’ counting on the fact that not even the opposition could agree to such terms. The discussion in parliament dissolved to the usual for Greek politics grandstanding and finger pointing. He didn’t get what he wanted because of course the opposition wouldn’t reject the document explicitly but not a single party said the creditor plan should be or could be accepted as is.

        5) Following those events, Juncker pretended to be shocked and said two lies:

        a) That Tsipras presented this plan as Juncker’s. He didn’t. He said the creditor plan was presented to him by Juncker, which is exactly what happened.

        b) That Tsipras said that it was a ‘take it or leave it offer’. He didn’t. This is what he said:

        […] Ladies and Gentlemen Members of Parliament,

        I must confess, to you and to the Greek people, that the proposal submitted to me by EC President Juncker, on behalf of the three institutions, came as an unpleasant surprise.

        I would have never imagined that the institutions would submit a proposal that would not take into account the common ground reached following the three-month negotiation with the Brussels Group.

        I could not imagine that the Greek Government’s honest efforts to reach a fair and comprehensive solution would be perceived by some as a sign of weakness.

        Mainly, however, 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.

        And if I’m wrong in this assessment, please speak up.[…]

        So here is his speech, translated. It took me less than a minute to do a google search and find it. I urge everyone to read it and draw their own conclusions on Juncker and what the creditors are doing. Keep trusting the financial press at your own peril.

        1. Yves Smith Post author

          Are you seriously suggesting that we should believe Tsipras? I don’t take Obama at face value, or Cameron, or Hollande, or Abe. Honestly, you are stunningly naive if you think we should accept what Tsipras is selling as unvarinished truth.

          There is even more reason to look skeptically on Tsipras’ account since Tsipras and Varoufakis have consistently been unreliable reporters. Tsipras for instance said in May that Greece would not make its IMF payment to the creditors when it did (a phony effort at brinksmanship), told Lagarde he’d make the June 5 payment and then reversed himself (IMHO it would not have gone over as badly for him to have used the bundling ruse if he’d alerted everyone, as opposed to reversing himself in a period of hours). Tsipras has also repeatedly claimed a deal is near when it isn’t and continues not to be. He has ALSO repeatedly made conciliatory statements after meeting Eurozone leaders, and then significantly or entirely reversed them upon getting back to Greece.

          Moreover, Juncker is not empowereed to make binding commitments. Tsipras and Varoufakis should understand that full well after the Moscovici memo flap during the Eurogroup meetings and the later Jucker trial balloon implosion: http://www.nakedcapitalism.com/2015/05/european-commission-tables-proposal-on-greece-to-break-logjam.html

          The timetable is the timetable. Greece had failed to submit a detailed and integrated proposal as of Friday the week before last. The creditors complained that even when they got material from Greece, it was either too abstract, or when they presented details, all in bits and pieces. They thus never had a single reliable record of where things officially stood. And that was a clear expectation presented in the Eurogroup memo. It was ONLY when the creditors decided they needed to take matters into their own hands and issue their own proposal that the Greek side roused itself and delivered a detailed plan, merely for the dubious purpose of saying they’d complied with a long-outstanding creditor request barely before they were given the creditor offer/demand.

          Moreover. Tsipras is out of line in saying that the offer wasn’t consistent with prior negotiations. He and Varoufakis had demanded FOR MONTHS that the negotiations be handled on a “political” as in Eurozone/creditor leader level, not the technical level (mainly the IMF program team for Europe). Various Eurozone leader told him that they could not do that, partly because Greece had agreed to that very process (of submitting a detailed reform plan to the Troika and getting it approved, and then having it approved by the Eurogrpup) but also because the people at the political level do not have the time or staff to handle this sort of detailed negotiation.

          Merkel, Lagarde, Juncker, Hollande, and Draghi met for two hours and reached a broad agreement on what they’d offer Greece. This was what Tsipras has been asking for, for months, to deal at the political level. Their offer was embodied in the five page memo, which was (as is always the case with senior people) fleshed out by staff. Tsipras now has buyer’s regret for getting what he’d asked for. He’d assumed that forcing the negotiation to the senior political level would be advantageous for Greece. That backfired (assuming that Trispras is correct that the creditors made a worse offer, as opposed to Juncker had floated some more favorable trial balloons that had not been authorized by the creditors). Tsipras is now complaining after going to the political level to get a different deal, which is what he clearly wanted and expected to happen, didn’t produce the sort of deal he wanted.

          I can see why the creditors are losing patience. I am generally sympathetic with horrible position that the Greek people are in, but Tsipras has done a disastrously poor job of handling the negotiations and presenting Greece’s case to the rest of Europe.

          Things were unlikely to turn out well for Greece, but this fiasco is making a bad situation even worse. It is also doing a huge disservice to the credibility of the left generally.

          1. Alan

            Yves, my post was simply to point out that Juncker’s statements on Saturday, that he was mad because a) Tsipras in his speech claimed this was Juncker’s proposal and b) that he presented the ‘offer’ as a take-it-or-leave-it, were both lies and too easy to disprove. I don’t have to trust Tsipras on this since he had already made his speech, before Juncker’s temper tantrum the next day! I only had to watch his speech live to know Juncker was lying the next day, and paste the speech here for everyone to read it today. I don’t understand how anyone can disagree with this simple fact. But you raise some other issues and I’ll give you either what I know if I can state a fact, or my opinion if I can’t.

            1) On the fact that Tsipras and Varoufakis have misled the public and everyone by playing their own game when claiming for months that “a deal is near”. Agreed. Obviously. One reason is of course trying to avoid a bank run. But your point stands.

            2) On Juncker not empowereed to make binding commitments. Agreed and they know that. However, this proposal on Wednesday was not a EC proposal, it was the creditor proposal and it was handed by Juncker. That’s what Tsipras also said in his speech.

            3) You say:

            The creditors complained that even when they got material from Greece, it was either too abstract, or when they presented details, all in bits and pieces. They thus never had a single reliable record of where things officially stood.

            I’m sorry, but I disagree. I have to ask you though: Why do you take those statements at face value? Wouldn’t the creditors have an incentive here to present it this way? Would you be willing to bet this is accurate? Why?

            4) You say:

            It was ONLY when the creditors decided they needed to take matters into their own hands and issue their own proposal that the Greek side roused itself and delivered a detailed plan, merely for the dubious purpose of saying they’d complied with a long-outstanding creditor request barely before they were given the creditor offer/demand.

            This is easily refuted by the fact that the GG presented a 47 page plan. You cannot do this in a few days. In contrast, the creditor ‘offer’ was 5 pages, which proves the fact that the creditors presented a much tougher proposal than what was negotiated until then, what was a difficult compromise between them in the Berlin summit when they had to finally stop negotiating on different tracks and bridge their internal differences and present a unified front. That’s why it couldn’t be more than 5 pages. It was the only way to present a unified front, and you have reported on the rift between the IMF and the EZ leadership. And by reading the ‘offer’, you can see that the only way to bridge their differences was by mixing everyone’s wishlist into a document that anyone who has actually read it understands as extreme, to say the least. I can post countless articles where the authors are perplexed on how such a document could have been presented with a straight face.

            5) Your next two paragraphs are correct that it was Tsipras who wanted a deal at the political level and got burned. However, I am at a complete loss as to why you would again present this from the creditor viewpoint (“I can see why the creditors are losing patience”) but not from the Greek side, which is that they tried to get as close to a deal as possible at the technical level and then bridge the remaining differences politically in order to give Greece a half-chance. It’s not as if this is not something that happens in the EZ all the time or that they had any difficulties to defy reality in crafting fantastical extend-and-pretend programs when it suited them, right? So suddenly they are all technocratic and competent and can’t move an inch? And when trying to move things politically, Greeks caused them to lose patience? Come on Yves. Tsipras is representing a country that has been devastated by that crap, you can’t forget the consequences of the creditors pretending they have a viable program 5 years now, only to again accept their viewpoint that they have a viable recipe for a Greek solution just because they say so in public and it’s all, surprise, the GG’s fault.

            6) Finally, you say:

            I am generally sympathetic with horrible position that the Greek people are in, but Tsipras has done a disastrously poor job of handling the negotiations and presenting Greece’s case to the rest of Europe.

            Things were unlikely to turn out well for Greece, but this fiasco is making a bad situation even worse. It is also doing a huge disservice to the credibility of the left generally.

            I am not sure I understand. If you are sympathetic because you know how much this charade has cost to the Greek nation, then what could they do other than elect a government that would try to achieve a honorable compromise, a half-decent chance to get out of their misery? What could they have done differently other than exiting the euro? If you accept that those programs devastated Greece, and that continuing the extend-and-pretend charade is not going to help them, then what could the Greek government do?

            And if the creditors’ incentive was from the beginning to burn this government, then how could the GG achieve anything by keeping them happy?

            ( Please don’t say “they should have tried for the lower surpluses and call it a day, the creditors were ready for that”. They only started accepting that in earnest when Syriza got elected and started the revolt. As I pointed out in February, the creditors have said lots of things only to then tell the Greeks to forget about it, like the debt relief they committed to almost three (!!!) years ago, once Greece achieved surpluses. Three years passed and nothing happened while the previous Greek government continued playing ball and delivering while killing the country. This is all just a power game, creditor vs debtor, including trying to put the blame on the victims, as always.)

            Finally, a comment on the Left. When a new anti-establishment force appears (Occupy, whatever), you’ll notice it is always demanded of them from the media and TPTB to be competent, likable, sensible, realistic, in short: perfect. Somehow people always fall for that and forget to hold TPTB to the same standards. This is no accident. We accept those who rule us as they are but demand from those who make an effort for change to be truly great. And the people who rule us always put the blame for no change on the shortcomings of the anti-establishment forces, using their media megaphones. Personally, I think this is what’s happening here. I may be wrong, but that’s my honest opinion.

            1. Yves Smith Post author

              It was clearly and obviously Tsipras who lied about the creditor offer. It was not “take it or leave it.” “Take it or leave it” means non-negotiable. Juncker clearly intended to negotiate the creditor offer, as proven by the fact that he was waiting for the Greek counter-offer and planned to meet Tsipras Friday! Moreover, the FT described in advance that the 5-pager was designed to elicit a “quick reaction” from Tsipras.

              The fact that you accept what Tsipras says without even thinking through what he said as obviously false shows how deeply vested you are in believing him.

              The creditors have been complaining for months as to how the Greek team has been maddeningly slow in its responses and has delivered data and other information in bits and pieces. The IMF team has also been snubbed by the Greeks, kept waiting in hotels (as opposed allowed to go to government building) with nothing to do at points. They finally seemed to get over those issues but the negotiations have been plagued by slow and fragmentary of information. Some of this seems to result from the Greeks not wanting the IMF into various files directly, as in they want to limit information access to keep the creditors from knowing exactly what was going on. That would confer some negotiating advantages, but that means you also need to be prepared to organize and deliver more info, and the government seems to lack the staffing and/or the knowledge of where things are to do that very well.

              The few complete documents provided by the Greeks, the short and then somewhat longer proposal papers (the last I saw prior to the 47 pager was ~25 pages) were clearly too abstract to be scored from a fiscal standpoint.

              As for that 47 page document, there were earlier full docs into which the material that was provided in bits and pieces could be integrated. And I have written 60 page documents from scratch in two days that were client-ready when done. It’s doable, particularly if the effort were tasked out among 2-3 people.

              As for “close to a deal as possible,” the two parties have been so far apart and so unwilling to budge that I can’t fathom why they are still negotiating, except stopping negotiating would lead the ECB to feel more pressure to pull the plug on the ELA. This again is a Greek fantasy that you’ve bought. Tsipras and Varoufakis have NOT been trying to get a deal done at the technical level. They have been fighting dealing with the IMF and using every opportunity and every route they could to try to move negotiations to the political level after repeatedly being told no, including by Merkel. In fact, I am not clear as to how much of the Greek inability to deliver information on a timely basis was incompetence v. stonewalling.

              Re incompetence, this crowd has been embarrassingly and visibly incompetent. Greek ministers make independent statements, contradict each other and don’t act like an organization that aspires to be taken seriously. Moreover, the government has deferred making any decisions until the negotiations are resolved. That’s insane and irresponsible. Leadership is about making decisions under uncertainty.

              Tsipras has done a massive disservice to the Greek public by promising something that was not going to happen unless he got foreign support (as we predicted from the outset) and not adapting when it became clear he was not getting the foreign support he needed (the Administration threw him under the bus in February and what passes for the European left has been missing in action). And this was plain to see in Greece. This is from a Jacobin interview with Costas Lapavitsas published March 12, which means the interview probably took place a week earlier. Key section:

              …this government went into negotiations with an approach which, as I’ve already said, was critical to its composition, to creating it, which is that we can go into the negotiating room and we can demand and fight for significant changes, including the lifting of austerity and the writing off of debt, while remaining firmly within the confines of the monetary union.

              This is the key point. This is what I have called in my own work the “good euro” approach. That, by changing politics, by winning elections, by changing the balance of political forces in Greece and in Europe, we will negotiate and we will transform the monetary union and Europe as a whole because of the political cards that we will bring to the table. That’s how they went in. And their negotiating strategy was determined by that…

              This government had a strategy, and it was as I laid it out just now. And it discovered reality. A reality, which is, I think, that this strategy has come to an end. It didn’t work. Yes, the political balance had changed in Greece, and changed dramatically. Because it isn’t just that this government had 40 percent of the vote, it also had 80 percent of popular support, as all polls were showing. But that counted for very, very little in the negotiations.

              Why? Because the confines of the monetary union are what they are. They are not susceptible to this kind of argument. It’s a very rigid array of institutions with an embedded ideology and approach to things. The other side wasn’t going to budge just because there was a new left government in a small country…

              TSyriza could not deal with that, because it had accepted the confines of the euro. As long as you accept the confines of the Euro, you’ve got no effective answer. That’s the reason why this in the end took the form that it took.

              They tried, they strove for something different. The other side, particularly the Germans, dug their heels in. And, towards the end of the negotiations, it was a matter of days before the banks would have had to be shut down. In that situation, the Greeks basically accepted a poor compromise.


              It was irresponsible for Tsipras to refuse to come up with a Plan B. It was an abdication of his duty as the leader of the Greek people.

              By contrast, there are many charges made against other leftist governments, like Kirshner in Argentina or Correa in Ecuador, that one can and should take with a fistful of salt, but they are not accused of being bad at the basic mechanics of running a government. The Greek ruling coalition is visibly bad at it.

              I have said from the outset that Greece was very unlikely to prevail. I don’t believe in cheerleading. It makes defeats even harder to bear. I have also said Greece has only bad choices available. That is separate and apart from recognizing that the Greek people have been the victims of neoliberal policies, as have workers in Germany and other Eurozone countries, just not to the same degree.

              1. Alan

                We agree on many issues and disagree on others. That’s ok. Just let me clear a misunderstanding first though because after two attempts it seems I haven’t made myself clear.

                1) Juncker on Saturday said that Tsipras presented the creditor offer in parliament as a take-it-or-leave-it by the creditors. Except Tsipras didn’t. I posted his speech for anyone to verify if that claim is true, as well as the other claim of Juncker that Tsipras presented in parliament the creditor plan as Juncker’s.

                Why would Juncker lie on Saturday? Why would he do that when it’s so easy to verify what Tsipras actually said in his speech? And how come he wasn’t called on it by the usual sources so many people rely on?

                And how many times has this happened?


                The fact that you accept what Tsipras says without even thinking through what he said as obviously false shows how deeply vested you are in believing him.

                The creditors have been complaining for months as to how the Greek team has been maddeningly slow in its responses and has delivered data and other information in bits and pieces. The IMF team has also been snubbed by the Greeks, kept waiting in hotels (as opposed allowed to go to government building) with nothing to do at points. They finally seemed to get over those issues but the negotiations have been plagued by slow and fragmentary of information. Some of this seems to result from the Greeks not wanting the IMF into various files directly, as in they want to limit information access to keep the creditors from knowing exactly what was going on. That would confer some negotiating advantages, but that means you also need to be prepared to organize and deliver more info, and the government seems to lack the staffing and/or the knowledge of where things are to do that very well.

                Well, maybe the fact that you accept what the creditors are saying without even thinking through what they have been saying for 5 (!) years as obviously and ridiculously false whenever it suits their purposes shows how deeply vested you are in believing them to avoid even to consider the possibility that you rely too much on FT, Bloomberg and so on for context.

                I only had to look at Tsakalotos’s face on Greek TV on Thursday (walking by the cameras, no comments) to know what had just happened. Another Europeanist romanticist who got burnt but according to the sources you rely on is a clever, manipulative liar, as is, apparently, Varoufakis.

                1. kemal erdogan

                  Yes, indeed.

                  Once you live in a second grade country, know your facts, and also follow closely the west media you can easily see how shockingly manipulative the west media can be. Not only the facts are ignored, there are often outright lies in what they report. What Alan tries to explain here is one example.

                  You apparently don’t believe Yves, but this is the truth.

              2. brazza

                Dumbfounded … a thorough character demolition based on what amounts to second guessing based on sporadic reports from a mass media with a vested interest? Who is the gullible one? Short of you being present … how on earth do you know with sufficient certainty to publish this degree of vitriol? And why are you selling it so hard? You just shot your credibility. And you are welcome to ban me.

  6. DJG

    I wouldn’t put much stock in what Matteo Renzi says. Yes, he just did well in the regional elections, but his opposition is now Movimento 5 Stelle under the “mercurial” Grillo (to put it politely), Lega Nord (the Italian version of the Tea Party), and the shambles left by Berlusconi. So Renzi is now in his full Tony Blair / Bill Clinton / Third Way moment. He has turned the Italian Partito Democratico into a branch of the U.S. Democratic Party.

    My reading of Italian newspapers and other sources of opinion and analysis hasn’t turned up much concern about Greek pensions–in fact, none at all. What I have read, though, consistently, is that Italian pensions are much too low, and many are being forced to subsist on 400 or so euro a month. Maybe Renzi could work on that… you know, some kind of Grand Bargain.

    1. Yves Smith Post author

      The US Democratic party is also opposed to increasing pensions and has been pushing to “reform” Social Security and Medicare. In fact, as I said to Lambert, that ALONE is a big reason the US will not support Greece in the negotiations. Both US parties are out to make pensions more meager. It’s just that the Dems are less obvious about it.

  7. Edna M.

    From the Guardian:


    The Greek television channel, citing a senior German official, described the US treasury secretary, Jack Lew, imploring his German counterpart Wolfgang Schäuble to “support Greece” only to be told: “Give €50bn euro yourself to save Greece.” Mega’s Berlin-based correspondent told the stationthat the US official then said nothing “because, as is always the case according to German officials when it comes to the issue of money, the Americans never say anything”.

    I read elsewhere in the Greek media that Obama said he was pleased that the Greek government was committed to staying in the euro. Even if Obama’s words seem to support the creditors, behind the scenes he still may be putting pressure on the creditors to make sure Greece stays in the euro. I agree that he is not concerned so much with Greece turning to Russia. But some other motives may be at play.

    1. tegnost

      there’s no eleventy dimensional chess nor has there ever been. Obama is there representing his constituency the banksters. remember that in the us bankruptcy for individual debtors continues to get more difficult or impossible, quaint you think he cares about debtors from other countries..(he does care, he wants them to pay, if not in cash then in kind)

      1. sd

        Obama made clear where he stands just by virtue of his support for slavery in Malaysia. That a nation can get a pass under “making an effort” is obscene. What more need anyone know?

    2. Yves Smith Post author

      As I have said repeatedly, a default does not equal a Grexit. Greeks continue to poll heavily against a Grexit. Syriza campaigned on staying in the Eurozone and Tsipras has yet to say a peep in public to Greek citizens about the possibility of an exit.

      And as we and others have said, a default within the Eurozone would serve the creditors’ ends, even though things would get messy and Mr. Market might get rattled for a bit. Greece goes into the sweatbox as the government can no longer fund operations. Workers and pensioners get paid in scrip. Government services decay even more. Even more money leaves the banks, hurting economic activity. Some tourists stay away, not wanting to incur the risk of having their holiday ruined by being in Greece if/when capital controls are imposed.

      Two of three months of that and I guarantee that Syriza’s popularity will fall a lot. That of course assumes the ECB lets things go on that long. They may force Greece into a Cyprus-style depositor bail-in, another move that will do wonders for Syriza’s support.

      Now that could also morph into a Grexit. If I were the creditors, I’d be focusing hard on what mix of carrots and sticks could be used to keep a default from leading to a Grexit.

      1. Sanctuary

        Then wouldn’t that mean, in the event of a default and an irresponsible EU move to impose bail-in, that Greece would have the incentive to proceed towards Grexit in a game of brinksmanship? Even if they didn’t want to they’d have to make serious moves towards it in order to check EU meddling and force a better deal. The EU also couldn’t take 2-3 months of escalating brinksmanship, not just Greece.

        The EU/creditors have no idea what they are doing. As I said earlier, the dynamics of Euro-intransigence is forcing an equal and opposite extreme response from Tsipras. The more extreme they force things, the more extreme the Greeks have to respond. There is no incentive from either party to back down.

    3. brazza

      BO just wants Greece to go away, and quit dominating the headlines, so media focus on his communication agenda: Russia, Isis. The Greeks instead want this to drag on ad infinitum … because every day that passes without a deal is a new story, and intensifies public opinion on the issue, that should they be forced to default they might trigger public outcry, and hopefully (in their perspective) more intense Eurobond volatility. It will need a full Grexit with blood on the streets to penetrate the media controls in Spain, France, and Italy – where the real front-lines are. And Syriza seems willing to go there … so this story is here to stay.

  8. Cassiodorus

    Calling snap elections would be a great opportunity for Tsipiras to do something! Constructive solutions can come out of the general conversation about economic futures which will accompany snap elections.

    1. Yves Smith Post author

      I’d bet against that. The Left Platform is threatening to bolt and run as a new party. If that happened, Tsipras would have a diminished number of seats with a rump party. He’d be weaker in a coalition by virtue of being less clearly in control, and would have to choose whether to tie up with the intransigent Left Platform, who would have even more power, or the even less trusted, pro austerity New Democracy, or try to round up enough votes between To Potmai and other small parties.

      A referendum would be a lower-risk way of throwing a spanner in the works, but Tsipras is doing plenty of that already. In general, Tsipras likes to temporize but is reluctant to act.

  9. RabidGandhi

    Agreed about “eleventy dimensional chess” (or lack thereof) inside Obama’s brain. Until proven otherwise, I assume he is just like everyone else in his technocrat class all of whom assume that “debts must be paid,” and his administration’s comments on Greece must be seen in this context.

    When Lew stressed that he hopes a deal gets done this means that the administration hopes that a deal on Greece will be reached within the boundaries of acceptable Washington consensus neoliberalism: ie, including pensions cuts, privatisation, full payment of debts, ktl. Thus there was no Washington U-turn on Greece policy. It’s just a matter of hammering out the details of Greece’s punishment.

  10. Wist

    There are obviously many complex issues but one of the major questions is CAN the Greeks govern? In Friday’s speech to the Greek Parliament, Tsipras/Syriza was asked by an opposition party:
    What have you done in 130 days of governance?
    What growth plans have been proposed?
    As Tsipras asks for moneys to pay future cushy patronage jobs, he has not paid third parties and contractors that have jobs. Greek tax collection is in chaos with the current computer system incapable and the government unable to issue documentation. With serial amnesty and lack of penalties being enforced, who would pay taxes when they get a better deal by non-payment? The problems for Greece are cultural/structural. The Greeks themselves have to face these massive issues and cannot expect someone else to do it for them. The circle of blame has to stop and reality must be recognized. Syriza/Tsipras are pushing the Titanic full speed ahead into the iceberg and it is time for the Greek populace to realize this. No more fairy tale beliefs in a Russian or a U.S. rescue. No more hiding behind a “democratic mandate”. No more scapegoating outside parties. No more hopium.

    1. Robert Dudek

      That is why they should default immediately and get to work on rebuilding their nation.

  11. purple

    The G7 is so obviously an aging imperialist coterie at this point in history. Nothing good can come out of their meetings.

  12. Punch floater

    To maintain protection for the Greek people’s legally binding right to social security (enacted as a commitment in ICESCR Article 9) Greece has to proffer offsetting savings…? Ok. You could halve Greek defense spending, bring it in line with Germany, Finland, Belgium, and Italy, and get a quick 1% of GDP. Or do like Iceland and double the savings. Funny how nobody brings that up.

    1. Yves Smith Post author

      The military is a big employer in Greece. Cutting the budget means cutting jobs. Syriza’s labor plan is to increase employment, not reduce it.

  13. Gaylord

    Folks need to pay attention to the St. Petersburg Economic Forum on June 19th – 20th, where a determination will be made of Greece’s membership in the BRICS, which previously had been discussed in Tsipras’s meeting with Putin in April. This could be Tsipras’s trump card and escape route, and I suspect it’s the reason for his stalling tactics. If it comes to pass, we might see the beginning of an economic domino effect where other oppressed EU countries follow suit by abandoning their commitments to the Western Bankers’ crime syndicate and joining the new Russia-China powerhouse of energy, trade, and military partnership. ‘Fuck the EU’ indeed.

    1. Yves Smith Post author

      The BRICS banks is not funding anything on a timeframe to help Greece now. And the lending is to fund specific new projects, not general government expenditures.

      Putin has also been notably cool but polite. He went out of his way to point out that last weekend’s call with Tsipras was at Greece’s instigation.

      In general. Putin has no incentive to intervene now. He’ll get the bits and pieces he wants later, at lower cost and with less international controversy, if he sits back.

  14. fosforos

    If the Italians had a PM named Rienzi instead of Renzi, Mediterranean solidarity would start to mean something!

    1. RabidGandhi

      Yes we could switch the Euro anthem from Beethoven to Flight of the Valkyries. The smell of austerity in the morning.

        1. ambrit

          Much more like “Till Eulenspiegels Merry Pranks.”
          I’m not too sure about “One Euro to Rule Them All.”

  15. Punch Floater

    Hell, if it’s featherbedding we want, then make the brass define a mission that’s less capital-intensive. Let em march with brooms. It’s not like guns n butter tradeoffs are unheard-of, and it is, after all, customary international law (A/RES/41/128 Article 7.) Omissions like this are how you can tell the US got their money’s worth from Varoufakis’ sinecures at Valve and LBJ.

  16. RBHoughton

    All that EU stuff about a common history, common aspirations, fair-do’s and eternal peace turns out to be just twaddle when it comes to the men of commerce. They want to get their pound of flesh one way or the other and they have EU politicians of several countries dancing to their tune.

    Listen to Poland whose solidarity movement was hijacked by the Chicago Boys and turned into endless hardship and suffering for the Polish people while the moneymen got Polish national assets on the cheap. Noisy Poles seem to believe that as they suffered Greece should too.

    The EU throws a fortune to the Cossacks running Ukraine into the ground, most of which has disappeared, and withholds all hope and support from the cradle of their own civilisation.

    How’s that for the power of money?

    You mentioned previously Yves that the German language has the same word for ‘sin’ and for ‘debt’ – that seems to be an irrational base of the problem. Perhaps the real Greek sin was going with original Christianity and repudiating the Catholic and Protestant versions. Not European at all.

    Every Western authority advocates less austerity, civil service reform and debt restructuring. That is a giant boot of immense velocity aimed at the nether regions of the Greek people.

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