Greece’s Creditors Meet to Prepare Offer (Updated – Creditors Agree on Uncompromising Terms)

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The press is awash with reports of a high-level meeting convened yesterday by Angela Merkel and attended by Francois Hollande, Christine Lagarde and Mario Draghi. The upshot is that Greece’s creditors have agreed to sort out their differences and come up with a proposal to present to Greece in the next few days. Greece is generally believed to be able to make its €300 milllion payment due to the IMF on Friday; if not, it has the expedient of asking to bundle payments under an existing IMF rule, which would give it till the end of the month to remit the €1.5 billion it has coming due in June.

While this emergency meeting would seem to indicate anxiety on the part of the lenders, and hence willingness to make concessions, the media reporting if anything is treating this as a last-ditch offer. Some of the reports are close to sanguinary; the Wall Street Journal, for instance, saber-rattles:

Greece’s international creditors late on Monday were preparing the text of a final bailout deal to present to the Athens government, in a sign that lenders are running out of patience after months of stalled talks….

Earlier on Monday, Germany signaled a tough stance on Greece’s bailout package, doubling down on demands for broad economic overhauls ahead of the top-level Berlin meeting.

Ms. Merkel’s spokesman, Steffen Seibert, said Greece has to agree to a “far-reaching reform package.” The finance ministry echoed the call, saying Greece must overhaul its labor market, change its service sector and pursue privatization.

Yet both reports in the German press (FAZ and Die Welt), the Telegraph and the well-connected Peter Spiegel at the Financial Times all say that the creditors are reaffirming the structural reforms. That means they are not prepared to give much issues where Greece and the Troika have been at an impasse for months, most importantly over pensions and labor market “reforms”.

To put it another way, if the aim were to prevent Greece from defaulting this month, the creditors had the face-saving expedient of finalizing the list of reforms that Greece has said it agrees to, like reforming tax collections (a claim of the Troika has been that the Greek plans have not been detailed enough), and give a partial bailout. This was an option mentioned several times by Eurogroup chief Jeroen Djisselbloem, so it would not look like a climbdown if the lenders were to use it to buy time. But as we’ve discussed, the difficulty of getting the Parliamentary votes to extend the bailout beyond the end of June, plus the fact that the Greek banks will run out of collateral on their current deposit bleed rate sometime between mid-July and the end of the summer means extend and pretend isn’t an easy course of action and won’t work for long either.

Despite quite a few media outlets playing up the “final offer” with the obvious “take it or leave it” undertones, Peter Speigel depicts the creditors as concerned about having Greece feel railroaded (cynics might say it is a bit late for such solicitude). Emphasis ours:

German chancellor Angela Merkel on Monday night hosted an emergency summit in Berlin over the Greek crisis to thrash out differences between the debt-laden country’s bailout monitors and to accelerate efforts to reach a deal with Athens….

According to a senior official from one of Greece’s bailout monitors, the Berlin talks were focused on a technical paper prepared by the commission which all sides are to use in an attempt to find trade-offs acceptable to all creditors.

Officials insisted that if a compromise had been reached in Berlin, it would not be used as a “take it or leave it” ultimatum for Athens, but rather an outline to be presented to Alexis Tsipras, the Greek prime minister, for a “quick reaction.”

The official said there were no new concessions to Athens in the commission paper. Rather, it was intended to spell out the core principles creditors need to conclude a deal….According to a senior official from one of Greece’s bailout monitors, the Berlin talks were focused on a technical paper prepared by the commission which all sides are to use in an attempt to find trade-offs acceptable to all creditors.

Officials insisted that if a compromise had been reached in Berlin, it would not be used as a “take it or leave it” ultimatum for Athens, but rather an outline to be presented to Alexis Tsipras, the Greek prime minister, for a “quick reaction.”

The official said there were no new concessions to Athens in the commission paper. Rather, it was intended to spell out the core principles creditors need to conclude a deal.

Um, since the disagreement is over core principles, as in Athens is trying to reject the “memorandum” as they refer to it, or “conditionality” in Eurocrat speak, it’s not clear how this exercise will do anything other than reaffirm the existing differences. But as Spiegel also stresses, the protracted negotiations have exposed differences in priorities and positions among the creditors, so the main point appears to be to agree on a unified position.

Die Welt reported that Tsipras is now willing to negotiate pensions. But I’d take it with a grain of salt until it is confirmed elsewhere. Hopefully you can get the drift of the gist via Google Translate:

As the “world” there from the environment of negotiation participants learned signaled Prime Minister Alexis Tsipras, wanting to talk about pension cuts and a later retirement age. A concrete proposal would have the Greeks, however, not yet, they said.

The willingness to pension cuts would be an important step in the for months sluggish running loan negotiations….

In the circle of negotiators Athens was, however, stressed Tsipras will have to cross some of the drawn of him “red lines”. In the circle of donors is however questioned whether Tsipras has the political power to represent concessions to the international donors also in Athens.

However, the lenders have wanted to make deep cuts. By contrast, Tsipras may hope he can get away with largely cosmetic concessions, although raising the retirement age to 67 would have a significant impact over time. One issue is the fishbowl nature of these negotiations and the parliamentary approval process. The European press has made a big issue of the purported high cost of the Greek pension system (and it is costly but that does not make it lavish, given how aged the Greek population has become). If the creditors were to unexpectedly let Greece get away with small fixes, Syriza would make a big point of that in getting parliamentary approval, and it would be widely reported in the German and Northern bloc (read hardcore austerity countries) press. The fact that the creditors still expect Tsipras to cross his “red lines” mean minor tweaks won’t appease the Troika.

The creditors do not appear inclined to show Greece mercy on other fronts. Again from the Financial Times:

The two sides remain far apart on how hard Athens should squeeze public finances. The new government has rejected the current arrangement with the creditors which involved a target primary surplus — the excess of government revenues over spending (before debt financing costs) — of 4.5 per cent of gross domestic product. Athens wants a figure closer to 1 per cent. The creditors may be willing to see a reduction, but not of this scale…

They also must decide on a medium-term surplus target. Although it is unlikely to be as high as the 4.5 per cent of GDP demanded in the current programme, it could be around 3.5 per cent — significantly higher than levels sought by Athens.

Things are even worse than they appear. The target for this year was 3%, and 4.5% for 2016. Most observers thought both figures were insane. And remember, when Syriza assumed office, Greece has a small primary surplus. As of April, the IMF projected a deficit of 1.5%, and matters can’t have gotten any better. To just meet Greece’s ask of 1% now means a swing of a full 2.5% of GDP, almost the unreasonable level they were expected to hit for 2015. Even if the creditors make what they think is a generous offer of 2% for 2015, that is equivalent to an asphyxiating 3.5% consolidation from the new starting point of negative 1.5%.

So the creditors may have read too much into Tsipras’ offer to negotiate on pensions. Or they may feel they have to go this step regardless of whether their gambit will work. Or they may be in denial as to how badly Tsipras has been boxed in by his Left Forum (although he can always cut a deal with To Potami, but he will also need votes from New Democracy representatives too). At a minimum, both sides appear to finally be about to get out of the Groundhog Day phase of these negotiations to an end game.

Update 7:30 AM: Just as we completed the post, the Wall Street Journal reports that the creditors have finished their draft. Key sections:

Officials representing European institutions and the International Monetary Fund on Tuesday morning completed the draft of an agreement to unlock bailout aid for Greece, after key European and IMF leaders met in Berlin late Monday to overcome differences between Greece’s creditors, they said.

Eurozone governments and the IMF have agreed to press Greece for far-reaching economic overhauls, while the IMF has softened its insistence that Europe offer explicit commitments to relieve some of Greece’s debt burden, the people said…

The creditors’ proposal for an agreement is expected to be put to Greece’s government soon. Greek Prime Minister Alexis Tsipras is expected to face politically explosive demands for tough reforms of Greece’s pension system, labor laws and other areas, as well as creditors’ insistence on painful budget measures to ensure that Greece runs a fiscal surplus before interest.

As we predicted, the IMF has backed down on debt reductions, as it did in 2012. This again allows the IMF to blame the continued program failure on the debt loads rather than austerity. We also cynically wonder, then as now, whether the IMF team threw that in to have a negotiating chip to trade away, so as not to give ground on its pet issue of structural reforms.

Moreover, notice that the resolution of differences among the creditors resulted in a toughening of terms. The EC position of keeping Greece in the Eurozone as an imperative has been abandoned. The IMF push for more debt relief is off the table. And as Ed Harrison pointed out via e-mail, the lenders also made their proposal public before presenting it to Tsipras. The lines have hardened against Greece.

Second update, 10:45 AM. Peter Spiegel at the Financial Times says the European Commission and the IMF still have to agree on the primary surplus target and the bailout teams need to create a formal document. But given how much has been leaked, one has to assume that Tsipras will have already have made up his mind by the time the offer is official. The officials are conducting themselves as if Tsipras will accept the offer (yes, that would be a remarkable reversal). From the Financial Times:

Once a text is agreed, officials must decide whether they present their proposal to Mr Tsipras’ government during a meeting or a teleconference. Either way, officials hope a political agreement on principles can be hammered out before Athens is faced with a €300m loan repayment to the IMF on Friday.

Over the course of the following two weeks, Greece owes the IMF an additional €1.2bn, and eurozone officials hope a full staff-level deal, which will include a more detailed delineation of what economic reforms Athens must quickly adopt, is agreed by the end of next week….

After being shut out of Monday’s meeting, the Greek government appeared keen to demonstrate that it remained an active player in the negotiations.

Mr Tsipras said on Tuesday that Greece had on Monday night submitted a “complete and realistic plan” to end the country’s six-year crisis. If accepted, he said, the plan “would signal the end to the scenario of split in Europe and transfer the responsibility for making a decision to its political leaders”.

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  1. generic

    So basically the creditors threw away any chance for compromise so they could present a united front in the post default blame game.

    1. Yves Smith Post author

      No, the creditors were not interested in compromise. The only party that was was the European Commission, which is part of the Troika but not a lender.

      We starting in February that there was no overlap in their bargaining positions. There was no solution space.

      That may have sounded extreme and continues to sound nuts given how obvious and high the costs are to the member states (the Target2 losses and recognition of losses on the loans by the member states, although they may have a way to finesse the state-level losses in the event of an IMF default. They sure have huge incentives to). But the creditors have political and personal constraints that limit their flexibility (one can argue, correctly, that if they had more courage or vision they’d be able to create more degrees of freedom).

      Now Tsipras may blink. He signaled (at least per Die Welt) some willingness to make concessions on pensions. But it is hard to imagine he’ll go far enough to make the creditors happy. But if he does, he’ll have to do a deal with To Potami, the centrist party. He’ll lose the Left Platform.

      1. DJG

        From the quote about the German position, above: “Greece must overhaul its labor market, change its service sector and pursue privatization.” Why the endless wrangling over employment law? Why the insistance on privatization? These are the issues that have set off popular movements in Spain, Italy, and Portugal. I recall a stipulation give to Italy once that the Italians had to “free up” the taxicab market, as if taxis are a top-ten contributor to the Italian economy rather than a bunch of small businesses.

        What I don’t read about are capital controls and banking controls (as Yves Smith keeps pointing out) to prevent flight of money. I don’t read about making the Greeks set up an effective tax assessment and collection system (having read a couple of articles about tax avoidance and enforcement). I don’t see anything about setting up a reliable system of land registration, which would allow the Greek governments to collect property taxes efficiently. Is the troika a bunch of dizzy bourgeois?

        This stress on impoverishing the populations means that the austerians are simply bad negotiators, no matter what you think of Tsipras. His latest broadside points out the weakness in their position. Does the troika think it would be uncool and too wonky to talk about banking controls and tax policy? Sheesh.

        1. Yves Smith Post author

          Greece was the one that needed to impose capital controls. The Troika can’t do that for them. And discussing that in advance would lead to such a rapid bank run that it would be pretty much guaranteed to lead to collapse of the banking system.

          The Greeks and the creditors have already agreed that Greece needs to fix it tax system, so that’s not and has never been a negotiating point of contention. What the two sides have argued over is how quickly Greece will actually be able to improve its system and collect more taxes. The bailout negotiators see Greece’s estimates as way too optimistic.

          The reason that the pension and labor market and other “reforms” are on the table is that they are part of the existing bailout deal, part of the hated “memorandum”. Greece agreed to implement those reforms and didn’t. Greece signed a memo in February which reaffirmed the deal. As we wrote on February 21:

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

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

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

          Even writers who take a positive view of what Syriza accomplished are under no illusion as to how far short Syriza has fallen relative to its lofty promises.

          Syriza has been trying for months to get out of an exiting Greek commitment, one that Syriza reaffirmed. Syriza has been a dead man walking all these months.

          Ireland, Spain and Portugal in fact complied with the IMF bailout program and have all exited it, Ireland in December 2013, Spain in January 2014, and Portugal too exited in May 2014. All these countries’ governments believe, pretty fervently, that since they took their austerity edicine. Greece should too. Spain is more hardline than Germany.

          1. Cugel

            It really has nothing to do with what compromises Syriza has been willing to make. The Troika has now signaled that they will accept nothing less than implementation of the entire Memorandum, including the totally insane target budgetary surpluses of 3% – 4.5%. If I’m reading this right, they are demanding Greece agree in advance to the 2016 target surpluses that nobody, but nobody, thinks are remotely possible.

            I.E. they don’t want Greece to accept any deal and are trying to make it a “poison pill”.

            So, labor “reforms” are really beside the point. The fact that the creditors are focusing any attention on these side issues indicates that they simply want to cobble together the lowest common denominator that all their parties can agree to – no concessions, and present that in order to avoid having to make any hard decisions about what could possibly solve the crisis. They are tired of having to negotiate because it generates negative press and they are confronted with unpleasant facts they would rather not deal with.

            Faced with a choice of abandoning their ideology in the face of reality, they have chosen to double down on Austerity and push Greece out of the EU, then point their fingers at the “lazy Greeks.”

            They have concluded that they have things “contained”. Given the general stupidity of bankers and banking institutions and their rigid group think I’m not at all surprised that they could think that. I deal with banks and credit card companies in debt negotiations all the time, and loss-mitigation is not something that they do well, as any attorney who deals with those morons could tell you. The Troika are simply those debt negotiations taken to a higher level, with a much greater sense of entitlement, arrogance and rigidity, with a higher level of group think.

            1. Cugel

              June 3 Update: Apparently the “we’ve got this contained” attitude in Europe is getting some push back from the White House today:

              White House economic adviser, Jason Furman, said a Greek default was a “potential accident” in waiting.

              “It would be a mistake to think it would be just contained to Greece,” he told the OECD conference, saying policy-makers had already been caught wrong-footed in recent years by contagion from the sub-prime debt crisis.

              Furman made his comments in response to news that Tsipras “has produced a plan of his own and said he intended to discuss this document in Brussels, calling on euro zone partners to show some ‘realism’ and urging a deal that would let Greece escape from ‘economic asphyxiation.'”

              “Economic realism” is absolutely the last thing the EU wants to face. That’s like asking global warming deniers to “show some realism in the face of scientific consensus.”

              But, although it’s doubtful they will take any notice, it’s nice to see somebody in the Obama administration telling the imbeciles “no, you do not have this ‘contained’, just because you figure the Eurozone won’t blow up in the next 6 months.”

          2. Oregoncharles

            Until they lose the election. And Portugal has already reversed its position.

              1. Oregoncharles

                Austerity. I think it was a change of government, but not well reported here (US) – Yves, have you seen anything recent on Portugal?

                1. IsabelPS

                  The Socialists in Portugal are not saying anything different from what they have been saying for the past 4 years. The only difference is that there will be an election in 5 months time and they are now seriously campaigning on that premise. They are slightly ahead in the polls, but the current center-right coalition is holding on surprising well. A few months ago everybody assumed that there would be a change of government, now the result is not so obvious. The economy seems to be recovering a bit, people haven’t quite forgotten who took them to these dire straits and, worse of all, the previous PM (a heavyweight in the socialist party) is remanded in custody and being investigated on suspicion of money laundering and corruption. And the Greek saga might very well act as a cautionary tale, the opposite of what Syriza expected. So, all bets are off.

      2. Santi

        I don’t expect Tsipras go with To Potami, this would be a suicidal move, he would not “just” loose the Left platform, but Syriza would break into pieces. To Potami is exactly the trap that the PTB set up for Greek people, and they reject it to go for Syriza.

        1. Tsigantes

          Exactly right Santi.

          Meanwhile it is worth remembering that Lafazanis does and says nothing without clearing it with Tsipras first, the two work together.

          To Potami is the goat in the parliamentary pack, taken seriously by no one and despised by everyone.

      3. Tsigantes

        The Telegraph link given above is trading in pure fantasy.

        (although he can always cut a deal with To Potami).

        SYRIZA has no need to “cut” deals with To Potami, since, as the article states, To Potami has declared it will vote for anything that keeps Greece in the eurozone. (This was the sole purpose of manufacturing To Potami in the first place.)

        To Potami is a fake, an oligarch-funded, US/EU invention. It was drummed up 20 months ago to augment or replace PASOK in the governing ND coalition should PASOK fail to make it back into parliament. It ran without a platform (except: “Atlanticism”), promising to produce a platform after the elections. Of course it has not delivered on this. Despised by left- and right-wing voters alike, its importance is to its external sponsors only, who are the only forces promoting it, as above [Telegraph].

        Miranda Xafa, ex-IMF and a private wealth manager in Athens, is regularly quoted by the neo-lib foreign press but has no credibility or position in Greece, except as an economic advisor to Drasi, a neo-lib party of .09%, not represented in parliament.


  2. ambrit

    So now it is a bald faced Diktat.
    If, as Mz Smith mentions, Syriza loses the Left Platform, and woos To Potami, where does the Left Platform go? More importantly, what does the “motivated” portion of the Greek public do?
    The Greek centrists may go all in for salvaging some parts of the status quo ante, but for what purpose if they find themselves isolated from the rest of the nation? Since Syriza needed a coalition with the Left Platform to form a government to begin with, do they think they will do any better with another coalition? I’d think that similar tensions would bedevil them.
    I know I’m being somewhat “romantic” about this, (just ask Lord Byron about that,) but a Left Right government of National Unity is possible when the extent of the suffering the Eurocrat’s Diktat imposes upon the Greek Nation becomes clear. Even when the ‘economic’ dust settles, this will be far from over.

    1. Yves Smith Post author

      This Telegraph post suggests that the Left Platform would form a new party if Tsipras capitulates.

      The extreme “Left Platform” faction of Syriza, who make up a third of the party’s membership, have promised to defy creditor powers, and called for a reinstitution of the drachma, as the government enters its fifth month of arduous bail-out negotiations.

      Syriza member Stathis Kouvelakis, who has led the insurrection, has vowed to end his country’s ritual “humiliation” at the hands of the International Monetary Fund, European Commission, and European Central Bank.

      “It has become now clear that the ‘institutions’ are not striving for what some are calling an ‘honourable compromise’” said Mr Kouvelakis, in a statement….

      Latest polling shows that 58pc of Syriza supporters would prefer to return to the drachma rather than continue implementing Troika austerity measures.

      Keep in mind 58% of Syriza voters (about 39% of the population) is not a majority.

      More from the same article:

      The insurrection poses a domestic headache for Mr Tsipras, who will have to pass any bail-out agreement through his country’s 300-member parliament.

      Holding only a 12-seat majority, failure to ratify an agreement would trigger a snap election and likely lead to an extreme Left breakaway, said Miranda Xafa, a Greek economist and senior scholar at the Center for International Governance Innovation.

      “There are indications that Mr Tsipras is ready to ditch his extremists should he lose a vote, but it will be very hard for him to come up with a face saving deal,” said Ms Xafa….

      “In any new election scenario, Syriza would be split and the Left wing would likely break off to form a separate party. Mr Tsipras would have to find new coalition partners,” added Ms Xafa.

      The country’s centrist To Potami party have pledged to vote in favour of any bail-out deal which keeps Greece in the euro.

      New Democracy, the main but much depleted opposition party, have said they will wait for the details of any agreement before making a decision on ratification.

      New Democracy has way more votes than To Potami, it appears. So Tsipras would need to get a decent chunk of New Democracy votes to get a deal passed.

      I saw the “Hope is coming!” Syriza slogan as troublingly similar to Obama’s “Hope and Change” message. And this result is a much more devastating outcome to the Greek people than Obama’s sellout to the bankers. Tsipras was trapped by his campaign promises, which stripped him of what little bargaining leverage he might have had. It was all over when the ECB started QE in March. They could and did contain periphery bond spreads.

      1. D. Galanis

        Tsipras will not blink. The left platform will capitulate. SYRIZA can not form a government with POTAMI because they are more neoliberal than Miranda Xafa and that says a lot.

        1. Yves Smith Post author

          Syriza already capitulated when Varoufakis committed to run primary surpluses. That was agreeing to continue austerity.

          What happens when the ECB informs Tsipras that Greece is on a path to having to agree to a depositor bail-in just like Cyprus did if it is to stay in the Eurozone?

          1. D. Galanis

            How many bank accounts with more than 100.000 euros you think there are left in Greece?

              1. Tsigantes

                A bail-in would involve stockholders only, so no threat at all. Since these are the people ECB protects, it’s not going to happen a la Cyprus.

                1. Yves Smith Post author

                  No, that’s completely wrong. In Cyprus it was haircuts of deposits. We reported on it extensively at the time. We were one of the few sites to follow Cyprus closely.

                  1. Tsigantes

                    There are no private citizens deposits left in the banks worth mentioning. My point.

              2. Yves Smith Post author

                More than just payroll, although that would be the biggest for a lot of businesses. There is no way to avoid having transaction balances if you are a business, and large ones if you have a lot of transactions. When Indymac failed here, uninsured depositors took huge losses.

                1. Tsigantes

                  The payrolls for most large businesses are sent from abroad and spend 24 hours in the bank. This applies to foreign owned businesses like Vodafone and Greek businesses that relocated abroad during the crisis – Fage, Hellenic Coca Cola / Bottling etc.

                  1. Yves Smith Post author

                    The bulk of Greek businesses are small and medium sized employers. Some like doctors deal almost entirely in cash, but others can’t avoid using banks, particularly ones that have tourists as customers and take credit cards. I’ve actually done a credit card project for American Express for its local cards (as in run by local partners, usually banks, for the in-country market, and Greece was part of the study).

                    1. Tsigantes

                      Please tell me about it. I run a Greek SME and like everyone else have taken all cash bar pre-dated tax payments out of the bank, paying in cash as needed at the counter and completing payroll within the hour.

          2. Tsigantes

            Syriza already capitulated when Varoufakis committed to run primary surpluses. That was agreeing to continue austerity.

            According to you, Yves.

            The agreement to run a primary surplus [though greatly reduced] applied only to the rest of the memorandum period, i.e. until September. This showed good faith. Made impossible by the ECB, or rather, redundant. Keep in mind that these negotiations concern only the last third of the program, under negotiation for the last year since agreeing to them was also politically suicidal for the previous government.

            1. Yves Smith Post author

              You are out of line.

              Varoufakis committed to running primary surpluses “forever” I suggest you do your homework before making unfounded accusations. This is an exact quote, emphasis mine:

              “What are we talking about? Of an independent tax agency, of keeping forever a reasonable primary surplus, of a sensible and ambitious privatization program… of a true reform of the pension system …of liberalizations of markets for goods and services etc,” he wrote.


                1. Yves Smith Post author

                  Any primary surplus in a depressed economy is austerity. Even in a growing economy it dampens growth. Bill Mitchell has estimated that Greece needs to run fiscal deficits of 10% of GDP for at least a few years to get the Greek economy out of its deep ditch.

                  You simply don’t want to acknowledge that Varoufakis capitulated early on. He wanted to finesses the Maastrict rules with his Modest Proposal by running fiscal surpluses while having the European Investment Bank invest in infrastructure, which amounts to stealth Federal transfers to more than offset the primary surplus. The Troika and Eurogroup shot down the EIB idea immediately. Yet Varoufakis did not retreat from his now-contractionary primary surplus commitment in light of changed negotiating realities.

                  1. Jackrabbit

                    But Varoufakis believes that a successful negotiation with the Troika would set the stage for economic growth. A “win-win” approach to these negotiations.

                  2. D. Galanis

                    What Varoufakis meant was that the Greek gov will not go on a spending frenzie as in the past

                  3. Sibiriak

                    Helena Smith: “The anti-austerity government, has it seems, agreed to overhaul the social security system and roll back on pension reform – but is still insisting that the primary surplus demanded of Athens be less than 1%.

                    It is also believed to be digging in its heels on its primary demand of reducing what it has repeatedly said is an unsustainable debt load – perhaps the biggest impediment to any kind of deal for creditors. ” (emphasis added)


                    1. Yves Smith Post author

                      Any primary surplus is a dampener on growth and will deepen the contraction of a depressed economy.

                      FWIW, a raft of other sources report the Greek ask as 1%, not less than 1%.

          3. Lambert Strether

            I think D. Galanias means that Tsipras will not blink in a confrontation with left platform. But if forming a government with Po Tami is ruled out (and Xafa’s entity has the word “Innovation” in its name, so you know its a scam), then what leverage does Tsipras have?

            1. Alan

              (Xafa’s entity has the word “Innovation” in its name, so you know its a scam)

              LOL Lambert, you’re so right, it’s the same game everywhere.

        2. Edna M.

          I totally agree about the Potami. People outside of Greece don’t seem to realize how ridiculous a party it is. Neo-liberal, cheerleaders for the creditor countries, funded by a media mogul, voted in by rich people who want to seem modern and who could care less about economic suffering. The troika (or the institutions) would like nothing more than to see them in government, and that says it all. Fortunately they only have about 6 or 7% of the vote

        3. alex morfesis

          one too many marxist millionaires in syriza…no one who has much ever actually worked for a living, or done anything other than hope and pray the area of study they got their Petty humbling Dud in can let them get some free room and board while speaking at a conference in some city or resort town they might want to check off their bucket list…chasing Panaratis off the ledge was a sad turn of mysogeny. Too many olde goats butting heads with the future. Kavoulakis and Dragasakis have never, it would appear, worked anywhere to create any jobs at any time…ever…and dragasakis seems from planet X

          but the end is near enough…the summer is around the corner and the flood of VAT money from the tourist season is about to hit the treasury…Minister Varoufakis will not be that much broke come july and august…the markets will hopefully notice that so there will be only a slight bump in the road if the country follows the insanity of Dragasakis and runs into the abyss of the draxma…seems PM Tsipras and Minister Varoufakis don’t like the idea of a dual currency…(me thinks it would work to their favor)…

          but when being accused of being corrupt and unaccountable, it might be best to remind the world how MUTI came to be in her position in the first place…since she has such clean hands…and her grandpapa was just a humble policeman in berlin during the days of goering….did I mention goring is sometimes spelled different was by different people… sometimes…not that they are trying to make you forget the past…oh my…

          Germany, as is pointed out in the demographic problem story in the links today, is in deep trouble…basically, german woman do not want to make babies with german men…pray tell I wonder why…??? and are prepared to let germany collapse in the near enough future…

          hello helga, hello gudrun, right this way to mister stavros house of fun…
          welcome to mykonos, should I start by rubbing your tired little feet…
          would you like me to use the “virgin” cold press olive oil,
          or some nice “real” greek yogurt to help…kool… you down first…

          auf Wiedersehen manfred…

          1. Yves Smith Post author

            Greece is way way behind on lots of bills, over 1.1 billion euros on pharmacuticals alone, and they also have to give the IMF back the 650 million euros they borrowed from the reserve account to make the IMF payment. The IMF replenishment is due soon. So the summer improvement in fiscal position may not even get Greece back to even. The IMF got detail (finally) from the Greek teams and is projecting a primary deficit of 1.5% for 2015. The summer tourist pattern is well known and sure to be in their estimates.

      2. ambrit

        “[Syrizas] result is a much more devastating outcome to the Greek people than Obama’s sellout to the bankers.”
        Maybe so, but the ‘fallout’ from that sellout is still happening. No one knows how bad things are going to be after the next ‘reset’ occurs. Obama’s legacy has yet to play out.

  3. papicek

    Maybe the Greeks should sell their NATO arms. Seems to me I recall Bush pressured Athens into buying a bunch of M1 Abrams tanks, even though our military said neither Greece nor NATO had any need of them (a jobs program at our tank factories).

    1. Tsigantes

      And maybe NOT sell our arms papicek in the case of default or other such option :-))

      Apart from Brussels we’re also enjoying “pressure” from the north, with Nuland opining that Greek (or Bulgarian -) provocateurs were behind the riots in FYROM, and the newly adopted Greater Albania project of Edi Rama contesting the Greek EEZ and making noises about Epirus….

      1. Kraut

        They have more US equipment than they can handle. But they might be interested in the manuals!

  4. papicek

    Now you’ve got it.

    Take what you read in the press and discount it by 60-90%.

    As for “far-reaching economic overhauls,” everyone knows what that means: screwing pensioners and massive layoffs, which we already know is the kiss of death for what’s left of Greece’s economy and ought to work as well as it did when Barings Brothers took over Egypt or when JPMorgan took over Haiti’s customs & tax collection, ie: total disaster.

    1. Yves Smith Post author

      Please tell me when the press has been inaccurate in reporting the positions of the various players in the negotiations. Both sides have been campaigning in public and either making public statements or leaking like crazy. These negotiations have been conducted in a fishbowl. In fact, they’ve been so overly transparent as to get in the way. There has been too little, as opposed to too much, feeling things out in private. Different media outlets have added their own interpretation, which is often questionable, but you can strip that out to find the “who has sent what signal or made what move” without too much difficulty.

      1. Tsigantes

        Yves you live in the USA, far away.

        For Europeans on the ground papicek has got it exactly right, and may be too generous citing that initial 60% :)

        A small, typical example is the farcical Telegraph ‘analysis’ you link to above which quotes a nonentity like Miranda Xafa talking nonsense with a straight-face, like Tsipras “partnering” with To Potami. Believe me she knows this is inane. This may seem minor, and it is; but the sheer accumulation of incorrect statements pouring out daily – week after week, month after month – has not only twisted every situation into a TPTB version of Alternate Reality but succeeded in framing and reducing whatever is under discussion to one narrow, skewed, semi-delusional storyline that is distributed world-wide to similar collaborative media.

        This extends beyond Greece to Ukraine, Middle East, Russia, supposed non-dissension in Europe, Successful Exits from The Program, European banks, what have you.

        But reality keeps breaking in: the Poles dump their war-mad president; the Finns ditto their austerity PM; Spanish regional elections; the Czech referendum on the euro; the Swedish referendum on the euro; Italian regional elections & triangulator Renzi’s support plumetting; the Brits voting for EU referendum; the very few reported demonstrations and riots across Europe; violent riots at the ECB opening; Orban protecting Hungarians from foreign bank mortgage repossessions; EU premiers at the Moscow 70th anniversary; strikes and dissension in Germany; the election of SYRIZA despite the Greek Success Story, etc.

        Because these are un-ignorable events they make it into the papers in a fleeting, minimizing way – most brushed over within a day or two to revert to the Alternate Reality: the media status quo that 90% of Europeans don’t inhabit.

        Try counting how often SYRIZA has been labelled incompetent, foot-dragging, failing to produce the goods without evidence by the MSM – ask, was this true? how do you know it’s true?- and count how often the MSM has attacked 1) the ECB for operating politically and illegally, i.e. beyond its mandate; 2) IMF, EU, ECB, Berlin for blackmailing Greece through finance and propaganda; 3) the IMF for incompetence – those multipliers – and breaking its mandate; 4) Troika’s illegality according to the Treaties; 5) revealing and evaluating Troika’s corrupt performance per country…

        Europeans see TPTB operate without transparency and create cover narratives through wholly oligarch owned media. European media has crashed financially, also unreported.

        Meanwhile the real story is not Greek “debt”, it’s: bankrupt European banks; the morphed Frankensteins of the new EU and NATO; the crushing of the nation state, sovereignty, democracy, the social contract on our continent; being strong armed into war by outside powers, with Europe the arena; and the approaching facism represented not by marginalised neo-nazi parties, but by the neo-lib project itself hand in hand with the Trojan horse of NATO.

        So yes, Europeans have zero trust or respect for their media (yours too by the way) and have somehow bypassed it to miraculously develop their own dissemination of information.

        1. Lambert Strether

          “miraculously develop their own dissemination of information”

          Which would be… Where? I’m on the hunt for good sources all the time; I explicitly ask readers for them, and readers send them to me. Ditto Yves. Yet I can’t count the number of times I’ve read “your sources are teh suxx0r” on these Greek and European threads, and the commenter, almost without exception, never goes on to provide better ones, or, if they really care about getting the information out, contacting either of us directly. This comment exemplifies the tendency, and frankly, I’m gobsmacked by it. Is it all word-of-mouth? Samizdat? Surely these would leak out somewhere?

          The other tendency this comment exemplifies is the idea that because a poster (say Yves) makes the right call, they’re somehow cheerleading for it. For example, your next-the-last paragraph: NC has covered every single one of those topics — granted, not always in the European context, but I’m sure you’d be the first to agree these issues are global — down to the level of Golden Dawn sightings in Queens, and often with original reporting. I don’t question your expertise in a European media critique, but it seems odd that you don’t invest a similar effort to master the work being done here, especially given that you comment so frequently.

          1. Alan

            Lambert, we all know you guys try do your best, that you are honest, that you are always sharp with strong bs-detectors and that’s why we all come here. And it is also true that sometimes being far away has worked to NC’s advantage, as in assessing correctly the Feb20 agreement, which was pretty big in my book. You got it right, and us romanticists who wanted to believe let that get in the way of reaching a dispassionate, sober assessment.

            But there is truly so much creditor propaganda going on, especially in the financial press, that as much as you try to be unbiased, sometimes you do end up being led astray by the likes of Peter Spiegel and others. Here is an article explaining how these guys, those who are always first with the “news”, get their info and context straight from apparatchiks in Brussels:

            […] The most influential group in the Brussels media machine is made up of the euro zone’s ‘hard core’ bloc. This means the Permanent Representation of Germany, located in Brussels, and assisted by political and financial satellite countries of Germany: Spain, Portugal, Slovakia and the Baltic states (among which, Latvia currently holds the EU presidency). France and Italy have clearly less influence and access in this system.

            In terms of collection and distribution of news, the main players in the system are the three major European-level media outlets: the agencies Reuters and Bloomberg, and the Financial Times newspaper. Whatever this group reports, all other media outlets in Europe rush to reproduce. Thus – intentionally or not – articles published by the group are spread widely.

            Information that enters the Brussels media machine comes from three sources: people working inside the EU bureaucracy who monitor critical meetings (interpreters as well as civil servants), the politicians themselves (or their aides) and senior officials of the European institutions. These sources are used to satisfy the need for timely, exclusive coverage of news events, which makes journalists extremely competitive in pursuing information on what is discussed during these meetings.

            The most common means of communication from these sources to journalists is SMS. When it comes to more detailed leaks though, journalists from the three main media players (together with others from mostly German and British outlets) are invited to an unofficial press conference and briefed. This has been the case for the past few months.

            In these meetings, the person doing the briefing is very often an official that also works at the European Commission’s Spokesperson’s Service. Of German origin, this man sets aside EU etiquette as well as the theoretical neutrality of his professional position.

            A recent example that highlights how well this system functions was in Riga, during the recent Eurogroup meeting. On April 23, Greek finance minister Yanis Varoufakis participated in a dinner with his colleagues, in order to prepare the issues for the forthcoming meeting. Everything proceeded normally. But the following day, the media ‘revealed’ highly aggressive rhetoric against Varoufakis from his colleagues during the Eurogroup meeting itself.

            The alien

            That same senior official of the European Commission, moments after the conclusion of the Eurogroup meeting, invited eight journalists for the ‘established’ daily informal press conference. “There was a lot of anger towards the Greek delegation,” a Brussels-based journalist, who asked to remain anonymous, told us. “When we asked about Mr Varoufakis’ position in the meeting, the official said ‘The guy lives on another planet’, and made derogatory gestures. This isn’t something we’ve seen before – neither from EU officials nor this particular person.”

            An identical ‘update’ was given by two further EU officials, one working for the Eurogroup and one from a diplomatic mission of a Southern European country. “They were equally aggressive; trying to present Mr Varoufakis as an ‘alien’”, said the journalist, who was present during these discussions. “When we got to the heart of the matter concerning the Greek economy, the ‘sources’ refused to say any more. They just blamed Varoufakis.” These briefings were followed by tough statements from various ministers, echoing the German government’s point of view.

            This specific information about the events of the Eurogroup meeting in Riga was published in all three aforementioned major media outlets, giving the impression of a war-like atmosphere at the meeting and breaking the unwritten rule of maintaining a professional distance from harsh words. Following these events, the Greek delegation decided for Varoufakis to not attend the planned dinner on the evening of April 24, to express his displeasure with the way his colleagues treated him and Greece. However, the ‘aggression’ from ministers, EU officials and the media did not subside. On the contrary, Reuters presented Varoufakis as “isolated”, simply because he did not attend the dinner, without asking for a statement from the Greek side. They also commented on Varoufakis’ decision not to wear a tie.

            The go-ahead for this latest smear campaign was given by SMS, from a German official to a journalist at one of the three major media outlets. The journalist in question then called some of his sources in Athens in order to warn them what was coming.[…]

            This is indeed how it works. Then there are those who are out of the loop and who are overly sympathetic for their own reasons, like the Telegraph’s AEP (hardcore eurosceptic) who may be 100% accurate in pointing out the inconsistencies and bs coming from the Troika but who cannot be relied upon when estimating where things are going.

            The way most Europeans (who, having to live in the real world and not the alternate reality created by the major media, know deep in their hearts what is going on) deal with this, is by reading local and/or social media. But one has to speak the language(s) to get in that loop.

            It is much more important though, at least in my opinion, to not lose sight of the bigger picture and the proper context. That’s why, when for example Yves says that ” the creditors say that Greece has yet to deliver a complete and sufficiently detailed set of reforms”, I have to reluctantly argue with her and remind her that as she herself so often has observed, the only immovable object has been the Troika’s unaltered positions – which means that whatever the creditors say, there can not be a “complete and sufficiently detailed set of reforms” that will satisfy them since that would in reality amount to a “credible” total capitulation “plan”. As long as the GG doesn’t totally surrender, they will never say that the GG delivered a “complete and sufficiently detailed set of reforms”, by definition.

            So the only way to stubbornly refuse to be led astray by that kind of megaphoned creditor nonsense is, at least in my opinion, remembering the bigger picture and overall context. I think that in that regard, Tsigantes wrote a truly great post above, nailing this in the head:

            […] Because these are un-ignorable events they make it into the papers in a fleeting, minimizing way – most brushed over within a day or two to revert to the Alternate Reality: the media status quo that 90% of Europeans don’t inhabit.

            Try counting how often SYRIZA has been labelled incompetent, foot-dragging, failing to produce the goods without evidence by the MSM – ask, was this true? how do you know it’s true?- and count how often the MSM has attacked 1) the ECB for operating politically and illegally, i.e. beyond its mandate; 2) IMF, EU, ECB, Berlin for blackmailing Greece through finance and propaganda; 3) the IMF for incompetence – those multipliers – and breaking its mandate; 4) Troika’s illegality according to the Treaties; 5) revealing and evaluating Troika’s corrupt performance per country…

            Europeans see TPTB operate without transparency and create cover narratives through wholly oligarch owned media. European media has crashed financially, also unreported.

            Meanwhile the real story is not Greek “debt”, it’s: bankrupt European banks; the morphed Frankensteins of the new EU and NATO; the crushing of the nation state, sovereignty, democracy, the social contract on our continent; being strong armed into war by outside powers, with Europe the arena; and the approaching facism represented not by marginalised neo-nazi parties, but by the neo-lib project itself hand in hand with the Trojan horse of NATO.

            That’s unfortunately what’s truly being going on, and that’s the filter through which everything has to be interpreted.

            1. Jackrabbit

              We’ve seen MSM antics often enough that we should always be careful about what we see from them. Especially on big issues that are important to TPTB. MH-17 is another example but there are many others.

            2. Jackrabbit

              Yanis wrote of the Riga meeting on his blog:

              Then came a New York Times Magazine story which raised the possibility of a recording of that Eurogroup meeting. All of a sudden, the journalists and news media that propagated the lies and the innuendos about the 24th April Eurogroup meeting changed tack. Without a whiff of an apology for the torrent of untruths they had peddled against me for weeks, they now began to depict me as a ‘spoof’ who had “betrayed” the confidentiality of the Eurogroup.

              To fellow Europeans I add this: Perhaps it is time we became a little more sceptical about the journalism we rely upon as citizens. And perhaps we should query European institutions in which decisions of monumental importance are made, on behalf of Europe’s citizenry, but in which minutes are neither taken nor published.

              Secrecy and a gullible press do not augur well for Europe’s democracy.

              1. Yves Smith Post author

                The fact that Bloomberg exaggerated what was said (yes a sin in journalism) does not negate the fact that other outlets, which reported on the same meeting more carefully, stated that the other ministers were united against and critical of Varoufakis. And that is borne out by the fact that their unhappiness forced Tsipras to reshuffle his negotiating team.

                The fact is that Tsipras’ action was NOT the result of media reports. It was in response to Eurogroup member beefing.

                Again, you fail to show how the errors and overstatements in the media have made our analysis and conclusions wrong. Every story we read has spin. So?

                What many readers are really objecting to is the fact that the creditor side has vastly more power here than Greece, and hence what they do and think is far more important than what the Greek side and the Greek public thinks.

        2. Yves Smith Post author

          The points you raise have NOTHING TO DO with the negotiating dynamics. It’s secondary to the analysis.

          As I have said repeatedly, financial time is faster than political time. The fact that voters are rebelling has not moved the creditors one iota. It is not relevant to the analysis of how the bailout negotiations are faring. To the extent they are considering it, if anything, as we have stated before, it strengthens their motivation to make sure the Greeks suffer if they continue their defiance pour decourager les autres.

  5. Jackrabbit

    I think Yves comments to this post are really important and provide a good summary of why we are at this point.

    I am not as skeptical about Syriza’s betrayal, though (I used to be very skeptical). Syriza’s noncompliance has added real costs that will be born by Greece and, I think (ultimately) the creditors too. And Syriza’s defiance has been politically damaging via the demand for WWII reparations and the Troika’s cruel stubbornness (as outlined in Tsipras’ LeMonde OpEd). Plus, I am not sure that Tsipras will make a deal that substantially breaches his ‘red lines’. It seems like political suicide for him to do so after taking such a hard line.

    The Troika put the Greek government into the ‘box’ of conditionality (what I have called the ‘Catch-22’): first explain how you can carry the debt, then we can talk about restructuring. Syriza has been trying to break out of that box by noncompliance. For the Troika, this negotiation is only about the structural reforms (in accordance with the agreed upon conditionality) but for Greece it’s about using ‘red lines’ and other tactics to highlight the need for debt restructuring. Recall that Greece originally wanted a process that would explicitly consider debt restructuring. The Troika insisted on conditionality and was ready to pull support for the Banks so the new Greek government reached a compromise (intending, it now seems clear, to be uncooperative).

    Note: If one works back from Greece’s ‘red lines’ to calculate the debt that can be supported if those lines are respected, then I’d suppose that one can determine how much debt Syriza thinks could be carried (and thus what should be forgiven).


    I was always suspicious of the IMF’s intentions when they said that they wouldn’t be part of any future bailout with out debt restructuring. I wondered if it was all about inducing Greece to present their plan for carrying debt. At that point, there is theoretically no need for a bailout or debt restructuring. What Yves writes in this post seems to confirm that the IMF’s gesture is a hollow one.

    Such a gambit by the IMF also seems unnecessary if the Troika expects Syriza to cave in to the Troika anyway.


    Yves point about QE is really interesting and important:

    It was all over when the ECB started QE in March. They could and did contain periphery bond spreads.

    H O P

    1. Jackrabbit

      Interestingly, Varoufakis has argued for Euro QE and transfer payments. Which never sat well with me because it seemed to simply transplant the US solution (which has failed to bring a real recovery and increased wealth inequality). What these amount to are payoffs that smother real reform.

    2. Jackrabbit

      What the ECB can’t contain is the value of the Euro itself. Political stress could mean that the Euro falls in value. This helps exporters like Germany but probably exacerbates core-periphery tensions. This could become a downward spiral.

    3. Jackrabbit


      The ‘Catch-22’ is related to, but differs from the Troika’s conditionality. Conditionality means that policy choices must be approved by creditors. The ‘Catch-22’ relates to the process the Troika wants to follow for debt restructuring: first tell us how you will pay the debt (satisfy conditionality), then we can talk about restructuring it.

  6. susan the other

    The IMF has backed off of its insistence for debt reductions. The ECB/EC is insisting on an inflated primary surplus promise without any investments to create it. The US gave Varoufakis a cool welcome. But the IMF generously gave Ukraine a big loan even tho’ it is in the middle of a civil war. The State Dept. failed in its latest attempt to cause a coup in Macedonia over the Turkish Stream altercation. The US and the EU don’t seem to be communicating, but Obama is pontificating that the EU should be more reasonable. And Obama is MIA on his big promise to campaign on Global Warming, as if it is too touchy a subject with world finances at such an impasse. I’m puzzled why no one wants to help Greece. Even worse, it seems the ECB and now the IMF are intentionally turning Greece into a failed state. It’s impossible to understand and too depressing to think about.

    1. ambrit

      I empathize, but must observe that it makes perfect sense if one views all this as a game. Games generally have ‘winners’ and ‘losers.’ Politics, when properly conducted, can have multiple ‘winners’ by adjusting everyone’s expectations. What we see here is a rigid mind set focused on ‘winning’ and ‘losing.’ Like all fanaticisms, this process is ultimately self defeating. Expectations are magnified as ‘successes’ mount. Moderation is shunned.
      We are fallible fiends.

    2. D. Galanis

      nobody wants to help Greece because they need it to fail in order to hide the fact that this is not a Greek problem but a global financial neoliberal failure

    3. Yves Smith Post author

      A clarification: Obama said the creditors should be more reasonable in February and basically reversed himself two weeks later.

  7. ambrit

    Re. the second update: Why does the phrase, “complete and realistic plan” remind me of Baldrick from the “Blackadder” television shows?

  8. Peter Dorman

    The piece of this puzzle I don’t understand is the continuing dispute over the level of detail in Greece’s reform proposals. This made sense a few months ago; it doesn’t make sense today. Surely it is not about staying in the office a few hours later and cranking out some numbers.

    My supposition is that it is really a dispute over forecasting. Varoufakis has said repeatedly that it is impossible to forecast the effects of policy changes without knowing the macro context, and that agreement on a target primary surplus is therefore logically prior to pricing reforms. I’m guessing that the institutions (hate that term) are demanding that Greece use their fictional forecasts (the ones in which the magic austerity wand summons an upsurge of growth) in reform pricing, and Greece is resisting. If so, that would be good to know, but I’m only guessing and could be completely wrong.

    I would like it if someone who has an inside track on this issue would explain what’s going on. Reporters should have done this already, but journalism has been dreadful.

    1. IsabelPS

      Whenever I saw Varoufakis in yet another international conference, forum, whatever explaining his ideas for the euro, Europe and the world, I kept thinking: “how on earth does he have time for THAT???”. Even with the best of minions slaving away in Athens, he should be putting 25 hour days in weeks of 8 days just to get a grasp of where exactly things were standing in the Greek economy (by all accounts, the previous government has not been very helpful).

      So, my guess is that they didn’t present any detailed plan because they kept hoping against all hope that it would not be necessary.

      BTW, while I was reading Yves’ post I kept thinking: this is not an ultimatum from the creditors, this is the creditors saying “here, we’ve done your job (our way, of course), since you haven’t put down any details we have done it for you; just sign the damned excel sheet and move”.

    2. Tsigantes

      The inside track is: that instead of negotiating the limited list of reforms requested in MOU2 (of which the current negotiations address the last part), and which was unsuccessfully under review with the previous government, they have demanded a ‘comprehensive list’, i.e. a whole gigantic plan for reforming the country plus worked out proof through models and projections that the plan will work. This comprehensive document would then go under review.

      This strategy (really, just a game) was our old friend ‘extend and pretend’ deployed this time alongside illegal ECB asphyxiation, to crash SYRIZA both in the international press and hopefully, especially inside Greece.

      A comprehensive plan of this kind would normally take at least a year to develop.

      1. Yves Smith Post author

        While I am not privy to “normal” IMF negotiations, I would have to think they have a routine drill and they expect Greece to conform to it. What Greece may see as excessive is what they require to be sure the borrower has real implementable plans, not 50,000 foot handwaves.

        1. Alan

          What Greece may see as excessive is what they require to be sure the borrower has real implementable plans, not 50,000 foot handwaves.

          So again you take de facto the supposed “technocratic” competence of the IMF which supposedly needs accurate information, so you are assuming again that this is just business as usual. Except that as I have proven repeatedly, this whole charade was from the beginning fantastical plans with no semblance to reality, which proves that this is indeed just classic creditor propaganda and that the numbers never mattered because here, from the very beginning, we are dealing not with financial number crunching or any “implementable plans” but political considerations, ideological stubbornness and just the right amount of ass-covering. My evidence has been the internal 2013 assessment leaked to the WSJ, the leaked confidential International Monetary Fund documents, including board meeting minutes, staff briefs and board-member comments that reveal considerable disagreement at the May 9, 2010 meeting at which the IMF board approved Greece’s first bailout.and of course I also pointed to the Paul Blustein report which is based on all the relevant bibliography.

          All this evidence leaves absolutely no space for illusions that the IMF has competence and “implementable plans” and that the problem is, alas, that the Greek government doesn’t. If everything I and all others have provided cannot convince you that this just a power game and not a technocratic issue at all, then nothing will.

          I give up.

        2. Alan

          And as a last hurrah before giving up for good, here is an article that was published right here from someone who should know exactly what this has been all about, from the beginning

          […] Virtually everyone now agrees that pushing Greece to pay its private creditors was a bad idea. The required fiscal austerity was simply too great, causing the economy to collapse. The IMF acknowledged the error in a 2013 report on Greece. In a recent staff paper, the fund said that when a crisis threatens to spread, it should seek a collective global solution rather than forcing the distressed economy to bear the entire burden. The IMF’s chief economist, Olivier Blanchard, has warned that more austerity will crush growth.

          Oddly, the IMF’s proposed way forward for Greece remains unchanged: Borrow more money (this time from the European authorities) to repay one group of creditors (the IMF) and stay focused on austerity. The fund’s latest projections assume that the government’s budget surplus (other than interest payments) will reach 4.5 percent of GDP, a level of belt-tightening that few governments have ever sustained for any significant period of time.

          Following Germany’s lead, IMF officials have placed their faith in “structural reforms” — changes in labor and other markets that are supposed to improve the Greek economy’s longer-term growth potential. They should know better. The fund’s latest World Economic Outlook throws cold water on the notion that such reforms will address the Greek debt problem in a reliable and timely manner. The most valuable measures encourage research and development and help spur high-technology sectors. All this is to the good, but such gains are irrelevant for the next five years. The priority must be to prevent Greece from sinking deeper into a debt-deflation spiral. Unfortunately, some reforms will actually accelerate the spiral by weakening demand. [My emphasis]

          What this means(and especially where emphasised with bold) is what so many people in the financial press either don’t (or pretend not to) understand: that the staff’s competence in number crunching and research and their subsequent recommendations have nothing to do with what the IMF as an institution prescribes to or asks from borrowers, where it is completely different considerations that rule the day.

          Yet too many people take at face value what Lagarde or apparatchiks like Tomsen say in public or in background briefings, where somehow they always manage to blame the victims while simultaneously ignoring what their own technocratic staff tells them. And as if Greece weren’t enough, look at what they are doing in Ukraine now!

          I stated my case. Perhaps you would like to state now your case and explain how, in light of all this, anyone can take seriously the claim that the problem here is the Greek government’s “50,000 foot handwaves”.

  9. Michael

    Greece needs oil and liquidity. Greece has a shipping fleet and a huge unnecessary stockpile of NATO arms.

    The Saudis have oil and liquidity, and they could use naval transport and a huge unnecessary stockpile of NATO arms.

    A solution begins to appear…

  10. Lambert Strether

    I thought I’d go looking for Golden Dawn stuff, but there’s not much in the English-speaking press.
    Citizen Side:

    The right-wing party Golden Dawn have held a rally in Mitropoleos Square, Athens on May 29, 2015, to commemorate the fall of Constantinople and the death of the last Byzantine Emperor Constantine XI Palaiologos in 1453.

    That’s it. That just doesn’t seem right.

    1. Tsigantes

      GD evaporated from public view after the murder of Pavlos Fyssas in September 2013, i.e. they no longer ruled the streets or committed assaults. Their few marches have been peaceful and orderly. Its leadership has been in custody for 18 months and were recently released (18 months = maximum custody) but are now attending court under criminal charges.

      GD has lost supporters (c. 2-3% of its electoral 8% depending on the poll) since the election, because SYRIZA is doing what their voters wanted: stand up for Greece and Greeks. GD voters are not identical with the leadership, the party grew through austerity & through GD neighborhood structures, not ideology.

      SYRIZA respected the GD MPs parliamentary rights, which the previous government had ignored and unlawfully denied. Since GD politicians are elected MPs they were released every day from prison to attend parliament, while they were still in custody. Despite hating communists, GD voted for SYRIZA’s humanitarian measures bill (in fact this was unanimous, all parties), the protection of primary residences, for the setting up of the Debt Audit Commission.

      Commemorating the Fall of Constantinople in a public rally is a nice thing to do actually. Most Greeks do this in church, but no doubt GD had some priests. GD also gives memorial services for the junta Colonels on the anniversary of their deaths and attends their graves.

      1. Tsigantes

        On the first working day of the GD trial, a trial of Conspiracy of the Cells of Fire (an anarchist group) was going on next door. Suddenly during a recess the CCF defendants broke into the GD courtroom to attack the GD defendants. LOL, who thought up that scheduling arrangement? The GD trial has been relocated to another venue.

        Here’s some links:

        Unfortunately I don’t have a link to the court attack but it should be easy to find.

      2. Tsigantes

        Sorry, the 8% was in Attica regional elections May 2014. However GD has lost supporters from its recent parliamentary elections (6,7%?), as have all parties but SYRIZA.

  11. Jackrabbitq

    Each side is making final offers. Tsipras sent his on Monday. Troika will present theirs tomorrow. They still seem far apart on some issues (like primary surplus – see link, above). Not sure that we can really read much into the flurry of activity except that time is short to reach any agreement (Martin Wolf claims it is necessary to do so before midnight – see link, above).

  12. kemal erdogan

    Despite all the posturing, the troika does not seem ready to pull the trigger. I knew some of what they say was to look cool but now it seems they are the ones who want a deal. Interesting times

    1. MyLessThanPrimeBeef

      It’s like the Qiantang River tidal bore watch in Hangzhou.

      Not unusual that spectators drown watching the show.

  13. kevinearick

    Commercial Banking

    Call a sample of commercial banks. Tell them you need a commercial line of credit for business expenses – tools, equipment, gas, hotels, etc., and see what they say.

    What you will find is that banking employees are oblivious to what makes an economy work, can only fill blanks in a computer, and think only in terms of loans against assets and income credit scores, bidding up rent to income, to maximize compliance. If you are making less than 100k, you are likely living paycheck to paycheck, whether you know it or not.

    Like they say in Seattle, with every bust, last one out, turn off the lights.

    The problem isn’t human biomass. The problem is stupid human infrastructure. In 75 years, what has Boeing Microsoft, Apple Samsung, or any other corporation actually accomplished, other than growing debt, to be charged to future generations?

    The Fed doesn’t do anything, but exchange paper for real estate inflation, against which loans are made, for consumption, measured as GDP productivity. Government, the majority, looks at the counterweight and sees a motor.

    Capital simply exploits the propensity of the majority to exploit natural resources expediently, taking a percentage of the resources and profiting on the resulting artificial scarcity. Then they stop having children, until nature restores a surplus, and the stupidity starts all over again.

    Meanwhile, the critters exchanging paper 7/24, to profit on the artificial demographic variability, think that money works, and the middle class is surprised that it is easily replaced by dc computers. You cannot change demographic behavior in real time, at the aggregate level, which is all the Fed can see. Volcker just choked the buffer, on the bubble peak of natural resource depletion, to get another squeeze out of the system.

    Commercial banks do nothing but confirm consumption, and that’s a problem, if you want the economy to work, as opposed to redistribute natural resources for depletion, which, of course, is booked by accountants to create paper profit. When capital feels sufficient pain, when the upper middle class buffer fails, commercial lending will resume, when it’s far too late, for most.

    If you let them, the critters will choke themselves to death, from the overhead, still hoarding. Do you really think that the Greeks are amateurs at sh-show economics, or do not see the demographic reality in Germany, or globally?

    New World Order, always the same as the old…Empire – entertainment, surveillance and weapon technology, is not an economy, but the majority always chooses to believe it is, because empire, peer pressure, is the path of least resistance.

    Fish don’t swim upstream to have their children by accident.

  14. Mr. G

    Angela Merkel is a shrewd political leader. She’s lasted because she seldom takes a personal position on an issue unless she knows the outcome will put her in a good light. She’s led this latest push……

  15. Pelham

    Let’s not lose sight of the fact that what has been inflicted on Greece over the past few years by these creditors is an extreme form of sustained violence. If the ordeal the Greek people have put through were caused by a natural disaster, there would be a global outpouring of aid and relief.

    The troika by all rights should be tried in an international criminal tribunal and condemned.

  16. purple

    Looks like Greece will get bailed up by the BRICS bank. Chinese imports could lay waste to entire European industries, maybe Germany should think twice. The EU has protected its industrial base much more than the U.S.

    1. Praedor

      That had been my position in this. Syria should be running behind the scenes, secret negotiations with the BRICS to set up a final escape hatch from EU neoliberalism. Play HARDBALL. Tell the EU banksters that the debt WILL be written down and restructured and when they refuse at the last moment, declare all EU debt odious and take a life preserver from BRICS (and sell off NATO crap). HARDBALL where the EU losses it all to an extent they couldn’t imagine.

    2. Praedor

      That had been my position in this. SYRIZA should be running behind the scenes, secret negotiations with the BRICS to set up a final escape hatch from EU neoliberalism. Play HARDBALL. Tell the EU banksters that the debt WILL be written down and restructured and when they refuse at the last moment, declare all EU debt odious and take a life preserver from BRICS (and sell off NATO crap). HARDBALL where the EU losses it all to an extent they couldn’t imagine.

  17. Praedor

    Sorry about double post, issues with my tablet, autocorrect and inability to edit a party once posted.

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