Author Archives: Yves Smith

Links 2/17/15

How Third Way Trade Agreements Study Distorts Via Omission to Pave Way for TTP and TTIP

Even cherry-picked data shows only modest gains for trade agreements, and more comprehensive looks tell a very different tale. And that’s before you get to all the nasty sovereignty-gutting provisions of the TTP and TTIP.

Greece, Its International Creditors and the Euro

his is an excellent background piece on how Greece got where it is and how its various bailouts were structured. It also helps explain the past and current roles the various members of the Troika play and discusses the prospects for Greece achieving its aims.

Varoufakis Charges Eurogroup with Bad Faith Dealing in Negotiations

Yanis Varoufakis describes how he was presented with one memo before the Eurogroup meeting and a very different one at the meeting proper. No wonder the Greek side got upset with how the meeting was conducted.

Eurogroup Talks Terminated; Greece “Won’t Take Orders on Bailout”

As we indicated, we were doubtful that a deal with Greece on its bailout could get done, since if nothing else the two sides had irreconcilable positions on structural reforms. That was one of the biggest reasons for Greece rejecting the idea of extending the current bailout, that they did not want the strings attached, such as continued privatizations and further “progress” on labor-crushing market reform. The only way an agreement could have been reached would have been for Greece to capitulate on these issues, which seemed unlikely given how Syriza had risen to 80% approval ratings in the polls based on its Troika-defying stance.

So it is not surprising to learn that the bailout talks are over, with no agreement reached. But what is suprising, and not encouraging, is that if anything the Eurogroup hardened its stance against Greece and expected it to capitulate.

Michael Hudson: Ukraine Denouement – The Russian Loan and the IMF’s One-Two Punch

Will America’s insistence that Europe, Russia, and Ukraine act against their economic interest ultimately lead the US to lose Europe?

Links 2/16/15

Robert Parenteau: Get a TAN, Yanis: A Timely Alternative Financing Instrument for Greece

TAN, or tax anticipation notes, would way be a for Greece to give itself more fiscal spending wriggle room without violating Eurozone rules. That will likely be necessary if Monday’s meeting in Brussels results in no extension of the current Eurozone bailout.

The Boston Globe Covers Up for Wall Street, Ignores Swaps Losses in Coverage of MBTA Turmoil

A new Boston Globe story, The T’s long, winding, infuriating road to failure, purports to be “the true story of the breakdown,” a “a decades-long tale of grand ambitions and runaway costs.”

Funny how this 2500 word article makes nary a mention of the huge losses that the Boston Metropolitan Transit Authority made, along with many other easily duped transit authorities, on swap transactions that went massively against them in an environment of seemingly permanent low interest rates.

Links 2/15/15

Ilargi: Ukraine – Trapped in Narrative

We’re offering two posts on Ukraine tonight, in part because Greece dominated our coverage last week, and each post covers a different aspect of this devolving situation. Ilargi focuses on the thin, as in WMD-in-Iraq-like, justifications for escalation

Michael Hudson: Has the IMF Annexed Ukraine?

Ukraine is going into an IMF program in even worse condition that Greece with its various loans from the Troika in 2010, and we can see how well borrowing more when you were already overindebted worked out for Greece. In addition, this interview with Michael Hudson makes clear that the loan to Ukraine is wildly out of line with IMF rules, making it painfully obvious that this “rescue” is all about propping up the government so it can continue to wage war rather than economic development.

Bill Black: The BBC Dismisses a Real Greek Economist as a Sexy “Ideologue”

Yves here. I know some readers have begged to differ, but Very Serious People are not described in the same terms as pop culture icons. Thus, as Bill Black points out, the “rock star” branding of Varoufakis is a way to depict him as a colorful, entertaining lightweight.

Links 2/14/15

Wolf Richter: Something Rotten Is Piling Up in this Economy

Given how many QE-induced distortions we have in the economy, I’m not certain the spike in inventories (in isolation) is as telling a symptom as it was last time around. But most analysts took note of how much of last quarter’s GDP figures reflected both a big increase in inventories and a negative GDP deflator, and they expect the next quarter or two to be less robust.