Greek debt crisis [update: 3rd Bailout deal reached]

[His Divine Shadow]

Well admission is the first step to recovery.

[Murazor]

I'd like to comment that I consider austerity advocacy during a recession a position largely divorced from good economic sense, that I consider the German position in this whole fiasco generally deplorable (I also find the Greek position and precedent generally deplorable, but Germany simply matters more, so I am more worried about them) and that I heartily disagree with Thanas in this whole topic.

So with all that said, I'd like to ask. What the bloody fuck does the kind of nastily personal being thrown around here accomplish? Really, what do you get out of it? In spite of where we are, this is not an Internet pissing match about the comparative superiority of this and that sci-fi franchise, and presumably none of us are teenagers anymore. I would assume that this is the board culture at work, but it really fits a much broader pattern of the Internet allowing people to feel angry towards their political/ideological opponents all the time.

While dehumanizing one's opponents seems to be a natural impulse of the human condition, it really does more harm than good to start throwing around vitriol, and insulting the intelligence and moral fibre of whoever you are arguing with is unlikely to help matters beyond perhaps some small catharsis. Now, trying to foster goodwill in the Internet isn't by any means guaranteed to help and is often a thankless thing, but at least it does no harm.

Having now delivered my naive mini-rant, I'll now re-engage my lurking engine.

[salm]

My instinctive reaction here is that you may have lost track of what we were talking about here.

Your opinion on the Greek debt crisis is your own and should presumably not be based on what a few SDN posters do.

But if your goal is to understand what this "lazy Greeks" meme is, and why the Greeks resent it...

That is something you might learn a little about by looking at SDN. You can learn more looking in other places- talk to Crown about that. But this thread at least provides a few illustrations of the nature of the problem. Since it's one source I know we both have easy access to, I used it to illustrate the concept.

For a more detailed discussion we could start with what Crown mentions in this post here:

http://bbs.stardestroyer.net/viewtopic. ... 7#p3915597

Sorry, I worded this wrong. I should have said that I won´t base my opinion on the "lazy Greeks" meme on a thread on SDN.
I am looking at other places. I am looking at plenty of other places. That´s my point. I am in the middle of the country that is accused of spinning lazy Greek memes and I just don´t see it, aside from the tabloids metnioned before.

OK, let's back up a moment.

If you think it's bad to talk about the current crisis as a result of "Greek vices," then we're in agreement, because that's my point. All along, I was using "lazy Greeks" as a shorthand for various arguments of the form "the Greeks have vices, and all these problems have to do with those vices." Whereas I (and you, it seems) would prefer to talk in terms of "the Greeks are tangled up in a network of broken systems."

Thing is, when you talk about the network of broken systems, you have to make rather calm, rational decisions about which systems need to be fixed first.

Yes, lazy Greeks is counterproductive tabloid speak. My argument is that I don´t see this meme from anywhere else than tabloids. Normal people and newspapers don´t use it in my experience. They talk about broken systems needing repair which then, so it appears to me, gets turned into a huge strawman ("they are assholes because they call us lazy"). Of course it is possible, and I suspect it is the case, that this strawman is also built up mainly by morons and tabloids. I suspect normal Greeks don´t think in such idiotic terms.
I can´t read Greek media so I only see what our media translates for me. And that is usually the case when some Greek tabloid posts a "witty" image involving swastikas.
"Lazy Greeks" and "Assholes call us lazy" is annoying because it offends the other side which muddles up and deflects from the real discussion with trivial nonsense.

And there are things that are obviously NOT going to do anything to fix the network, because they will if anything make things more broken. For example, austerity measures are likely to do this. So is loaning the Greeks more money while refusing (or being very reluctant) to forgive any of the interest payments on the existing loans.

The problem is that when you try to reason in this way, you arrive at conclusions that are... unpalatable to part of the European electorate. Like "Well, it looks like this Greek government debt will never be paid back, therefore we'll have to forgive it if we don't want Greece to turn into a failed state."

Since European taxpayers and governments spent a lot of money bailing out private banks and buying that Greek government debt, many of them do not want to hear that. So they start looking for a different narrative in which they are not forced to accept an undesirable conclusion. A narrative like "it's not our fault the Greeks did something stupid, they have to fix their stupidity and corruption before we do anything!"

The trouble is... such a narrative is not based on a calm analysis of the network of broken systems that brought us to this crisis in the first place. It will not end the crisis, in which case Greece will continue to devolve into a failed state.

And I disagree. If you have a different underlying theory of economics you might very well come to this conclusion. Economics is not like a hard science where something is either right or wrong.

In this case, though, the 'booze' and the 'spare livers' come from the same people. The 'spare liver' is debt forgiveness. If, after forgiving the debts, foreign creditors stop loaning Greece money, Greece will be forced to recover from its metaphorical drinking problem and operate on a balanced budget.

At which point it can actually benefit from fighting corruption and tax evasion. Because instead of having all the money it recovers from tax-dodgers go directly to foreign creditors, it can reinvest that money more efficiently into the Greek economy and produce actual growth instead of producing stagnation and long term debt-slavery.

Moreover, the resource here is not 'scarce' in the sense that there are several deserving recipients for each one of the small number of livers available. Forgiving the Greek debts only "costs" European governments in the sense that they won't get whatever money they WOULD get from asset-stripping Greece. Because those are really the only viable options:
1) Asset-strip Greece
2) Forgive Greek debts.

(1) will make some money in the short run but is not actually to the advantage of Europe as a whole. Because it would greatly damage the European unity project, and because it would ultimately result in Greece either becoming a failed state, or a wildly xenophobic and hostile state. Neither of those outcomes is worth the relatively small sums that can be had by stripping Greece of assets and selling them off to (private) foreign owners.

(2) will 'cost' money, but realistically no one is endangered by doing this. If you transplant a liver to Bob, then Alex who needed that same liver is at risk of dying. That is WHY you are so careful about liver transplants- because by deciding who gets the transplant you decide the Bob will live and Alex will die, or the other way around.

If you forgive Greek debts, that doesn't mean that suddenly the Portuguese economy collapses because Portugal was counting on getting that same lump of debt forgiveness.

That´s why I don´t find such analogies useful. The situation is way too complex to simplify it into something like that. Everytime someone creates an analogy the other side can just say "but factor x or y is different" therefore the analogy is not valid.

Out of curiosity, how much evidence should it take to convince Schäuble that his underlying theory is not working?

This is not a question I can answer. In fact that would probably be a good caption of a bacherlors thesis in economics (which could then be controversially debated).
I´d first have to thorougly study ordoliberalism and keynsianism. Then I´d have to figure out to which degree Schäuble is ordoliberal. Then I´d have to study how often and in which cases ordoliberal and keynsian theories worked in the past. Then I´d have to find out in which ways these past cases are similar to the current situation. And so on.
This whole matter is so complex that there is absolutely no way for me to figure this out on my own. I suspect that the vast majority of people (including this thread) debating the issue actually have no clue what they´re talking about either and only parrot stuff they´ve read somewhere else that fits their narrative.
Hence I have to rely on experts. Most experts tell me that austerity is nonsense.

But such tabloid behavior is BOTH the actions of someone who does not understand the situation (the tabloid journalists) AND the actions of someone who is trying to exploit the situation for their own benefit (the tabloid publisher).

My point is simply that anyone advancing "lazy Greeks" argument is likely to either:

1) Not understand the situation and think it is simply a matter of Greeks being lazy/corrupt/whatever, and that if the Greeks would just be good and honest then the problem would disappear. OR...

2) Understand the situation, but want to exploit the emotional reactions of others to make money or gain prestige.

For the popular media, both (1) and (2) may be in play. For politicians, business owners, and economists, one would hope that (1) is not in play, but (2) certainly is.

Or (3) arrives at a different conclusion due to different underlying economical theories.

And I fully agree with you on this- that's my point in the first place. I will note that most people here have been relatively restrained in this matter and have not gone full-on "it's ALL because the Greeks are lazy entitled welfare queens."

But my point is simply that the entire line of reasoning based on "the Greeks need to stop feeling so entitled before this crisis can be solved" is toxic and will ultimately make things much worse. At best it will fail to fix the crisis. At worst it will actively put power into the hands of people trying to profit from the crisis by causing damage to Greece in ways that make money for them.

Quite a few people on the other hand have said "Germans are assholes because they call Greeks lazy" which I find counterproductive as well. I´m trying to argue that "Greeks are lazy" is tabloid speak and should be ignored and not countered with "Germans are assholes" because that is useless tabloid speak as well.

One last question: You suggested to look at that comment by Crown in the other thread. Should we take it to that other thread completely? It´s a bit distracting to have two threads about the same topic.

[salm]

So with all that said, I'd like to ask. What the bloody fuck does the kind of nastily personal being thrown around here accomplish? Really, what do you get out of it? In spite of where we are, this is not an Internet pissing match about the comparative superiority of this and that sci-fi franchise, and presumably none of us are teenagers anymore. I would assume that this is the board culture at work, but it really fits a much broader pattern of the Internet allowing people to feel angry towards their political/ideological opponents all the time.

I fully agree. These emotional outburst are infantile and counter productive. And boring.

[Pinjar]

Almost all the people I have spoken with talk about how the Greeks brought it on themselves and a few clearly do, even when they don’t directly say it and couch it in diplomatic language, believe that they should suffer as consequence (at least those that don’t just want to blame the Germans for everything).

The problem seems to be that what makes sense to people at a personal level “spent too much so should cut back” does not need to make sense at a collective level and probably the majority of people think as individuals and extrapolate. I am willing to accept that those people that want to impose austerity do genuinely believe that it is the best way to get long term improvement and as it seems to be the way things will go, despite our opinions, I hope that they are right.

I don’t believe that anyone actually wants the Greeks to starve to death.

[salm]

Almost all the people I have spoken with talk about how the Greeks brought it on themselves and a few clearly do, even when they don’t directly say it and couch it in diplomatic language, believe that they should suffer as consequence (at least those that don’t just want to blame the Germans for everything).

Where are these people you´ve spoken to from and in which context did you speak to them (personally, via internet, something else)?

[Pinjar]

I socialize with people professionally. Its not evidence by any stretch of the imagination. Its also not demographically diverse. By definition everyone I socialize with has money to spend.

[salm]

I socialize with people professionally. Its not evidence by any stretch of the imagination. Its also not demographically diverse. By definition everyone I socialize with has money to spend.

So where are these people form?

[Thanas]

A bit of economic analysis by an actual analyst on the 2010 bailouts and if they were a mistake.

Two parts:
https://medium.com/bull-market/2010-and ... 89d468e8ae
https://medium.com/bull-market/2010-and ... 839e32c286

Well worth reading, no matter where you stand on the issue.

[aerius]

He missed the elephant in the room, not surprising since he's working from inside the financial industry. If you want to get down to it, the root problem is that the financial system in Greece and the rest of Europe was allowed to become "too big to fail", along with the regulators failing to enforce proper capital limits on the banks, the latter being the key point. If proper capital limits are enforced, a bank can never go into negative equity and require billions to recapitalize it and protect its depositors. The losses are always minimal and remain contained.

But that never happened. Banks were allowed to lie about their asset values so that by the time the regulators got around to doing something about it, their liabilities vastly exceeded the actual value of their assets. And now you can't allow them to fail because if those assets sell at market price, it would "blow up the system". So we have to keep doing bailouts and all that other shit so that the EU economy doesn't instantaneously implode.

[Simon_Jester]

There is a difference between humanitarian aid and (unconditional) debt forgiveness, where you as a creditor will have no guarantee, that the Greek won't continue to do business as usual (which brought them into the mess they are in in the first place). If the first two times give you the impression of the later, you would pull out the thumbscrews, too and demand something more substantial.

The problem is that my natural reaction to such behavior would be either debt forgiveness (and ceasing to even bother loaning Greece any more money ever), or to not bother giving Greece any kind of benefits whatsoever, regardless of the consequences for Greece.

If I care what happens to Greece, the appropriate thing to do is whatever solves their problem. Not just whatever temporarily makes their problem go away until it eventually comes back with a vengeance in the form of more debts they can't pay.

If I don't care what happens to Greece... why give them the humanitarian aid?

Regarding the difference between an ordoliberal (=austerity) and keynesian approach we should also all remember, that economics isn't an exact science. Both have their value, if properly applied, but in the case of Greece "just" throwing money at the problem isn't the solution considering the way their state and society used to (and probably still) works.

Thing is, I fail to see a significant difference between "throwing money at the problem" by essentially paying the Greeks' welfare budget for them with foreign aid, versus "throwing money at the problem" by forgiving Greek debt so they can afford to pay their own welfare budget.

To me, the whole thing sounds like Schäuble is trying to say "it would be wrong to subtract negative five dollars from the Greeks' accounts, because that might lead to misbehavior. But it is right to give them five dollars, even if the 'give five dollars' option does less long term good, and even if there is no reason in principle it wouldn't allow them to misbehave the same way."

I don't think that's the kind of reasoning I'd want from a minister involved in major financial decisions for my country.

Well if austerity makes sense to you, a lot of other things probably make sense as well. Vaccines cause autism, black cats cause bad luck, disease is generated via foul odors, stuff like that must make perfect sense too.

Indeed, and I like to eat children in my spare time too.

Does this mean you disagree with Shadow's contention that austerity is a stupid way to solve economic problems?

I am looking at other places. I am looking at plenty of other places. That´s my point. I am in the middle of the country that is accused of spinning lazy Greek memes and I just don´t see it, aside from the tabloids metnioned before.

Remember, you're looking for the mindset of "The Greeks need to reform before we will consider doing anything that might actually end their problems. They owe us that! Otherwise, we're going to extract our pound of flesh."

I suspect that if you look around you will find this mindset in Germany, if only because if it weren't popular in Germany, then the German government wouldn't be pushing the issue. Just like if you actually walked around asking people in the US, and read between the lines and were paying attention, you'd find Americans who thought Saddam Hussein was in some way responsible for the September 11th attacks.

Without that core of popular support, a government isn't going to push a stance that might otherwise be interpreted as hard-hearted or cruel.

Yes, lazy Greeks is counterproductive tabloid speak. My argument is that I don´t see this meme from anywhere else than tabloids. Normal people and newspapers don´t use it in my experience. They talk about broken systems needing repair which then, so it appears to me, gets turned into a huge strawman ("they are assholes because they call us lazy")...

Well, remember that the Greeks are not just referring to people who "call us lazy" as such, but also to Greeks who feel like the European debtors are callous enough to say "spend five years reforming your corruption problems and THEN maybe we'll let you start actually funding basic government services properly again."

Because it is understandable that the Greeks would react to that with a certain degree of patriotic anger, saying "what, are we so little to you, so inferior in your eyes, that you won't even allow us to get back on our feet until we fix whatever problems you claim are foremost in our society?"

And I disagree. If you have a different underlying theory of economics you might very well come to this conclusion. Economics is not like a hard science where something is either right or wrong.

I disagree partly with that.

Economics may not be a science where we can easily prove things right. But some things CAN be proven to be wrong, when they are tried and failed. People have spent twenty-plus pages on this forum alone making quite a few arguments, including numbers-based arguments about this. Claiming that the IMF and European debtors have demanded Greece take steps that are making the problem worse. As Crown said a while back, "the wrong medicine was given to the patient."

And while you may not be able to prove that there is One True Theory of economics that is correct... you can certainly observe what happens when a patient gets the wrong medicine.

After that's happened, an economist cannot just shrug and say "well, economics isn't a hard science, so your evidence doesn't matter." If the economist does that, then they're not just not practicing hard science. They are practicing economics as a pseudoscience.

It is very much wrong to take a person or a nation with a lot to lose, and force them to obey the advice and orders of a pseudoscientist.

That´s why I don´t find such analogies useful. The situation is way too complex to simplify it into something like that. Everytime someone creates an analogy the other side can just say "but factor x or y is different" therefore the analogy is not valid.

Salm... you created that analogy. If you thought it was an oversimplification, you shouldn't have used it.

Meanwhile, if you object to my analogies, don't just say "all analogies are flawed." Point out the specific flaw in mine.

Analogical reasoning can be a very good tool for illustrating the nature of a complex problem IF people are both responsible and flexible. The key is to recognize that yes, all analogies are limited... but that just means you have to think about the limits. Not that you should just totally ignore the analogies.

Out of curiosity, how much evidence should it take to convince Schäuble that his underlying theory is not working?

This is not a question I can answer. In fact that would probably be a good caption of a bacherlors thesis in economics (which could then be controversially debated).

I´d first have to thorougly study ordoliberalism and keynsianism. Then I´d have to figure out to which degree Schäuble is ordoliberal. Then I´d have to study how often and in which cases ordoliberal and keynsian theories worked in the past. Then I´d have to find out in which ways these past cases are similar to the current situation. And so on.

This whole matter is so complex that there is absolutely no way for me to figure this out on my own. I suspect that the vast majority of people (including this thread) debating the issue actually have no clue what they´re talking about either and only parrot stuff they´ve read somewhere else that fits their narrative.

Hence I have to rely on experts. Most experts tell me that austerity is nonsense.

And insofar as I've understood their arguments, I have found them to be far more compelling. I, for one, am convinced... and this is why I keep arguing that austerity is folly.

If you do not want to stake out a position on the issue because "the whole thing is complex," fine- but there's no point in you participating in that part of the conversation, then. If you're not prepared to say "I think, based on what I know NOW, that this decision is right or wrong," then why bother commenting on that decision in the first place?

For the popular media, both (1) and (2) may be in play. For politicians, business owners, and economists, one would hope that (1) is not in play, but (2) certainly is.

Or (3) arrives at a different conclusion due to different underlying economical theories.

Except that here, there are only two competing theories, and one of them has repeatedly failed to deliver the promised results- austerity has not worked. All over Europe it has failed, it has harmed the nations that practice it, and there is no shortage of people pointing this fact out.

Therefore (3), in my opinion, reduces back to (1) and (2). The pro-austerity faction is led by people who OUGHT to know better, who really ought to recognize that what they're doing isn't working.

One possibility is that they don't realize austerity is failing, in which case they don't understand the situation and are in group (1).

The other possibility is that they have seen the evidence austerity is failing and have decided to pursue their current policies regardless, in hopes of profiting themselves. For example, a pro-austerity economist might keep promoting austerity in hopes of preserving his reputation, whereas his reputation might be badly damaged if he 'recanted.'

Or a pro-austerity politician in charge of negotiating over the Greek debt might promote austerity for Greece and claim previous austerity failed because the Greeks are corrupt. Not even for personal gain, necessarily... but because maybe that way his country can get the money back. Or at least some of it.

Both of those motives would fall under group (2)- people who understand, on some level, what the situation is, but are knowingly misrepresenting it, because they hope to achieve some kind of benefit.

It would be understandable if, for instance, a finance minister from a country that holds Greek debt were to be deliberately obtuse, and to refuse to accept debt forgiveness... because debt forgiveness means his country loses money. Or rather, loses the hope of getting money back. In that case, the politician's only real fault is that he is letting patriotic nationalism for German interests override Greek interests.

And I don't actually have a problem with that- as long as:
a) He's prepared to admit that he's doing it for nationalist reasons and that it really isn't important to him whether the result will be harmful to Greece. And...
b) He's prepared to admit that this is NOT consistent with the stated values of the project of creating European unity. You can't have a unified Europe if the leaders of the most influential nations within that union are actually nationalists out to strengthen their own nation at the expense of weaker ones. That's not unification, that's imperialism.

One last question: You suggested to look at that comment by Crown in the other thread. Should we take it to that other thread completely? It´s a bit distracting to have two threads about the same topic.

The other thread is on a general topic of how participation in the Eurozone has impacted European countries in general. I don't think it would be a good idea to derail that thread with a pile of Greece-specific topics.

[Nova Andromeda]

Will the IMF participate as Merkel says or is she blowing smoke without any idea of knowing?

Reuters

Merkel says she expects IMF to take part in Greek bailout
REUTERS — 30 MINUTES AGO

* Merkel says room for mild forms of Greek debt relief

* She rejects suggestions Berlin wants "German Europe" (Adds quotes, background)

By Noah Barkin

BERLIN, Aug 16 (Reuters) - German Chancellor Angela Merkel tried to reassure sceptical lawmakers on Sunday that the International Monetary Fund would take part in a new bailout for Greece, before a parliamentary vote in which many of her conservatives may break ranks and reject the rescue.

In her first public comments since her summer break, Merkel told broadcaster ZDF that she was sure Christine Lagarde, head of the IMF, would ensure the participation of the fund if conditions on Greek pension reform and debt relief were met.

"Mrs. Lagarde, the chief of the IMF, made very clear that if these conditions are met, then she will recommend to the IMF board that the IMF takes part in the programme from October," Merkel said. "I have no doubts that what Mrs. Lagarde said will become reality."

Uncertainty over the IMF role in the 86 billion-euro bailout has become a headache for Merkel before Wednesday's vote in the Bundestag. Lawmakers from her Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), want the IMF involved because of its reputation for rigour.

Volker Kauder, a close Merkel ally and the leader of her conservatives in parliament, has even described IMF involvement as a "condition" for supporting a new bailout.

But Lagarde, who has been pressing euro zone countries to provide Athens with "significant" debt relief, has said the IMF will wait until October to decide whether to participate. That would force lawmakers to vote without any guarantees that the Washington-based institution will have a role.

In a nod to its calls for debt relief, Merkel said there was room to ease the burden on Greece by extending the maturities on its debt and reducing interest rates.

German approval of the bailout is not in doubt because of the support of parties like the Social Democrats and Greens. But a rebellion by a large number of her allies would be a blow for Merkel, who remains highly popular after 10 years in office.

Last month, a record 65 lawmakers from Merkel's conservative camp broke ranks and refused to back negotiations on the bailout. German newspaper Bild estimated at the weekend that up to 120 CDU and CSU members may refuse to back the government in the vote on Wednesday.

In the interview, Merkel rejected the notion that Germany had driven too hard a bargain with Greece or that Berlin had been isolated in the talks on a third bailout.

"It doesn't help if we are all nice with each other now, only to have a situation in two to three years where we are worse off than today. The euro crisis has already lasted too long," she said.

Asked whether Berlin was striving for a "German Europe", Merkel said: "We don't want this". (Reporting by Noah Barkin, editing by Larry King)

(c) Reuters 2015. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.



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[Fingolfin_Noldor]

It wouldn't be the first time the IMF has bent back to accommodate political considerations.

[aerius]

The only difference IMF participation makes is which EU leaders get shit splattered on their faces when it blows up again.
Seriously, how many times do they have to do this before they realize it doesn't work?

[Bernkastel]

I suppose this would be the proper place to post this.

Syriza rebels break away to form Popular Unity party
MPs angry at what they consider a betrayal of anti-austerity principles announce decision in letter to parliament, the day after Alexis Tsipras’ resignation


The Greek prime minister, Alexis Tsipras, announced his resignation in a televised address.
Rebels within Greece’s ruling party, the leftwing Syriza movement led by the prime minister, Alexis Tsipras, have announced they are breaking away to form a separate entity called Popular Unity.

Angry at what they see as a betrayal of Syriza’s anti-austerity principles, the 25 MPs announced their intention to form a new party in a letter to parliament the day after Tsipras resigned to pave the way for snap elections next month.

Led by the former energy minister, Panagiotis Lafazanis, the new movement will be the third-largest group in the Greek parliament and could conceivably receive a mandate to try to form a new government.

Tsipras announced his resignation in a televised address on Thursday night. He said he felt a moral obligation to put Greece’s third international bailout deal, and the further swingeing austerity measures it requires, to the people.

Last week he piloted the punishing deal through the Greek parliament, but suffered a major rebellion when nearly one-third of Syriza MPs either voted against the package or abstained. Tsipras is gambling that he will be able to silence the rebels and shore up public support for the three-year bailout programme.

Speaking on BBC Radio 4’s Today programme, the Syriza labour minister, George Katrougalos, said the government needed to “reconfirm its mandate” to implement the third Greek bailout and that the party is “crippled by a number of dissident MPs”.

“This is the essence of democracy, we do not have any problem to ask the people. We do not want to govern against the popular will,” he said, adding that Tspiras and his government were “confident in rightness of our policies and the maturity of the Greek electorate”.

Last week Tsipras successfully piloted the punishing three-year, €86bn package through the Greek parliament but only thanks to opposition backing: nearly one-third of his ruling Syriza party’s 149 MPs either voted against the package or abstained.

Katrougalos said the government had managed “the best possible deal” when faced with “economic blackmail”. He added that democracy had functioned in Greece, but had failed at the EU level.

The package entails a radical overhaul of the Greek economy and major reforms of health, welfare, pensions and taxation. Tsipras will be counting on securing re-election before its harshest effects – which include further pension cuts, VAT increases and a controversial “solidarity” tax on incomes – make themselves felt.

Asked whether there was a risk in a growth of support for rightwing parties in Greece, Katrougalos said there was no longer a “typical confrontation between left and right”, saying there was a clear difference between Syriza and “the political parties that support oligarchies”.

The party’s success in the forthcoming election was not just a battleground for the country, but a test of whether Europe could “neutralise neo-liberal policies and counter balance recession measures with growth”, he said.

“Greece is going to be become the mirror of the future of Europe, depending on how we implement this difficult arrangement,” he said. “It was never just a Greek issue, it is a more broad confrontation between two visions of Europe, a social one and a neo-liberal one.”

On Thursday night the Greek president, Prokopis Pavlopoulos, began the process of asking the main opposition party leaders whether they would be able to form a new government following Tsipras’ resignation.

The current makeup of the 300-member parliament makes that improbable, with neither the centre-right New Democracy party, the new Syriza rebel group Popular Unity, the far-right Golden Dawn or the centrist To Potami thought likely to have enough allies to govern.

If no party can form a coalition government, parliament will be dissolved and fresh elections must then be held within a month. Government officials told Greek media on Thursday that the most likely date for the poll was 20 September.

Once parliament is dissolved, the prime minister will be replaced for the duration of the short campaign by the president of Greece’s supreme court, Vassiliki Thanou-Christophilou, a vocal bailout opponent, as head of a caretaker government.

Tsipras, who swept to power elections seven months ago on a promise to end austerity, remains popular with many Greek voters for having at least tried to stand up to Greece’s creditors. He is widely tipped to win the poll, the country’s fifth in six years.

He insisted in his Thursday address that accepting creditor demands for further tough reforms was the only way to ensure Greece remained in the eurozone, which is what opinion polls show the overwhelming majority of the Greek population want.

Tsipras said he was proud of his time in office and had got “a good deal for the country” after seven months of bruising negotiations with its international lenders, despite bringing it “close to the edge”.

He added: ”I wish to be fully frank with you. We did not achieve the agreement that we were hoping for. But [the agreement] was the best anyone could have achieved. We are obliged to observe it, but at the same time we will do our utmost to minimise its negative consequences.”

Greece’s European creditors did not appear to be dismayed by Tsipras’ widely expected move to call an early election.

Asked whether the election would change the numbers of the bailout deal, Thomas Wieser, the head of the Euro Working Group that prepares decisions for meetings of eurozone finance ministers, told Austrian broadcaster ORF: “No … This was really an expected step and for many people a desired step to get to a clearer structure in the Greek government … In October we have a meeting about a possible debt relief and (after the election) we hope for further progress of the programme.”

[bobalot]

Santa is Four Months From Christmas – But a Week From Bankruptcy

Santa Claus has been given a week to pay his creditors.

Finland’s shrinking economy has hit Dianordia Oy, the company that offers kids from all over the world an opportunity to meet Santa Claus. Just four months before Christmas, the firm faces bankruptcy as it struggles to repay its debts.

The problems started as tourists from Greece, Italy, Spain and then Russia stopped coming, Jarmo Kariniemi, chief executive officer of Dianordia Oy, which runs the Finnish Santa Claus office, said in a phone interview from Rovaniemi, close to the Arctic circle in Finnish Lapland.

“The state of the global economy makes a big difference to our business,” Kariniemi said on Thursday. Most of the company’s debts — about 200,000 euros ($223,660) — are owed to the tax man, he said.
Kariniemi says his company is “not yet bankrupt, and we are confident a solution will be found.” The challenge is adjusting to the shifting revenue streams as various countries get hit by economic shocks, he said.
As news of the potential bankruptcy emerged, Santa’s staff were were keen to stress the village was open for business as usual.

“Despite the current news, lets keep smiling and work for a better future. Tide will change, we have a week to turn this around,” Santa’s Helpers posted on Facebook on Thursday.

Santa’s plight is the latest example of Finnish businesses fighting to survive the decline of a euro nation that spent the debt crisis trumpeting the wisdom of austerity. Moody’s Investors Service now says Finland faces a fourth year of economic contraction, imperiling its Aaa rating. Standard & Poor’s stripped Finland of its top credit grade in October.

Prime Minister Juha Sipila says the only way for Finland to reboot is for production costs to drop. Labor unions have already rejected his proposed pay cuts, and the two sides have so far been unable to find a compromise.
Unit labor costs in Finland are as much as 20 percent higher than those of its main trading partners, including Germany. Finland’s euro membership means it can’t rely on a weaker currency to help close that gap. Unemployment has held at, or above, 10 percent for the past five months.

Meanwhile, companies are continuing to falter. After watching the demise of a consumer electronics industry once led by Nokia Oyj, Finns are now witnessing the slow decline of a paper sector unable to keep pace with digitalization. The government is struggling to find ways to prop up others. Mining company Talvivaara Oyj will get a cash injection to stay afloat, the Economy Ministry said this month.

Should Santa Claus go bankrupt, it would deprive Finland’s politicians of a venue they’ve often used in the past to entertain visiting dignitaries. Finnish President Sauli Niinisto hosted his Indian counterpart, Pranab Mukherjee, at Santa’s office in October. The speaker of Poland’s parliament, Radoslaw Sikorski, also went there as part of an official visit.

Before the conflict with Ukraine, Russia represented about 20 percent of Dianordia’s revenue. That’s now dropped to just under 15 percent, Kariniemi said. Tourists from Japan generate about 18 percent of revenue, while Germans, French and English visitors each bring about 10 percent, he said.

“We have problems at the moment,” Kariniemi said. “The world’s troubles are reflected in our business.”

Source

The structural weaknesses of the Euro on display again but I'm sure the EU elite can find a way to call the Fins lazy and the cause of all their problems.

[FTeik]

Santa is Four Months From Christmas – But a Week From Bankruptcy

Santa Claus has been given a week to pay his creditors.

Finland’s shrinking economy has hit Dianordia Oy, the company that offers kids from all over the world an opportunity to meet Santa Claus. Just four months before Christmas, the firm faces bankruptcy as it struggles to repay its debts.

The problems started as tourists from Greece, Italy, Spain and then Russia stopped coming, Jarmo Kariniemi, chief executive officer of Dianordia Oy, which runs the Finnish Santa Claus office, said in a phone interview from Rovaniemi, close to the Arctic circle in Finnish Lapland.

“The state of the global economy makes a big difference to our business,” Kariniemi said on Thursday. Most of the company’s debts — about 200,000 euros ($223,660) — are owed to the tax man, he said.
Kariniemi says his company is “not yet bankrupt, and we are confident a solution will be found.” The challenge is adjusting to the shifting revenue streams as various countries get hit by economic shocks, he said.
As news of the potential bankruptcy emerged, Santa’s staff were were keen to stress the village was open for business as usual.

“Despite the current news, lets keep smiling and work for a better future. Tide will change, we have a week to turn this around,” Santa’s Helpers posted on Facebook on Thursday.

Santa’s plight is the latest example of Finnish businesses fighting to survive the decline of a euro nation that spent the debt crisis trumpeting the wisdom of austerity. Moody’s Investors Service now says Finland faces a fourth year of economic contraction, imperiling its Aaa rating. Standard & Poor’s stripped Finland of its top credit grade in October.

Prime Minister Juha Sipila says the only way for Finland to reboot is for production costs to drop. Labor unions have already rejected his proposed pay cuts, and the two sides have so far been unable to find a compromise.
Unit labor costs in Finland are as much as 20 percent higher than those of its main trading partners, including Germany. Finland’s euro membership means it can’t rely on a weaker currency to help close that gap. Unemployment has held at, or above, 10 percent for the past five months.

Meanwhile, companies are continuing to falter. After watching the demise of a consumer electronics industry once led by Nokia Oyj, Finns are now witnessing the slow decline of a paper sector unable to keep pace with digitalization. The government is struggling to find ways to prop up others. Mining company Talvivaara Oyj will get a cash injection to stay afloat, the Economy Ministry said this month.

Should Santa Claus go bankrupt, it would deprive Finland’s politicians of a venue they’ve often used in the past to entertain visiting dignitaries. Finnish President Sauli Niinisto hosted his Indian counterpart, Pranab Mukherjee, at Santa’s office in October. The speaker of Poland’s parliament, Radoslaw Sikorski, also went there as part of an official visit.

Before the conflict with Ukraine, Russia represented about 20 percent of Dianordia’s revenue. That’s now dropped to just under 15 percent, Kariniemi said. Tourists from Japan generate about 18 percent of revenue, while Germans, French and English visitors each bring about 10 percent, he said.

“We have problems at the moment,” Kariniemi said. “The world’s troubles are reflected in our business.”

Source

The structural weaknesses of the Euro on display again but I'm sure the EU elite can find a way to call the Fins lazy and the cause of all their problems.

Right, because in bobalot-country devalueing your currency is the solution to every economic problem.
Nokia is no longer bought - devalue your currency.
Nobody needs your wood for paper, because the world goes digital - devalue your currency.
The russian customer-base breaks away because of war in Ukraine - devalue your currency.

If everyone devalues their currency all problems will be solved. Oh wait ... .
http://www.independent.co.uk/news/busin ... 64801.html
or
http://collapse.news/2015-08-21-china-c ... lapse.html

[K. A. Pital]

But woudn't it at least partly alleviate the problem, FTeik? Seriously, when there's some exogenous shock to your system, it does respond normally with devaluation. But this cannot happen right now. I don't think devaluation itself is solving all problems, but it helps the state to keep budgets balanced and exports running (especially relevant for smaller industrialized countries which don't have a huge market that could absorb all the production).

Under capitalism, the normal response to exogenous shock is devaluation. Nokia collapsed? Currency falls. Wood market shrinks? Currency falls. Etc. You are right, that is what was supposed to happen.

[Vendetta]

Devaluation isn't the solution to all problems, but it is the solution to the particular problem Finland has.

Which is a problem because they can't do it.

[His Divine Shadow]

The structural weaknesses of the Euro on display again but I'm sure the EU elite can find a way to call the Fins lazy and the cause of all their problems.

Hey the local comment fields are full of National colation voters doing the same already! Finland's got you beat! And soon Finland will beat you off for spare change.

[Edi]

The structural weaknesses of the Euro on display again but I'm sure the EU elite can find a way to call the Fins lazy and the cause of all their problems.

Hey the local comment fields are full of National colation voters doing the same already! Finland's got you beat! And soon Finland will beat you off for spare change.

I'm a National Coalition voter for several reasons, but I don't buy that bullshit about Finns being lazy. We have many, many other structural problems in many places, but the current talk about the "society contract" was nothing but a grab-bag of employer demands with little or nothing on offer. The claimed remedies in that were also in part outright lies, because supposedly it would help unemployment, but extending everyone's workweek just increases unemployment. In addition, half an hour extra every day will not make anyone more efficient. You'll get much better results by actually optimizing efficiencies of time use inside the workplace by eliminating needless waste. We've been doing this for something like four years where I work and we're not done by a long shot yet. And this is not just some "crack the whip to make the peasants work harder" kind of stuff. It's instead "help the peasants work smarter, so they get more done in the same amount of time without additional strain" kind of stuff and depending on what the starting efficiencies were, it works fucking wonders.

[FTeik]

But woudn't it at least partly alleviate the problem, FTeik? Seriously, when there's some exogenous shock to your system, it does respond normally with devaluation. But this cannot happen right now. I don't think devaluation itself is solving all problems, but it helps the state to keep budgets balanced and exports running (especially relevant for smaller industrialized countries which don't have a huge market that could absorb all the production).

Under capitalism, the normal response to exogenous shock is devaluation. Nokia collapsed? Currency falls. Wood market shrinks? Currency falls. Etc. You are right, that is what was supposed to happen.

In the short term? Certainly. But the underlying structural problems would still be there and had to be dealt with sooner or later and if you have to deal with them later, because you postponed dealing with them because you devalued your currency instead solving them might be even harder. Especially if the other countries did the same as you. If everybody devalues, it is a zero-sum-game or worse. See the fear of currency-wars.

[Tiriol]

The structural weaknesses of the Euro on display again but I'm sure the EU elite can find a way to call the Fins lazy and the cause of all their problems.

Hey the local comment fields are full of National colation voters doing the same already! Finland's got you beat! And soon Finland will beat you off for spare change.

I'm a National Coalition voter for several reasons, but I don't buy that bullshit about Finns being lazy. We have many, many other structural problems in many places, but the current talk about the "society contract" was nothing but a grab-bag of employer demands with little or nothing on offer. The claimed remedies in that were also in part outright lies, because supposedly it would help unemployment, but extending everyone's workweek just increases unemployment. In addition, half an hour extra every day will not make anyone more efficient. You'll get much better results by actually optimizing efficiencies of time use inside the workplace by eliminating needless waste. We've been doing this for something like four years where I work and we're not done by a long shot yet. And this is not just some "crack the whip to make the peasants work harder" kind of stuff. It's instead "help the peasants work smarter, so they get more done in the same amount of time without additional strain" kind of stuff and depending on what the starting efficiencies were, it works fucking wonders.

My analysis is that as long as the current batch of EK (Elinkeinoelämän keskusliitto, Central Union of Trade Life, a central employer organization) leadership sits tight in their chairs and current batch of trade union leadership just reacts to their demands AND current batch of leading politicians keep on listening to only one side of the equation, now mostly apparent with Prime Minister Sipilä, there won't be any progress. No sane employees' union will ever accept such demands as were now put in front of them; no sane politician will want to accept full responsibility for messing up after such tough talk as Sipilä talked this spring; and EK will keep on parroting neo-liberal ideas until the Judgement Day itself unless someone smacks their little heads silly and makes them live as they preach. Devaluation itself wouldn't solve these problems, Finnish society itself needs some changes (and I say this as a Social Democrat). Unfortunately tough talk tends to drive people of all sides to their own barricades. And we have The Finn(ish moron brigade)s making the mess even more godawful with their single-minded pursuit of white Christian Finland with no dirty immigrants.

No efficiency rise will come out of cutting wages or by making people work more hours for same pay. As I have said in my political blog to one commentator, such methods would only work in a drone-like factory environment where x amount of time always produces y amount of results. There are better, more real life -oriented and less idiotic ways to raise efficiency that don't even cost money, but for some reason Sipilä and his circle of advisors don't want to think about them.

[Thanas]

So Tsipras has resigned.

Has there ever been a Government as useless as his in recent memory?

Achievements:
- scuttled economic recovery
- drove the country into capital controls which will probably last for a while
- reverted reforms
- announced to the world that Greece will not keep its word
- tried the classic "put a gun against own head, dare others to call the bluff. Oh wait, they did. Now what?" technique
- increased the negative perception of Greece in Europe
- paralyzed the country for half a year and will now continue to do so until the end of the election
- before accepting a deal that was way worse than the one offered before.

The guy and his clown posse should write the book on how to lose every bargaining advantage while shooting yourself in the foot.

And what is even double crazy - he probably is the only viable candidate in Greece.