The Eurozone Crisis Thread

tsipras is counting on them getting offered a better deal with these results... maybe that will happen, but if so it would be marginally better, nothing radically different.

Well, he was counting on them getting offered a better deal with a simple 'No' majority but the margin is 20% (and seems to be rising) so I imagine he'll be looking for something more than marginally better.

i guess we'll find out

When Iceland voted against paying what they owed, they came out of it really well. Yeah, this is going to be fucking tough on the Greeks, but at leat it will be tough on their own terms. Short term and middle term will be rough, but the bullshit provisions french and german banks kept getting in these deals would have kept the suffering eternity-termed. So yay Greece!

greece != iceland

the referendum was a hypothetical counterfactual: if this offer were still on the table, would you have liked for us to vote for it?

This is about strengthening his government's position in the country more than it's about strengthening the government's hand in the negotiations.

The central bank and IMF were no doubt curious to see if the greeks would repudiate their government, which would have strengthened their own hand in dealing with that government, but with the greeks backing tsipras it either solidifies the stalemate and leads to default and grexit, or the bankers must make concessions to break the stalemate. Either way, tsipras stays in power now and has political cover for the national consequences of the outcome - whatever it is.

And whatever happens, it must happen pretty quickly. I hope the greek parliament is primed for quickly passing the kind of currency controls needed under grexit.

The risk is that German public / political opinion has become too entrenched for any substantially better offer to happen. Leading politicians across Europe, but particularly Germany, are framing this as a rejection of an offer of help and suggesting there can't be any way back to negotiations. There's a chance that the risk inherent in having Greece leave with popular momentum behind it might be too great for the wider European project to bear but the deals on the table were never about finding workable, pragmatic solutions. That political culture isn't going to change overnight because the Greek public wants it to.

otm

French resolve is wobbling though? If not, I expect it to.

France has always been open to a better deal, i think.

french not enough though

This is about strengthening his government's position in the country more than it's about strengthening the government's hand in the negotiations.

Either way, tsipras stays in power now and has political cover for the national consequences of the outcome - whatever it is.

otm
imf/cental bank aren't accountable to or obligated by greek vote

what's the current take on whether Greece will (have to) leave the EU as well?
and will they stay in the Schengen zone?
thinking about hot new airport chaos if they're gone from the Schengen zone (can't imagine Spanish tour properties would be unhappy with that)

echoing shari's last point

https://pbs.twimg.com/media/CJLMeV-WgAAcCcf.jpg

Le Monde's take : this is a defeat for Merkel and Germany, and her vision of a German Europe.

Varoufakis may sound delusional in that statement, but it's his job not to slam the door on reopening negotiations right now, even if it means sounding foolish. I give it about two, maybe three days before everyone realizes it's game over. First, the markets have to open and have their say. Losses need to be in a non-panic-inducing range. I expect they will be modest.

i would be curious what the result would have been if this had been a eurozone/eu-wide poll

'Not tough enough on those damn lazy greeks!!!!' Would be my guess.

if the answer is to have wealthier european countries subsidize poorer european countries then europe is going to have to become a lot more like the US. some ppl here complain about NY sending so much money to Alabama or whatever down south but it's not a real political stream.

The risk is that German public / political opinion has become too entrenched for any substantially better offer to happen.

the fact that this is now a decisive factor is one of the increasingly evident straining points in the architecture of the eu. fiscal union is at the avant garde of further EU integration, and at the moment, as it is threatened, there just doesn't seem to be the imagination to try to find a solution that isn't a retreat. if greece leaves I don't see how it could reenter, it jeopardizes the whole nature of serious political union. but it still seems incredible to imagine them leaving. if there are still followers of jean monnet in the eu, you would hope they would copy his methods and seize the crisis as the moment to open the discussion on reform. otherwise this is treated as an isolated problem when it clearly isn't.

"if greece leaves I don't see how it could reenter, it jeopardizes the whole nature of serious political union"

yeah I don't see this. the political union is to make sure that Germany and France don't declare war on each other anymore, and to a lesser but still important extent, on their immediate neighbors. *fiscal* union is there to serve that political end.

the political union is to make sure that Germany and France don't declare war on each other anymore

europe is so weird

Old habits are hard to break

An unnamed but apparently "senior and influential" German politician was quoted in The Times as saying that the CDU and CSU had privately agreed to veto any deal proposed while Syriza was still in office in the event of a no vote.

The risk of 'contagion' seems pretty high to me. If Greece goes, i could see Portugal, Spain and maybe Italy following over the next few years unless there is some kind of miraculous upturn in the global economy. Already in Italy, the 2nd, 3rd and 4th biggest parties have been actively cheering on a 'no' vote. Podemos seems to have been emboldened by it as well. The Greek exit from the Euro will either have to be soft enough for other countries to be able to leave the currency without compromising their membership of the EU or so appalling that everyone is scared back into line.

Tusk has called an emergency meeting for Tuesday.

the political union is to make sure that Germany and France don't declare war on each other anymore, and to a lesser but still important extent, on their immediate neighbors.

there has always been a much more ambitious vision of european integration than this, otherwise we'd have stopped at the coal&steel community (& nato)

this is crazy

https://pbs.twimg.com/media/CJLm3xMWEAACqif.jpg

do you want more of whatever that is or less of it

(xp) Yeah, for the economically illiterate (me) could you explain what that means... also I see Ireland1 on that graph but where how are Ireland2 doing?

between the hellenic republic ("greece", to the obtuse imperialists), spain, italy, and portugal, perhaps there is political will for a southern european union. a confederacy, if you will

This is a guess, but I think the graph shows how much of a country's theoretical gdp-growth would become a surplus? So a country like Greece is already amazingly austere compared to rest of Europe, but since it's in an IMF-mandated gdp recession, they get nothing out of it.

Is that close to correct?

silby: less

primary surplus is just gov revenue minus gov expenditure expressed as a % of gdp. "cyclically adjusted" means you adjust for the business cycle, basically saying "what would the primary surplus be if the economy were at full employment?" (which is pretty non-trivial and that's why smart people at the IMF compute tables like that--btw IMF research economists & bankers are m/l independent, that's why you've seen all these headlines saying "new IMF research show austerity doesn't work" but fruitless negotiations) so in 2014 the greek government raised 5% of "potential" gdp in taxes that it didn't spend. here's a picture with both

http://www.ispionline.it/FOTO/grecia_fig1.png

the cyclically adjusted thing sounds like a weird trick but it's necessary bc otherwise countries in recessions would have low govt revenue simply because their output is (temporarily) low, even though it would even out over the business cycle

so greece is the most fiscally conservative country in europe lol

There are a lot of people on social media hailing this as a "victory for democracy" while conveniently not thinking about what would happen if the German public held a referendum on the issue tomorrow.

"When Iceland voted against paying what they owed, they came out of it really well"

my God

sv otm about the two ways this will go, and there's far more govts in power with a serious vested interest in terrifying the voters with the Greek example before the next round of elections. can only see this being a massacre, and a quick one. no vote only makes it an easier sell to the mass european electorate that the Greeks were complicit at every stage tbh.

There are a lot of people on social media hailing this as a "victory for democracy" while conveniently not thinking about what would happen if the German public held a referendum on the issue tomorrow.

― Matt DC, Sunday, July 5, 2015 6:47 PM (5 minutes ago) Bookmark Flag Post Permalink

yup. that's why monetary unions are... awkward. lots of really basic bad analysis going around on both sides, it's crazy how many people there are on both sides who see this purely as a moral good vs evil thing (lazy greeks getting what they deserve on the right/righteous democrats sticking it to evil banks on the left)

If Germany held a referendum tomorroe they would have to admit they are working in their own interests, instead of out of economic logic and nescessity. Which would be a plus for democracy as well.

Greece has chosen, and they've chosen suffering. But they were suffering already, and with no end in sight.

how to make a drachma out of a crisis

Dying on yr knees or, errrrr, not on yr knees, on yr feet I suppose.

I'm all for countrywide 'fuck you' gestures at the stage where hope has long since gone, Sparta is gonna be a p apt comparison tbf

But I guess my response would be pretty differintly if the imf way hadn't alreay tried and failed. And if greece wasn't already the most austere country in Europe. Etc.

does this mean the Greeks return to worshiping the gods of Olympus

lots of american expertise itt

doesn't seem so democratic now

But I guess my response would be pretty differintly if the imf way hadn't alreay tried and failed.

I think Greece's would be too. The EU / IMF only seems to have one setting - the answer is austerity. If that fails, the answer is more austerity. If that fails the answer is more austerity, etc. Which might be excusable from a technocratic perspective if it wasn't trashing the Greek economy and reducing the country's long-term ability to pay its debts, in addition to its short-term ability to provide food, shelter and medical care.

Probably sensible for Varoufakis to step aside if Germany is flat-out refusing to consider any proposals he makes.

putting that backwards a bit, no?

Probably sensible for Germany to refuse to consider any proposals Varoufakis makes if he is no longer finance minister?

The FTMIB seems to have been worst hit this morning but the markets / Euro haven't plummeted so far.

well this referendum wasn't hugely relevant in a lot of ways tbf

The no-austerity posture would be more credible if Tspiras wasn't so reluctant to tackle the fiscal elephant in the room, namely the largely tax-exempt crazy-rich shipowners