Greek Financial Crisis Thread

[Borusenfront]

So I have a question: To what extent did polling agencies intentionally mislead the public in the run-up to this election and what was their motivations for doing so?

61% is not even close to any of the polls that were touted here. What methods were used to obscure the actual intent of the Greek people?

This referendum is not actually the first time this year polls were predicting wrong. Here is a list of some recent elections:

According to this polls PM Cameron would have lost the UK elections or at least force to some coalition.
According to IPSOS and other "unbiased agencies" Komorowski was about to win the Polish presidential elections with landslide victory.
In all cases the polls are biased to the left and pro-EU politicians. I think this polls are here only to manipulate the electorate.

The good news since thepolls are predicting that the majority of Brits want to stay in the EU, it is a good sign for the Eurosceptics.

[Novus America]

The situation was different. The U.S. had credit and its own currency, taxation that worked plus tons of natural resources. Greece has none of these.

Austerity would still be needed because Greece would still have not enough money. And nothing to invest.

Let's for the sake of the argument, presume that Tsipras magically transformed into FDR. Oh no, he cannot walk! Anyways,

Credit and Currency - Greece can plan this out. As Balt pointed out, it's something that Tsipras should've done.
Taxation - it didn't work because ND/PASOK didn't collect taxes properly. An IRS style organization can get the job done.
Natural Resources - Greece has amazing real estate. I'm genuinely looking to invest.

Well he did not. Would have, could have should have. If the debt is forgiven nobody will lend Greece money at decent terms. And I am not talking about real estate, but things like coal, iron, oil other energy etc. The things you need to make things. During the depression the U.S. was still the worlds biggest industrial and argiculuteal power.

Plus getting out took over 10 years and a World War.

[Bogdanov Vishniac]

Spanish parliamentary elections are 5 months away. For all we know, the crisis could be solved by then. Besides which, even if Podemos or won huge majorities in the elections they still would have nothing to gain by trying to break the eurozone or by doing their own quantitative easing. Their economies are in nowhere near as bad of shape as Greece's.

http://www.forbes.com/sites/mikegonzale ... ilds-play/

Podemos has already promised to do similar things.

Podemos wants to restructure its debt, which means negotiating with the EU, not playing hardball like Greece is doing. Playing hardball gets them nothing, because taking Spain's otherwise functional economy and running it into the ground does not tend to make your electorate disposed towards reelecting you.

Not to mention that the IMF will probably be forced to concede that the other PIIGS are in similar straights as the Greeks, and that debt restructuring will have to be part of any lasting EU economic policy that deals with them.

[Pollona]

The EUrocracy solves something in less than 5 months. Ha. Haha. Hahaha. *Breaks into laughter*

Granted, your second point might or might not be true, but first point is highly unlikely.

The longer the crisis goes on, the greater the pressure is on Syriza to just bite the bullet and drop the euro. The troika knows that just as much as Syriza does, so the more this goes on the greater pressure they'll be under in turn to end the crisis definitively. Doubly so considering the US is now leaning on the IMF and probably its European allies as well.

This is why I suspect the next round of "negotiations" will take some time. All the Eurozone negotiators have to do is wait Syriza out until the ECB pulls the plug on Greek banks, which could be within the next week. At that point IOUs or a parallel currency or reintroducing the Drachma all come into play. They have to realize this. It would be foolish if they do not. I think Syriza's assurances that an agreement can be reached within 48 hours are optimistic.

As for the US, any instability abroad gives reason for the Fed to not raise interest rates as rumored. Greece piddling around on the edges of the Euro doesn't offer any good news. The longer the delay the more investors will get jittery wondering when the FOMC will act. I'm unsure how much actual pressure the US is putting on the IMF. The Fund is the most honest voice in the room at the moment, they at least acknowledge that a partial debt write off is inevitable; however, they will likely insist on more long-term structural reforms in exchange for reduced "fiscal consolidation" (austerity).

[Bogdanov Vishniac]

This is why I suspect the next round of "negotiations" will take some time. All the Eurozone negotiators have to do is wait Syriza out until the ECB pulls the plug on Greek banks, which could be within the next week. At that point IOUs or a parallel currency or reintroducing the Drachma all come into play. They have to realize this. It would be foolish if they do not. I think Syriza's assurances that an agreement can be reached within 48 hours are optimistic.

Given everything that's happened, I think the troika will be the one to blink in this particular standoff. Greece doesn't have anything to lose, after all, and nobody in the other EU states wants to go down in history as the leaders that broke the euro or be the ones that tanked the EU economy because they refused to listen to the IMF.

As for the US, any instability abroad gives reason for the Fed to not raise interest rates as rumored. Greece piddling around on the edges of the Euro doesn't offer any good news. The longer the delay the more investors will get jittery wondering when the FOMC will act. I'm unsure how much actual pressure the US is putting on the IMF. The Fund is the most honest voice in the room at the moment, they at least acknowledge that a partial debt write off is inevitable; however, they will likely insist on more long-term structural reforms in exchange for reduced "fiscal consolidation" (austerity).

It was rumoured last week that the US was the one who pressured the IMF into releasing the report on the sustainability of Greece's debt to the public. It was circulated internally a few months ago, but wasn't released to the public due to political pressure from the other EU states - it would have given Greece, and has still given Greece, a major advantage on the negotiating table. Then last week the US decided to intervene and forced the publication above and beyond protestations from members like Germany.

That, to me, signals that the US is likely going to be looking over the shoulders of the troika during this next round of negotiations and will try to steer it as best it can towards a meaningful resolution - whatever that ends up looking like.

[Novus America]

http://www.forbes.com/sites/mikegonzale ... ilds-play/

Podemos has already promised to do similar things.

Podemos wants to restructure its debt, which means negotiating with the EU, not playing hardball like Greece is doing. Playing hardball gets them nothing, because taking Spain's otherwise functional economy and running it into the ground does not tend to make your electorate disposed towards reelecting you.

Not to mention that the IMF will probably be forced to concede that the other PIIGS are in similar straights as the Greeks, and that debt restructuring will have to be part of any lasting EU economic policy that deals with them.

Debt restructuring all of them is something they likely cannot afford. Debt restructuring costs creditors money. And they have no incentive to unless Podemos ups the ante. Nobody thought Syriza would push things this far. Podemos will push as far as they think they can. So how the EU deals with Greece sets the precedent.

[Novus America]

This is why I suspect the next round of "negotiations" will take some time. All the Eurozone negotiators have to do is wait Syriza out until the ECB pulls the plug on Greek banks, which could be within the next week. At that point IOUs or a parallel currency or reintroducing the Drachma all come into play. They have to realize this. It would be foolish if they do not. I think Syriza's assurances that an agreement can be reached within 48 hours are optimistic.

Given everything that's happened, I think the troika will be the one to blink in this particular standoff. Greece doesn't have anything to lose, after all, and nobody in the other EU states wants to go down in history as the leaders that broke the euro or be the ones that tanked the EU economy because they refused to listen to the IMF.

As for the US, any instability abroad gives reason for the Fed to not raise interest rates as rumored. Greece piddling around on the edges of the Euro doesn't offer any good news. The longer the delay the more investors will get jittery wondering when the FOMC will act. I'm unsure how much actual pressure the US is putting on the IMF. The Fund is the most honest voice in the room at the moment, they at least acknowledge that a partial debt write off is inevitable; however, they will likely insist on more long-term structural reforms in exchange for reduced "fiscal consolidation" (austerity).

It was rumoured last week that the US was the one who pressured the IMF into releasing the report on the sustainability of Greece's debt to the public. It was circulated internally a few months ago, but wasn't released to the public due to political pressure from the other EU states - it would have given Greece, and has still given Greece, a major advantage on the negotiating table. Then last week the US decided to intervene and forced the publication above and beyond protestations from members like Germany.

That, to me, signals that the US is likely going to be looking over the shoulders of the troika during this next round of negotiations and will try to steer it as best it can towards a meaningful resolution - whatever that ends up looking like.

The Germans do not seem to be backing down.
http://www.newsweek.com/get-out-german- ... ote-350355

[Pollona]

This is why I suspect the next round of "negotiations" will take some time. All the Eurozone negotiators have to do is wait Syriza out until the ECB pulls the plug on Greek banks, which could be within the next week. At that point IOUs or a parallel currency or reintroducing the Drachma all come into play. They have to realize this. It would be foolish if they do not. I think Syriza's assurances that an agreement can be reached within 48 hours are optimistic.

Given everything that's happened, I think the troika will be the one to blink in this particular standoff. Greece doesn't have anything to lose, after all, and nobody in the other EU states wants to go down in history as the leaders that broke the euro or be the ones that tanked the EU economy because they refused to listen to the IMF.

Perhaps, it will depend on several actors. Specifically France, Germany, Italy, and the previously mentioned "northern Eurozone" countries. Their approach to this new round of negotiations will be crucial. Just before the referendum they all voted as a unitary bloc. If the IMF report has persuaded some of them then we can expect some shifts. The IMF hasn't come out and blamed the Troika, but they acknowledged a third bailout/debt write-off will be necessary. Whether that information will process with other Eurozone leaders I do have doubts. They seem so completely put off by Syriza that no amount of referendum or IMF reports could change their attitude. A serious tactical mistake by Tsipras in my opinion.

As for the US, any instability abroad gives reason for the Fed to not raise interest rates as rumored. Greece piddling around on the edges of the Euro doesn't offer any good news. The longer the delay the more investors will get jittery wondering when the FOMC will act. I'm unsure how much actual pressure the US is putting on the IMF. The Fund is the most honest voice in the room at the moment, they at least acknowledge that a partial debt write off is inevitable; however, they will likely insist on more long-term structural reforms in exchange for reduced "fiscal consolidation" (austerity).

It was rumoured last week that the US was the one who pressured the IMF into releasing the report on the sustainability of Greece's debt to the public. It was circulated internally a few months ago, but wasn't released to the public due to political pressure from the other EU states - it would have given Greece, and has still given Greece, a major advantage on the negotiating table. Then last week the US decided to intervene and forced the publication above and beyond protestations from members like Germany.

That, to me, signals that the US is likely going to be looking over the shoulders of the troika during this next round of negotiations and will try to steer it as best it can towards a meaningful resolution - whatever that ends up looking like.

Do we know when the IMF drafted their report? It would be nice if there was some form of confirmation, but as usual rumors are rumors. I can't remember any past times the US would have leaned on the Fund in such a way. They certainly didn't try with Argentina or other major defaulters in the 90s. Perhaps it's because there are still private US creditors with Greek debt holdings? Given the US is the largest contributor of cash to the IMF, influence over their behavior cannot be ruled out. But the suggestion that the US would want to help direct the negotiations is a radical change of course from the 2010-2014 "let the Euros handle it" attitude.

[Shofercia]

Let's for the sake of the argument, presume that Tsipras magically transformed into FDR. Oh no, he cannot walk! Anyways,

Credit and Currency - Greece can plan this out. As Balt pointed out, it's something that Tsipras should've done.
Taxation - it didn't work because ND/PASOK didn't collect taxes properly. An IRS style organization can get the job done.
Natural Resources - Greece has amazing real estate. I'm genuinely looking to invest.

Well he did not. Would have, could have should have. If the debt is forgiven nobody will lend Greece money at decent terms. And I am not talking about real estate, but things like coal, iron, oil other energy etc. The things you need to make things. During the depression the U.S. was still the worlds biggest industrial and argiculuteal power.

Plus getting out took over 10 years and a World War.

Ten years is fine, and the whole "Murika recovrd cuz WWII" is a myth. When you spend resources to build bombs, that's detrimental to your economy.

[Bogdanov Vishniac]

Perhaps, it will depend on several actors. Specifically France, Germany, Italy, and the previously mentioned "northern Eurozone" countries. Their approach to this new round of negotiations will be crucial. Just before the referendum they all voted as a unitary bloc. If the IMF report has persuaded some of them then we can expect some shifts. The IMF hasn't come out and blamed the Troika, but they acknowledged a third bailout/debt write-off will be necessary. Whether that information will process with other Eurozone leaders I do have doubts. They seem so completely put off by Syriza that no amount of referendum or IMF reports could change their attitude. A serious tactical mistake by Tsipras in my opinion.

I'm not so certain a less antagonistic approach would have done Syriza any good. IMO, the troika and the northern bloc had their mind made up about Syriza the minute Tsipras moved into his office. They knew what platform they got elected on, and they had made up their minds to stand firm and play the role of the Berlin Wall. If they steadfastly refused to budge on the austerity measures despite what they knew from the IMF figures, they wagered Syriza would be weak and/or uncertain enough to bow to their demands.

The problem was that Syriza decided to call their bluff and the situation spiralled out of control. The US saw this and while they didn't have any strong means of leveraging Greece into compromising (or maybe they do and we just haven't seen it), they did have the means to leverage the troika - the IMF report. They engineered the report's release, which upped the pressure on the EU leaders to make concessions while giving Syriza an opening to agree upon the IMF's findings as a starting point for a clean slate and a new round of negotiations. The hope, I suspect, is that agreeing on most or part of the IMF's recommendations will act as a means for everyone to save face. Syriza gets to go back to its electorate having stared down the German colossus and 'won', while the northern bloc gets to go back to their electorate and say that sound fiscal policy and common sense won out over Greek recklessness.

Do we know when the IMF drafted their report? It would be nice if there was some form of confirmation, but as usual rumors are rumors. I can't remember any past times the US would have leaned on the Fund in such a way. They certainly didn't try with Argentina or other major defaulters in the 90s. Perhaps it's because there are still private US creditors with Greek debt holdings? Given the US is the largest contributor of cash to the IMF, influence over their behavior cannot be ruled out. But the suggestion that the US would want to help direct the negotiations is a radical change of course from the 2010-2014 "let the Euros handle it" attitude.

The document itself (link opens PDF) says that it was ready for release on June 26 of this year, but they've presumably known about the findings of the report for at least a few months.

As for Argentina, Greece's debt situation is a lot more globally hazardous than Argentina's because of the eurozone factor. Greece exiting the euro threatens to send the world economy back into recession, and nobody wants that - especially not the US.

[Empire of Narnia]

Syriza has balls. Gotta give em that.

[Alyakia]

Well he did not. Would have, could have should have. If the debt is forgiven nobody will lend Greece money at decent terms. And I am not talking about real estate, but things like coal, iron, oil other energy etc. The things you need to make things. During the depression the U.S. was still the worlds biggest industrial and argiculuteal power.

Plus getting out took over 10 years and a World War.

Ten years is fine, and the whole "Murika recovrd cuz WWII" is a myth. When you spend resources to build bombs, that's detrimental to your economy.

having huge portions if not most of your country smashed into ruins is also detrimental to your economy, much more so than making bombs. hmm. one wonders if perhaps, just maybe, every other major competitor having their economies wrecked may have benefited the united states?

[Novus America]

Ten years is fine, and the whole "Murika recovrd cuz WWII" is a myth. When you spend resources to build bombs, that's detrimental to your economy.

having huge portions if not most of your country smashed into ruins is also detrimental to your economy, much more so than making bombs. hmm. one wonders if perhaps, just maybe, every other major competitor having their economies wrecked may have benefited the united states?

Plus it created effective universal employment. Not that I am saying WWII alone ended the Depression, but it was part of the recovery process. But WWII and its effect on the Great Depression is not the topic. It simply illustrates there is no quick and easy way for Greece to get out of this. It could easily take Greece decades. And it will be painful. Very painful.

[Benian Republic]

Yes. We're still talking about reforms

That doesn't mean anything. Until is everyone from birth to death is working 16 hours/day 365 days/year with only mere survival income, they'll be talking about "reforms". There is no bottom to austerity/recession/interest spiral apart from death.

(like cutting down on pensions which cost 16% of GDP).

And how pensions "costing" 16% of GDP is bad ? Greece has 19% of its population aged 65+. That means that if pensions are at 16% of GDP, retired people already have less than their share of GDP. And with half of retired people live below poverty line, they definitely can't cut it anymore.

But there is another mistake in what you say : considering pensions to be a "cost". That's wrong on many levels. It's wrong on the human level, of course, considering that allowing people to live decently in their old age is a "cost". But it's also wrong on the economical level. Most of the money paid through pensions is actually spent, in Greece, on the short term. So it comes back to the economy, in creates jobs, and significant shares of it quickly returns to the Greek state in the form of taxes. That's why austerity just doesn't work, because when you cut government spendings (like on paying decent pensions to the elderly), you automatically contract the whole economy, destroy jobs, and lower government income.

The same mistake applies with increasing the age of retirement in a country with high unemployment. When 60% of the youth don't find a job, as it's the case in Greece, asking people to work longer is both criminal and insane. In which twisted mind is it better to have old, tired people at work, and youth people unemployed, rather than young people working, and old people retiring and resting ? It's complete madness.

That was beautiful...

[Teemant]

Greece would be kicked out if it angered the Eurozone at an alarming enough level. Whether it pisses off the ECB by printing Euros it isn't supposed to or if it pisses off the Eurogroup by having Varoufakis spit in Dijsselbloem's face doesn't really matter, since all of those European entities are deeply interlinked.

How would they go about kicking Greece out? What legal precedent would exist to do this?

They can make Greece kick itself out.

[Qart chadast]

Greek finance minister Varoufakis resigns to ease tentions on the coming negotiations.

Wether the EU likes it or not, they will have to ease their extreme and unhealthy pressure on Greece from here on, its good though that he resigned to ease the tentions on the negotiations.

[The Alma Mater]

Greek finance minister Varoufakis resigns to ease tentions on the coming negotiations.

Wether the EU likes it or not, they will have to ease their extreme and unhealthy pressure on Greece from here on, its good though that he resigned to ease the tentions on the negotiations.

Instead they shall just divide up Greece. Dibs on Kos anyone ?

[Minoa]

So I have a question: To what extent did polling agencies intentionally mislead the public in the run-up to this election and what was their motivations for doing so?

61% is not even close to any of the polls that were touted here. What methods were used to obscure the actual intent of the Greek people?

This referendum is not actually the first time this year polls were predicting wrong. Here is a list of some recent elections:

According to this polls PM Cameron would have lost the UK elections or at least force to some coalition.
According to IPSOS and other "unbiased agencies" Komorowski was about to win the Polish presidential elections with landslide victory.
In all cases the polls are biased to the left and pro-EU politicians. I think this polls are here only to manipulate the electorate.

The good news since thepolls are predicting that the majority of Brits want to stay in the EU, it is a good sign for the Eurosceptics.

Maybe people just don't want to take part in those opinion polls anymore: no wonder they have less data to predict.

[Pollona]

I'm not so certain a less antagonistic approach would have done Syriza any good. IMO, the troika and the northern bloc had their mind made up about Syriza the minute Tsipras moved into his office. They knew what platform they got elected on, and they had made up their minds to stand firm and play the role of the Berlin Wall. If they steadfastly refused to budge on the austerity measures despite what they knew from the IMF figures, they wagered Syriza would be weak and/or uncertain enough to bow to their demands.

The problem was that Syriza decided to call their bluff and the situation spiralled out of control. The US saw this and while they didn't have any strong means of leveraging Greece into compromising (or maybe they do and we just haven't seen it), they did have the means to leverage the troika - the IMF report. They engineered the report's release, which upped the pressure on the EU leaders to make concessions while giving Syriza an opening to agree upon the IMF's findings as a starting point for a clean slate and a new round of negotiations. The hope, I suspect, is that agreeing on most or part of the IMF's recommendations will act as a means for everyone to save face. Syriza gets to go back to its electorate having stared down the German colossus and 'won', while the northern bloc gets to go back to their electorate and say that sound fiscal policy and common sense won out over Greek recklessness.

IMO you are certainly right that the Troika and the Northern Eurozone were going to be hostile to Syriza from the beginning. Their stated aim, of course, was for the end of austerity and for the renegotiation of the bailout. Terms which would have meant significant losses to their taxpayers. However they spun it, a budge would have opened them up to cries of fiscal irresponsibility. But at the same time, you have an odd alliance with the bailed out countries like Spain, Portugal, and Ireland; any agreement would have meant their own electorates demanding for a renegotiation (which they may or may not have won). I think the show of unanimity was an marriage of convenience across both sides, with such support waverers like France or Italy unable to resist the sheer arithmetic.

However, I don't think that Syriza can be left off the hook here. They were particularly aggressive towards the Troika and were, for example, caught in rather embarrassing photo-ops with Russian leaders. Talking up the "blackmail" of the creditors and ridiculous proposals like WWII reparations would not endear them to the North. It would, and probably did make the North stubbornly hold their ground and see Syriza as a bunch of negotiating amateurs. So they wanted the government to fail in the renegotiation, or at least make it more difficult. I see it as a case where both sides essentially "bluffed each other" and then got called on it. Syriza initiated the referendum, the Eurozone withheld further funding. I am more skeptical that the US played as prominent a role as you are suggesting, as the US has rarely (if ever).

What will happen now I have no idea, but for Greece a completely new bailout (short of a Grexit) that encompasses the IMF report will meet the satisfaction of both sides. Perhaps it will turn a page, who can say. That largely depends on the Greek reforms. There is one remaining snag: the IMF cannot help Greece until her government pays the money it currently owes to the Fund. It means that Greece is entirely at mercy of the ECB and the Eurozone for a negotiated settlement. So what then?

I'm no political expert, but imo a unity government in Greece would be a wise tactical move to ease tensions with the North.

MAJOR EDIT: Varoufakis gone is a sign the government is shifting ground. Good start.

The document itself (link opens PDF) says that it was ready for release on June 26 of this year, but they've presumably known about the findings of the report for at least a few months.

As for Argentina, Greece's debt situation is a lot more globally hazardous than Argentina's because of the eurozone factor. Greece exiting the euro threatens to send the world economy back into recession, and nobody wants that - especially not the US.

That report is highly interesting, thanks!

I'm not so sure Greece's exit from the Euro is as hazardous as one might think. In 2010 the situation was arguably more severe than it was now: a Greek default would have meant losses of hundreds of billions of Euros to private creditors and banks. That, on top of the extremely sluggish recovery from 2008 financial crisis, could have easily caused to another banking crisis or recession overnight. But now, most of Greece's debts are owned publicly by Eurozone countries and the ECB. Only a small fraction outstanding is still held by private creditors (mostly in the UK and US). If Greece were to go under and default, the burden would fall on Eurozone taxpayers to pick up the bill for the bonds their government's bought. Greece is also a tiny fraction of the overall Eurozone economy. Given the circumstances a Grexit is not the global apocalypse I think some cast it out to be. Undoubtedly however, it would be a catastrophe for the Greeks.

The real threat, IMO, are potential knockoffs in the other PIIGS nations and a very wobbly Euro. That would be unsavory for Europe indeed, for the US its another spooky monster hiding in the closet.

[Pollona]

I did not expect that resignation.

A very interesting sign coming from Athens. They probably believe, following the referendum, that they need to shift their ground and adopt a different negotiating position to the Troika.

[Qart chadast]

I did not expect that resignation.

A very interesting sign coming from Athens. They probably believe, following the referendum, that they need to shift their ground and adopt a different negotiating position to the Troika.

Unexpected indeed, but its a good thing. Now we only need to hope that France is going to Replace Germany a bit in the negotiations and then the two can perhaps find a solution that will benefit both countries.

[Minoa]

I did not expect that resignation.

A very interesting sign coming from Athens. They probably believe, following the referendum, that they need to shift their ground and adopt a different negotiating position to the Troika.

Unexpected indeed, but its a good thing. Now we only need to hope that France is going to Replace Germany a bit in the negotiations and then the two can perhaps find a solution that will benefit both countries.

I feel a bit empty inside without a bold bully like Varoufakis.

[Respawn]

Greek finance minister Varoufakis resigns to ease tentions on the coming negotiations.

Wether the EU likes it or not, they will have to ease their extreme and unhealthy pressure on Greece from here on, its good though that he resigned to ease the tentions on the negotiations.

He's probably going to run back to Australia before Greece really falls apart.

[Qart chadast]

Unexpected indeed, but its a good thing. Now we only need to hope that France is going to Replace Germany a bit in the negotiations and then the two can perhaps find a solution that will benefit both countries.

I feel a bit empty inside without a bold bully like Varoufakis.

Well you still have Merkel and Dijselbloem.

[Minoa]

I feel a bit empty inside without a bold bully like Varoufakis.

Well you still have Merkel and Dijselbloem.

But how would Syriza find another tough guy so that they don't have to even think about capitulating? It pays to have a Plan B if the referendum doesn't scare the Eurogroup.