Greece...

antrobus

Graham_Devon wrote: »

...Not sure how things move forward now. Germany now seem to be moving against both Greece and the IMF.

What the IMF actually said was;

To ensure that debt is sustainable with high probability, Greek policies will need to come back on track but also, at a minimum, the maturities of existing European loans will need to be extended significantly while new European financing to meet financing needs over the coming years will need to be provided on similar concessional terms. But if the package of reforms under consideration is weakened further—in particular, through a further lowering of primary surplus targets and even weaker structural reforms—haircuts on debt will become necessary.

That is perfectly consistent with the German position.

Graham_Devon

antrobus wrote: »

3 party issue? Don't the other 17 Eurozone nations count?

Yes, 3 party. EU, IMF, Greece.

Generali

remorseless wrote: »

What would have been a better option back then? Tell Greece, nope you won't get bailout and collapse 5 years ago? The outcome would have been the same, delayed, but not much different.

The main difference would have been that BNP and Deutsche Bank would have been insolvent if the Greeks had gone bust prior to 2012.

antrobus

Graham_Devon wrote: »

Yes, 3 party. EU, IMF, Greece.

There are 18 other nations in the Eurozone. Each one of them is just as important as Greece. And the IMF is not really a party to the Eurozone negotiations; it merely has an interest in the outcome.

antrobus

Generali wrote: »

The main difference would have been that BNP and Deutsche Bank would have been insolvent if the Greeks had gone bust prior to 2012.

The potential for 'contagion' would have been much larger prior to the second bailout; now it would be more like the controlled explosion of an UXB.

MacMickster

michaels wrote: »

Why did it take a socialist (not social democrat) govt to stand p and say that the emporer had no clothes on? Any mainstream govt would have happliy signed up to pretensd and extend again.

Interesting that the system dynamic was that pretend and extend appeared to be in the interest of all parties, apparently it was in no one's best interest to admit that there would need to be write-offs.

If the Greeks had defaulted 5 years ago, then they may well have been followed by more of the PIIGS.

Delaying the inevitable has certainly been in the interests of the rest of the Eurozone countries so far, but not in the interests of Greece itself. They will have to endure the pain of exiting the Euro on top of the years of austerity rather than getting it over and done with (a bit like enduring years of severe toothache before eventually going to the dentist). They were never going to be able to service their debts effectively going forward.

wotsthat

Graham_Devon wrote: »

Merkel has now stated that the conditions are not there to negotiate with Greece about any new bailout program.

Instead, she says "the door remains open". Basically interpreted as "should Greece fall in line with our expectations".

She goes on to say that solidarity requires countries to take responsibility.

However, not sure Merkel can do much now. It's a 3 party issue. Greece and the IMF want debt write downs.

Merkel disagrees and has put out a statement that a "debt cut is not an issue for us". In other words, it's not happening.

Seems Germany respect the referendum and respect the right for people to vote. However, it changes nothing from their POV.

Not sure how things move forward now. Germany now seem to be moving against both Greece and the IMF.

The IMF report says for Greek debt to be sustainable with a high probability the Greeks need to get a move on with reforms, they'll need further debt with concessional rates and current debt may need to have maturity dates extended.

i.e. that's not incompatible with a German position of saying debt size must not be reduced.

Debt haircuts, they say, will only be required if the reform package is weakened further or primary surplus targets reduced.

Your narrative sounds a long way away from Varoufakis' claim at the end of last week..

“If it is a ‘no’, I can assure you that on this week of impasse, we’ve had some very interesting proposals coming from official Europe confidentially, and a deal is more or less done,”

antrobus

michaels wrote: »

Why did it take a socialist (not social democrat) govt to stand p and say that the emporer had no clothes on? Any mainstream govt would have happliy signed up to pretensd and extend again.

Interesting that the system dynamic was that pretend and extend appeared to be in the interest of all parties, apparently it was in no one's best interest to admit that there would need to be write-offs.

But wasn't that exactly what Tsipras was willing to do? Granted, on terms that might not have been quite as exacting as the Eurgroup wanted, and with the promise of some more money. But not really that much different.

[Deleted User]

While the Eu, the ECB, the IMF and the banking system is general seem happy with kicking the can down the road for a few months, the bulk of international creditors (the ones who buy bonds and keep interest rates at near zero) are in Asia and don't like this financial instability.

Unlike the West, they are not very leveraged and are indeed quite hedged with gold and other hard assets.

If only they deinvested a few percent points of their junk bond portfolio (let alone pulling the plug altogether), interest rates would skyrocket and would send the whole system belly up.

This financial war will have no winners: everybody is going to get hurt, but some more than the others.

remorseless

Generali wrote: »

The main difference would have been that BNP and Deutsche Bank would have been insolvent if the Greeks had gone bust prior to 2012.

indeed, so it would have caused a bigger havoc than just sinking Greece so a better outcome for the majority of EZ.