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Monday, February 2, 2015

Don Vito Corleone? Or Sonny or Michael?

Prof. Paul Krugman made the following brief comment in this article in his blog: 

"At the moment, Germany is talking as if it intends to follow the MichaelCorleone strategy ("My offer is this... Nothing!"). But do we really think that Syriza will or even can retreat with its tail between its legs immediately after winning a dramatic election victory? Again, wanna bet on it"?

This comes from Godfather II. I have previously suggested to SYRIZA that they should rather look to Godfather I. In an article prior to the June 2012 election, I wrote the following about an interview with Mr. Yiannis Dragasakis, now the Vice Premier of Greece: 

"Mr. Dragasakis does not talk like the hot-blooded Sonny Corleone's of Greece who have recently rejoiced in "calling Germany's bluff" or declaring that they would reform the EU into the kind of EU "which Greece wants to have". Instead, Mr. Dragasakis talks more like the Godfather himself: "I'll make you an offer which..." Note the following sentence: "It is self-evident that Greece’s relationship with the European Union is not an external relationship but a multifaceted one of structural interdependence between our country, EU institutions and member-states. Consequently, under no circumstances can we imagine a resolution of problems arising from conflictive procedures instead of consensual agreements". Hear, hear - no immature threats like some Greeks have come up with of late! (even renowned university professors!)".

It seems to me that what we have seen in the first week of the new SYRIZA government is quite a few hot-blooded Sonny Corleone's but not one single Godfather. Some think that it is a good strategy to change the tune at least once every day just to confuse the other side and keep it guessing as to what your real motives are. Vito Corleone would have told his followers that they should never let the other side know what they think and talk as little as possible because nothing confuses the other side more than no talk at all. 

And then, of course, never demand anything! Just make them offers which they can't refuse! And after they accept the offer, thank them very nicely! 

11 comments:

  1. Mr. Kastner,

    I can't resist the temptation but to answer to you. First, i think Prof. Krugman is doing a mistake in trying to compare the current situation inside the EU, with the Godfather. I understand it is always popular , having a blockbuster that everyone has watched in your articles and one can quickly relate to it.

    However, there are some differences. Let us leave aside the fact that this is a Hollywood fiction, based on a novel. Greece isn't in the position of Don Vito. Germany is. The position of Don Vito, is the position of superior power. And the offer, is "nothing". Can Tsipras survive with nothing? No.

    Now let's leave Hollywood aside and go back to the real world. If you recall, it was no long ago, that, by pure coincidence, from Germany, there were constant leaks to the press, that "we can handle Grexit, this isn't 2011 or 2012". In poor words, "prepare to capitulate, because, we really don't care about what you say or what you do".

    Prof. Varoufakis, is apparently doing nothing. Yet, in the last days, we have:
    - Activity from Russia and USA. Obama will be meeting with Merkel on Feb 9, and Greece will be in the list. Mind you, neither Syriza nor ANEL are pro-american parties. On the contrary!
    - We have Juncker, Moscovici, trying to build bridges and the dutch emissary flying to Athens.
    - We have Berlin saying that they have nothing for Tsipras, yet they complain that they wait to hear his plan.
    - The Belgian PM a while ago, said he wants to hear a plan from SYRIZA.
    - Schauble-Moscovici meeting tonight with Greece as subject.
    - The ECB threatens that will cut off liquidity to the greek banks.

    Why?! If nobody cares for Grexit, why all this? Threats and anger, Mr. Kastner, are expression of fear. When you are not afraid, you don't come before the elections to day that Grexit isn't an issue to you, nor do you try to drive Greeks to vote against Tsipras. When Grexit isn't an issue, you simply come out and say: "We have nothing to say, time will let things take their natural course. We are sorry that Syriza didn't want to follow the current plan, but this is Tsipras' choice". You also say clearly "there is nothing to do with the debt". You don't say "there is no way to make haircut".
    Is there anything better, than taking away from a German, the time to plan? Prof. Varoufakis will have them sweating making multiple plans. And the Germans will be asking themselves every day, "but which one is the real one?!".

    There will be an agreement, Mr. Kastner. If Tsipras had waited for Podemos, his position would be better. So his compromise now will be worse.
    Look at your own blog. You still can't decide on whether the good professor will fail his job or not. Although, my feeling is that you rather think he will fail (Maradona falling, wrong strategy, etc). You are an experienced banker and you still can't make an article entitled "Greece will fail the negotiations!". Do you think that less experienced bankers in Frankfurt or politicians in Berlin, have a more clear idea than you? If they do, there is no reason to have poor Prof. Varoufakis touring Europe. Juncker, representing the Comission, can come out tonight and simply say "we are sorry that Greece didn't continue the agreed program. The EU will continue its course and Greece its own".

    Besides, Mr. Kastner, do you really think that Tsipras' star will disappear so easily? Rise from 3% to 36%, to end immediately in a few months from taking office? Unfortunately, i don't think so. Usually, destiny smiles for longer than that. Polyphemus can play Don Vito. Little guy must play Ulysses and in a manner that isn't comfortable to Polyphemus.



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    1. I am not Mr. Kastner, but if you allow me: I would like to react on your comment, which sounds rather arrogant, and it is clear you do not really get the clue concerning "Europe", its talking or keeping silence. But that is not possible to explain. You will not understand my words so my offer is... nothing.

      I would like to add some words, and a video on what you say: "Besides, Mr. Kastner, do you really think that Tsipras' star will disappear so easily? Rise from 3% to 36%, to end immediately in a few months from taking office?"
      My answer: The 36% has been achieved with dreams exposed in brainwashing speeches on squares with desperate people. As soon the Greeks who voted for him will find out that Tsipras created a nightmare it will not be so far from a civil war, and yes, Tsipras may be so clever to disappear to somewhere else, probably to Russia, or US, and live anonymous there. His ideas do not make sense so not any university or political area will be longing to have him around.

      I long for a Greece, with real strong men and women, with the real courage of going through hard times, as long as needed, as they have proved to have been able to, so often.
      To celebrate those Greeks I'd like to dance with the right spirit:
      Raised head, strong legs, strong heart, and not the boots of the military, but the white ones of the Cretans. Click on my name and the video will appear. (I hope)

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    2. Google refused my link, of course, I should have known. But the video is too nice and too inspiring to leave it away. Enjoy Antonis Martsakis, and his dance group: https://www.youtube.com/watch?v=lBE0R-pa4J4

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    3. I'm sorry, but I just don't get what a Norwegian has to do with Greece. It explains your ignorance of all things Greek (other than some textbook learning) but not your interest. Why do you comment here?

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    4. Ms. Janssen,

      I agree with you on the way that Tsipras was elected. I have expressed my desperation on the new cabinet and said that their program, according to a newly elected SYRIZA MP and prestigious economics professor in UK, prof. Lapavitsas, is 20 beur short. I singled out prof. Varoufakis and Mardas.

      But this doesn't impede me from separating one matter from the other. I have written in this blog days earlier, that "the divorce will be postponed". I have also written, that Tsipras will agree on debt extension, but inside a package, so that he can sell it to the Greek population.

      I think we do little justice to prof. Varoufakis, if we think that he didn't know that a deal with haircut wouldn't work. If one is actually careful observator, he will seen that prof. Varoufakis doesn't pronounce the word "haircut" since the beginning. It's SYRIZA's position, but never spoken out of the professor's lips. He was speaking of restructuring, but he was also saying "if we don't agree, i have other options". Prof. Varoufakis, strengthened his position, by doing what Samaras didn't do. Create a credible threat. By begging alone, you get what Samaras got. Nothing. Exactly like Andreas Papandreou didn't go to war with the Turks in 1987, but first he played the "mad man", who was ready to go to war. Game theory isn't begging theory. Tsipras rallied the people behind him using Germany as the foe. Prof. Varoufakis showed the Germans that they prepare for the worst and that... he has a plan B since 2012. He then burnt the troika on camera, while Germany was saying that "troika has legitimacy and there is no eliminating it". He then started playing with all players except Germany, that had to call others to learn what he was doing. Prof. Varoufakis effectively executed a plan, while leaving Germany wondering "what is he doing". By the time Germany understands what he is doing, prof. Varoufakis will have rallied support, will have made the press speak about him and support him.

      The real task for Tsipras, Mrs. Jannsen, will begin now. He will lose some popularity to his left, because his left wing voters had been indoctrinated to expect the maximum. Then, he will have to find money to keep the rest of his voters happy.

      The SYRIZA statalism, is the bigger danger now for Tsipras. Already minister Katrougalos today anounced 15.000 new jobs in the public sector. I really don't know how Tsipras intends to go forth. If i was in his place, i would subordinate every minister related to the economy to prof. Varoufakis and have the good professor approve or cancel every single decision, because many other ministers, will have a big urge to expand the state as soon as they can. We have seen this in 1981, their instinct is to repeat it.

      It was not my intention to appear arrogant, dear madam, i was actually very upset seeing the cabinet, but Tsipras is necessary evil. Ironically, the left and the right cooperated without their will. The right wing brought Tsipras to the position where he can make a credible threat.

      There will be no civil war. Ms. Janssen, you should have more faith on the Greeks. Greeks have passed through many things, they were always fighting each other, but they always survived in a way or another.

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  2. Mr. Kastner,

    What would be your explanation?

    REUTERS SUMMIT-Germany's Schaeuble doesn't like Greek proximity to Russia

    Asked to what extent the dealings between Greek Prime Minister Alexis Tsipras' new government and Russia were a cause for concern, Schaeuble said: "We don't like that."
    "I don't believe that Russia can replace European solidarity," he said at the Reuters Euro Zone Summit.


    Read more: http://www.dailymail.co.uk/wires/reuters/article-2936684/REUTERS-SUMMIT-Germanys-Schaeuble-doesnt-like-Greek-proximity-Russia.html#ixzz3Qc35bWx3
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    Question:
    1) Why does Mr. Schauble care about insignificant Greece's relations with Russia, even more, when he doesn't care about a Grexit?

    2) Shouldn't he be happy that someone else is offering to replace european solidarity? Or, if Russia can't replace European solidarity, even worse for Greece!

    3) Could it be that Obama also isn't happy with Greece's opening to Russia?

    What are the chances of not reaching a deal with SYRIZA? I think very slim, if they allow Tsipras to save face. Besides, Mr. Kastner, a bit of resistance, is good for both sides. Tsipras can show he put a hard fght and Germany that was severe enough and didn't give in easily.

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  3. Addendum: If i were in Tsipras' shoes, my biggest concern, would be to be alert, in case prof. Varoufakis tries to save everyone. Prof. Varoufakis, would like very much to save the entire continent. But it seems they aren't eager to be saved. So, asking for debt convention, without any other members for example, is a maximalistic target. That prof. Varoufakis would very much like to achieve. If i were Tsipras, i would stay vigilant, to be able to stay satisfied with a more modest prize, like saving myself.

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  4. And, Mr. Kastner, have faith in the good sense and flexibility of the Americans. The Americans will talk both to Tsipras and to Merkel. For the greek left, the United States is closest thing to hell and devil on this world, but they actually kept worse things from happening and keep shepherding the infantile EU when things become critical. Obama will help Mrs. Merkel get past her german rigidity, show her that there are more roads that lead to one destination. In the past, the United States, again, avoided Grexit, with subtle moves that we would never know about, had it not been for Timothy Geithner, who subsequently authored a book on his work.

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  5. No, Germany isn't Corleone!
    A very bad boy, a misbehaving boy, who is effectively exporting deflation to its neighbours...
    http://www.irishtimes.com/business/economy/is-germany-europe-s-real-bad-boy-1.2021968

    Btw...
    What Is Plan B for Greece?
    http://www.project-syndicate.org/commentary/greek-exit-syriza-troika-negotiations-by-kenneth-rogoff-2015-02

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  6. And now, after Prof. Varoufakis showing Berlin that he is dangerous, here the attempt of compromise, Mr. Kastner:

    - No haircut asked.
    - menu of debt swaps
    - creation of 2 new types of bonds (perpetual and growth linked).
    - Bridge program up to June 1 and 1.9 beur funding.

    http://www.real.gr/DefaultArthro.aspx?page=arthro&id=389528&catID=2

    If you were a German, you would already think "Ah, a much less dangerous Varoufakis. Maybe i should consider it, before i push him becoming dangerous again".

    Now, we can wait for the american cavalry. It's Don Vito's turn to drop "nothing" for something. Obama will help everyone.

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  7. And the results of Prof. Varoufakis, "burning" on camera the troika:

    Junckers' spokesman (who is greek): There is the possibility, that the future, the troika can be substituted by something new, with more democratic legitimacy.

    http://www.skai.gr/news/politics/article/274595/anoihti-se-endehomeno-adikatastasis-tis-troika-i-komision-alla-horis-desmeuseis/

    So Greece, can take debt extension under the form of swaps and perpetual bonds, the troika can leave and later come a new troika under new cloak.

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