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Sunday, February 15, 2015

There Will Be An Agreement on Monday!

FinMin Varoufakis has stated that there will be an agreement on Monday for sure, perhaps only a couple of minutes before the door closes. That is exhilerating news, for sure!

This morning, I read that Varoufakis stated that "what has started is not negotiations but exploration of common ground" and that "the outcome of these explorations will help Monday's discussions". Ok, we now have got explorations and discussions. Unclear is to me when the negotiations will begin.

The most likely outcome for next Monday has been described as a typical Euro fudge formula that the creditors will call 'extension' and the Greek government will call 'transformation'. Ok, after explorations and discussions, we now have got transformations before we get into negotiations. All clear?

If the Greek FinMin commits that there will be an agreement, even at the 11th hour, then he suggests that he has things under his control. He certainly has the Greek side under his control. If it gets to the point of "either/or" and the others make signs that they are about to leave the room, the FinMin can quickly have a change of heart and ask where the dotted line is for him to sign.

Where it becomes a bit more difficult is where the Greek FinM thinks that he also has 'the other side' under his control. That may be the case but it also may not be. What should concern Greece is that, while Germany is playing its cards very close to the chest and not saying much publicly, suddenly other EZ-members are coming on the scene to voice their objections. Even if they agree to something at the 11th hour, will their parliaments at home agree to that as well?

29 comments:

  1. The dimensions of the challenge facing Tsipras became clear last Wednesday night when his close lieutenants attended an emergency meeting of euro zone finance ministers

    http://www.irishtimes.com/opinion/greece-faces-the-cold-stare-of-its-creditor-countries-1.2103288

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  2. Very nice post. I like the fair and honest, justified cynicism.
    I do not believe Varoufakis' words, because of my own fair cynicism. Until now he has been a chameleon, changing color all the time, and escaping. He will get away with what he has stated now also. Again. With again some other excuses and denials, and new promises.

    I advise him to resign, as the only solution.
    To get his life back again.
    To be an author and a blogger again, to play with words and theories, ideas, not a serious politician.

    There must be a very excellent Greek who can replace him, and can start working very soon with the task of being really a minister of finances. But he will not, cannot be found in the Syriza party. It must be somebody who knows from experience. This, what is going on, is for Senior Politicians, not for students.


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    1. After this ridiculous comedy which will soon turn into tragedy maybe he will resign. But I still think that the outcome is exactly what he an Tsipras intended from the 1st day after election.

      H.Trickler

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  3. Here is an excellent summary of the situation from a comment on the LSE blog:

    "If ordinary Greeks want to end “austerity” then they can simply pay their taxes. It’s a bit sickening to hear “ordinary” Greek people who I know do everything they can to avoid declaring their full income and who only want to be paid and to pay in cash railing against the supposedly German-imposed austerity.

    If Greeks want public spending to increase then they can simply declare all their income and pay their taxes.

    Except, the situation we have now is that “ordinary” Greeks want an increase in public spending in Greece that is not paid for by them but by the taxpayers of Germany, France, Spain, Portugal, Italy, Estonia, Slovakia, Slovenia, Latvia, etc., etc. – often countries that themselves have restricted public spending.

    The reason the Greek state does not have enough money to spend is because Greeks aren’t paying their taxes. Instead, for several decades Greeks expected not only that they could get away with not paying their full taxes but that they would still receive generous benefits, large pensions and all sorts of exemptions.

    It’s simple: if Greeks want an end to “austerity” and increase public spending, then they should declare their full income and pay their taxes in full. Otherwise, can you explain where the money to pay for more public spending will come from? Especially since the Greek government – and especially this particular Greek government – cannot turn to the markets for funding?"

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    1. I think it's time to say enough is enough with this propaganda. Ordinary Greeks pay their taxes as much as ordinary citizens in any other country. Something that can't be said for multinationals that operate in Greece for example. Today Greece's health minister pointed out the paradox of Greek pharmaceutical companies declaring profits and paying their taxes while much larger multinationals with greater market share posting losses and not paying a dime. Now what exactly do you think is taking place? Tax evasion most likely via the international avenues of capital movement courtesy of our lovely EU. This is the main problem. Tax revenue from companies like that lagged significantly according to the latest data and not revenue from individuals.

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    2. Oh, give me a break. Remember the ridiculous tax office requirement from a few years ago where you had to submit a binder full of faded receipts amounting to what I believe, was at least 35% of your take-home pay? Or the even more ridiculous idea of having a card that you were supposed to swipe at every purchase transaction, so as to let the tax office get a complete record of all your purchases? And asking for a receipt in the first place could get you some very strange looks.

      I'm sure the tax office didn't just do that to annoy us, but rather to crack down on the rampant tax evasion among the self-employed and small businesses. Ordinary citizens, mind you.

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    3. I have already explained very clearly what is the issue with taxes in Greece, yet some people here seem to think that their ignorant prejudices are more valid than those with real knowledge and understanding of the situation. One can perceive an identical attitude from Schauble, who thinks that his arrogant and foolish comprehension of economics far surpasses that of the world's best economists.

      Of course, Anonymous above is quite correct. The principal issue of tax evasion across Europe is that of the criminal activities of banks and the stinking rich -- of which only a few are Greek. Trying to lay the blame for the Greek economy on (a) the collection of taxes, and (b) the conduct of the ordinary population is not only crass ignorance but highly racist and offensive.

      As a non-Greek who suffered much when I lived in Greece, I am not short of a criticism or a hundred: but I try to confine my comments to factual evidence and serious analysis, as opposed to repeating right wing newspaper and government propaganda.

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    4. @Klaus: I am no expert on either practical negotiations or game theory. My only comment on all this is that I wish Greece well, and I fervently hope that Varoufakis will succeed in bringing some sense to the collapsing EU as well as aiding Greece.

      I do not know if it is relevant (after all, Greece is only one country) but my knowledge of the history of negotiations within the EU is that almost always they are farcical. The end results are usually far from optimal and the reasons for getting to them are often more ridiculous than the visible processes.

      In that context., Greece is showing itself to have learned from past negative experiences in dealing with northern Europe and specifically the Troika. It is not really very sensible to lambast the Greeks for behaving in as ridiculous a style as the Germans, the French and the British (to name the principal players of the regular farces). The only reason one might adduce is that Greece may not have enough negotiating power: my view, as I have stated here before, is that this involves global geopolitics and the future of Europe, and Germany will not be allowed to destroy Europe. Let's see who is right on that, although the tension is now very high.

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    5. Here is why I am somewhat cautious about the new government's tax colledtion ability. I remember that King Otto, shortly after arriving in Greece, decided he needed some solid Bavarian tax collectors to teach the Greeks how to collect taxes. I believe they were several thousands. They went to the Greek villages and valleys to teach the Greeks what God wanted them to do and those Greeks reminded them where God lived. A few years later, the solid Bavarian tax collectors had to be sent home...

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    6. This is why I insist that this is propaganda; nobody is producing any data other than anecdotal incidents when addressing the issue. I would like to repeat my first claim: Greek pharmaceutical companies produced profits and paid taxes while their multinational competitors losses and paid nothing. Simple as that. One can also take a look at the tax income distribution, he will easily find that it is not taxes from individuals that miss the mark rather than taxes from corporations by a sum close to 1 billion per year according to Syriza's claims.

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    7. Dear Xenos,

      I read the 2 articles and comments of the last 2 days. You prove to be the most realistic in your conclusions and discussions of what is really going on. Thank You.

      I can not believe how much anamocity, hatred and gerneralized bigitry here. While this whole crisis has been affecting the Eu i have never pointed my finger at any people of Europe. Never generalized any fellow european but moreso the politicians and those who pull the cords of europe.

      This weekend i pulled out my series of "The world at War." I watched nearly all of it and the parts which involved the whole of Europe i must say has many resemblnces of what is going on now. I pondered on the idea of just how unified are we with this euro or more accurately how much more are we divided. I wish people really understood the concept that history repeats itself as it is dangerously being repeated.

      It is a sad Monday seeing such harsh comments which are based on lies or half truths (Xenos) the exception. You are a reason for me wanted to stay in the euro. But if the family includes so many easily waivered minds i am not sure i want to be in this family.

      V

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    8. The Greeks were soon more heavily taxed than under Turkish rule;[2] as the people saw it, they had exchanged a hated Ottoman tyranny, which they understood, for government by a foreign bureaucracy, the "Bavarocracy" (Βαυαροκρατία), which they despised.
      http://en.wikipedia.org/wiki/Otto_of_Greece

      but the Bavarians’ absolutist rule and heavy taxation led to discontent, which was appeased by the resignation of Otto’s chancellor, Joseph Ludwig von Armansperg, in 1837

      http://www.britannica.com/EBchecked/topic/434867/Otto

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    9. @xenos: I have lived in Greece more recently than you - from 2007 to 2011 to be specific. My wife is Greek. My two children have Greek citizenship. What I said is borne out by things that really happened during that time. Including the demand by a doctor to my pregnant wife to forgo a receipt for services, or else pay double. Including a fellow contractor who openly asked me if I really was going to declare the income from the contract. Yes, it's anecdotal, but it happened. And the efforts by the tax office that I mentioned are not anecdotal.

      We can argue about the impact of these facts on the health of the Greek state and the Greek finances all day. I suspect that in the end we would simply have to agree to disagree. That's fine. I don't mind. All part of a healthy debate that needs to happen.

      I do mind constant ad-hominem attacks on anyone who does not share your worldview, Xenos. I've seen you write across many blogs since 2006, and while I have a healthy dose of respect for what you have to say, the frequent ad hominem attacks much diminish this in my eyes.

      For the record, I am center left. If all this now counts as "right-wing propaganda," all I have to say is that without studying a problem from all angles and completely understanding it, I don't see how it can be solved. I do agree that income inequality and taxation inequality are a travesty and need to be fixed. However, it doesn't absolve every citizen and resident from doing their part.

      With respect to the 1 BEUR: While collecting on this would be wonderful, I don't see how this alone would account for "missing the mark", considering that this sum is only a small fraction of all the tax revenue in Greece.

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    10. @Anonymous Feb 16: my post was not in reply to you, so please do not take it as such! (our posts coincided).

      I don't think I have any disagreement with what you have just written, which is also statistically true (not merely anecdotal). But two things to say: first, the persons engaged in this are amongst the wealthiest (doctors with private and public practices, for example). These are not ordinary Greeks, whose tax evasion is near-identical to that in the UK. Secondly, the Greek tax evasion is irrelevant in comparison with the criminal activities of the super-rich of the world, including all of Europe.

      As a point of information, I resided in Greece 1997-2014. My knowledge of Greece is derived from extensive research, reading, discussion with Greeks, and actual personal experiences. None of these is more important than another, and I try not to let my personal feelings interfere with some sort of scientific understanding.

      @V: thank you for your kind words. I too worry about the EU, and whether we should continue to support it. I was an ardent Europhile in the 1980s, but the last decade has left me very, very concerned about its future.

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  4. This contradicts what you wrote earlier, and, honestly, imho that's very much unbased optimism. Evidently, Varoufakis doesn't have "his" side under control, he isn't always in sync with Tsipras, other Syriza folks say what they want and don't give a damn about prty unity, and who knows what views Kammenos and his gang have on this issue!

    And to seriously consider if Varoufakis has the lender side under control is simply ridiculous. He has no leverage on them at all, so they will determine the outcome of the negotiations, not he! Apart from that, all this may be just a smokescreen to distract from Tsipras and Varoufakis stearing towards the Grexit, as you correctly noted as a possibility.

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    1. Evidently, you don't have much of an antenna for cynicism.

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    2. Apparently not. Pls increase the amplification of your transmitter!
      :)

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    3. @kleingut February 15, 2015 at 1:54 PM

      Not being the only one missing a sufficiently sensitive antenna, I now feel much better :O

      H.Trickler

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  5. "We're willing, where there are issues of privilege, to discuss them... but we're not going to clash with society,» says greek government spokesman Sakellaridis on TV.

    Well, then there is not much room to change anything. "Discussing" issues seems to be all Syrizanel is ever able to do. They probably know that even they do not have the power to control the professional protesters, communist union leaders, hooded anarchists and other "clients".

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  6. Reaching an agreement is easy. What is very, very difficult is a) "selling" this agreement to the voters of the various political parties across the EMU and b) "selling" this agreement to the various financiers of the political parties. These two are the really tough negotiations. What is going to happen in the end? I wouldn't know. However, here are two tips: voters will buy a disagreement more easily. They love controversy. Businessmen on the other hand, just want more money. Give it to them and they are OK. That's the solution for the EMU. Work it out behind closed doors, throw fuel into the machine to keep it running, announce that you disagree and there you have it. Everyone is happy!

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    1. The voters seem to be more important for the nationalsocialist government in Greece right now. Therefore it now suddenly wants a moratorium. "Give us money to let the show go on." The Greek voters love drama and demonstrations. No bread but circuses!

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  7. Klaus, we are impatiently waiting for your next sarcasm ;)
    H.Trickler

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  8. Well, I think yesterday evenings drama has made us all speechless. A grexit now seems to be unavoidable.

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    1. What seems unavoidable is the collapse of the eurozone, with or without Greece in it. That is the shame that the Germans will have to bear. Let us hope that the incompetents of the Troika manage to think logically, as opposed to playing their political games, for the first time ever since the foolish and reckless construction of the euro.

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    2. Xenos, your view again looks too based!

      http://www.dpa-international.com/news/international/q-awhat-is-at-stake-in-greeces-bailout-negotiations-a-44286435.html

      H.Trickler

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    3. @Herr Trickler. There is no bias (assuming that is what you mean). The eurozone is in crisis, the policies of austerity are failing miserably, plunging all of Europe into deflation, and the so-called EuroGroup are too full of their own stupidity and arrogance to deal with reality.

      Within that context, the key player is Germany. Specifically, one person who was never elected by the European citizenry to determine the future of Europe. Just as in older times, Herr Hitler was not elected by Europeans to determine the future of Europe.

      The Swiss have always had the good sense to distance themselves from the reckless and dangerous activities of their fellow Germans: I am surprised that you do not share this approach.

      BTW: your link does not function, so I cannot comment on it.

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  9. http://t.co/9MNdv6AbSB

    Some want total surrender by SYRIZA or Grexit without being accused that they kicked Greece out.

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  10. Bye, bye Varoufakis. Costas Lapavitsas is waiting off-scene.

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    1. I doubt that Varoufakis, who is a reluctant politician, would be sad to leave office if he achieves what is needed. I am quite sure that Lapavitsas is not interested to be Finance Minister. Moreover, he is a more hard-line marxist than Varoufakis who is actually Keynesian more than Marxist.

      So, I presume that you are afraid of varoufakis' negotiating skills. We have already learned this week that the German government demanded the removal of Varoufakis as minister, so I can also assume that you are working for the German government. This would explain your extreme propaganda here.

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