Below is the Term Sheet which I would propose to the Eurogroup if I were in the shoes of Greece's Finance Minister:
Instrument: Two Bonds in equal
amounts („A“ and „B“)
Issuing Date: June 30, 2015
Amount: The combined sum
of Bonds “A” and “B” will be calculated as follows: (a) total bonds/loans
(including interest accrued to June 30, 2015) on the books of the
“Institutions”; plus (b) 7,2 BEUR (the last tranche of the current agreement);
plus (c) an amount necessary to reduce the ECB’s funding of Greek banks to a
level which the ECB can commit to make available on a sustained basis (if the
ECB so requires)
Purpose: To prepay all
loans from the institutions; to repurchase all Greek bonds at book value which
the ECB and/or other Institutions hold; and to provide working capital for
Greece.
Tenors: Bond “A” – 25 years
Bond “B” –
50 years
Interest: Greece commits to
allocate 8% of its State Budget Net Revenue (tax revenue and privatization
proceeds) to interest payments (10,8% in 2014). Approximately half thereof
should suffice to pay interest on debt owed to private bondholders. The
remainder is available to the Institutions.
Covenants: Reform steps and
policies will be agreed with the Institutions whereby the Institutions have the
decisional prerogative. Greece commits to honor all reforms and policy steps
‘mandated’ by the Institutions provided that the OECD can issue a ‘highly confident
opinion’ that each such mandated step contributes to financial and economic
stability and to economic growth.
New debt: Greece commits not
to assume any new sovereign debt, except for the refinancing of bonds held by
private creditors, without the approval of the Institutions.
And I would present it in due form and humility with respect for the Eurogroup.
Sounds good, but you are missing the point. The main problem imo is not money, but solely the issue summed up under "Covenants".
ReplyDeleteDo Greeks (better: Greek politicians) (a) want to, and more importantly: CAN they? With the current state of public administration I doubt that any deep structural reform is possible. Mostly due to, imo, the undue power that trade unions have gained (been granted by previous parties in order to gain support) during the last decades.
My take on that: As long as Greeks do not willingly admint that they are not capable (for the time beeing) to design and implement a public administration of western standards, there is only very limited hope.
I mean: What the heck? Greeks posess so many unique and adorable abilities and characteristics! Public administration is not one of them, so f*@^+ing what? One could be even proud of not being built to have these abilities!
Hence, why not happily and enthousiatically embrace the help offered from specialists from friendly disposed neighbours? Austrians, Dutch, Finns and, yes, even Germans? Have fairly capable public servants from such countries put in the highest ADMINISTRATIVE level of (all?) ministries for 5, 10, whatever years and watch Greece become the paradise it easily can be!
Having a quite good picture of the average Greek, I am sure that the vast majority would embrace that idea. Unfortunately, however, the narrative will be provided by the existing oligarchs (through _their_ media as well as trade unions).
"All things are subject to interpretation whichever interpretation prevails at a given time is a function of power and not truth."
Friedrich Nietzsche
Varoufakis has said in a recent discussion that "reform" is a hate word for all Greeks. And I have not the slightest doubts that accepting advice from foreign technical experts triggers the same kind of allergic reaction.
DeleteThis imho is the most basic reason why the five past years are lost time: The governments preferred to perpetuate cronyism and rise taxes for the poor citizens instead of reforming the state.
Todays humanitarian crisis is the result of this braindead approach and the only way out is via Grexit.
H.Trickler
Dear Mr. Kastner,
ReplyDeleteYou have made many such proposals and suggestions. I wonder sometimes if the ministers at the eurogroup and eco fin, already should know such proposals or can suggest such proposals. In reality though we do not know what they are discussing nor if such proposals are wanted.
I always find your suggestions so logical even if sometimes they is a percentage detrimental aspects involved. On the most part though they are constructive ideas which are a positive step in the right direction. Personally i have expressed a multiple ideas of a way foward on a much lower elementary level but i have one greek saying to all these ideas.
This in relation to greek governments on a whole and our european partners / institutions.
"On a deaf man's door you can knock forever."
I say this because with so many great ideas of help out there, nobody with power is listening. Which many times brings me to the conclusion that indeed there are alterior motives for all people in power and in the choices that they make. I was a fan of Varoufakis and still am to a significantly reduced amount. What i was expecting was some fresh ideas, some rolling up the sleeves work and solid negotiations with partners. Either power has affected his ideas or he is simply a theorist which is very bad in either aspect. For the 1st it means he is trying to take power for his own purposes and the later is even worse because acedamia should be the ones to help solve the problems, not worsen them. Furthermore, it will deter people from believing in acedamia's to lead ideas into the future and will need to settle for regular politicians, lobbyists and the oligarchs to control, as they have always done.
Completely frustrating, especially coming from the private sector, where our job is to solve everyday new problems at a moments hand.
Sincerely,
V
Dear V.
DeleteThese sentences of your comment are really great (I copied and pasted:)
"On a deaf man's door you can knock forever."
I say this because with so many great ideas of help out there, nobody with power is listening. Which many times brings me to the conclusion that indeed there are alterior motives for all people in power and in the choices that they make. I was a fan of Varoufakis and still am to a significantly reduced amount. What i was expecting was some fresh ideas, some rolling up the sleeves work and solid negotiations with partners. Either power has affected his ideas or he is simply a theorist which is very bad in either aspect. For the 1st it means he is trying to take power for his own purposes and the later is even worse because acedamics should be the ones to help solve the problems, not worsen them.
______
Theorists do not know what the reality is of practicing where they think, write and talk about.
Simple example: washing dishes is something simple, looks easy, there for simple not academic people. For the most stupid among us, humans.
Professors, academics, students, intelligent people can sit at the table, watching these dishes, and talk about it, write, etc. discussing, that the dirty dishes do not disappear, and getting angry that they do not become clean while they are talking about it, with so much energy, making good sense, isn't it, taking so much time to find very difficult calculations, formulas, for it, and meeting after meeting follows, continues, endlessly.
A simple woman or man, intelligent though, wise, and knowing that standing up, adding warm water and washing-up liquid in the sink, and taking each dirty plate in the hand, going over it with a brush, is the only solution to clean them, to stop the discussions and to save time, to create a wonderful kitchen.
This kind (see it as a metaphor) of practical acts are needed. But students do not learn anything else than theory, and when it is really worse they learn how they can make it more interesting by using game theory. To entertain all, even more exciting, at that kitchen table.
To make calculations about the time it costs to do the job, how many plates can be cleaned in an hour, etc. etc. and how to avoid the really work. by pretending that they are busy, for hours, while the work itself is not taking more than five minutes.
The only answer is that there is one simple person who starts shouting at these academics and professors, and waking them up from their meaningless wasting time.
The world needs this kind of common sense people.
Academics and professors are dangerous. They live in their heads, and lost the entire contact with their base: the earth, and its simple common sense numans.
Completely lost. Using quotes of the big of the past to make us believe they are big also, on moments that they are finally criticized (with fair, good reasons!). So pathetic. I refer to the one who quoted Franklin D. Roosevelt: "They are unanimous in their hate for me; and I welcome their hatred."
It made me think about somebody who tries to be even Jesus Christ: "Father forgive them, they do not know what they are doing."
It needs more to be F.D. Roosevelt, or to be Jesus Christ.
Why don't you, sehr geehrter Herr Klaus, send this directly to the president of the Eurogroup? Dare. It is so excellent to think with, about, for, to write down, to invest in the case, in this case Greece, and EU. This is democracy. Using one's voice/pen.
ReplyDeleteJe suis Charlie. Vous êtes Charlie. Nous sommes Charlie.
(To all who read this:) And that is more than weeping and tweeting when "Charlie" was killed.