Thursday, January 29, 2015

Must Debt Relief be "Deserved"?

As is well know to my readers, I am for a Greek debt relief but against a haircut. Strictly on the basis of economic – and not political – grounds. A well-structured debt relief provides the same benefit for Greece as a haircut (perhaps even more) and it causes less one-time pain for the creditors. Both sides have to be happy!

SYRIZA has presented the argument that Greece deserved the same debt forgiveness as Germany in 1953. I argued that 1953 was not a good example because no one would have had to take a loss on German debt if, instead of a haircut, there would have been a well-structured debt relief. And now I read this article by Leonid Bershidsky, a former publisher of Forbes in Russia, in Bloomberg’s ("Germany deserved debt relief; Greece doesn't!"). Given his background, Bershidsky obviously has some very strong feelings against anything which comes from the left. But still, his article is worth reading and there will undoubtedly be many who will consider it as a reality check for Greece. Here is an excerpt:

“Of course there are political arguments for Greek debt relief, as there were in the German case 62 years ago. European leaders are worried that Greece might leave the euro zone and trigger its disintegration. It might be less costly to write off some of the debt than to deal with such dire consequences of a tougher stand. Then, however, the problem should be framed in these stark terms: Greece's creditors would be paying ransom to its far-left government so it doesn't mess up the common currency, which Greece had no business adopting in the first place. If that is the case, we should be spared parallels with the 1953 London conference. It had far nobler goals, and Germany was much better positioned to put creditors' generosity to good use than is Syriza's Greece”.


  1. Far nobler goals? Has Mr. Bershidsky ever heard the wonderful speeches of prof. Varoufakis via Tsipras? SYRIZA is fighting to stop a humanitarian crisis, against cronyism, clientelism, corruption, for a real development without misanthropist austerity. Is there nobler cause?

  2. Mr. Kastner,

    You still haven't grasped, as to why SYRIZA, a leftist party in a very leftist country, couldn't gather up 4% in 30 years. SYRIZA knows well one thing: Occupy and blackmail. Be it a ministers' office, a school, a university, the street, a public square, that's it. In Greece, it goes like this: "I occupy, what are you going to do? If you send the police, i will tell the press you beated me. If you don't send the police, i will keep occupying until i paralyze the function.".

    Tsipras is now applying the same principle. He occupies the EU. "If you don't satisfy my demands, i will default".

  3. I am so sure everything will go well. Our new government and Eu officials are ready to make dialogue and open a new road. Most likely an already newly agreed road.

    Yanis is just a pure leader....have a listen.....
    Talking to Phillip Adams, on the ABC’s LNL


    1. Doesn't the word "hubris" come from ancient Greek?

    2. Mr. Kastner,

      Yes it is (same in modern greek actually). But consider this. Can you imagine Prof. Varoufakis, that all media adhore to have as a guest, giving interviews to them, saying: "Yes, unfortunately, Europe prefered a self-destructive solution that will be the end of the euro and about Greece, "yes it is true that we are under siege in the parliament, people have turned rather angry"?

      Compared to the version: "I had since the beginning said that we will all sit in a table and will find a mutually beneficial solution. And that we did, despite all the fear and mayhem, all the panic in the press, i was saying it all along that there was no reason to worry".

      And the key to the agreement, is that prof. Varoufakis has absolute control over the negotiations. The fact alone that Mr. Dragasakis, responsible for SYRIZA's economy sector and old parliament member, was put aside to give the chair to prof. Varoufakis, speaks volumes about where the real power lies in SYRIZA's economic policy. Prof. Varoufakis is running the show. Tsipras is watching.

    3. I think Mr. Kastner does not understand how much ingrained in Greece is the notion of 'apo mihanis theos'. It used to be Americans/Obama/Russians/Chinese/Government/Andreas Papandreou. Now it's Varoufakis/Tsipras.

      When they leave Greece, they realize that the only entity they can depend on is themselves, that's why they do better.


  4. More posturing from Tsipras: "Tough reception for Schults. Greece from now on will be treated like equal partner", is the comments from SYRIZA circles to the press. It's part of Tsipras' "madhouse dogma", to make his threat credible and to gather popular approval behind him, in the case the negotiations go south.

    As one commentator of the news says: "Bravo! I may have not voted him, because i am distant miles from the left, but hats off to Tsipras. He regave us dignity towards every German. Let them shout. Let the tv channels shout all they want. Even Golden Dawn issued statement supporting him".

    Tsipras "madhouse dogma", is copycat of Andreas Papandreou '87. Mr. Kastner, it's worth your time to bother your wife with a translation:

    At 2:50, you can see what Papandreou did... He got on camera, in front of the 3 Chiefs of staff and with very calm voice, he said that he trusts them, that he will not give an inch of greek soil and effectively sent via television a casus belli to Turkey. A country sending a casus belli to another country 6 times its size. The main difference with Tsipras, is that size aside, Papandreou had done a good preparation and in firepower, Greece could almost match Turkey, plus he got Bulgaria to take aggressive posture against Turkey. Tsipras doesn't have the same firepower, but if he can get Obama or other big countries with him, he can repeat it. As the video shows, greek women stormed the supermarkets (empty shelves), the army was mobilized, soldiers were tearing up their release papers from the army and staying at their units etc.

    If negotiation fails, he knows that this is the 2nd best card he can play. The only way to survive politically. And he plays well the Papandreou dogma.

  5. I'll tell you all something personal....

    I have never been so excited about greek politics in my life. Any politics for that matter. Even in the points that i do not agree with Syriza they manage to prove a sound point of argument and with the fact that they are within a plan, it means they have set objectives.

    My father always taught me as a child that your basket of goals must be set somewhere where you can reach them. After years i told him, "i will set my basket higher than what i can reach as to have other goals easierly achieved."

    Syriza has had a plan for quit some time and they are gaining support. Setting high objectives to reach some objectives easier. They are all calm and cool and there is no ounce of fear. Sometimes a picture, or a video is worth a 1000 words. Just by their manner you get the feeling of "MONON LABE," how can people not get inspired.


    1. That was quite inspiring. I congratulate you on your positivism! If I had to add a word of caution: it was never more important for Greeks than now to read Nikos Dimou's little book "The Misfortune of being Greek". And after observing the new government for 3 days I would remind them that hubris comes from ancient Greek.

    2. Mr. Kastner,

      You already lost faith for Obama after just 3 days? They haven't even applied their program yet.

      What Greeks must read, is a compendium with all Andreas Papandreou's tricks for populism and then an economic analysis of his real policy. It should be taught at school. With a final warning. "So remember! Wonderful soundbites by people that are lost in their ideological nirvana, isn't a dream, but rather a nightmare for a country".

      I had written Mr. Kastner, that had Tsipras real the country's interest at heart, he would have waited for Podemos to come to power in Spain. Any way you want to cut it, he would have a secure ally, no matter what the result. Instead, Tsipras preferred to use the same weapon George Papandreou used to come to power. The election of President of the Repubblic. What Tsipras did, is a rape of the spirit of the Constitution. This alone is enough to have seen the hubris long before. Let me explain to you the arcane mystery of the Presidential election. At first glance, it seems an oddity to have 180 votes to elect President and if not, a goverment can fall. Even a goverment elected a month before can theoretically fall.
      This constitutional provision, was made in 1975, by Konstantine Karamanlis Senior (ND founder), as a way for national unity after the junta. The spirit was, to have a figure, above parties, getting elected as a respected representative of all Greeks. A figure, that would not divide the parties, but would unite more parties into acknowledging that he was a man worthy of common support. Both George Papandreou and Tsipras used this, to make the goverment fall and take power.

      The hubris Mr. Kastner, was there long before...

    3. Have restarted to read your blog..., after the elections of last Sunday. There was a break of some years.
      The missing factor until now is any comment of your side on the new minister of finances..... That is worse than the most bad comment: it is ignored completely. How excellent. Your diplomacy is really exquisite!

      I am nicely surprised by the word "hubris".
      You leave it to the readers (bravo!) what the gods might think about "the" party, and its individuals, and if the gods are intelligent enough (and I expect them to be) they know that this what is happening now is the only way to unmask all who need it.
      In my opinion not any member of Syriza is a real Greek in its deepest meaning, though they speak the Greek language, and know how to become popular among those who are desperate.

      For those who would like to know what "hubris" means:

    4. Mrs. Janssen,

      " How excellent. Your diplomacy is really exquisite! "

      Alii bella gerunt, tu felix Austria nube.

    5. Mrs Janssen,

      Tsipras will have his deal and prof. Varoufakis, will be triumphant. But SYRIZA will tumble in the economy. It is a matter of time. Then, the real attrition will start.

    6. @ Antoinette Janssen
      You might want to go back to June 15, 2012 of this blog.

    7. Mr. Kastner,

      I found your article on prof. Varoufakis. And yet, don't you find it ironic, that the dear professor, ends up in the party that you see as the hope? It is almost taken out of a greek tragedy.

      Somewhere in your blog, i had anticipated SYRIZA's rise to power. It was inevitable, because while all the foreign press was writing about "reforms", in reality, there was continuous, nerve breaking stillicide of incomes. When you have to do that, you must either postpone these and do reforms first or do cuts una tantum and then do reforms, with people thinking "well, that was it". Have you ever watched a doctor amputating a leg by sewing it off over hours? No. There is a reason for that, apart bleeding. Also, the troika has humiliated many times greek politicians. When a goverment passes a law and 5 days later is forced to cancel it because some troikan came to Athens, this doesn't look good to the population. Samaras went as beggar many times to Merkel for some slack. Do you know the details on why there was an agreement with the troika last December? It was ridiculous. The troika was asking a "pillow" of 1.2 beur instead of 1 in the budget. I have also written, that this will turn around and blow on the creditor's face.

      You may argue that it will blow to the Greek's face even more so. Yes, but at the end Mr. Kastner, you have no idea how many things have blown on the faces of the Greeks over the centuries. And they are still here...

      Tsipras, is part of an educational process, through which the greek society must pass from, to find a balance in politics. Greeks, do have this soft spot for good orators and prof. Varoufakis did a great job for Tsipras. He even captivated you, an Austrian former banker!

      An entire population went mad for 5 years, listening every witch doctor on the planet with his own recipe. At the beginning, i was curious to read foreign sources. Every website, had a different one. You went to a leftist, one recipe. You went to another, other recipe. All had a recipe. "Default, don't default, kick out the troika, don't privatize, privatize, go to the drachma, don't go the drachma, it's the elite's fault, it's the troika's fault, it's the ordinary man's fault". In the interior, the opposition calling "traitors, Merkel's servants". At some point, 36% wants to have a goverment to make its own program. Are they crazy? No. They are tired and they are desperate. But there is also a 64% that didn't vote for that program. Are they crazy?

      The irony, Mr. Kastner, is that, above all countries, Germany should understand better than anyone where this would lead. Mrs Merkel also had plenty of chances, to give to Samaras breathing room, in the light of Tsipras. Give him a weapon for the elections, the infamous debt extension, something...

      So now, all will pay. Because in ancient tragedy, hubris isn't simply "arrogance" or "pride". It is a characteristic of the human nature (not present in divinities), of a crime that insults the laws of the gods (usually thus done by arrogance, that defies such laws) and for this, even after years, is punished by nemesis.

      There are several parties involved that will pay...

      Philosophical question for amusement. I wonder, can an atheist be punished for hubris? Mr. Tsipras will answer.

      One last thing. Stournaras, in an occasion, had made a polite mention to Schauble about the debt extension. Schauble replied: "Forget it, Yannis". Now, this has become a bliss for Tsipras. There are jokes saying "Forget it, Yannis. Remember it, Alexis" or "Now Schauble can't tell Tsipras to forget it".

      I think i have overburdened your blog lately. My thanks, apologies and greetings.

    8. Thank You Mr. Kastner for your complements...We must be positive for the greater good of Europe.

      And yes i will ward your caution of hubris in mind. Meanwhile thank you for the book suggestion and i have put it on my reading list.

      How can i not be positive. Comparitively, of leaders up till now since the fall of junta these are my sentaments:

      1. Papandreou. Ballsy, for the people, a leader. Lots of bullshit though.
      2. Mitsotakis: Tried to be a leader. lot of bullshit, got back stabbed by Samaras. Samaras Character shown.
      3. Papandreou: same.
      4. Simitis: Technocrat, did some stuff, lots of bullshit. lots of stealing.
      5. Karamalis: Looks like a leader, own people did alot of bullshit and stealing. Love him but could not control his own people.
      6. G-PAP: Efialtis is a hero by comparison. Biggest Greek traitor in History. His father and grandfather will ask god or gods for him to be sent to hell. He deserves to pass all levels of torture in DANTES inferno. And the worst torture of Dante's inferno is for the worst crime when alive and that is betraying your state which symbolically is a betryal of thy self. Fear, sold off the country.
      7. Samaras. Quietly continued. Some more fear. Had nothing to propose. No negotiation skills. Thinks he is a leader. Conitnues to fuel fear and the more he does the more he pushes people left and right. He is a big contributor to the rise of the golden dawn.
      8. Alex. Confidence. Not fear. Feeling of butterflies in the stomach before you commence an important sports game. Answers for decisions made, whether they look good or bad.
      Change for the better for the better good. A TEAM of leaders. Not one guy. not just one Daddy Papadreou but a team of them. Also one idiot Mitsotakis along with them, to keep rights happy. ND is so jealous they have nothing to say and continue to spoo out there poison. I do not care about left or right nor if i am hurt on personal level. The gerneral greater good of greece is important and these are the only guys that show they have their own plan and seem to go to a negotiating table to have DIALOGUE. This has scared the eu officials. Samaras continues to spoo out fear because he has fear for himself.

      The Gods are punishing Samaras and well deserved. At least Venizelos has the common sense to just shut up. Hubris. The god's gave us the self confidence we needed. They will show us when to scale down our confidence.


  6. No, Greeks don't have a soft spot for orators, they have a soft spot for crowd-pleasers, they need them. And yes, actions counts, not words.
    And now to today's hilarious quote from a reader comment in Kathimerini "no Greek has ever met a microphone he did not like".

  7. Or, free after Nikos Dimou, all radio senders and no listeners.

  8. And if Lennard was not clear.
    To be an orator (with Klaus's words make nice sound bites) does not make you charismatic.
    A charismatic man can convince people to go out and prove they are worthy, sell them blood, sweat and tears for a common goal.
    A demagogue (crowd pleaser) can sell people the idea that they are better than others and therefore deserve happiness and other peoples money.
    And now have a nice weekend, the markets are closed, the banks are closed all is quiet. The devil "but the markets are only closed in Europe and you can still do electronic banking and the politicians and media are still on the loose, Xa Xa Xa".