Tuesday, March 10, 2015

Draghi's Deal

"As Draghi pressed Varoufakis to accept the return of the troika officials, the minister said that the idea that Greece was opposed to such a move was a misunderstanding, according to one of the officials with direct knowledge of the exchange. 

Can they start soon? Draghi asked. 

Varoufakis agreed. 


And the deal was done".

Source: Bloomberg


  1. And never the less the Greek media (with To Vima leading) declare the "negotiations" a success. "The ECB has softened it's stance and will soon start financing Greece. The conquering hero has returned after a major victory. A(nother) Greek politician has (again) slain the dragon (the Troika). Austerity has been called off". And have they started cooking the books again, as, Draghi seems to think? Maybe, on a more scary note, maybe they are just ignorant of the actual situation.

  2. Well, that simply seems to be morale-boosting slogans. Wait until the "technical experts" come to Athens in order to scrutinize the books.

  3. And. To understand the urge of a control panel in Athens, I would like to recommend the interview in "Die Zeit" with Heinz Richter.
    He, with his immense knowledge and insight about Greece's history, answers questions, and those answers are eyeopeners.

    For those who cannot read German: you can find the most paragraphs translated into English in my Greek google+

    For those who can read German:

    Items: clientelism, rousfetia, patrionage, English colonialism, Churchill, Balkan politics, Ottoman,Cyprus, 1897, Papandreou, Angela Merkel, referendum, difference between the referendum of 2011 and the proposed one in 2015.

    1. Thanks, Antoinette, this is indeed an interesting article. It gives me the impression that the chances of keeping Greece in the euro zone - at an acceptable cost for the rest of Europe - are not very good.

    2. OK, there is a nice generalize wikpedia blog on Greece. There are some facts and many generalizations. But it is always very nice to see blogs showing both sides of a story. At the specific it seems only the bad things of Greece are portrayed. As such it is very easy to sway an opinion of what should be done with Greece.


  4. I agree. A very readable article. Thanks Antoinette.

    And Heinz Richter is not just anybody. He is one of the most renowned historical experts on modern Greece and Cyprus. He has been living there part of his life and has written tons of books and articles. You can check out his bibliography on Mannheim University here:


  5. In Switzerland we all know that not each and every announcement made before the elections will be realized afterwards.

    However, such a "full u-turn to the opposite" would have harsh consequences and no rhetoric could transform it to a verbal victory.


  6. Interesting could be for all of us, to learn to know more about "Game Theory".
    This is important to learn to understand the reason for all what we do not understand about Varoufakis' and Tsipras' behavior. I found some websites, and they create some insight for starters.

    Now I realize how important it is to understand the psychology of it.

    It is also related with what we learned form the film: A Beautiful Mind.

    The danger now, in reality life is, that only Varoufakis has studied it, and not anybody else within the scenery of Brussels/Athens. This is, as the partner in this game, trying to compete with a professional in playing poker. About billions of Euros.

    1. Antoinette, you should not get confused by game theory, which is a pure mathematical setting not at all relevant to Varoufakis and the current negotiations with the Troika.

      As you say, psychology and especially group dynamics are important. And we have seen that academics lacking political experience on this platform may for a very short time get attention of the media who happily enjoy higher reading counts due to some novel buzzwords.

      But realistically seen, all Varoufakis has achieved is further loss of several weeks within a very tight time frame.

      I do not have the slightest doubt that by end of April Greece will run out of money and by end of June will be out of the Euro.

      If by July this forecast has not materialized, I will stop commenting and feel too dumb to understand the political world.


    2. If I could delete only parts of a comment, I would - in your own interest - delete your last paragraph because you could live to see the day where you regret it... Remember: it is not illegal in the Eurozone to go bankrupt.

    3. Dear H. Trickler,

      To be honest: I had to search for the word dumb. I am not so good in English. Searched even for Pink Floyd's "comfortably numb", but numb is obviously something else.
      I found the right translation and:
      From time to time people are or feel dumb. Even cats can feel dumb. Dogs, cows, horses. Trees.
      That is an in between of something. But natural. Even Varoufakis will feel dumb, maybe very often or all the time, or sometimes, also Tsipras. But we do not witness that and the most of the people do not even dare to talk about it.
      Th(d)umbs up. Life is beautiful anyway. That is not arrogant, but true.

      You know, I love it that there is a crisis. There is always somewhere a crises. Also in ourselves. Crisis means that there is something changing and we can do something with it.
      This crisis learns me a lot, it is incredible interesting, next to that it is often depressing.

      Would like to send you some music but I do not know your taste.
      Find your taste and listen. The world is more than politics.
      And I agree with Herr Kastner: please stay. We like comments. Even when they are dumb. A lot do not even have a dumb comment. They are "dead". ;)

    4. @kleingut - March 11, 2015 at 2:53 PM

      Klaus, before I offered a bet for a fine Swiss chocolate in an comment to an Austrian blog and renewed it in the last paragraph above, I have thoroughly analyzed all aspects of the situation.

      As I retired scientist I had to spend an enormous number of hours to learn the mechanics of the worldwide financial crises and about the pecularities of the crisis in Greece.

      Now, if after that effort, my current analysis and forecast are proven to be wrong, then I must admit not being capable enough. Therefore I will happily stop commenting and redirect my primary interest again towards scientific problems.


      Found the following text right now:


    5. @ Trickler
      This is not a case where you can scientifically say that you have made your analysis and, thus, logical conclusions are obvious. Why? Because we don't know what the ulterior motives are of each side.

      I think the motives of the 17 are easier to understand than the motives of the 1. The 17, I believe, truly want the Greek problem to go away even if it means sending more money. They are almost begging Greece to take the minimal steps so that they can justify more lending.

      Greece, on the other hand, cannot be figured out. Maybe it's all tactics which they believe will eventually get them a better deal. Or maybe they have a hidden agenda.

      If Greece indeed has a hidden agenda, then I think it would be Varoufakis' old theory: declare default but hold on to the Euro. However, they don't want to declare default because then they would be the ones to blame. Instead, they seem to be doing everything possible so that default occurs seemingly against their will and only because Germany was intent on running Greece into the ground. Then the new stage is clear: Germany is the villain; we have a new holocaust (this time with money and not with lives); and Greece is the martyr who deserves all the sympathy from the rest of the world (other than Germany). And who knows, maybe the rest of the world - other than Germany - will rally with Greece to get Germany to pay up on WW2 damages.

      I recommending reading Tsipras' latest Speech on Germany's war debts:


      Here is one interesting paragraph: "Some people tell us – why do you tackle the past, look at the future. But what country, what people can have a future if it does not honor its history and its struggles? What people can move forward, erasing the collective memory and leaving historically unjustified its struggles and sacrifices?"

      Well, I wonder if someone will ever inform the Greeks that the decade of the 1940 consisted of 10 years and not only of 3. Greece has made it a cause celebre to scratch from memory everything which happened from 1946-49 even though historians claim that the human and material damage of the latter years was far greater than that of the Nazi occupation. Personally, I don't think this "Struggle for Greece" was over in 1949. I remember reading an old article by Varoufakis on the dekembriana of 1944. Varoufakis prided himself that the Cold War had begun in Greece. The ELAS spirit lives on today. I once asked Varoufakis about this and he confided in me that "the civil war is in us, deeply embedded in our cultural and spiritual DNA". In the 1940s, the ELAS/establishment conflict took 3 different stages; 3 "rounds". After the 1st round failed, all hope was on the 2nd round and when that failed, all hope turned to the 3rd round. I have once made the point that what we are seeing now with SYRIZA may be something like the "Fourth Round". I think this time the left has a fair chance of winning.

      But how can you predict that based on analysis? You can't.

    6. @kleingut March 12, 2015 at 5:20 PM:

      Thank you for publishing your analysis. In my amateurish analysis this outcome got a probability of about 20%.

      I see the 3 major players on scene like this:

      IWF: Strictly bound by the rules which do not allow to negotiate amount of repayment.

      EU: Determined mostly by hidden agendas, but fully whitewashed so that blaming will not be possible. It is well known that Schäuble has made the necessary analysis and found out that Grexit this time is manageable.

      GR: Syriza had a clear plan up to 5 weeks before the elections. Then they realized that with those plans they would loose elections and adapted accordingly. They certainly were surprised by the clear victory and not at all prepared to take responsibility. I doubt that they currently have any real plan, because they are busy to scrape enough money together for all payments due end of March. It looks probable that the previous government has placed this time bomb to soon end that electoral victory.

      So with overwhelming probability, if Tsipras& Varoufakis have a plan, then they too follow the hidden agenda towards Grexit, and they too must strictly deny it!

      Thats why I come with 70% probability to the conclusion that we will see Grexit in 1st semester 2015.

      The outcome you describe imho has 20% probability and the remaining 10% go to various other possibilities.

      In engineering we are used to have such complicated scenarios where it is impossible to exactly know and understand the situation. The best we can do is estimate probabilities.

      This is (in abbreviated coverage) the way my analysis works and it proves that you are wrong by saying I can't ;)

      If in engineering a manager is too often wrong in his analysis, he either gets promoted higher or dismissed.


    7. Antoinette March 11, 2015 at 7:50 PM:

      From your text I got the impression that my English was not too clear. I used dumb in the sense of "lack of knowhow/intelligence", silly etc.

      And if that is proven by end of June, then I indeed will again spend my time on other subjects I better know to succeed.

      That is how an old stubborn Swiss ticks, nothing to care about ^_^


  7. "Remember: it is not illegal in the Eurozone to go bankrupt"

    Out of the euro or in?

    1. What I meant to say is that Greek default does not necessarily translate into Grexit. Suppose Germany had a company with 320 BEUR of debt. If that company went bankrupt, it wouldn't mean that Germany has to exit the Eurozone.

      As long as Greece has enough Euros to pay domestic bills, Greece can stay afloat domestically. What a default would mean for Greece's cross-border business is hard to predict.

  8. A quote from the mises.org text:

    "For example, a parliament employee in 2011 received an average of 3,000 euro net per month, not counting the bonuses and allowances on top of the wages. According to the budget of the National Assembly, the “15th and 16th month” salaries alone for these employees in 2011 cost taxpayers 16.9 billion euro. Politically speaking, a socialist government could easily get away with such a maneuver."

    This is nonsense. The clientelist Syriza government has no interest to pursue such manoeuvre and has no chance to get away with it. The masses would storm the parliament.

  9. Another interesting text (in German) - Mr. Galbraith, an impartial observer who personally knows the PM and his FM:

    with the title "The Greek economic success was a statistical illusion."

    With convincing arguments he comes to the conclusion

    "In the past years Greek governments have lost credibility because they promised everything and delivered nothing"

    That is exactly what I also think, and I would even say that Syriza has smashed all the the tiny rests of Chinese porcelain necessary for building new trust.


    1. Prof. Galbraith is quite moderate in this interview. An 'impartial observer', as you suggest, he definitely is not. The Galbraith family has always had a soft spot for the Papandreou family (Andreas, that is). Prof. Galbraith sen. was a flamboyant economist who had held several senior positions under JFK. His book “The new industrial state” was for quite some time the gospel for leftist critics of capitalism. I attended one of his courses at college and can confirm that the man was flamboyant (and very impressive!).

      Prof. Galbraith jun. once told me how his father had saved the lives of Andreas Papandreou and family after the coup. The colonels wanted to kill Papandrou as an ‘enemy of the state’. Only Galbraith’s intervention made possible the evacuation (I believe he even travelled to Athens to pick them up). Galbraith jun. now sees Tsipras as the ideological successor of Andreas Papandreou.

      Galbraith’s blind admiration for Varoufakis goes back to the early days of the crisis ("Yanis is the most intense and deep intellectual figure I've met in my generation"). The original Modest Proposal was authored by Varoufakis and Holland. Galbraith then joined the two and gave the whole thing a facelift. Galbraith co-authored a front-page article in the NYT with Varoufakis.

      Galbraith belongs to the crowd which is convinced that Germany is the cause of all problems. Maybe they are right; maybe not. But I am a bit reminded of what William F. Buckley jun., the late conservative voice of America, once described as the conservative maxim: “I’d rather be governed by the first 2,000 people in the Boston telephone directory than by the 2,000 people on the faculty of Harvard University.” Harvard is a very ‘liberal’ (leftist in our terminology) university and I say that as someone who studied there.

    2. @kleingut March 13, 2015 at 1:51 PM:

      You obviously know much more about Galbraith jun. than me... I came to the wrong conclusion of 'impartial observer' by that interview which I deemed not at all moderate but correct by the conclusion:

      "In the past years Greek governments have lost credibility because they promised everything and delivered nothing"

      Such clear words are rarely expressed. If he thinks that Germany is the cause of all problems, he has carefully hided it in that interview.

      I better know the scientific departments of Harvard where excellent non political research is done.

      I am tempted to say: Somehow is Galbraith correct when stating that Germany is the cause of all problems:

      If Germany too would blindly follow the wrong approach, all controversies would immediately vanish :p

      Anyhow, I wholeheartedly hope that Germany and a few other countries will resist. Throwing good money after bad is long known to fail!


  10. This is just getting worse!

    Greek defence minister Kammenos today said to German mass paper Bild:

    "Statements by finance minister Schaeuble are like a psychologic war, so Schauble poisoned the climate between the 2 countries. All in Greece remember very well that he was involved in a donation affair years ago.

    We will send immigrants to Germany if Greece is getting marginalized to leave the Eurozone. Then there is nothing anymore: no arrangements, deals or whatever.

    If Greece explodes, the next is Spain and Italy and sometimes Germany.

    Greece don´t need a 3rd bailout but a debt cut.

    We are demanding compensatory damages from the EU because of the Russian sanctions, otherwise Greece can´t follow the sanctions anymore.

    We demand war reparations! All other countries got compensated but not Greece."

    He said all of this in a mass newspaper of the biggest creditor! Bild is the sixth biggest newspaper globally.

    Now more Germans and Europeans can hate Greece and want to get rid of it. Isn't that wonderful? Already more than half of Germans think that Greece should leave the Eurozone. Just a few weeks ago still a majority was against Greece leaving.

    And the Greek defence minister finds delight in turning the country into a rogue state!

    1. For many bild.de has the reputation of a gutter paper.

      But now, Bild feels happy to present 22 major tv stations and newspaper who repeated worldwide what Kammenos had told in that interview.

      I wrote far above that Syriza has smashed all remaining Goodwill. Imho Grexit will not be an accident but an intended next step where everybody shall believe it was an accident.


  11. Another interesting text: "Will this time be different for Greece?
    How to assess its ability to deliver on the reform agenda"


    And the latest proposal of Varoufakis:


    I would see it as Schäuble is reported to have said in general (and not literally): Brilliant rhetoric but less brilliant content ;)


  12. Thanks, Mr Trickler.

    Here is another excellent text, arguing for Zyriza being a "mutant left ... akin to the ethno-bolshevism of Slobodan Milosevic":