Friday, July 10, 2015

Alexis Tsipras Growing Up Fast!

Alexis Tsipras reportedly told the parliamentarians of his party: "We got a mandate to bring a better deal than the ultimatum that the Eurogroup gave us, but certainly not a mandate to take Greece out of the eurozone." And furthermore he said: "This isn't simply Grexit, this would cause the state to explode." The latest proposal which Greece submitted to the Institutions seems to confirm that reality has set in with Alexis Tsipras. And his Finance Minister Euclid Tsakalotos even praised the ECB for its support during the last couple of weeks!

Letting the developments of today pass before my eyes one more time, I wonder whether this is the same Greek government as the one of only a couple of days ago. No threats? No blame for humiliation? Perhaps even honestly seeking a compromise?

Suddenly, the chances of saving Greece from the precipe, the chances of a deal seem as high as they haven't seen in quite some time. Judging from the analyses I have read, it now boils down to two women agreeing with each other: Christine Lagarde and Angela Merkel. Lagarde allegedly wants a haircut; Merkel definitely does not. Both are said to be in the camp of favoring Grexit. And then there are those small EZ countries who have gotten so tired with Greece that they seem to want out; regardless.

Lagarde now has made noises that what she really wants is debt relief and Merkel is beginning to make noises that debt relief does not at all equal a haircut. Do I see them pointing into the same direction? The direction of stretching maturity dates, lowering interest rates and perhaps even grant a moratorium? I hope that's what they are moving towards.

Which leaves the subject of what happens if some countries refuse to go along with any new deal. That may sound very dangerous but in actual facts it's very simple: at issue is money. If countries whose combined share of the new bail-out deal would be, say, 10 BEUR and they bail out from the bail-out, then someone else will have to assume that load. Who?

If I were in a position to advise the German government, I would advise them to assume the full load all by themselves to set a signal of German solidarity with Greece once and for all. A few billion more or less won't matter all that much to Germany but it would make a world's difference in the context of Germany's reputation in the Eurozone (and in the EU, for that matter) and particularly in the context of German-Greek animosities.

And behind closed doors in a soundproof room where she is alone with Alexis Tsipras, Angela Merkel could put her arm around his shoulders and say to him: "Please do me a personal favor. I know you can make sure that the issue of German war reparations is put to rest once and for all. Would really appreciate it if you made sure of that!"


  1. I could tell you who should take the load: the shares should be distributed according to the bail-out of bank claims against Greece. This would have the effect, that the originating countries, who saved their banks through a debt deal with Greece will bear the risk of that operation. So countries who are not exposed in Greece would be free. This would remind even the germans, that unrestricted business of bankers could result in public debt. You know how the story evolved.

    A question by the way: do you know if in Greece there exists something similar like the "Wechselgesetz"? The use of Wechsel could alleviate the need for cash for business transactions and would restore some kind of payment morality together with the immediate and only few time consuming process of "Wechselprotest". If banks start to discount these Wechsel they could usually make some "good" haircuts which will improve their "G+V" and besides they do not need so much liquidity in general. But you know what I want to say...

    Best regards

    1. I don't know whether there is bill discounting in Greece but I once wrote this:

    2. The problem with an allocation key based on banks pre bail out engagement would then be that Greece has to be the major contributor to its bailout then. But they have no funding.

      Also, US and UK are not keen to participate (US was #4 in 2010 if I remember correctly, behind GR, FR and GER banks)

  2. "is the same Greek government as the one of only a couple of days ago. No threats? No blame for humiliation? "

    One has a deadline to meet. On the other hand, you probably missed the rest of Tsipras' speech, as in "we were put in a situation of your money or you life" or how the program has nothing to do with SYRIZA's positions and beliefs.

    "And his Finance Minister Euclid Tsakalotos even praised the ECB for its support during the last couple of weeks!"

    When someone brings you what you asked for, you praise him, don't you. Tsakaloto's "proposal" is Juncker's proposal plus some more measures.

  3. " I wonder whether this is the same Greek government"

    I would add this. It is called politics. Tsipras had to take an emergency vote last night, out of his disappointed and angry MPs. Tsipras yesterday, if the opposition hadn't backed in up, he would have lost a vote of confidence. 8 SYRIZA MPs voted "present" , 2 voted "No", 6 were absent (including prof. Varoufakis). The Independent Greeks mitigated the damage to the goverment camp, because they all voted YES, still, Tsipras in the goverment camp, lost the vote of confidence (a hypothetical one).

    Moreover 15 SYRIZA MPs that voted YES, made clear that this doesn't mean they will vote YES for individual laws.

    So what did you expect Tsipras to say? Have his entire speech explaining how he was trapped and blackmailed? He actually did that in his MP group meeting in 2 sessions. You have to help MPs save face. Minister Tsakalotos was quite honest about it. The plan is recessionary, but there is some chance, that if handled in a certain way, using the investment package, that it may work, but only a chance, not a certainty.

    Tsipras more or less, said the same, but added "we have no other choice, we are not prepared for organized Grexit, please vote this". What else could he say? "That we will make this plan ours, because we like such measures?"

  4. And I was wondering all these years what is your role in the big picture, what got you into spending so much time of what is left from your life and writing about Greece? Did they pay you or you have been doing it for free? I know now.

    1. Most probably you had a pipe dream o__O


    2. Are you proud of yourself? Does it make you feel better to belittle your interlocutors? What is your next step, issue a psychiatric order for a gulag? You should be ashamed.

  5. "Perhaps even honestly seeking a compromise?"

    There is no compromise. Tsipras offers total surrender. This is why yesterday night, he managed to pass the vote only thanks to the opposition's votes. Today even an Independent Greeks representative, said that several of their MPs wanted to vote NO, but at the end they were forced to vote YES, after watching the ranks of SYRIZA bleeding badly.

    At the end, even the biggest gambler, knows when he runs out of money and out of plan.

    Because SYRIZA had no real plan on how to return to the drachma. Tsipras admitted it.

  6. "And his Finance Minister Euclid Tsakalotos even praised the ECB for its support during the last couple of weeks!"

    This explains much. From minister Tsakaloto's speech:

    "In a meeting with Mrs Merkel, i told her that the institutions don't want us to include any state inflow that will count for the fiscal gap from these non parametric measures. And i told her, that how is this possible, since we (SYRIZA) have as our top priority the fight against tax evasion and corruption. It is as if you are Bayern Munich and we are Barcelona and you don't allow us to use Neymar or Mesi. And Mrs. Merkel replied to me: And neither Suares".

    At the end, minister Tsakalotos agreed not to include any inflow from non parametric measures, as the creditors wanted. They praised him.

  7. Something to keep in mind. Tsipras has repeated twice in the last days, that if he couldn't pass the vote based only on goverment's vote, he would resign. He characteristically said "I will not become a Papademos". Yesterday night, he passed the vote only thanks to New Democracy, PASOK and Potami. The Independent Greeks in his coalition held up much better than SYRIZA as a matter of fact. Mrs. Zoe Konstantopoulou, the President of the Parliament (or speaker in anglosaxon terms), openly attacked Tsipras, to the point that one has to wonder, how Tsipras can let her stay where she is.

    So, if Tsipras is to abide by his word, he will resign.

  8. Open letter by 15 SYRIZA MPs (belonging to Left Platform) that voted YES, titled "Declaration of justification of our vote".

    "This proposal is a plan of austerity, deregulation and privatizations, that not only won't give answers to the country's problems, but will worsen the recessionary tendencies in the economy and make the country's future even bleaker.

    For this, we express our solidarity to those who voted against this plan and state that this position reflects also our political beliefs. We all think that this plan shouldn't be voted from the parliament and if we vote in favour of it, it is only as not to give the excuse to put in question the confidence to the goverment, because of us.

    Our YES vote, is dictated by the above political reason and can't be registered as a YES to the application of austerity measures and of neoliberal demolition and against which, we will fight together with the workers' movements so that they can't be brought to life in the next period.
    The country doesn't need more austerity, but support of wages and pensions, liquidity and deep debt cancellation".

    1. This indeed says it all.

      And some FinMins in Bruxelles this afternoon publicly stated for TV: We do not believe that this plan could be implemented in Greece...


  9. "Do I see them pointing into the same direction? The direction of stretching maturity dates, lowering interest rates and perhaps even grant a moratorium? "

    If one watches what the Europeans have done with Samaras, then they will offer Tsipras a promice for debt restructuring, in 2020-21. Up until then, the annual payments are manageable. They can keep the carrot and stick up to 2021, so that they can squeeze as high primary surpluses as they can. The higher, the lesser the debt restructuring necessary. Unfortunately for the greek economy, this won't remove the scarecrow of Grexit and there is risk of repeating history.

  10. Klaus, you seem to hope that Syriza will from now on conduct a sound financial policy, implement all the measures that it promises to take and follow the advice of their European partners. You might as well hope that a crocodile will become a vegetarian.

    1. I think only a few days ago I commented something like: 'even if the debt problem is resolved, I don't see how this government can lead Greece towards a better future'. Have I changed my mind?

      No. If the same cast of characters that we have witnessed over the last 6 months remains in place and in power, Greece will be heading towards an economic Cuba of Europe. They simply have no understanding of private enterprise.

      But my gut tells me that something might be in the making. Something like a complete restructuring of the political landscape of Greece. Not a high probability but, still, a possibility.

      The key player is Alexis Tsipras. It looks like he will dominate the scene for a long time. I think he will do a lot of thinking about the role he could play in Greece future history books over the next few days. To pick up a thought from the commentator H. Trickler: Tsipras will have to make up his mind whether he wants to enter history books as another Allende or as another Lech Walensa.

      What are the odds? You tell me!

    2. I don't know if you watched Schauble's statements before the Eurogroup. He very politely described that he wants a change in goverment. As in...national unity goverment. And i believe Tsipras has no option but to accomodate. He can use as excuse the fact that he couldn't obtain majority vote from his own MPs.

    3. Mr. Kastner,

      To add to my previous message. All this german (and satellites) position of "we can't trust, how can we trust this goverment", despite Tsakalotos has offered everything, is a message to Tsipras "we don't trust this goverment, we want a goverment we can trust". When no matter what one gives or is ready to give, you insist that you don't trust him, you imply you want someone you can trust. Another goverment. Tsipras in the position he is now, must do it. He can agree to a national unity goverment.

    4. I doubt Schäuble want to topple Tsipras.
      But he is rule-driven. If he cannot trust the Greek government (what I understand after their propaganda for a "No"-Referendum), he perhaps can be satisfied with rules, checks and balances, that controls that Greece remains on track and any new money will be used in good ways.
      Like conditional "if-then"-rules:
      "If Greece succesfully implements reform X, than they get Money Y/Debt cut Z..."

      But that will continue several problems that we already know from the last years:
      - External controls are usually quite inefficient and inflexible. And as they do not know greek mentality and culture that good they prob cannot find the best ways for Greece.
      - The close controls may feel like a new kind of foreign, colonial heteronomy, even more than the hatred Troika-controllings in the past.
      - So the medicine may taste even more ugly than before - and there is still no guarantee that it works as hoped.

      Probably its worth to deepen the consultations about Grexit at the same time to develop a perhaps viable alternative.

      By the way: I hear a lot of mourning that European governments would wish a governmental change in Greece. I missed this mourning when the Syriza-government declared that they wish to topple governments in other European countries, when theyregularly promoted Podemos in Spain.
      Sorry, but that mourning is double faced.

    5. Mr. Kastner,

      reply to....kleingutJuly 11, 2015 at 6:10 PM

      I'm quite tired so i will not get into details.

      Tsipras will show his next stage of change after the deal closes. He MUST be the leader with new people some old some new + Potami and ND and Pasok if they want to move in and enforce the new deal.

      Tsipras may be young and may have made mistakes, he may have a called a referendum that the eu partners do not understand right now, but he is flexible. Merkel knows this. Lagarde knows this. The most important quality a politician is political survival but without looking like a cheap politicians to the people.

      He will bring change but i am not sure how much. I feel a momentum coming and i hope he can enforce the majority of the program.

      He will need foreign help and i am glad France has final gotten off its ass.

      Even in his failures he has proven that he is a new character in the miserable greek political scheme.

      There are also some good other politicians in various partys. They need to get rid of the junk which i figure is about 100-120 mps of the 300 parliment. I watched news all weekend. I can not believe how some of these idiots got into office.


  11. @kleingut - July 11, 2015 at 6:10 PM

    For almost 2 years I advocated that Greece needs kind of Greek Lech Walensa, but I was never convinced that Tsipras could take that role.

    I am still convinced that his intimate goal is Grexit and that all the current fuss is part of a highly sophisticated blame game.

    Imagine the Eurogroup saying no to the current proposition which goes farther than anything before -> They will be blamed.

    They even need not say no, but take steps that need a few weeks: Greece will be bankrupt -> Grexit.

    Due to that blame game, nobody dared to admit thinking about Grexit - until today when Mr. Schäuble told the press that he thinks that a "temporary Grexit" should be considered a possible next step!

    It is quite clear that Mrs. Merkel agreed that he publishes that idea, and I can not imagine that anything else will have the slightest chance to be realized.

    Imho it is a cute idea to speak about "temporary Grexit" because it does not look as grim as pure "Grexit". But in fact it will not make much difference for the short term outcome.