Tuesday, December 13, 2016

For Once, The IMF Got It Right!

"Greece’s debt is highly unsustainable and no amount of structural reforms will make it sustainable again without significant debt relief. Similarly, no amount of debt relief will allow Greece to return to robust growth without reforms."

Well, this article titled The IMF is not asking Greece for more austerity really nails the issues which Greece is confronting and which Greece needs to handle successfully in order to return to growth. Just one minor addition appears appropriate:

The IMF always reminds the world that Greece needs debt relief but it never accepts the notion that such debt relief should also come from the IMF itself. After all, the IMF's loans are by far the most expensive portion of all official loans to Greece. If only the IMF's debt relief came in the form of lowered interest rates, that would also be a contribution!


  1. Dear Mr. Kastner,

    Yes i agree with them, but unfortunately the other parties do not. And with that said and done we will take on both bads or the referendum. Everything the IMF wants. More pension cuts, lowered minimum income tax bracket and the allowance of companies to fire people in masses. Meanwhile, the EE says the growth must stay at 3,5%. Which means more taxes, more taxes, more funds to the pension plans and the health system. More cuts in public companies.

    The only good or constructive criticism in the last days, came from Steinmier. That the public employees and companies need complete reconstruction and reduction in bureaucracy. And debt relief.


  2. Here's another interesting, albeit uncomfortable part, that is worthwile:

    " it should be obvious that pushing the budget to a surplus of 3.5 percent of GDP will take an even larger toll on growth. It will reduce demand in the short run—which is why we would in any case not recommend increasing the surplus above 1.5 percent of GDP until the recovery has taken better hold. And it will weigh on medium-term growth by delaying the onset of the needed implementation of a more growth friendly budget. Thus, an open-ended long-term commitment to very high surpluses is simply not credible."

    Uncomfortable question: Who is pushing for 3.5%, despite the IMF reccomendation and why?

    1. In case you don't know which idiotic germany is pushing the 3.5% nonsense let me remind you that the purpose of the 3.5% according to the Berlin idiots is to cover debt service and then allow for left over surplus to gradually pay down the principal on the debt. In other words german nonsense raised in the power of 2 (Berlin nonsense squared). And these are the people who are supposed to be our equal partners.

    2. Schaeuble takes every opportunity to destroy Greece. The 40 and more years of Greek apathy, believing all the lies and ignoring the corrupt leadership, which inevitably sank us in the mire, while these criminals and their friends fled with their ill-gotten gains, is difficult for the average Greek in 2016 to acknowledge. We need a whole bag of reforms, EU requested and psychological.

    3. "As he began the settlement, a man who owed him ten thousand bags of gold[h] was brought to him. 25 Since he was not able to pay, the master ordered that he and his wife and his children and all that he had be sold to repay the debt.

      26 “At this the servant fell on his knees before him. ‘Be patient with me,’ he begged, ‘and I will pay back everything.’ 27 The servant’s master took pity on him, canceled the debt and let him go.

      28 “But when that servant went out, he found one of his fellow servants who owed him a hundred silver coins.[i] He grabbed him and began to choke him. ‘Pay back what you owe me!’ he demanded.

      29 “His fellow servant fell to his knees and begged him, ‘Be patient with me, and I will pay it back.’

      30 “But he refused. Instead, he went off and had the man thrown into prison until he could pay the debt. 31 When the other servants saw what had happened, they were outraged and went and told their master everything that had happened.

      32 “Then the master called the servant in. ‘You wicked servant,’ he said, ‘I canceled all that debt of yours because you begged me to. 33 Shouldn’t you have had mercy on your fellow servant just as I had on you?’ 34 In anger his master handed him over to the jailers to be tortured, until he should pay back all he owed." - Matthew 18.

      A thousand years later, psychoanalysis explained with more scientific terms the behaviour of the servant. A more contemporary example is a judge who is unusually severe against a specific crime. Usually, there is a connection in his past with this crime. Much like the servant, the severe judge, feels compelled to be more severe than others, because by punishing the sinner, subconsciously purges himself from his own sin.

  3. The IMF needs to be fully repaid and exit the Greek program. It's time that the euroidiots undertake the full burden of their nonsense and the mess they have created. IMF out, Germany pays the full bill. Full stop.

  4. The IMF has had it mostly right for a long time, we can argue the heading of the letter. "The IMF is Not Asking Greece for More Austerity", it depend what you understand by austerity.
    IMF say that if Greece is to have a fighting chance to become a normal economy then they must radically restructure:
    - The public sector.
    - The income tax system.
    - The pension system.
    - The regime regulating employer/employee regulations.
    They are very specific about these restructurings.
    Europe must grant Greece "significant debt relief", like Keynesian economists they are very vague about a figure, that guarantees success.
    Greece treat it as a trade-off (honest compromise), we will maybe restructure, depending about how much debt relief we get.
    Europe, being the burnt child, say, restructure, and we will give you the debt relief we find necessary.
    Personally I find it unrealistic that Greece can create a normal economy, it would require a change of culture and values. I look forward to a tug of war that will end when Europe restructure itself in a not too favorably way for Greece.

    1. Europe to restructure itself? You mean when Italy and France leave the eurozone?

    2. Lennard,

      Can you please inform me which nation has taken such a shock and survived to the extent that we do? Do you honestly believe our culture and our values has anything to do with this, well put, tug of war? We are in the middle and being ripped to pieces but we still stand.

  5. What a debacle.

    Since the IMF has/ had objections, why did it participate?

    Why did the Europeans want the IMF to participate in the first place, considering the Eurozone is a surplus area?

    Why can't the Europeans come up with a solid program for Greece, considering they have the most to lose if yet another program fails? Insisting just on fiscal consolidation hasn't worked so far, why will it work in the future?

    Why doesn't Greece reform it's defunct public sector?

    Why don't the Europeans insist on Greece reforming it's defunct public sector?

    Why doesn't Greece support productive activities instead of non-productive activities?

    Why don't the Europeans insist on Greece supporting productive activities instead of non-productive activities?

    Why must it all end in tears (another Argentina)?

    Why, why, why, why, why.

    What a debacle.

    1. So a productive activity in your estimation is for Greece to pretend that some european morons who don't have a clue about what they are talking about are worth listening to? And unproductive activity is resistance to the disgusting and unscientific nonsense from Berlin?

      I will tell you why: Germans are plain stupid and conditioned to blind obedience and that's a fact you can take and deposit in a bank. And Greeks are not germans nor they will ever become relegated to barbarism anytime soon.

    2. Because the Greeks never gave up the mindset of a colony of the Ottoman empire (I know that they were de jure not a colony). They have no clue how an economy works, they lack the self-confidence that they can make a difference, they always look for someone else to protect them, pay for them or at least to work as a scapegoat for them. As long as the Greeks do not give up this mindset, there will be no change.

    3. Urs:

      On November 24th (thanksgiving Day for the US) of this year I flew into your Zurich International airport due to a rerouting caused by a Lufthansa strike. The conclusions I gathered is that the Swiss are the same cold barbarian types such as the german cousins (your immigration officers are some pieces of work) and that the so called german efficiency of getting me promptly from point A to point B is nothing but a myth. The only satisfactory outcome of such ordeal was that my ticket was reimbursed and damages paid by Lufthansa ( I just deposited the Lufthans check into my bank account) and therefore I caused german and philogerman companies to offer me a free experience at their own cost due to their malfuctioning societies and inability to deliver results as promised. Now if this is a byproduct of my Ottoman occupation I can assure you that flying turkish Airlines via Istanbul is a far more pleasant experience than flying unworthy Lufthansa through Frankfurt or arrogant Swiss Air (the Swiss pilot captain of the flight acknowledged the Lufthansa passengers and declared with conviction that next time they and I would be booking with Swiss Air instead). Bottom line: You can have the Swiss and German prisons for youself because I have checked them both out and found them unsuitable to my tastes.

      And by the way, Zurich from the air looks like an uninteresting compilation of mideaval construction which is not worthy of anyone's time or desire to look any further into it.

      Oh and one more little thing about the theiving nature of the "civilized" Swiss. I had a pair of sunglasses which I left for a moment on little table in a waiting area in the Zurich airport and which were stolen from me in broad daylight. When I asked a sour looking and thoroughly unattractive Swiss woman at the counter whether any sunglasses were reported at the lost and found she gave me a disgusting look that such couldn't possibly be happening. So your non-Ottoman compatriots are both thieves and also horrible servants who don't even know their right place working in a business that basically has to do with customer service. I have noticed that both Lufthansa and Swiss Air employees have this terrible attitude that basically they are doing customers a favor rather than the other way around. So I made it a point to collect money from these idiots and as an ex-Ottoman subject I am glad to report to you that I am particularly happy for taking money from Swiss and Germans. I thought that you might want to know these true experiences and perhaps come to your senses as to the horrible PR image your people have in the civilized world. Bis dan.

    4. To Urs December 14, 2016 at 8:01 AM
      What a nebulous yet clear-cut analysis! Says everything without saying anything at all. Brilliant for a Bild reader!
      As for me, i think it won't be long before the Germans and - even worse - their cousins cease to beat about the bush, toying with ill-digested notions such as "mindset", "culture", "mentality", and revert back to their - oh so familar - "national character" and "race". Pseudo-sience is after all the heart and soul of the german nationalism, which is alive and kicking today, even if, for the time being, it comes up with and entertains ridiculous labels such as "reluctant hegemon"...

    5. Two wrongs don't make a right.

      The fact that the Eurozone is an incomplete monetary union doesn't mean that the Greek economy/ society operates smoothly.

      The Greek economy still resembles a bucket full of holes, out of which money flows abroad. The Greek society still is a place where law appliance is arbitrary. Any such society is bound to collapse. Unsurprisingly, this is what happened to Greece.

      Most of the ills that are plaguing Greece are of it's own making. If Greece thinks it can print it's way out of trouble, then it can simply exit the Eurozone.

  6. Hang on folks.

    At the conclusion of last year's 3rd bail-out we were all told that everything would be fine in the future and that Greece would be on the road to prosperity. That's what our EU Masters told us.
    And I've still got the reports from the "economic experts" supporting this promise.

    So what's the problem?

    Or.....were we fed a bunch of lies!!

  7. What form did the Greek refinacigg take. Was it new credit of did it involve converting bank deposits to bonds. Converting bank deposits to bonds seems counterproductive in this context, as cash can be used to but Greek exports and bonds can not.

    1. Bank deposits have remained 100% bank deposits throughout the crisis. Financing came from official lenders and was used to repay private creditors and, later, to repay themselves.

    2. Hi

      I was thinking of the of source of the funding from the creditors , was it from from deposits from bond sales or was it new bank credit.

    3. Oh, you mean how the creditors financed the loans they were making to Greece?

      Well, to the extent that the loans were booked at the ESM (the majority), the ESM finances itself with (a) equity (moderate amount) and (b) sale of bonds.

      Bilateral loans from individual governments: I have no idea how these were financed but I presume out of borrowings.

  8. @ V's lament, (oh weh, oh weh).
    Of cause Greece has suffered a big chock, it was proportional to the distance between the "make believe" world she had created and the real world she now find herself in. As for how Greeks describe the chock let me quote one of your compatriots. Greeks feelings (and emotions) are made to appear five times greater than what they actually feel.
    Of cause the culture and values have something to do with it, to a large extent they determine what we do and say.

    1. @Lennard,

      At least Greeks do have feelings.

    2. Lennard, i will tell you what a german wrote, probably more famous than the greek you cite:

      "“As far as I know, only the old Greeks had gods of drinking and the joy of life: Bacchus and Dionysus. Instead of that we have Freud, inferiority complexes and the psychoanalysis. We’re afraid of the too great words in love and not afraid of much too great words in politics. A sorry generation!”. Erich Maria Remarque

  9. Moscovici: Greece cannot handle more austerity measures


  10. It's hard to disagree with a fan of EMR, I am a great admirer of his literature. A propensity for "kefi" and a sense of reality are not mutually exclusive. EMR certainly knew that and lived it, frequently cynics have a lot of fun. If we are into quoting, another of his:
    "Whatever happens to you, never take it personally. Nothing in this world is so important.

  11. Mrs Lagarde told the court last week that “the risk of fraud totally escaped me”, insisting that she had acted with “a clear conscience with sole aim of defending the public interest.”

    The court clearly concluded otherwise. It appears a harsh ruling. There is no evidence - at least so far - that she bowed to pressure from Mr Sarkozy’s political machine.

    In a larger sense the details of the case hardly matter. Her travails crystallize a feeling that the IMF has been in the wrong political hands for a long time. It needs exactly the sort of reform that it demands so clinically from the hapless countries that fall under its tutelage.

    source: The Telegraph