Grexit Daily News – 25 June 2015

grexit daily news

25 June 2015  —  From Grexit to Brexit : The politics of retaliation

Today has seen another (yes another) Eurogroup meeting that failed to achieve a resolution to the Greek Odyssey. With no end in sight, and with the end of the month approaching fast, another meeting is possible on Saturday. Banal as it is to say it (again), this is the last chance (another one) for Greece and its creditors to reach a deal.

What will happen now? If a deal is reached on Saturday (unlikely as this may be after today’s events) the only way to avert a default to the IMF (Lagarde said that non payment will be considered a default – no grace periods this time) would be for the ECB to raise the T-Bill issuance limit for Greece and for Greek commercial banks to buy those T-Bills. Where will they get the money to buy them? But from ELA of course. So the ECB will give effectively Greece the money. This is why Jens Weidmann, boss of the Bundesbank, wants to restrict the power of the Greek central bank to provide Emergency Liquidity Assistance to the Greek banks as he does not want the Greek banks to use these reserves to purchase short-term government debt (at this moment total assistance is about 89 billion). He thinks this is a violation of the no-bailout clause in the Treaty. Yet, this is the only way Greece can avoid defaulting on the IMF as we have actually ONE DAY left to work this out. I guess an alternative would be to sell something to the Saudis, or to get a billion or so from the Russians, both of which alternatives being very unlikely.

So far so well known. What I wanted to raise in this post is something else, the building anti-European resentment, not just in Greece but in other parts of the continent, Britain included. What this sorry episode with Greece shows is that despite all the faults and stupid mistakes of Tsipras and Varoufakis, the idea of Europe as a force for good is dead. Dead as the dodo. The European project has been battling accusations of being undemocratic, bureaucratic, illegitimate, elite-serving, market-serving, neoliberal, aloof, you name it. The imposition of recession inducing austerity for so long, and so hard, on Greece also makes Europe appear vindictive, disinterested, cruel, lordly, immoral. Say what you want about the Greeks and the errors of their ways, but the math speaks for itself. Trying to get a heavily indebted country to repay its debt, while forcing contraction that causes a depression (this decreases GDP and increases the debt/GDP ratio) is odd to say the least.

Everyone looking at this sorry saga, Greeks and foreigners alike is sick of this situation. Of the never-ending negotiations, the threats of Armageddon, the austerity proposed by the Greeks to counter the austerity proposed by the creditors. Everyone is thinking “enough already”! This is becoming known as #Grexhaustion.

Sick as we all are of all this and building on long standing reservations and criticisms of the European project, don’t you think there is a risk that after the Grexit issue is out of the way, the people of Europe may seek other exits? Would the British not be tempted to vote for Brexit just to stick it to the evil suits in Brussels (even though that would mean giving the same powers to punish the working class to the suits at home)?

Please everyone find a decent solution for Greece. Do not cause Grexit Mme Lagarde and Mr Schäuble, because when it comes to Brexit, we may well just vote for it. Wanna try us?




2 thoughts on “Grexit Daily News – 25 June 2015

  1. Randall says:

    Perhaps you already saw, but when the EU summit turned to the subject of migrants, Italy’s PM Matteo Renzi had bitter words for his counterparts who were resisting taking migrants from Greece and Italy into their countries, telling the assembly “If that is your idea of Europe, you can keep it.” However, it is a shame — literally — that Renzi has not stood with Greece in its fight against austerity.

    To me it has been somewhat shocking how much the professional class of economists has been naive about the motives of many European elite when it comes to the euro, and in attitudes toward Greek debt and democracy. Even those fundamentally in sympathy with Syriza’s arguments for an end to austerity kept giving the ECB and the IMF the benefit of the doubt in negotiations with Greece. For myself, I believed in the European project up to the moment that Syriza was elected and I saw the reaction of Europe’s present leadership. Whatever happens this weekend, the fate of Europe was set last January 26.


  2. The Greek Tragedy

    With a public debt of $ 320 Billion , and unable to raise fresh loans ( to pay off old loans ) , Greece is on the verge of bankruptcy – and exit from Euro-Zone

    Dire predictions are being made by the Economists / Bankers / Politicians etc , as to what will be the impact on :

    * Other debt-ridden countries like Portugal / Italy / Spain etc

    * Economies of the European lender-countries

    * Balance Sheets of Financial Institutions ( eg : IMF / European Common Bank etc )

    * Economies of Developing countries , unable to export to Europe

    But hardly anyone seems to be asking :

    * Why did Greece land itself in such a trouble ?

    * Will Spain / Portugal / Italy – and other debt-ridden countries – soon find themselves in a similar condition ?

    You don’t need to have a Ph D in Economics to know the obvious answer !

    Greece finds itself in this trouble for the same reason that a person would , if he starts spending far in excess of his income

    Usually by borrowing lots of money from friends / relatives , who , oblige without asking :

    > What is your current income ? What is your current savings ?

    > What is likely to be your future income ?

    > What do you need this loan for ? When – and how much – will you repay ?

    If there are no satisfactory answers , then you know that either the borrower has no capacity to repay

    or , ( worse ) , no intention to repay !

    Apparently , Greeks have been living beyond their means ( income ) for many many years

    Generation after generation of Greeks thought :

    > Let us enjoy today . Why worry about tomorrow ? Let our children worry about that !

    The 20+ something Greek youth ( of which , 26 % are unemployed ) , have ” inherited ” that debt of $ 320 billion , from their fore-fathers

    Hence , it is reasonable for them to say :

    ” Hey , I did not borrow / spend all that money ! Why should I be made to suffer for the sins committed by my parents / grand parents ? ”

    Problem is not that the lenders cannot accept this argument and agree to , even write-off $ 320 billion

    All that the lenders are telling the Greek Youth ( thru Greek Government ) , is :

    ” No problem , but no more money either ,

    Just learn to live within your own income . Learn to fend for yourself .

    Stop living on borrowed time ( – and borrowed money ) ”

    Here , there is a lesson for us Indians , as well !


    hemen parekh / 29 June, 2015



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