We Are Vlakes


To the delight of all Greece watchers, the show in the circus has kicked off again after wikileaks alleged leaking of discussions between Poul Thomsen and his IMF staff on the future of the fund’s participation in the Greek Bailout.

Supposedly Thomsen and Velkouleskou are talking about options for Greece and the role of the IMF in the programme. The gist of it is that the IMF wishes debt relief, or exit from the Greek bailout. Wow (as Prophet Varoufakis would have said). We only heard this before, what, a million times? Thomsen himself has said time and time again in his IMF blog that the Greek programme is barely sustainable and debt relief is needed.

Thomsen’s point is simple and correct. For Greece to have sustainable finances it needs severe reductions in expenditure (especially in pensions) or debt relief, or a combination of the two. As Germany (primarily) and Europe (ECB and Commission) are adamant on no debt relief, the burden of the programme falls on fiscal measures. The problem for the IMF as everyone well knows is that it is not allowed by its charter (and logic) to participate in a programme that does not add up. The current combo of fiscal measures and lack of debt relief does not work. It will not reduce Greek debt/GDP to 120% as required.

Two options therefore exist for the IMF, recognition that Greece will sustain debt/GDP ratios way above 120% for a long long time (and exit of the IMF from the programme), or debt relief.

Now, I am telling you what you know and this is not much fun. You know what is fun? The Greek government’s reaction! Yes, you got it, Tsipras is furious, at the IMF, for requesting… eh… debt relief for Greece.

You done laughing? Take a breath and read this:

“The Greek Government asks the IMF for explanations whether pursuing the creation of bankruptcy conditions in Greece, just before the British referendum, is the Fund’s official position,” government spokeswoman Olga Gerovasili told state television.

Commenting on the leak, Greek Prime Minister Alexis Tsipras told weekly newspaper Ethnos: “It seems that some people are playing games with an aim to destabilize us. We will not allow (IMF’s) Thomsen to destroy Europe.”

So, the IMF is trying to destroy Europe according to Mr Tsipras. You could not make this stuff up. This comes from the man who supposedly allowed Varoufakis to negotiate the country almost to death in order to achieve what? Debt relief.

Now, why is Tsipras doing this? Is he that stupid? What could be the agenda? Lets venture a guess. Merkel has agreed with Athens that they will let things drag on, turn a semi-blind eye to the lack of enforcement of measures required by the bailout and continue the drip-drip of disbursements. They want to do this because they are sick of Greece and have bigger fish to fry (refugee crisis, Brexit). The IMF will not play ball and insists on its projections instead of the European Commission’s rosier estimates. Something has to give. Tsipras has been ratcheting up the rhetoric against the IMF in recent months not because he does not want debt relief, but because he knows Merkel cannot allow it, and he cannot stomach the alternative (meeting the milestones and satisfying IMF expectations).

We end up therefore in this new farcical episode in this sorry saga. One has to smile. The usual band of useful idiots has jumped in to yell again #ThisIsACoup, evil evil IMF, baaaaad neoliberalism.

Goodnight and good luck







2 thoughts on “We Are Vlakes

  1. It gives me no pleasure to say that….”I told you so”, but…..I told you so!

    As the economic crisis in Greece last year crawled towards its ultimate “solution”, I, like a few others out here in blogland could not see the Greek affair ending happily, not least for the Greeks!

    However, there were experts who saw things differently.

    Anatole Kaletsky wrote an article “Why the Greek Deal Will Work” on a web-site called “Project-Syndicate” that was published on 22 July 2015. Here were my comments on his article:

    “I could not help myself having a bit of a laugh as I was reading it. At first, I thought that this was a satirical piece, poking a bit of fun at Tspras and the bail-out plan. On re-reading the article, however, I started to realise that the author was being serious. Mr. Kaletsky really puts a lot of effort into convincing us that Greece will soon become the new “Garden of Eden”.”

    Permit me to quote a little of what Kaletsky wrote:

    “……The deal between Greece and the European authorities is actually a good one for both sides. Rather than marking the beginning of a new phase of the euro crisis, the agreement may be remembered as the culmination of a long series of political compromises that, by correcting some of the euro’s worst design flaws, created the conditions for a European economic recovery……”

    “……In short, the main conditions now seem to be in place for a sustainable recovery in Greece. Conventional wisdom among economists and investors has a long record of failing to spot major turning points; so the near-universal belief today that Greece faces permanent depression is no reason to despair.”

    It should, therefore, come as no surprise that “Why the Greek Deal Will Work” was the winner of the Peter Smith “Funniest Story of the Month” award for August last year.



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