Saturday, June 27, 2015

Is Grexit finally here?

The surprise call for a sudden referendum seems to indicate that Tsipras and Syriza want to make sure that the public shares the blame for Greece crashing out of the Euro.
In the aftermath of yesterday's "nuclear option" announcement by Greece, when in a dramatic after-midnight speech Greek PM Tsipras announced that Greece would hold a referendum next Sunday, the day after the US independence day, the same Greek government made it very clear how it wants the Greeks to vote.

First, it was the Greek Energy Minister Panagiotis Lafazanis, head of the Left Platform movement of Syriza, who said in comments broadcast on state-run ERT TV that a no vote by the Greek people in July 5 referendum “will open the road for a new future for the country" adding that "the dilemma facing Greeks is “whether to live better or not. Greek people are aware of difficulties of a new starting point, they’re ready to support new national effort."

Then the alternate health and social security minister Dimitris Stratoulis doubled down telling ERT-TV that Greeks are being given the opportunity to decide the way forward and “I’m optimistic” that they will give a “resounding” no to the “provocative” demands of the country’s creditors. The only issue is the question being put to the people in the referendum." It got better when he said that "Greeks are being asked to vote whether the country should be a colony, or not, of creditors."

Well, if that's how the referendum question is indeed phrased then yes, it is clear how the Greeks will vote.

As was to be expected, the Greek opposition parties, except for the Nazi-inspired Golden Dawn, expressed horror at the referendum. Conservative main opposition leader Antonis Samaras accused Tsipras' radical left government of advocating an exit from the eurozone and the European Union. "Mr Tsipras has led the country to an absolute impasse," he said. "Between an unacceptable agreement and leaving Europe."

Why? Because they know that despite the referendum move, which is clearly just a last ditch attempt by Tsipras to save his political career by punting the decision straight to the people, if there is a "Yes" vote to the proposed bailout, then Syriza is out and new elections have to follow.

As for the reason why Tsipras had to punt, it is a simple one: at the core of the ongoing Greek negotiation debacle is the inability of the local people to decide what they want: according to various recent polls 80% of Greeks want to stay in the Eurozone and keep the Euro currency, the problem is that 80% also want an end to austerity. Two conditions which are mutually exclusive. It is no surprise then that Tsipras had no clue how to proceed based on his mandate.
Getting out of the Euro and the EU is absolutely the right move for the Greeks, but they're afraid to go ahead and do it. But given the unacceptable price of the status quo, which is unemployment levels higher than anything the USA saw in the Great Depression, it looks as if they may be forced to do the right thing.

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Anonymous Jourdan June 27, 2015 12:34 PM  

In D.C. today there is a lot of chatter among the IMF and World Bank types that Greece not only won this round of negotiations, they badly embarrassed the "experts" that had loudly declared just a few days ago they wouldn't even talk to the Greek leaders after presentation of what they characterized as a "take it or leave it" final proposal.

What I'm hearing is that, once again, the so-called deadline was completely illusory. Greece has been given another five months to negotiate, and there is no evidence whatsoever that this latest deadline is any more serious than the last.

Greece has also been extended a further 7-billion-something (I'm hearing conflicting figures from 7.2 to 7.8 billion) Euros for their banking sector, which is very revealingly not being characterized either as a loan or an advance.

Contrary to the news article cited, the Greek leadership's brilliant call for a vote is not a means to make Greeks choose their poison but simply to allow the Greek PM to have his people veto any decision somehow reached over his head, which would force the EU to openly overthrow yet another EU government, something they are very loathe to do.

Greece has played its hand masterfully, though, truth be told, this wasn't that difficult. The political and financial elites of the EU cannot remove Greece from either the Euro or the EU at any price any more than the political and financial elites in the U.S. could resolve to immediately do away with illegal foreign labor and "qualitative easing."

Again, no "Grexit." Quite the contrary, this wholly-manufactured crisis will end with substantial debt forgiveness and "responsible" nations like Ireland taking notes on how not to handle business next time.

At the end of the day, more American students will pay more in owed student loan debt over the next 10 years than Greeks will their pay of their outstanding debt.

Blogger JohnG June 27, 2015 12:34 PM  

Could they live within their means? Seems like an awful lot of bad habits...

Anonymous Steve June 27, 2015 12:39 PM  

80% of Greeks want to stay in the Eurozone and keep the Euro currency, the problem is that 80% also want an end to austerity.

Greek politics.

Get out of the Eurozone, bring back the Drachma, stuff the ECB, and watch investors and tourists pour foreign currency and new jobs into the Greek economy.

It'll be horribly painful at first, but the alternative is living hand-to-mouth as a nation of perpetual deadbeats.

Anonymous NateM June 27, 2015 12:42 PM  

"Mr Tsipras has led the country to an absolute impasse,"

It would only be an impasse if the opposition had any power to stop it. This just puts their abject fear put on display. They know people will never vote to accept the terms put forth, and they know they can't stop them from voting to leave the Euro behind. They are just trying some last minute scare tactics to hopefully stop enough people from voting to bail.

Anonymous The other robot June 27, 2015 12:47 PM  

It's amusing that ZeroHedge pulled out the Nazi bogeyman.

Same old playbook.

Anonymous Roundtine June 27, 2015 1:01 PM  

Greece has a lot of options open to it. Default is bankruptcy, but the country doesn't have to do anything to the currency. The ECB could decide to keep the banking system funded, even as Greece sticks it to sovereign creditors. The eurozone members would have to vote to kick Greece out of the euro. Even if kicked out, Greece could still use the euro as the official currency, just as Panama and other nations officially use the U.S. dollar. They have no ability to print the currency, but it effectively functions as a "gold standard" since they must obtain foreign currency through trade. I doubt they will accept the discipline of the market and do what it takes to keep the euro, but that is one of many options.

Blogger Cinco June 27, 2015 1:02 PM  

So the Greek government offers its people the appearance of choice. The reality is that the government can now manipulate the votes to suit themselves or their masters. Remember, nothing in politics happens by mistake.

Anonymous TK421 June 27, 2015 1:02 PM  

Karl Denninger has made the point that there is another option - stay in the Euro, default on/repudiate the debt, then live on a balanced budget going forward.

Blogger Salt June 27, 2015 1:08 PM  

Listening to these politicians; yes, I'll respect you in the morning. Right! I'll wait and see what Greece has done and not listen to what they say they'll do.

Anonymous Brian June 27, 2015 1:16 PM  

Why was this post labeled "#GamerGate"? The other two (EU, Economics) I understand...

Blogger Rantor June 27, 2015 1:35 PM  

Let the Christian among the Ilk pray for Greek independence.

Blogger Aeoli Pera June 27, 2015 2:28 PM looks as if they may be forced to do the right thing.

That's the only reason I ever saw anyone do the right thing, up to and including surrender to Jesus.

Anonymous Grinder June 27, 2015 2:59 PM  

Can Tsipras be trusted? Unfortunately, it's too plausible that most Greeks could vote to still give in to any EU demands. Too many of the wrong people will benefit from extending the suffering of the Greek people so the safe bet is that a referendum result will show Greek capitulation to ECB demands, kicking the can down the road to the next election.

Anonymous BGS June 27, 2015 3:06 PM  

Because they hold the threat of releasing the nigapocalypse kraken on the EU via giving papers to illegals Greece might take longer to exit than UK or France. Le Penn and Génération Identitaire say no to the genocide of Europeans.

Blogger Thucydides June 27, 2015 3:46 PM  

Reality does have a nasty way of intruding. While the Greeks may have been able to dodge the bullet year again, the banks and financial institutions which hold Greek securities and derivatives backed by them now know they are essentially worthless, and will, one way or the other, try to offload them.

The only thing that makes it difficult is that any open attempts to get rid of these toxic assets will trigger a panic as other financial institutions rush to dump their holdings, and the rest of the financial world will also have to do the same with securities backed by the rest of the PIIGS nations as well.

This is what has to happen sooner or later, continuing this farce only makes the process longer and more painful in the end.

Blogger Mark Citadel June 27, 2015 4:08 PM  

Why did Golden Dawn not stand aghast at the referendum? Simple. They know this is their ticket to political power. Once people's pensions are liquidated entirely, Syriza is dead, and the beneficiaries are Golden Dawn.

I had only dreamed this day would come! Greece is the first domino. It is time to destroy the Liberal economic order for good!

Blogger bearspaw June 27, 2015 4:29 PM  

Syriza were elected to make just this decision. Punting to the electorate is a cowardly way out. No way the electorate is going to vote to lose their perks.

Anonymous A Paradigm Is More Than Twenty Cents June 27, 2015 4:40 PM  

Karl Denninger has made the point that there is another option - stay in the Euro, default on/repudiate the debt, then live on a balanced budget going forward.

Karl seems to be confused. "Balanced budget"? What's that again? Greece is the topic, not Germany

Blogger Bard June 27, 2015 4:41 PM  

Do you think they will ever officially use the word "Default"? That would trigger an avalanche of derivative contracts. Personally, I think that has been the plan all along. Rack up the debt, explode the economy, pick up the pieces with a global cashless credit system.

Blogger Bard June 27, 2015 4:49 PM  

Although I do think it highly probable that as there is no honor among thieves, there is no honor amongst bankers either. One group will seize another like circling sharks. Rise and fall of empires all within the adversary's domain, each vying for more power, only working together when convenient. I just don't see how they can seamlessly coordinate this chaos when they are out for maximum personal gain.

Blogger Bard June 27, 2015 4:51 PM  

Too simplistic?

Anonymous ENthePeasant June 27, 2015 5:22 PM  

"You can ignore reality you juast can't ignore the consequences of ignoring reality." AR

Anonymous Godfrey June 27, 2015 5:26 PM  

"Getting out of the Euro and the EU is absolutely the right move for the Greeks, but they're afraid to go ahead and do it."

This is impossible. Socialism needs somebody fleece. If the socialist government leaves the Euro, Greece would be forced to admit bankruptcy and would be forced to rebuild. There is nobody left to fleece within Greece. So they need to feed off the rest of Europe.

Socialism is parasitical system. Unfortunately for the socialists in Greece, their host is dead. And the rest of Europe, for now, is refusing to be fed upon.

Anonymous Godfrey June 27, 2015 5:37 PM  

This is really interesting to watch. The socialists in Greece are screwed. Greece has admit bankruptcy, leave the Euro, the EU and begin the process of rebuilding. However socialism is a parasite system. It can only survive by feeding upon capital previously accumulated or by going into debt. Both options are gone.

The country will collapse into a much more dangerous primitive state. It will only emerge again when the culture embraces sound money, property rights, and the rule of law.

Blogger Robert What? June 27, 2015 5:43 PM  

Something tells me we will be hearing this exact same song at this time next year."Should I stay or should I go".

Blogger rcocean June 27, 2015 6:53 PM  

The conservatives and banksters will run the same scam they did during TARP. Bail us out or the sky will fall! Stay withe Euro or it'll be chaos and anarchy and little puppies and old women will die of starvation!!

Lets see if the Greeks are as smart as the Icelanders or as dumb as the Irish.

Anonymous A Paradigm Is More Than Twenty Cents June 27, 2015 6:56 PM  

Godfrey, Greece could try to become a protectorate of Russia…the Russians would gain some port access, the Greeks would have a new sugar daddy. What's not to like?

Anonymous Satan's Hamster June 27, 2015 7:02 PM  

"The country will collapse into a much more dangerous primitive state."

I visited Greece about thirty years ago. The economy mostly seemed to consist of guys sitting outside cafes, drinking. I can't really see that collapsing to such a primitive state would be so bad for them; ok, they might have to give back the keys to their BMWs, but they wouldn't really need them any more, unless they lived a long way from the cafe.

And, with machines likely to replace humans for most work over the next few decades, that would seem a far more viable future economy than making BMWs.

Blogger J Van Stry June 27, 2015 8:20 PM  

The problem with the Greeks are, is that they're addicted to the government teat. There is no hope for them, no matter what they do, until they get off of the dole and start to work for a living.

Anonymous A Paradigm Is More Than Twenty Cents June 27, 2015 8:41 PM  

Greece could be free of the EU next week, if Putin and the C.I.S. were to take them in. Of course adopting Russians as the new overlords might have some unpleasant details.

Anonymous Jourdan June 27, 2015 8:53 PM  

Maybe they should try a stimulus package of government spending centered around a massive project to re-take Constantinople.

That seems to me to be a win-win situation.

Anonymous Jack Amok June 27, 2015 9:20 PM  

The country will collapse into a much more dangerous primitive state. It will only emerge again when the culture embraces sound money, property rights, and the rule of law.

Wait, which country were we talking about again?

Blogger Anthony June 27, 2015 9:21 PM  

Syriza should have defaulted right after the election; delaying the default hurts Greece and Syriza. Forcing the issue now is good - it means Greece will have a dictator who will restore order before my parents' trip there this fall. (It's my dad's last trip home.)

Blogger James Dixon June 27, 2015 9:23 PM  

One thing is certain, the stock markets will be an entertaining ride come Monday.

Anonymous Rolf June 27, 2015 10:46 PM  

The problem is, and has been for decades now, one of *solvency*, not "liquidity." As long as they demand living beyond their means, nothing that is done is more than one person passing the debt-bomb to someone else hoping it doesn't go off before they get theirs.

And they are not the only nation facing this problem - virtually every other country in the world has some variation on the theme.

Blogger rcocean June 27, 2015 11:31 PM  

Another expected internationalist talking point: "Don't you understand, Socialism is the problem, not the bankers or the EU - stay in the EU and get rid of socialism and everything will be OK" Sounds like the Libertarian solution to illegal immigration. Keep the illegals coming and get rid of the welfare state in 30-40 years and everything will be OK.

Anonymous Eric the Red June 28, 2015 12:32 AM  

Nothing will change in this situation, the can will keep on getting kicked down the road, until and unless the infectious memes that started it, that keep it going are somehow killed off and their source eradicated. Obviously this is not a new thought, but to me it all seems more and more like a disease spreading throughout the land.

Anonymous Frank Brady June 28, 2015 1:47 AM  

Damn, Vox, that's FUNNY!

Blogger Shimshon June 28, 2015 6:03 AM  

In hindsight, I think the Syriza has been masterful. They really have hoodwinked a lot of us. By dragging the charade out as long as they could, they have gotten billions in ELA funds. Unlike the bailout under discussion, this was a genuine bailout (for the Greeks, not the rest of the eurozone). Once the troika freezes ELA, they can rightly be blamed by government for the capital controls. And now this referendum, which many of them are actively campaigning against, is the final FU to the troika.

Blogger James Higham June 28, 2015 6:20 AM  

Now for Brexit.

Blogger Anthony June 28, 2015 11:29 AM  

" To a person with any historical awareness, being told that Greece is on the verge of a default is like hearing Dean Martin is on the verge of a martini. "

" If Ancient Greece invented finance, it also was the inventor of the financial crisis. The first one in recorded history, during the 6th century BC, was so bad that they actually resorted to bringing in an academic – a poet, no less – to clean it up."

Anonymous rubberducky June 28, 2015 7:53 PM  

My take is a bit different than Vox's. It seems to me the current Greek leadership ran on a mandate to:

1) work it out
2) stay in the EU
3) keep the Euro

That's an impossible mandate. What they are doing by this referendum is seeking political cover to either leave the EU or leave the Euro, or both.

I see this call for referendum as a squaring move, to get Greek internal politics right, for what's bound to happen. The Troika has already made moves hinting that they'll take the deal off the table before the vote, rendering the whole thing moot.

But they can't render it moot. Greeks will vote, and I suspect they will hand the government a mandate to do the unthinkable, if I know Greeks right.

They're going to punt the ball to the moon.

Blogger James Dixon June 28, 2015 9:13 PM  

Events continue apace:

They can blame this on the EU and use it to shape public opinion against the offer. Things are going to get very interesting.

Blogger HickoryHammer #0211 June 28, 2015 11:45 PM  

Looking forward to reading the updates on this tomorrow morning. I really thought the Troika would blink.

Anonymous Kiwi the Geek August 18, 2015 2:12 PM  

Why does the Bill & Melinda Gates Foundation need to be replaced at all? AFAIK, everything they do is harmful in one way or another. Vaccines in third world countries? We've discussed at length their ineffectiveness and harm. Subsidizing education? It's all a push toward even greater conformity and prevention of thinking skills. We'd be better off without their 3 trillion.

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