Greek Referendum on IMF/Troika deal

[ingemann]

It would have been so much better if all this were accompanied by a European program designed to somewhat soften the impact of what is coming up on the population. This is what they should have been discussing all this time. And none of it seems likely now.

I was idly wondering the other day whether maybe it would have made sense to propose some form of aid to social services alongside any demanded structural economic reforms of whatever. Bit late now I guess.

The problem was that in the early crisis Greece wasn't the only country going through tough structural reforms, and I'm not talking about just southern Europe, half of eastern Europe was hard hit, in fact the Baltic countries was harder hit in the early crisis. Not that you hear a lot about it, because they made their structural reforms, even through it was hard. Of course while they was harder hit than Greece in the early crisis, they didn't need to reform as much, because they had made many of the reforms earlier.

So if this crisis had only had hit Greece we could have seen that kind of aid, but because half of Europe was hit, there was really not enough money to aid to everybody, and the Greek behaviour didn't place them high on the list as aid recipients.

[Velasco]

He simply has considered the implications of defaulting on IMF and ECB.

He implicitly admitted that the choice is between sudden impact and agony, given that apparently is "set in stone" that both ways lead to impoverishment. Do you think is better defaulting on lower and middle classes?

Ah, but all options include that, I am afraid. There is no choice there. At least none, that anybody - including the current Greek government - would consider.

If there's no choice is because some of the parts involved want it in that way. In case there had been an actual interest in finding some relief for Greece, they would have considered options like the one exposed above. Needless to say that all is morally nauseating.

No Greek government has ever asked for anything that would realistically help its middle class or its poor. Most definitely, THIS Greek government has not. They cared too much about pride and not enough about their own people.

How can this Greek government help realistically the middle and lower class when it's depending on the financial assistance of certain institutions demanding more and more burdens on that sector of the population?  

[Beezer]

First poll?

Greece [KappaResearch/@tovimagr poll]:
· 47.2% vote Yes (for agreement)
· 33% No
· 18.4% undecided
https://twitter.com/YanniKouts/status/614896548791590913

[ag]

He simply has considered the implications of defaulting on IMF and ECB.

He implicitly admitted that the choice is between sudden impact and agony, given that apparently is "set in stone" that both ways lead to impoverishment. Do you think is better defaulting on lower and middle classes?

Ah, but all options include that, I am afraid. There is no choice there. At least none, that anybody - including the current Greek government - would consider.

If there's no choice is because some of the parts involved want it in that way. In case there had been an actual interest in finding some relief for Greece, they would have considered options like the one exposed above. Needless to say that all is morally nauseating.

No Greek government has ever asked for anything that would realistically help its middle class or its poor. Most definitely, THIS Greek government has not. They cared too much about pride and not enough about their own people.

How can this Greek government help realistically the middle and lower class when it's depending on the financial assistance of certain institutions demanding more and more burdens on that sector of the population?  

They should have been asking for social programs helping to deal with the dislocation. It should have been a negotiated exit from euro. Of course, it would have required certain humility.

[ag]

First poll?

Greece [KappaResearch/@tovimagr poll]:
· 47.2% vote Yes (for agreement)
· 33% No
· 18.4% undecided
https://twitter.com/YanniKouts/status/614896548791590913

Would be funny if the people would vote to swallow their pride - with the government urging them not to.

[jaichind]

First poll?

Greece [KappaResearch/@tovimagr poll]:
· 47.2% vote Yes (for agreement)
· 33% No
· 18.4% undecided
https://twitter.com/YanniKouts/status/614896548791590913

Lets be clear.  This poll, which I also posted earlier, was done BEFORE Tsipras announced the referendum.  I suspect the No's will be higher now since Tsipras brought national honor into it.  I still feel that Yes should have the upper hand.

[jaichind]

The economic adjustment Greece must go through will be born by the middle and lower classes.  

For what reason? Why the 'adjustment' must fall on middle and lower classes? Are upper classes exempted in completion of some divine law? Are you sure that there are no other options? Defaulting on the IMF and ECB, for instance? Have you considered the moral and political implications of your assertion?

There are several reasons for this.  First the top 1% are the top 1% for a reason.  They are very good with money and have the financial resources for various financial engineering to shift their assets outside of Greece where they will not be affect by all this as well as shift their assets to hedge against such an event.  Of course this is not to say that the rich in Greece will be untouched.  They will take losses of course but they will be well hedged.  Furthermore there are just not enough of the rich to go around.  Once we factor in how much money they have which is "available" to the government from the rich, the hole is so massive that the only way to dig your way out is to make the middle and lower income population pay.  Of course Greece and always just default on the entire loan, but understand that the economy is so bad now that even a primary surplus is out of reach.  Greece will be locked out international debt markets so get money the government will have to borrow from, guess who, the 1% who will attached conditions on how the economic adjustment will work.  Of course there is the even bigger factor that the wealth held by the middle and lower middle income as a result of devaluation will be worth a lot less while the 1% already have most of their assets out of the country and any assets they have in the country would be structured to hedge against such an event.

So in summery, continue with status quo means massive cuts in welfare state and pensions which impacts middle and lower middle class.  Go for devaluation means non-1% Greeks will have lower wealth will now have real wealth and real incomes much lower than today while the 1% will be affected a lot less, certainly in percentage terms. 

[jaichind]

http://www.bloomberg.com/news/articles/2015-06-27/greeks-working-on-deal-blindsided-by-twitter-post-on-referendum

"No one was more surprised about Greek Prime Minister Alexis Tsipras calling a referendum than his team of negotiators in Brussels."

Wow.  Just wow.  I have no idea why Tsipras wants to do this in a way that only serves to anger the rest of the the EU for no real benefit for Greece, other than perhaps the political angle of himself as tragic hero defending the honor of Greece.   Tsipras  could have at least told his counterparts earlier yesterday what he was about to do.  There were plenty of chances even yesterday.  

For example, this might been a good time to mention it to Merkel and to explain why it would be necessary to save his political skin and get a deal.

She seems to be in a good mood.

Perhaps his own party is so divided on this and the extremists so radicalized that any deal will destroy him political so he might as go down as a hero fighting for Greek honor.

[jaichind]

They should have been asking for social programs helping to deal with the dislocation. It should have been a negotiated exit from euro. Of course, it would have required certain humility.

This will not work.  What Tsipras promised was that Greece can stay in the Euro and somehow the austerity program go away and the debt forgiven.  So to start down the path of Euro exit on his own will destroy him politically just as agreeing to more austerity with the EU will do the same.

[Velasco]

They should have been asking for social programs helping to deal with the dislocation. It should have been a negotiated exit from euro. Of course, it would have required certain humility.

Was Grexit a starting point in the bargaining between the new Greek administration, the EU and the other institutions? I'd swear that some sworn statements were made, assuring that Greece would stay in the Eurozone and in neither case send to the cold. I'm not sure what kind of humility is some people asking for. Given how Greeks have been treated by the Troika and the current Greek administration demonised, certain statements are quite understandable. Maybe Tsipras and other cabinet members should have been a bit more cautious with words but... 'humble'?

[jaichind]

Greek Parliament to vote in 10 minutes to vote on Referendum. 

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If the bankers don't want to negotiate with a left-wing government because they'd rather destroy it, then Greece should just declare bankruptcy and stop all payments.

[jaichind]

Greek Parliament to vote in 10 minutes to vote on Referendum. 

Ooops.  I got this wrong.  It seems the ND MPs walked out of the debate so a 10 minute recess is called. Of course it is almost 1am in Athens so I am sure a vote has to come soon.

[jaichind]

At the Greek Parliament debate Samaras makes a point that I am also confused about as well.  It seems yesterday the two sides were actually getting close to a deal.   The EU asked for a primary surplus of 1% of GDP this year and 2% 2016, compared with 3% and 4.5% in the original bailout plan. Greece agreed.  If so the rest is mostly details on how to get to this primary surplus.  So why did Tsipras throw this last minute bomb?  Only thing I can thing of is his own party would agree to this and that Tsipras will be destroyed if he tries to bring this deal up for a vote.

[ingemann]

At the Greek Parliament debate Samaras makes a point that I am also confused about as well.  It seems yesterday the two sides were actually getting close to a deal.   The EU asked for a primary surplus of 1% of GDP this year and 2% 2016, compared with 3% and 4.5% in the original bailout plan. Greece agreed.  If so the rest is mostly details on how to get to this primary surplus.  So why did Tsipras throw this last minute bomb?  Only thing I can thing of is his own party would agree to this and that Tsipras will be destroyed if he tries to bring this deal up for a vote.

The only sane explanation are that the Greek government are playing a game of chicken.

[jaichind]

Some of the things Tsipras says in his speech just makes me laugh.  Such as

1) he did all he could to find a “mutually beneficial” agreement -> as in I am going renege on what my predecessors promised in in return you guys keep on paying
2) Greece negotiated with “open cards” -> so open that he forgot to tell everyone including his own team that he will call a referendum
3) only thing Greeks need to fear is fear itself -> Tsipras as new FDR ?

[jaichind]

Greek Officials Warn "Some Banks May Not Open Monday" and "Stock exchange might not open Monday"

[ag]

They should have been asking for social programs helping to deal with the dislocation. It should have been a negotiated exit from euro. Of course, it would have required certain humility.

This will not work.  What Tsipras promised was that Greece can stay in the Euro and somehow the austerity program go away and the debt forgiven.  So to start down the path of Euro exit on his own will destroy him politically just as agreeing to more austerity with the EU will do the same.

Well, he volunteered to becom the PM in these circumstances. Being destroyed politically is an implication. If he was worried about it, he should have avoided taking this office.

[ag]

If the bankers don't want to negotiate with a left-wing government because they'd rather destroy it, then Greece should just declare bankruptcy and stop all payments.

 It, probably, will, anyway. That is pretty much a given at this point. Good luck to Greeks. Unlike them, the "bankers" will manage.

[ag]

They should have been asking for social programs helping to deal with the dislocation. It should have been a negotiated exit from euro. Of course, it would have required certain humility.

Was Grexit a starting point in the bargaining between the new Greek administration, the EU and the other institutions? I'd swear that some sworn statements were made, assuring that Greece would stay in the Eurozone and in neither case send to the cold. I'm not sure what kind of humility is some people asking for. Given how Greeks have been treated by the Troika and the current Greek administration demonised, certain statements are quite understandable. Maybe Tsipras and other cabinet members should have been a bit more cautious with words but... 'humble'?

When you go begging for money, you do well to be somewhat restrained in insulting the people you ask to give you the money. Seems like common sense.

But the point is, actually, it would have been a lot better, from the standpoint of an average Greek, if Grexit had been negotiated by the previous Greek government. Because what is happening today seems to be a huge disaster, into which Greece is driven headlong by a bunch of headstrong amateurs.

This has nothing to do with being leftist or rightist. But everything to do with caring a lot more about national pride than about one's own people.

[jaichind]

Referendum Proposal passed 178 vote for 120 against.

[jaichind]

When you go begging for money, you do well to be somewhat restrained in insulting the people you ask to give you the money. Seems like common sense.

Yeah.  If you give someone a timeline of all the functional events since Jan between the new Greek government and the various other stakeholders and exclude any technical details up to last night, one would think it is the EU that is begging Greece for money.

[jaichind]

What is ironic about this referendum is that it asks for Greek people to vote on a proposal that might no longer be on the table.   According to IMF chief Lagarde ``legally speaking, the referendum will relate to proposals and arrangements which are no longer valid.''  So I am not sure what this vote will accomplish.   Say the vote is yes, what the IMF might say is "that deal is so last week, this is the new deal."

[Velasco]

When you go begging for money, you do well to be somewhat restrained in insulting the people you ask to give you the money. Seems like common sense.

Yes, in spite of the fact that the damage done to Greece by the Troika can be deemed criminal, it's possible that calling the IMF a "criminal gang" is not politically wise when you are in a disadvantageous situation.  That's why I said that possibly they should have been more cautious. However, you don't take into account that Greeks have been offended by those asking them for 'humility'.

But the point is, actually, it would have been a lot better, from the standpoint of an average Greek, if Grexit had been negotiated by the previous Greek government. Because what is happening today seems to be a huge disaster, into which Greece is driven headlong by a bunch of headstrong amateurs.

This has nothing to do with being leftist or rightist. But everything to do with caring a lot more about national pride than about one's own people.

Samaras negotiating an exit from the Eurozone in acceptable conditions for Greece? That sounds like science fiction. Given that many economists admit that the debt is impossible to pay in its entirety, I think it would have been more reasonable negotiating a debt restructuring in exchange for actual reforms which set the foundations of a future growth and allow running a reasonable surplus without strangling people. That way Greece could repay at least a part. Instead, the "institutions" demand more and more cuts. You say the question has little to do with the left and the right, but there's an obvious ideological motivation behind the stubbornness in persisting in recipes that have proved to be a failure. Such intransigence is a crime. If winning the ideological battle implies permitting a Grexit and opening a new period of uncertainty in the Eurozone, they seem ready to assume the potential risks. Can anybody say with honesty that the risk of contagion is totally neutralised?  

[Hydera]

KKE voted against approving the referendum?

Are they going to be contrarian even towards their own beliefs?