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Saturday, August 15, 2015

"So, In The End, It Depends On The Greeks!"

I was very much impressed by the brief statement to the press ("doorstep" is the new lingo for it) by Finance Minister Euclid Tsakalotos after agreement on the 3rd bail-out program was reached. I draw particular attention to the last paragraph which I put in bold. That paragraph is the key to the success or failure of any program. 

"After six months of very difficult negotiations with lots of ups and downs, we finally have an agreement. This agreement is one that many people have worked very hard for. I would like to thank from the bottom of my heart the people in Greece and the technical teams, the advisors that have worked for this deal, and also the institutions. Many Europeans have worked for this deal, whether representing their country or within the institutions themselves. And this deal is something we hope will take Greece forward. It takes Greece forward in the sense that the financial system should be much more stable from now on. There is a promise of recapitalization of the banks without any depositor having any bail in or anything to worry about. So, the process of reversing the negative effects of capital controls will start very quickly and will speedily return the banks to where they were before and hopefully on a far firmer footing.

This deal, we have never hidden the fact, has many opportunities. It has the opportunity for the Greek people to reform their public sector, to address the issues of corruption, to address the issues of tax evasion and a number of very important structural reforms. At the same time, it is a deal that has many problems for many social groups. How we will address those problems depends on how the government presents proposals that the institutions are willing to listen on the economy as a whole – there will be a development plan which will be presented in March 2016. At the same time, there will be plans for instance for the agricultural sector, for farmers, much before that to hopefully develop the agricultural sector. 

So, in the end, how good this deal is, it depends on how the Greek society, the Greek state, the Greek economy, social actors, economic actors respond to it. Any deal is only as good as what you make of it. Let’s hope that the Greek people will be able to make the best of this deal, to make the best of the reforms and the ability to reform and mitigate any negative consequences that surely exist within it."

15 comments:

  1. I have a slightly different interpretation. For me, it is a damning indictment of Greek society/political elites that it has taken a seven-year-long depression, a 25%+ decline in economic activity, three massive bailout loans the terms of which make them in reality disguised handouts from the taxpayers of other euro zone states, an extended 'bank holiday', ongoing capital controls, and a humiliating state of almost complete surrender of sovereignty to reach the point where a Greek finance minister actually *says* something which sounds semi-reasonable - i.e. not delusionally banging on about the forces of neoliberalism/neocolonialism arrayed against Greece and not resorting to the tried and trusted Greek post-independence standby of "blame malign foreign powers for all our problems" - to other Europeans.

    So, Tsakalotos is now 'talking the talk': good. Let's see whether he, the Nationalist/Socialist coalition in office, the bureaucracy, and Greeks from all walks of life are prepared to 'walk the walk' by making the appropriate sacrifices, renouncing unearned privileges, cracking down on/refraining from corruption and tax evasion, and generally reforming and modernizing their state.

    Given what has happened over the past few months, I don't see a fourth bailout under any circumstances. I reckon that Tsakalotos and his fellow class warriors have figured this out also. Their wet dream - for their country to subsist, unreformed, on perpetual fiscal transfers from more productive countries within the EZ - is now exposed as a fantasy. They will sadly have to make do with the 3-4% of GDP in net transfers that Greece is still receiving from the EU in structural and cohesion funds - more than three decades since it joined the club.

    The new tone should not be applauded because it is not IMO the result of any Damascene conversion to sound economic management. On the contrary, government ministers have only eliminated the aggressive rhetoric because ever since Varoufakis' and Tsipras' exit bluff was called they have been cornered and have been compelled to face reality squarely in the face. They now realize that denouncing their creditors as "looters" and "criminals" will only make it more difficult for them to implement the reforms they have signed on for, the non-implementation of which will certainly see future loan tranches withheld and their country tumbling out of the euro zone.

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  2. I will also believe in Greece the day they "walk the walk". I will believe in Greece the day Tsipras hold the speech that Klaus wrote for him in May, and the Greek audience applauds him. I will believe in Greece the day they publish a convincing and long overdue (now March 2016) plan for getting out of the mess they have created (they had 2 years in opposition and 7 months in government to make it). Until such time Klaus, I find your proposal for debt adjustment premature.
    And the first time any member of any Greek government say that the changes were forced upon them by the Quadriga, I will lose all potential trust.
    Lennard

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  3. :ditto: Flipper304

    No mention of how the political actors might respond to it, so no sign of political leadership here, shouldn't surprise I guess.

    But he's already lined up who to blame when it goes pear shaped - Greek state (civil servants), Greek society (is that just the elites and celebrities, or does it include the hoi polloi), social actors (whatever they are), economic actors (private enterprise) and the Greek people at large - i.e everyone 'cept us.

    Tsakalotos is just another lefty echochamberist. Sure he can talk the talk with his faux upper class British accent (how's his Greek). Swan around with his mates from the Warsaw Pact intelligentsia. Get his missus a job advising the BoG while he has drinks with Messrs Adams and .McGuiness in Dublin. But what has he actually ever done - did he ever run a business, or a government department, or command an air force squadron, or invent a new anything that actually delivers some useful good or service. None of the above - just another Greek academic windbag.

    In some respects I preferred Vara to Tsaka - there was a perverse 'honesty' about Vara, one could always trust him to do the wrong thing, But with Tsaka I get the impression he talks with his fingers crossed behind his back,

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  4. A change of mind in Syriza or Greece? Not likely, they reacted to one thing only, Mr Scheubles statement that if they want to leave the EZ, "feel free to do so".

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  5. Hello All,

    Well in softly following everything from my vacation, i am quite sure the implemtation of this new bail out is going to happen. And since June July where i made some forecasts, so far i have ben on the spot. Today i just read and formally that the privatisations of the 14 peripheral airports has moved foward. Seems everything is going to plan. Let's see what other privatizations will also move foward which is the key to the recovery. I also read Cosco offer 50 bil euro for Trainose which is also a breathe of fresh air.

    As for us on the ground things have changed alot and everyday life is and will continue to be harder. I a have prepared a windfall, for the new taxes come Sept.

    Hope u are well Mr. Kastner.

    Sincerely,
    V

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  6. Klaus,

    copied from Erik de Sonville's blog

    Could this be the reason breathed into Syriza's revolutionary spirit, you seem to have been occasionally wondering about? He is correct, the introductory comment of the Jan-June report is quite interesting. That's link 3. Ditto is the report for January-March, by the way.

    Surely enough there is expertise available in Greece. See for instance the reports (2) of the Greek Parliamentary Budget Office. Excellent work, under the direction (1) of Prof. Panagiotis Liargovas, currently at the University of Peloponnese. The full reports are very technical and long reading, the 12-page Executive Summary for Apr-Jun 2015 (3) can give an idea.
    (1) http://www.pbo.gr/en-gb/organizationoperations/director-scientificcommittee.aspx
    (2) http://www.pbo.gr/en-gb/reports.aspx
    (3) http://www.pbo.gr/DesktopModules/EasyDNNNews/DocumentDownload.ashx?portalid=3&moduleid=5206&articleid=7822&documentid=3505

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  7. I am not so optimistic about the process of privatising the airports. Fraport wants to renegotiate the concessions.

    There will probably also be a lot local opposition against this scheme, as for instance on Crete:

    http://www.chaniapost.eu/2015/08/20/municipality-of-chania-against-the-privatization-of-daskalogiannis-airport/

    Ans what will the unions say and do? They can close down the airports and create trouble as they like to do.

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    1. "And what will the unions say and do? They can close down the airports and create trouble as they like to do" - well, maybe Fraport realized in the ast 6 months that this is a risk and that they ought to negotiate additional guarantees.

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  8. So once again the Greeks must trudge wearily to the ballot box. As I understand it many Greeks choose/have to vote in the place where they were born, so for them it may be a long trudge, drive, flight, ferry or otherwise ride.

    What about Greeks who have been chosen to seek employment overseas to make ends meet, can they vote without returning home? No. Didn't think so.

    I understand Tsipras' rationale for calling a 'snap' election, but what happens if he can't get a clear majority even with the 50 giveaway seats Ψ²

    Would it be another unstable/paralytic government that can't implement reforms without collapsing. This time its to be hoped that the Greeks will make a more informed decision - which party can best manage the countries Finances and it's Economy to get us out of this seemingly perpetual crisis - without resorting to emulating circus performers and clowns.

    TE

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    1. In Reply,

      Greeks living abroad can cast their vote at their local greek embassies. As an American in Greece I vote at the American embassy.

      As for the elections and the what is to happen. Well the great majority of parlament now is pro eu. We have a new agreement and whatever the pie split of the parties is, a cohelision will be formed. The agreement will be implemented. It will be rocky but it will be implemented. The major drawback is that which could have been done, if our politicians got together like other countries and did what was necessary, we would be on the road to recovery after 5 years of recession. Unfortunately for us we are looking at 10 years of recession. But even if it is painful as long as it gets done it is worth it. Better late than never.

      The agreement will be closely followed and the majority is nonfiscal objectives. No objective no money. And basically it means the privatizations, revamping the salary of the public and seperating Tax and Statistical services as seperate entities without political control. Those three things will change the country alone and i won't go into detail as to why. Everything else will fall into place.

      Sincerely,

      V

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    2. Is this correct? My wife always said that voting outside Greece was impossible.

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  9. Invest in Greece, the paragon of political and economic stability in south-east Europe. Provided you consider south-east Europe to consist of................Greece. Likewise they make the best souvlaki in the world.

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  10. If, in fact, it depends on the Greeks they are in trouble. Greek voters, politicians and economists (not only Greek) have, beyond any doubt, proven that they are unable to govern the nation. Nothing surprising in that. their reaction to the latest crises is the usual, to do absolutely nothing.The election mode is again causing the nation to go into total coma, while waiting for an outside solution to the problems. That will not prevent them from claiming that the suggested solution is wrong, on the contrary.
    My, partly joking, suggestion for a High Commissioner for Greece becomes more and more valid. Given the track record of the previous actors, may I suggest a duo of a Certified Public Accountant and a banker? I am convinced they could do a lot better. I'm also convinced the CPA/banker duo would be much cheaper than any of the previous economists.
    Lennard

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    1. Well, I still remember something about banking and if you are a CPA we could form a team...

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  11. No , I'm not a CPA, as an engineer I have suffered and benefited from CPA's and bankers most of my career. It is not yet time for engineers, that time may come if a governing body presents a plan. Bankers, CPA's and engineers can then discuss it. Does it do the right thing? Is it feasible? Do the resources tally up? It's sort of the CPA saying , we have lots of bottles of gin, the entrepreneur saying, I could sell a new product called "gin and tonic" if we had tonic, and finally the banker saying, I can get you the money for tonic if you can show me a good business plan.
    If you engage in it, bear in mind: Since 1974 the economy of the Hellenic Republic has gone down the drain, at the same time lawlessness has increased. During that time Greece has had 14 Prime ministers sharing a total of 8 law degrees and 7 economy degrees, with a couple of scientific degrees thrown in for good measure. The best of luck, and may the best man win.
    Lennard

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