Greece - SYRIZA, in the margin of the Eurozone

[Rowdy]

All their leadership has done is involve in populism and fool their public and make BS claims and made tall and useless promised about default.

A responsible govt should have stuck with their reform agenda and should have made at least some effort to get back on track instead of blaming others and promote victimhood.

And a responsible govt would not hide behind a referendum specially when they know their population is full of gullible idiots

Their PM reminds me of Kejru.

 

[jouni]

Russia and Greece are masters in blaming others of their own problems. Maybe some national soul searching is needed.

 

[jouni]

All their leadership has done is involve in populism and fool their public and make BS claims and made tall and useless promised about default.

A responsible govt should have stuck with their reform agenda and should have made at least some effort to get back on track instead of blaming others and promote victimhood.

And a responsible govt would not hide behind a referendum specially when they know their population is full of gullible idiots

What has happened to you? You write posts that make sense...

 

[Rowdy]

the Eurozone is not something solid , but floating.
Always will be the question of .. who is next..

The Eurozone was always a floating entity because You had always political autonomy.
The question is never "who's next" as even France can leave if it wants to (hypothetically)
The question is , AT WHAT COST
that is the question ... the PIIGS(Portugal,ireland,italy,greece & spain) can leave the Euro any time the question is at what cost.
And that is why everyone is looking at Greece and that is why greece will be PUNISHED .... the costs have to be so high , no one will dare leave the Euro.
You are now germany's B*tch.

 

[aliyah]

india too faced similar problems in 1990s but that time india had the best pm ever p.v.Narasimha Rao in command he not only saved but put india on right track

 

[pmaitra]

I am sure creditors will line up to give credit to a proud unapologetic defaulter

I am sure the creditors were not doing any charity.

• The creditors either were not informed of the faulty evaluation of Greece or knowingly ignored. I will explore the latter possibility later.
• Then when Greece due to its lack of fiscal discipline began to slide, the creditors got scared, and wanted their money back, and forced austerity.
• Austerity drove up the Debt-to-GDP ratio, further stifling the economy and production. No one likes to work for free, just like many of us don't like giving free stuff for no work.
• Now, the creditors are suffering.

Coming back to the second option, assuming the creditors deliberately gave credit to Greece and had Greece's financial evaluation fudged up; why did they do that? They knew Greece was going to go belly up, and they wanted Greece to go belly up, so that they could take control of Greece's assets.

Their PM reminds me of Kejru.

To me, the former PM is responsible, not the current one.

 

[pmaitra]

America's Greece: Who owns Puerto Rico's debt?

 

[pmaitra]

The Greek crisis: 9 questions you were too embarrassed to ask
Updated by Dylan Matthews on June 30, 2015, 9:22 a.m. ET

Greece is falling apart. The unemployment rate is 25 percent — down from a peak of 28— and four in ten children live in poverty. In the wintertime, Athens is overcome with smog as residents too poor to afford electricity burn everything and anything they can to stay warm. The income of the country's rich, once inflation and taxes are taken into account, is back where it was in 1985. The poor are back where they were in 1980. And this weekend, things hit a new low, as fear of a total financial meltdown grew so widespread that Greeks emptied over a third of the country's ATMs on Saturday in a desperate attempt to pull out as much money as possible before the banks collapse.

The crisis is at a pivotal moment now, but it has been brewing for years. Despite what you may have heard, it's not happening because the Greek government spent beyond its means and now is suffering the consequences. It's happening because Europe isn't sure whether it wants to be one country or many, and has in the meantime adopted policies that have created a humanitarian catastrophe for the Greek people.

1) What, in as few words as possible, is happening in Greece?

The 2008 financial crisis blew a hole in Greece's budget, which was already not in great shape. The Greek government took billions of euros in bailout money in 2010 from the European Union and International Monetary Fund. The lenders required Greece to implement crushing spending cuts and tax increases, which contributed to skyrocketing unemployment and plummeting living standards.

Since then, Greece has faced a choice: either stick with the bailouts and endure the pain of austerity, or reject the terms of the bailout — likely leading to default and, possibly, leaving the eurozone entirely.

Greeks elected a new government in January that tried for a third option: renegotiating the terms of the bailout to require less severe austerity measures. But this failed, partly because Greek leaders have no leverage, and partly because European politicians feared that granting Greece's demands would encourage other countries who've accepted bailout money — like Spain, Portugal, or Ireland — to rise up as well.

This new Greek government has punted the decision to voters: On July 5, Greece will hold a national referendum on whether to accept lenders' latest proposal and keep going with austerity, or reject the proposal and, in all likelihood, abandon the euro.

2) Why has the euro been so bad for Greece?

When Greece joined the euro in 2001, confidence in the Greek economy grew and a big economic boom followed. But after the 2008 financial crisis, everything changed. Every country in Europe entered a recession, but because Greece was one of the poorest and most indebted countries, it suffered the most.

Commentary: No one could have predicted the 2008 crisis. The 2008 crisis is the first to blame for the Greek crisis. Greece's fiscal policies are second to blame. ​

If Greece didn't use the euro, it could have boosted its economy by printing more of its currency, the drachma. This would have lowered the value of the drachma in international markets, making Greek exports more competitive. It would also lower domestic interest rates, encouraging domestic investment and making it easier for Greek debtors to service their debts.

But Greece shares its monetary policy with the rest of Europe. And the German-dominated European Central Bank has given Europe a monetary policy that's about right for Germany, but so tight that it has thrust Greece into a depression.

So Greece is squeezed between a crushing debt burden — 177 percent of GDP, about twice the level in the United States — and a deep depression that makes it difficult to raise the money it needs to make its debt payments. Any tax hikes or spending cuts enacted to help pay back the debt would just worsen the depression.

So, for the last five years, Greece has been negotiating with the European Commission, the European Central Bank, and the International Monetary Fund ("the Troika") for financial assistance with its debt burden. Since 2010, the Troika has been providing Greece with loans on the condition that the country raise taxes and cut spending. Those policies have contributed to crisis-level unemployment and poverty, causing massive resentment among ordinary Greeks. They've also hurt the country's economy so much that Greece can't raise money to pay off its debts on its own, and will keep needing bailout money.

Without the euro, Greece could handle all this without external help. But the euro means it can't use monetary policy to help itself out, locking Greece into this horrible cycle.

3) This sounds like a disaster for Greece. So it's all Europe's fault?

It's mostly Europe's fault, but Greece isn't blameless. The financial crisis revealed that its government had been, for years, borrowing more than it reported publicly, meaning the country was running bigger deficits and racking up more debt than previously thought. As an EU member, it was required to limit its deficits to 3 percent of GDP and its debt to 60 percent of GDP. But Greece enlisted banks like Goldman Sachs and JPMorgan Chase to evade those rules and borrow money under the radar to enable more spending.

The discrepancy was massive. On November 5, 2009, the newly elected socialist prime minister, George Papandreou, admitted that the year's budget deficit would be 12.7 percent of GDP, almost quadruple the 3.7 percent the outgoing right-wing government had projected. The country's finances were in much, much, rougher shape than anyone — especially anyone financing the Greek government by buying its bonds — had realized.

At the same time, tax evasion by Greek citizens and businesses was, and remains, a huge problem. A 2012 study comparing Greek bank account data with government tax data found that the true income of the average Greek person is about 92 percent higherthan the income they report to the government. Tax evasion accounted for half of Greece's 2008 deficit and a third of its 2009 deficit.

All that being said, the biggest factor in Greece's collapse into crisis was the global recession, which was enough that even countries like Spain that were running budget surpluses before the crash found themselves in debt crises. Greece's budget mismanagement was bad, and its tax evasion is a chronic problem. But don't get distracted: the real root of the crisis is that economies across Europe collapsed, the European Central Bank acted in the interest of rich northern countries like Germany and against the interest of poorer southern countries like Greece, and the Greek people paid the cost.

4) How has Greece's new leadership handled the crisis so far?

Following their landslide victory in January 2015, Syriza and its leader, now-Prime Minister Alexis Tsipras, made it their top priority to renegotiate the terms of the bailout and ease up on the austerity program. This was what they were elected to do, but it was an impossible task, because Syriza has no leverage.

Commentary: The bailout was predatory. It was done to give a stronger case for the creditors to take control of Greek assets. They knew their austerity measures were going to fail, but pushed their economic conditions nonetheless.​

A few years ago, a Greek exit from the euro would've been a catastrophe. Foreign banks held so much Greek debt that a Greek default would've threatened to sink them. There was also a chance that a default would drive up interest rates for other struggling European countries like Portugal, Spain, and Ireland and force them to default. But now foreign banks aren't holding that much Greek debt, and European lenders are backing up Portugal, Spain, Ireland, and the like, so they have little to worry about. A Greek default would mostly just affect Greece. That denies the Greek government its most powerful tool in negotiations: a threat to just pick up and leave the euro.

The Syriza government tried to renegotiate the terms of the bailout all the same. But, predictably, the negotiations went poorly for the Greeks, and after a February stand-off Greek leaders made a number of concessions — giving up core promises such as a minimum wage increase — to extend the bailout for another four months, austerity and all. It was a huge defeat for Syriza.

It's now time to negotiate another extension, but after Greece made even more major concessions, European lenders still judged them to be insufficient. Eventually, the Greek government gave up trying to reason with its lenders. Tsipras put the lenders' latest proposal — which he calls "unbearable" and German chancellor Angela Merkel calls "extraordinarily generous" — up for a national referendum on Sunday. Voters will decide whether to accept lenders' demands and continue with austerity, or reject them and thus likely default.

In the meantime, Greece has announced it will not make a required payment to the IMF on Tuesday. The big three rating agencies — Fitch, S&P, Moody's — say that failing to make the payment will not constitute a formal default on Greece's debts. But a failed payment will definitely spook investors and cause bond interest rates to spike, which isn't something Greece needs now of all possible times.

Can we get a Greek musical break?

Of course. Here's Vangelis with the "Love Theme" from Blade Runner:

[video omitted]

It has recently come to my attention that there are Greek musicians other than Vangelis and Yanni. Here's Diamanda Galás's cover of "I Put a Spell on You":

[video omitted]

5) If austerity is so much of the problem, then why is Europe imposing it on Greece? And why are European lenders being so inflexible?

Here's how European lenders see it: Some of the money the Europeans are lending to Greece comes from the IMF and the European Central Bank. But a lot of it comes from other European taxpayers, particularly German taxpayers. If you're a German politician, this puts you in a tough spot. You don't want Greece to collapse in upon itself, because you believe in the European project and don't want to see the eurozone break up, because you don't want to spur other countries to leave, and because you're a human being who doesn't like needless human suffering.

Commentary: Sorry Frau Bundeskanzlerin, an Empire costs money. If you want an Empire lapping the Aegena Sea, you gotta pay for it. Or, let go of Greece. You don't want to lose it, but you cannot afford to keep it. ​

But you also don't think it's fair to use your own people's money to subsidize a country that's shown itself to be really bad at basic state functions, like collecting taxes, that has traditionally handed out government jobs as political favors, and that engaged in outright fraud to enable reckless amounts of borrowing during the mid-00s boom years.

It doesn't seem fair, and it also doesn't seem sustainable. What's to stop Greece from running up its debt again in the future and provoking a similar crisis? From European lenders' point of view, the way you do that is by making deep reforms a condition of bailout money. That has the side benefit of making it easier to sell aid to your German voters. Sure, we're giving the Greeks money — but we're making them get their shit together too.

That's what the Europeans say, but it doesn't make a whole lot of sense. Nobody disagrees that Greece needs major reforms. But major reforms don't need to go side by side with destructive, economy-wrecking austerity measures. They also don't need to go alongside a European Central Bank that hasn't been willing to do what it takes to grow the economies of Greece and other struggling European nations.

Basically, what's going on here is that Germans and other northern Europeans are acting in their perceived self-interest. They think the European Central Bank's monetary policy works for them, and don't seem too concerned that it could be causing a depression in Greece. And because Germans control the ECB, and monetary policy is made for Europe as a whole, Greece is helpless. It has to accept the policies the German-dominated ECB adopts. Greece could cope if the Germans agreed to compensate for this destructive policy regime by giving the Greek people cash to boost their economy and get back on their feet. But Germans and their allies won't do that, both because it's domestically unpopular (German voters don't care about suffering abroad any more than voters anywhere do), and because of a strong moralistic streak that insists that the Greeks have sinned and have to atone.

6) Why is Greece imposing these odd bank rules and ATM restrictions?

The Greek government has officially imposed capital controls to try to contain the economic crisis. That means, for example, that it has shuttered all banks until after the referendum on the bailout deal, and issued strict regulations on other use of financial institutions. ATM withdrawals are limited to €60 per day, per account. Transfers of money outside Greece are banned; exceptions require Finance Ministry approval. Pension and wage payments proceed as normal, as does internet banking and debit card transactions.

The basic reason behind the rules is to prevent bank runs. If people take too much cash out of the country's banks, then they'll cease being able to make loans and the country will fall into a financial crisis.

But if you're an individual Greek citizen, you have strong reasons to want to take your money out. Deposits could be raided to help keep banks solvent, as happened in Cyprus. Or Greece could abandon the euro, convert all deposits into its new currency (probably the drachma, the country's pre-euro currency), and then devalue that currency dramatically.

7) Is it possible that defaulting and leaving the euro is really Greece's least-bad option?

It really bears repeating what a humanitarian catastrophe Greece is enduring. 25 percent of people are unemployed. Youth unemployment is near 50 percent. Hunger among Greek children has risen. And the economy is set to grow a paltry 0.8 percent this year. People will continue to endure immense suffering for years if austerity does not end.

Greek leaders need to do something; anything to make austerity less severe is desirable. If Greece were allowed to run a budget deficit and spend on programs to create jobs and offer relief to the most desperate citizens, then its social crisis would lift. Fiscal stimulus works and if a country has ever needed it, it's Greece right now. But the terms of Greece's bailout forbid it.

If the Europeans don't relent, leaving the euro may just be the best option left. In the short-term, this would be a rough path. Very, very stringent capital controls would be needed to keep banks solvent, and if they weren't enough, an all-out financial crisis would ensue. A lot of wealth would be wiped out as the value of drachma-denominated assets plummeted. There's a chance of dangerous inflation.

But leaving the euro at least provides a path toward an actually growing economy for the country sometime in the next decade. The Greek people would finally have control over their monetary policy, letting them devalue their currency, boost exports, and get back on track.

8) So what happens now?

If the referendum passes, then, assuming European lenders stick by their old offer, Greece goes back to austerity and muddles along the way it has been. But that may not be a safe assumption. It's not at all clear that the Europeans' last offer remains on the table. The Financial Times' Wolfgang Münchau predicts that a "yes" vote wouldn't lead to a bailout extension, but instead to Greece trying to maintain capital controls and introduce a parallel currency to the euro. Greece isn't allowed to print euros, but it could declare that the country has two official currencies, and start printing the other one and using it to shore up banks, pay bills, etc. That way, they wouldn't technically leave the euro. Euros would still be legal tender. But they could get most of the benefits of leaving the euro.

If the referendum fails — or if non-payment of the IMF loan or some other catastrophe happens before the referendum and forces dramatic, immediate action — things are even less clear.

The European Central Bank currently provides emergency loans to Greek banks to keep them from failing. It will likely stop doing that if Greece stops cooperating. That means Greece has to do something to stop Greek banks from running out of money and collapsing. At best, that'll look something like the capital controls that have already been implemented. Those could theoretically be enough to keep money in Greece and the banks humming along, even without European support. A "bail-in" in which money is taken from depositors is also possible.

The other, more dramatic option would be to reintroduce the drachma, either as a parallel currency to the euro or as a full replacement (Münchau predicts full replacement). It'd be a painful adjustment, but it lets Greece get out of its depression the same way the US, Canada, the UK, Sweden, Israel, and other countries with their own currencies got out of the 2008 financial crisis: through big, aggressive monetary policy.

Greece would be the first ever country to leave the euro, a disastrous result for the project of European integration as a whole, not least because it could embolden voters in other struggling countries like Spain to elect left-wing or populist right-wing governments and try to leave the euro themselves.

9) Isn't there another option here? Maybe something that is at the moment politically untenable but theoretically could really work?

There is another option, yes. It's not one that European policymakers are really considering, but perhaps they could: become more like the United States. Here in the US, as in Europe, we have states with weaker economies that require endless financial assistance. Only, in the US we don't call them bailouts, and we don't treat it as a crisis.

Every year in the US, richer states pay more in federal taxes than they get back in federal spending, and poorer states get more in federal spending than they paid in federal taxes. South Carolina, for example, gets $5.38 back in federal spending for every dollar it gets in taxes, according to a WalletHub analysis. Last year, it was $7.87. But we don't consider that money a bailout and we don't demand that South Carolina impose crushing austerity measures. The arrangement is quite stable; it's been well over 150 years since South Carolina last formally considered an exit from the union.

Now, the US is a political union as well as economic union, and the EU is only the latter. But the goal of European integration is to get it there, and one thing that entails is real fiscal union, including huge, unlimited, never-ending transfers from rich areas of the union to poor ones. It's politically tough to stomach, but that's the deal.

If European lenders really cared about the European project, they'd be trying to persuade their countrymen to move closer to European super-statehood, big transfer to Greece and all, rather than punishing Greece. And the more spending and tax policy Europe takes on as a whole, the less it has to rely on the Greek government's poor tax collectors and corrupt bureaucrats. The reforms the lenders want so desperately would come naturally. They just need to lend Greece a hand.

Timothy B. Lee contributed to this article.

 

[pmaitra]

The Eurozone was always a floating entity because You had always political autonomy.
The question is never "who's next" as even France can leave if it wants to (hypothetically)
The question is , AT WHAT COST
that is the question ... the PIIGS(Portugal,ireland,italy,greece & spain) can leave the Euro any time the question is at what cost.
And that is why everyone is looking at Greece and that is why greece will be PUNISHED .... the costs have to be so high , no one will dare leave the Euro.
You are now germany's B*tch.

Greece will walk free.

Another legal issue that has surfaced concerns the 476 million reichsmarks lent against its will to Germany by the Greek National Bank during the war. If this were to be considered a form of war damage, then in principle it would be subject to reparation — except that according to the 1990 treaty, Germany would not have to pay it. If the money were, however, to be considered a normal credit, then Greece would be entitled to get the money back.

Without interest, the amount in today’s money would amount to $14 billion. With interest at 3% over 66 years, that would come to at least $95 billion. The problem is this: even partial recognition of such a debt would create a precedent that could bring untold claims in its wake.

Full article: http://www.forbes.com/sites/timwors...etrillion-in-war-reparations-probably-not-no/

In his first act as Prime Minister of Greece, Alexis Tsipras laid a wreath at a memorial to Greek victims of the Nazis. It was a symbolically charged gesture, and was widely interpreted as a reminder of the historical debts owed to Greece by Germany. In Germany, however, it was seen as yet another anti-German provocation from a country being kept afloat financially, to a significant extent, by bailout loans from German taxpayers.

Full article: http://www.debatingeurope.eu/2015/03/18/parallels-greece-today-german-debt-relief-1953/#.VZSzOflViko

When the loan amount is small, it is the debtor's problem. When the loan amount is large, it is the creditor's problem.

 

[arpakola]

The Eurozone was always a floating entity because You had always political autonomy.
The question is never "who's next" as even France can leave if it wants to (hypothetically)
The question is , AT WHAT COST
that is the question ... the PIIGS(Portugal,ireland,italy,greece & spain) can leave the Euro any time the question is at what cost.
And that is why everyone is looking at Greece and that is why greece will be PUNISHED .... the costs have to be so high , no one will dare leave the Euro.
You are now germany's B*tch.

he he .. lets see referendum's results first..
The so called punishment .. lots o Greeks interpret it as LIBERATION..

we dont stay (or not ) within Europe .. we ARE the EUROPE

(stamp showing Europe on the back of the Zeus -bull)

vid clip .. we VOTE NO because..

 

[Rowdy]

he he .. lets see referendum's results first..
The so called punishment .. lots o Greeks interpret it as LIBERATION..

we dont stay (or not ) within Europe .. we ARE the EUROPE

(stamp showing Europe on the back of the Zeus -bull)

vid clip .. we VOTE NO because..

you may be 'Europe' but you are broke
And you killed your own history / culture and embraced a desert cult. so stop with the photos.

 

[Rowdy]

Greece will walk free.

Not really.
If that happens Italy & spain will try the same.
Greece will be made a deterrent of .

 

[Mad Indian]

Not really.
If that happens Italy & spain will try the same.
Greece will be made a deterrent of .

He believes that creditors will be lining up in Greece even if it defaults. Forget about the decades it takes to build back the trust of the creditors and the trust on the government.

 

[Rowdy]

30 characters of bull$hit

 

[Neil]

Ιts not about technicalities
its about an austherity program that has left 50% of young people without jobs
Greece will decide if they want to keep going on this..

but it was always upto greece to decide.. but not via referendum rather via an elected government with consultation and advice from various stakeholders in the economy.What the government has done is shed responsibility and is hiding behind the greek folks who will not think long term effects or consequences!

 

[pmaitra]

Not really.
If that happens Italy & spain will try the same.
Greece will be made a deterrent of .

All the more reason for Germany to prop Greece up, and all the more reason for Greece to call Germany's bluff.

In any event, about 90% of all the money that was given as bailout 5 years ago went into Greece and left Greece. Only about 10% of that money was actually spent in Greece. That Greece is in default today is largely because they took the austerity measures recommended by those that are blaming Greece now. These institutions, such as IMF and ECB, while pretending to be trying to help Greece, were actually trying to help themselves.

 

[pmaitra]

He believes that creditors will be lining up in Greece even if it defaults. Forget about the decades it takes to build back the trust of the creditors and the trust on the government.

No, I don't believe creditors will line up, but I believe Greece will be able to show these creditors the door.

As far as trust is concerned, no one in Greece with half a brain will trust these creditors, after all the bad advice they gave Greece.

More on trust - the Euro project is bust.

 

[pmaitra]

I see many people heaping all the blame on Greece. These very people fail to see how much the Greek people have suffered due to the austerity measures, that have only made their situation worse. It is about time to look beyond the typical hubris coming out of media sympathetic to Germany.

Europe has suffered a reputational catastrophe in Greece
The eurozone has shown itself unable to manage its basic moral responsibilities

Oxi Day has totemic significance in Greece. It commemorates the defiant Greek “No” to Mussolini’s ultimatum in October 1940, and the heroic acceptance of war against a vastly bigger military machine.

• Greece crisis live - Polls suggest vote will go down to the wire

It is the same word that will top the ballot sheet when Greeks vote in a snap referendum this Sunday on creditor demands, and prime minister Alexis Tsipras is not shy in evoking the same spirit of wartime resistance.

His speech to the nation on Wednesday night was peppered with talk of ultimata. He accused “extreme Right-wing circles” of forcing the closure of the Greek banks and the imposition of capital controls through liquidity asphyxiation.

He lashed out at “authoritarians” in charge of the IMF and EU institutions. He spoke of attempts to blackmail the Greek people. And he vowed to campaign against the creditor package - which, strictly speaking, is no longer on offer - deeming it the “destruction of Europe”.

Where this will take him, and take Greece, is anybody’s guess. The latest Efimerida ton Syntakton poll shows the “No” side leading by 54pc against 33pc for “yes”. But that lead - if it really exists - may evaporate as the ghastly consequences of financial collapse become clearer by the day.

Distraught pensioners have been gathering in small, tense crowds outside banks trying to withdraw their weekly allowance of €120 (£85). Many have not been paid. A throng of veterans protested outside the finance ministry on Wednesday morning, denouncing EU “dictatorship” and Mr Tsipras with equal fury.

Ambulances in parts of northern Greece have run out of fuel. The Greek Chamber of Commerce warns of “serious shortages” of basic goods and pharmaceutical supplies within days. The radical-Left Syriza government is skating on very thin ice.

If Europe’s creditor powers have succeeded in bringing Greece to its knees, they have paid a fearful price themselves. As Pyrrhus said after the battle of Asculum: “Another such victory, and we will be utterly ruined.”

We can already see that the EU itself has suffered a reputational catastrophe on several fronts. This is of far greater importance in the sweep of events than daily twists and turns in Athens.

It has brought about a state of affairs where a member of its own eurozone family has become the first developed country in history to default to the IMF.

Let us be clear what this means. The currency union itself is delinquent. The rich countries of northern Europe are refusing to pay African, Asian and Latin American states. Blaming it on Greece alone does not wash.

The eurozone has shown itself unable to manage its basic moral responsibilities. Russian president Vladimir Putin could hardly resist his own wicked dig, professing “great concern” over the EU’s vanishing credibility.

This default is doubly shameful given that the original IMF-Troika loan in 2010 was not intended to save Greece. The extra debt was imposed on an already bankrupt Greek state to buy time for the euro, against Greek interests.

Leaked documents leave no doubt that the real purpose was to save monetary union and the European banking system - and to avert a “Euro-Lehman”, in the IMF’s own words - at a time when the eurozone had no defences against contagion.

Worse, the bitter showdown has made brutally explicit what many long suspected, that sovereign democracies count for nought when push comes to shove in Euroland.

The European Central Bank is not the chief villain, perhaps, in the latest chapter. It is in an impossible position. Yet citizens across Europe can see with their own eyes that the ECB has been rationing emergency liquidity (ELA) for a prostrate country as a tool of political pressure, and that it forced Syriza to take the drastic step of shutting the banks by freezing ELA at €89bn.

It is an odd spectacle to watch a central bank with a treaty duty to uphold financial stability take the deliberate decision to precipitate the collapse of banks that it regulates. But the deeper point is that the insane construction of the euro - a naked currency union without fiscal and political foundations - must inevitably tend to authoritarian monetary dystopia in the end.

It is, however, too soon to conclude that Syriza will buckle to creditor demands. It is certainly hard to read the real intentions of Mr Tsipras. His defiant stand on Wednesday night is starkly at odds with the letter he sent to EMU officials earlier in the day and the IMF on Tuesday that seemed, at first blush, to make big concessions. But nothing is ever what it seems in this weird drama.

“Those who say we have a secret plan for Greece to exit euro are lying,” he swore, with an impressively straight face. He denied that a “No” vote implies Grexit - though the leaders of France, Germany and Italy say it means exactly that - knowing that few Greeks are yet willing to take such a drastic step.

Yet one might suspect - and I have not made up my mind - that he and Syriza’s inner circle concluded in April that they could not do business with an EMU regime that acts solely as the enforcement arm of the creditors.

They may have concluded that demands for further fiscal contraction were economic lunacy - a view shared by the Nobel fraternity and the US Treasury - and that no serious debt relief was on the table, and therefore they would do better to default and restore a Greek sovereign currency.

If so, they cannot admit it. They must make it appear that the decision was forced upon them, just as France’s Leon Blum had to tell white lies to free his country from the Gold Standard in 1936.

Syriza officials are fully aware that the likely consequence of a “No” vote would be a parallel currency - or IOUs - along with the nationalisation of the banks along the lines of the “Icelandic Model”. Syriza’s Left Platform has already drawn up plans along these lines. Variants almost certainly exist in the Greek finance ministry.

Such action implies a return to the drachma in short order. The Greeks would continue to insist that the country remains a member of the euro, with full legal rights - blaming the creditors and EU bodies for acting illegally. Only by doing so could they ensure that the full losses from Grexit fall on the ECB and the EMU bail-out funds, while the assets of Greek citizens remain legally protected in foreign accounts, free to return later to rebuild a new banking system.

If you were of a suspicious mind, you might wonder whether Mr Tsipras has not in fact lured European leaders and officials into a legal trap, and that they have fallen for the bait.

His Byzantine negotiating tactics may make perfect sense after all. Just a thought.

 

[jouni]

Greece is an example of what happens when you put people with slavic mentality together with EU...like oil and water. Greece should join Klepto-Union with Russia & co instead. Where stealing is the norm, they would flourish.

 

[pmaitra]

Greece is an example of what happens when you put people with slavic mentality together with EU...like oil and water. Greece should join Klepto-Union with Russia & co instead. Where stealing is the norm, they would flourish.

The Euro is an example when people who make good cars are assumed to be good with fiscal and monetary policies.

The Soviet Union, for all its flaws, was not half as stupid as this EuroZone.

The whole of EuroZone is in trouble, and Greece happens to be the one to break first.