Κυριακή, 28 Ιουνίου 2015

Ευρώ, Ευρώπη και Ελλαδα: Έπεσαν τελικά οι μάσκες [Europe wants Greece to suffer: The truth about the never-ending financial crisis & the cult of extreme austerity]

Του ΜΑΡΙΟΥ ΕΥΡΥΒΙΑΔΗ

Από την αμερικανική επιθεώρηση Salon (23/6/2015, salon.com) “Η Ευρώπη θέλει την Ελλάδα να υποφέρει” (“Europe wants Greece to Suffer”), διαβάζουμε:

Αυτό που συμβαίνει στην Ελλάδα είναι μια επί μακρόν άσκηση σαδισμού από τις ευρωπαϊκές ελίτ των οποίων η μόνη τους έγνοια είναι πώς θα διατηρήσουν στη ζωή το πολιτικό τους πρότζεκτ (το Ευρώ) ανεξάρτητα των συνεπειών σε αυτούς που επηρεάζονται. Τρείς διαδοχικές ελληνικές κυβερνήσεις δημιούργησαν ένα μεγάλο χρέος το οποίο είναι πρακτικά αδύνατο να αποπληρωθεί. Η δομή της Ευρωζώνης των 19 κρατών μελών, ενεθάρρυνε την δημιουργία αυτού του χρέους που πήρε την μορφή ροών κεφαλαίων από τον πλουσιότερο βορρά στην νότια περιφέρεια. Μέσω ενός κοινού νομίσματος, οι επενδυτές κυνηγούσαν υψηλές αποδόσεις σε χώρες όπου υπήρχε σπάνη κεφαλαίων. Αυτό υπήρξε το δομικό χαρακτηριστικό του ευρώ. Όταν οι επενδυτές απεσύρθησαν και τα δάνεια έγιναν ληξιπρόθεσμα, τα βόρεια κράτη προσποιήθηκαν πως ο ανεξέλεγκτος δανεισμός δεν έλαβε χώρα και, υπό την ηγεσία της Γερμανίας, απαίτησαν τα λεφτά τους πίσω”.

Να το πούμε και λαϊκά. Όσο καιρό κέρδιζαν …έπαιζαν. Όταν άρχισαν να χάνουν τους κακοφάνηκε και …ξίπαιξαν.

Για το ίδιο ζήτημα ο τίτλος άρθρου της “The Washington Post” (23/6/15) μιλά μόνος του:
Η Ευρώπη καταστρέφει την οικονομία της Ελλάδας χωρίς κανένα λόγο”, (“Europe is destroying Greece’s economy for no reason at all”). O δε νομπελίστας οικονομολόγος και αρθρογράφος στην “The New York Times”, και ένας από μια σειρά επιφανών επιστημόνων που προβληματίζονται για τις ανερμάτιστες πολιτικές της ΕΕ και του ΔΝΤ διερωτάται, μεταξύ άλλων, στο πιο πρόσφατο κείμενο του (25/6/15) που τιτλοφορείται “Διαλύοντας την Ελλάδα” (“Breaking Greece”) “…Λοιπόν τί συμβαίνει; Στόχος είναι να διαλυθεί ο Σύριζα; Είναι να εξαναγκαστεί η Ελλάδα σε καταστροφική χρεοκοπία ως παραδειγματισμό ; ….εαν υπάρξει δυστύχημα ή έξοδος της Ελλάδας από το ευρώ, θα είναι διότι οι πιστωτές ή τουλάχιστον το ΔΝΤ, το επεδίωξαν”.

Επειδή οι πιο πάνω απόψεις ίσως θεωρηθούν “αριστερών” αποκλίσεων, ας δούμε τι γράφει, για παράδειγμα, ο συντηρητικός συνεργάτης της “The Telegraph” του Λονδίνου (19/6/15), Ambrose Evans-Pritchard (“Greek debt crisis is the Iraq war of finance”) για το πως λειτουργεί το Ευρω-ιερατείο με αναφορά στο ελληνικό ζήτημα. “Σπάνια στους σύγχρονους καιρούς γινόμαστε μάρτυρες τέτοιας επίδειξης οξυθυμίας (petulance) και κακών εκτιμήσεων από εκείνους που είναι, τάχατες, υπεύθυνοι για την παγκόσμια χρηματοπιστωτική σταθερότητα και από εκείνους που καθοδηγούν τον Δυτικό κόσμο. Το θέαμα είναι εκπληκτικό. Η Ευρωπαϊκή Κεντρική Τράπεζα, ο μηχανισμός διάσωσης της Οικονομικής Νομισματικής ´Ενωσης και το ΔΝΤ, μεταξύ άλλων, κτυπάνε αλύπητα μια εκλεγμένη κυβέρνηση που αρνείται να κάνει αυτό που την διατάσσουν. Και αποφεύγουν εντελώς να αναλάβουν τις δικές τους ευθύνες και σφάλματα (blunders) τα τελευταία πέντε χρόνια, που προκάλεσαν το αδιέξοδο. Αυτό που θέλουν είναι να δουν τους επαναστατημένους αυτούς “Κλέφτες” (Klepts) κρεμασμένους από τις κολώνες του Παρθενώνα-ή παλουκωμένους (impaled) όπως αρέσκονταν να κάνουν οι Οθωμανικές δυνάμεις που τους θεωρούσαν ληστές- ακόμη και εαν, ως συνέπεια της πολιτικής τους αυτής εξευτελίζουν τους δικους τους θεσμούς”.

Ο εξαιρετικός αυτός δημοσιογράφος, που πρώτος αποκάλυψε χρησιμοποιώντας εσωτερικά έγγραφα του ΔΝΤ πως η Ελλάδα θυσιάστηκε το 2010 για να σωθεί η Ευρωζώνη και οι μεγάλες της τράπεζες, και που παραδέχεται πως κάθε άλλο παρά φίλος της κυβέρνησης Τσίπρα είναι, προχωρεί θαρραλέα και πιο πέρα. Γράφει πως “αν θελουμε να προσδιορίσουμε την ιστορική στιγμή που η φιλελεύθερη Ατλαντική τάξη έχασε την νομιμοποιήση της και που το Ευρωπαϊκό πρότζεκτ (της ΕΕ και του Ευρώ) έπαυσε να παρέχει κίνητρα και να λειτουργεί ως ιστορική δύναμη”, είναι η στιγμή που οι θεσμοί της Ευρώπης μαζί με το ΔΝΤ, άρχισαν να εκβιάζουν με σκιώδεις μεθοδεύσεις την Ελλάδα. Ως παράδειγμα της πολιτικής κατάντιας και τον κυνισμό των ηγετών και των θεσμών, ο έγκριτος δημοσιογράφος αναφέρει την “συνεργασία” της ΕΚΤ και της “θυγατρικής” στην Ελλάδα, της Ελληνικής Κεντρικής Τράπεζας, υπο την διεύθυνση του γραφικού της Διοικητή, του Γιάννη Στουρνάρα. Μετά απο τις πρόσφατες δηλώσεις του τελευταίου πως πιθανόν να υπάρξει έξοδος της Ελλάδας από το ευρώ και την ΕΕ, οι ελληνικές τράπεζες έχασαν δισεκατομμύρια καταθέσεων από τον πανικό που προκλήθηκε. Και η κυβέρνηση Τσίπρα συνειδητά και οργανωμένα εκβιάστηκε με ντε φάκτο χρεοκοπία στην μέση διαπραγματεύσεων με τους λεγόμενους Θεσμούς.

Το μαρτύριο της σταγόνας που εφαρμόζεται κυνικά και χωρίς προφάσεις πλέον κατά της μεγάλης πλειοψηφίας του ελληνικού λαού, πρέπει να τερματιστεί είτε έτσι, είτε αλλιώς. Και ο Πρωθυπουργός Αλέξης Τσίπρας πρέπει να αποφασίσει, όπως εξάλλου δήλωσε πηγαίνοντας στις Βρυξέλλες, αν θα πει το “Μεγάλο Ναί” ή το “Μεγάλο Όχι”.

Πέραν της όποιας απόφασης, αυτό που είναι πλέον κοινός τόπος, και σε αντίθεση με την πρόστυχη προπαγάνδα των Βρυξέλλων, των ενεργούμενων της και των λογής-λογής πεμτοφαλαγγιτών της στην Ελλάδα, είναι πως η κρίση χρέους της Ελλάδας είναι κρίση του Ευρώ και της ανάπηρης κατασκευής του. Απεδείχθη, δηλαδή, αυτό το οποίο εξαρχής υποστήριζε ο αεί λοιδορούμενος Υπουργός Οικονομικών της Ελλάδας Γ. Βαρουφάκης. Στην Ελλάδα είχαμε απλά την τεκμηρίωση του γεγονότος αυτού το οποίο έγινε και με χυδαίες μεθοδεύσεις αφού, λόγο των πραγμάτων, αναγκαστικά έπεσαν και οι μάσκες του ευρωπαϊκού καθωσπρεπισμού.

Κατά ακρίβεια ο Βαρουφάκης δεν έλεγε τίποτα περισσότερο απο εκείνο που ο σημερινός Διοικητής της ΕΚΤ, Μάριο Τράγκι, διατύπωσε σε δημόσια δήλωσή του τον Νοέμβριο του 2014: “….Γι αυτό πρέπει να είναι ξεκάθαρο πως η επιτυχία της Οικονομικής ´Ενωσης σε ένα συγκεκριμένο χώρο εξαρτάται από την επιτυχία της παντού (μέσα στην ευρωζώνη). Το Ευρώ είναι- και πρέπει να είναι- μη αναστρέψιμο (irrevocable) σε όλα τα μέρη της ΕΕ, όχι επειδή το λένε οι Συνθήκες (Treaties), αλλά διότι χωρίς κάτι τέτοιο δεν μπορεί να υπάρξει πραγματικό ενιαίο νόμισμα”.

Όποιες και να είναι οι εξελίξεις στην Ευρωζώνη, η περιδίνηση του Ευρώ στην Ελλάδα αποδεικνύει
α) πως η ΕΕ λειτουργεί ανερμάτιστα, χωρίς στρατηγική αλλά και με μνησικακία απέναντι σε αυτούς που την αμφισβητούν,
β) πως το κατεξοχήν εργαλείο της, το Ευρώ, αδυνατεί να θεραπεύσει τις εγγενείς αδυναμίες της Ευρωζώνης, και
γ) πως το Ευρώ παύει να είναι ένα αξιόπιστο νόμισμα στην Ευρώπη και στον κόσμο αφού δεν μπορεί να θεραπεύσει εσωτερικές κρίσεις χρέους. Το πρόβλημα είναι μόνο “περιστασιακά” ελληνικό. Είναι δομικό και συστημικό.

Τίποτα από όσα γράφτηκαν εδώ δεν δικαιολογούν διαδοχικές ελληνικές κυβερνήσεις που εγκληματικά και ανεύθυνα οδήγησαν την Ελλάδα σε σύγχρονη ειλωτεία. Και αυτό είναι και το τραγικό συμπέρασμα του εμβληματικού βιβλίου του Μιχάλη Ιγνατίου “Τρόϊκα: Ο Δρόμος προς την Καταστροφή: η ‘διάσωση’ της Ελλάδας μέσα από τα έγγραφα του ΔΝΤ, Αμερικανών και της Κομισιόν και οι τραγικές ευθύνες των Ελλήνων πολιτικών (Εκδόσεις Λιβάνη, 2015) που παρουσίασα στον “Φιλελεύθερο” την περασμένη βδομάδα. Όμως εγκληματικές και ανεύθυνες υπήρξαν, παράλληλα, και οι πράξεις της Ευρωπαϊκής Ένωσης, κυρίως, όπως αποδεικνύουν τα πράγματα. Και που όλα έρχονται να επιβεβαιώσουν για μια ακόμη φορά την διαπίστωση του Γάλλου διανοητή και μελετητή των διακρατικών σχέσεων Raymond Aron (1905-1983) πως αλλιώς θα ήταν η ιστορία της Ευρώπης τον 20ο αιώνα αν οι ηγέτες της λάμβαναν αποφάσεις για να εξυπητετήσουν το συμφέρον τους και όχι για να ικανοποιήσουν τα πάθη τους.

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TUESDAY, JUN 23, 2015 09:57 PM +0300
Europe wants Greece to suffer: The truth about the never-ending financial crisis & the cult of extreme austerity
Greece's financial nightmare has lasted five years now. There's no sign of real relief—for a very specific reason
For someone who writes about economics, the situation in Greece offers two enticing elements: the ability to spin out moments of high drama, and the probability it will endlessly repeat forever. We’ve experienced five years (really, here’s one of my first stories on Greece, from April 2010) of wondering whether the deeply indebted country will exit the euro or submit to more painful conditions from its European creditors. Two governments – the center-right and the center-left – took the latter option, and paid dearly for it. Now the far-left Syriza appears poised to do the same, after delivering a new proposal to unlock bailout funds.
Meanwhile, the prospects for ordinary Greek citizens never changes, adding a nightmarish “Groundhog Day” touch to the proceedings. Regardless of whether the country is spiraling into near-default or praising a debt deal, unemployment hasremained over 25 percent for the past three years. Half a decade into the Great Depression, there was at least some semblance of a brighter day; in Greece there are only gradations of misery. And what could break this terrible cycle is the only thing the political system and the public imagination cannot seem to contemplate: leaving the euro.
What has been happening in Greece has been a long exercise in sadism by European elites, who care only about keeping their political project alive, regardless of how those who must deal with the consequences are affected. Three governments ago, Greece rang up a series of debts that they have no practical ability to pay back. The structure of the eurozone, 19 countries sharing a common currency, encouraged this debt buildup, which manifested through capital flows from the wealthier north to the southern periphery. With a single currency, investors chased higher returns in countries where capital was scarcer; this was part of the core euro design. When the investors pulled out and the debts came due, the northern states, led by Germany, pretended this didn’t happen and demanded their money back.
The European Union, the European Central Bank and the International Monetary Fund – the “troika” for short – forced Greece and other debtor nations into a bailout program, where they would run budget surpluses, even in the midst of a depression, and repay debts over the long-term. But the troika had another mission. They wanted to suck the oxygen out of any anti-austerity movement in Europe, and knuckle every country under their dictates. Therefore, the troika’s entire goal with Syriza, who entered office in January, has been not only to grant them concessions in negotiations, but to directly humiliate them and force them into a series of bad choices, as a lesson to all other Eurozone countries.
The latest proposal from Syriza, after months of delays and rejections, reflects this forced grovel. The government, which faces default if they don’t pay the IMF 1.6 billion euro by the end of the month, has committed to higher contributions for their pension plan, including from retirees. They will significantly ramp up their value-added tax (VAT), which acts like a sales tax, hitting those of modest means the hardest. Because Syriza didn’t cut pension payouts any further, and maintained the same VAT for selected items, they are claiming that they didn’t cross any of their red lines.
But despite some modest tax increases on corporate profits and luxury yachts, the bottom line is that Syriza agreed to future austerity measures indefinitely. Under the plan, they would maintain a budgetary surplus at 1 percent of gross domestic product for 2015. The surplus would steadily rise to 2 percent next year, 3 percent in 2017 and as high as 3.5 percent by 2018, as a condition for getting their bailout funds. It’s possible that these targets are “made to be missed,” as writer Daniel Davies puts it. And the surplus for 2015, at least, is less than first proposed. But since conditions have worsened in Greece since negotiations began in February, and the current budget deficit is higher, they’re still assenting to the same level of budget cuts to hit the target. And this is before the troika tweaks the deal more to their liking.
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Greek debt crisis is the Iraq War of finance
Guardians of financial stability are deliberately provoking a bank run and endangering Europe's system in their zeal to force Greece to its knees
Rarely in modern times have we witnessed such a display of petulance and bad judgment by those supposed to be in charge of global financial stability, and by those who set the tone for the Western world.
The spectacle is astonishing. The European Central Bank, the EMU bail-out fund, and the International Monetary Fund, among others, are lashing out in fury against an elected government that refuses to do what it is told. They entirely duck their own responsibility for five years of policy blunders that have led to this impasse.
They want to see these rebel Klephts hanged from the columns of the Parthenon – or impaled as Ottoman forces preferred, deeming them bandits - even if they degrade their own institutions in the process.

If we want to date the moment when the Atlantic liberal order lost its authority – and when the European Project ceased to be a motivating historic force – this may well be it. In a sense, the Greek crisis is the financial equivalent of the Iraq War, totemic for the Left, and for Souverainistes on the Right, and replete with its own “sexed up” dossiers.
Does anybody dispute that the ECB – via the Bank of Greece - is actively inciting a bank run in a country where it is also the banking regulator by issuing this report on Wednesday?
It warned of an "uncontrollable crisis" if there is no creditor deal, followed by soaring inflation, "an exponential rise in unemployment", and a "collapse of all that the Greek economy has achieved over the years of its EU, and especially its euro area, membership".
The guardian of financial stability is consciously and deliberately accelerating a financial crisis in an EMU member state - with possible risks of pan-EMU and broader global contagion – as a negotiating tactic to force Greece to the table.
It did so days after premier Alexis Tsipras accused the creditors of "laying traps" in the negotiations and acting with a political motive. He more or less accused them of trying to destroy an elected government and bring about regime change by financial coercion.
I leave it to lawyers to decide whether this report is a prima facie violation of the ECB’s primary duty under the EU treaties. It is certainly unusual. The ECB has just had to increase emergency liquidity to the Greek banks by €1.8bn (enough to last to Monday night) to offset the damage from rising deposit flight.
In its report, the Bank of Greece claimed that failure to meet creditor demands would “most likely” lead to the country’s ejection from the European Union. Let us be clear about the meaning of this. It is not the expression of an opinion. It is tantamount to a threat by the ECB to throw the Greeks out of the EU if they resist.
Greece's central bank in Athens
This is not the first time that the ECB has strayed far from its mandate. It forced the Irish state to make good the claims of junior bondholders of Anglo-Irish Bank, saddling Irish taxpayers with extra debt equal to 20pc of GDP.
This was done purely in order to save the European banking system at a time when the ECB was refusing to do the job itself, betraying the primary task of a central bank to act as a lender of last resort.
It sent secret letters to the elected leaders of Spain and Italy in August 2011 demanding detailed changes to internal laws for which it had no mandate or technical competence, even meddling in neuralgic issues of labour law that had previously led to the assassination of two Italian officials by the Red Brigades.
When Italy’s Silvio Berlusconi balked, the ECB switched off bond purchases, driving 10-year yields to 7.5pc. He was forced from office in a back-room coup d’etat, albeit one legitimised by the ageing ex-Stalinist EU fanatic who then happened to be president of Italy.
Lest we forget, it parachuted in its vice-president – Lucas Papademos – to take over Greece when premier George Papandreou merely suggested that he might submit the EMU bail-out package to a referendum, a wise idea in retrospect. That makes two coups d’etat. Now Syriza fears they are angling for a third.

The creditor power structure has lost its way. The IMF is in confusion. It is enforcing a contractionary austerity policy in Greece – with no debt relief, exchange cushion, or offsetting investment - that has been discredited by its own elite research department as scientifically unsound.
The Fund’s culpability in this fiasco is by now well known. As I argued last week, its own internal documents show that the original bail-out in 2010 was designed to rescue the EMU banking system and monetary union at a time when it had no defences against contagion. Greece was sacrificed.
One should have thought that the IMF would wish to lower the political temperature, given that its own credibility and long-term survival are at stake. But no, Christine Lagarde has upped the political ante by stating that Greece will fall into arrears immediately if it misses a €1.6bn payment to the Fund on June 30.
In my view, this is a discretionary escalation. The normal procedure is to notify the IMF Board after 30 days. This period is a de facto grace period, and in a number of past cases the arrears were cleared up quietly during the interval before the matter ever reached the Board.
The IMF could have let this process run in the case of Greece. It has chosen not to do so, ostensibly on the grounds that the sums are unusually large.
Klaus Regling, head of the eurozone bail-out fund (EFSF), entered on cue to hint strongly that his organisation would trigger cross-default clauses on its Greek bonds – 45pc of the Greek package – even though there is no necessary reason why it should do so. It is an optional matter for the EFSF board.
He seems to be threatening an EFSF default, even though the Greeks themselves are not doing so, a remarkable state of affairs.
It is obvious what is happening. The creditors are acting in concert. Instead of stopping to reflect for one moment on the deeper wisdom of their strategy, they are doubling down mechanically, appearing to assume that terror tactics will cow the Greeks at the twelfth hour.
Personally, I am a Burkean conservative with free market views. Ideologically, Syriza is not my cup tea. Yet we Burkeans do like democracy – and we don’t care for monetary juntas – even if it leads to the election of a radical-Left government.
As it happens, Edmund Burke would have found the plans presented to the Eurogroup last night by finance minister Yanis Varoufakis to be rational, reasonable, fair, and proportionate.
They include a debt swap with ECB bonds coming due in July and August exchanged for bonds from the bail-out fund. They would have longer maturities and lower interest rates, reflecting the market borrowing cost of the creditors.
Syriza said from the outset that it was eager to work on market reforms with the OECD, the leading authority. It wants to team up with the International Labour Organisation on Scandinavian style flexi-security and labour reforms, a valid alternative to the German-style Hartz IV reforms that have impoverished the bottom fifth of German society and which no Left-wing movement can stomach.
It wished to push through a more radical overhaul of the Greek state that anything yet done under five years of Troika rule – and much has been done, to be fair.
As Mr Varoufakis told Die Zeit: “Why does a kilometer of freeway cost three times as much where we are as it does in Germany? Because we’re dealing with a system of cronyism and corruption. That’s what we have to tackle. But, instead, we’re debating pharmacy opening times."
The Troika pushed privatisation of profitable state assets at knock-down depression prices to private monopolies, to the benefit of an entrenched elite. To call that reforms invites a bitter cynicism.
The only reason that the Troika pushed this policy was in order to extract money. It was acting at a debt collector. “The reforms were a smokescreen. Whenever I tried talking about proposals, they were bored. I could see it in their body language," Mr Varoufakis told me.
Yanis Varoufakis, the Greek finance minister
The truth is that the creditor power structure never even looked at the Greek proposals. They never entertained the possibility of tearing up their own stale, discredited, legalistic, fatuous Troika script.
The decision was made from the outset to demand strict enforcement of the terms agreed in the original Memorandum, which even the last conservative pro-Troika government was unable to implement - regardless of whether it makes any sense, or actually increases the chance that Germany and other lenders will recoup their money.
At best, it is bureaucratic inertia, a prime exhibit of why the EU has become unworkable, almost genetically incapable of recognising and correcting its own errors.
At worst, it is nasty, bullying, insistence on ritual capitulation for the sake of it.
We all know the argument. The EU is worried about political “moral hazard”, about what Podemos might achieve in Spain, or the eurosceptics in Italy, or the Front National in France, if Syriza is seen to buck the system and get away with it.
But do the proponents of this establishment view – and one hears it a lot – really think that Podemos can be defeated by crushing Syriza, or that they can discourage Marine Le Pen by violating the sovereignty and sensibilities of a nation?
Do they think that the EU’s ever-declining hold on the loyalty of Europe’s youth can be reversed by creating a martyr state on the Left? Do they not realize that this is their own Guatemala, the radical experiment of Jacobo Arbenz that was extinguished by the CIA in 1954, only to set off the Cuban revolution and thirty years of guerrilla warfare across Latin America? Don’t these lawyers – and yes they are almost all lawyers - ever look beyond their noses?
The Versailles victors assumed reflexively that they had the full weight of moral authority on their side when they imposed their Carthiginian settlement on a defeated Germany in 1919 and demanded the payment of debts that they themselves invented. History judged otherwise.

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Europe is destroying Greece’s economy for no reason at all
This story has been updated.
History repeats itself, first as tragedy, then as farce, and finally as trolling. That, at least, appears to be the case in Greece, where its lenders want it to cut its pensions rather than hike its business taxes, because they're afraid those increases would, as the Financial Times's Peter Spiegel reports, "crimp economic growth."
There is a certain irony to Europe starting to worry that austerity is hurting Greece's economy. For years, Europe's leaders have insisted Greece cut deficits in exchange for concessions. Greece's economy has already shrunk 25 percent, and it is having trouble honoring its obligations in part because it has had so much austerity.
Now, the latest Greek drama isn't over, but it is in its last act. A deal should—admittedly one of the more dangerous words in the English language—be imminent. The problem, as it has been for the past five years, is that Europe and Greece haven't been able to agree on what austerity the latter will do in return for money from the former. This time, Europe has wanted Greece to cut its pensions more than the 40 percent they already have, but Greece hasn't. And that was that. Both sides thought the other would cave the closer they got to the deadline, so there was a lot of talk about "red lines" and "final offers" but not much actual negotiation.
That's changed now. Why? Well, Greece has discovered it has much less leverage than it thought. Part of it is that panic about Greece has stayed in Greece because the European Central Bank has both begun to buy other countries' bonds and promised to buy as many as it takes to keep their borrowing costs down. And the rest is that Greece's banks aren't so much an Achilles heel as an Achilles whole. In other words, they're pretty easy to pressure. Greece's banks not only need emergency loans from the European Central Bank to stay afloat, but are also sitting on a pile of Greek government bonds and deferred tax assets that would presumably be worth a lot less if there isn't a deal and Athens defaults.

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Greece may default on its debts if a deal for more funding in exchange for fiscal reforms is not made. Here’s why that matters. (Jorge Ribas/The Washington Post)
So all Europe has to do is say it isn't sure Greece's banks have enough cash to stay open, and people will pull their money out even faster than before. That's what happened when European officials apparently leaked that they weren't sure Greece's banks could make it past Monday, and followed it up by saying they might have to stop people from moving their money out of the country. That's like yelling run in a crowded bank. And it worked. Greek depositors pulled out three times as much as normal the past few days, and that's left their banks even more at the mercy of the ECB — which has forced the government to either leave the euro or accept Europe's terms.
Greece gave in. Well, mostly. It's proposing to cut its pensions about half as much as Europe wants — raising contributions and retirement ages, as well as cutting back on early retirement — and then raising taxes to make up for the rest. Specifically, it would levy a new tax on corporate profits and increase its value-added tax, basically a national sales tax, to 23 percent on all but a handful of items. In all, this would be a fiscal tightening of 1.5 percent of gross domestic product this year and 2.9 percent the next.
The only thing holding up a deal is that Europe thinks this is the wrong kind of austerity. Spending cuts don't seem to be as bad for the economy as tax hikes, so that's what Europe wants Greece to do. On the one hand, this is sound economic advice. But on the other, it might be impossibly hard for the Greeks to accept. In the eyes of the Greeks, it's as though Europe is telling them to kill their own economy -- and then disapproving of the way they'll do it.
A real question for many economists, however, is why Europe is forcing Greece to do any more austerity at all. It's already done so much that, before this latest showdown, it actually had a budget surplus before interest payments. And, in this view, that's all it should shoot for, really: the point at which it doesn't need any more bailouts from Europe. Anything more than that, though, could just inflict unnecessary harm to the economy. When interest rates are zero, like they are now, budget cuts of 3 percent of gross domestic product would, by Paul Krugman's calculation, make the economy shrink something like 7.5 percent. So even though you have less debt, your debt burden isn't much better since you have less money to pay it back.

In the end, there seems to be only one reason to make Greece do more austerity, and it's hard to see how it makes any sense. That's to try to make it pay back what it owes. Indeed, one European official said that the entire point of this was that they "want to get our money back some day." The problem, though, is it's inconceivable Greece will ever do that. Many feel its debt should have been written down in 2010, but it wasn't because it was "bailed out" to the extent that it was given money to then give to French and German banks. The longer Europe demands this new debt be paid back, the longer Greece's depression will go on. Now, it's true that Europe has lowered the interest rates and extended the maturities on Greece's debt so far out that, for now at least, it's like a lot of it doesn't exist. But eventually it will, and at that point they'll either need to extend some more or hope that Greece has returned to growth.
Until then, Greece will be stuck in its economic Groundhog Day. It keeps trying to resist budget cuts that keep it in a perpetual state of high unemployment, but then gives in at the last minute. On second thought, history is just repeating itself as tragedy over and over again.


Matt O'Brien is a reporter for Wonkblog covering economic affairs. He was previously a senior associate editor at The Atlantic

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