Out Of Cash, Out Of Time, Out Of Options // Greece – EUROZONE Report

I’m reposting a letter sent to me, which I think is a poignant response to the economic situation in Greece today.

Dear Mr. Edelman, 

As you already know, today Greece was obliged to pay at least a quarter of the €1.5bn due to the IMF regular payment in June.

The creditors say they will only disburse the money if the Greek government enacts various key economic reforms and does not roll back reforms the last government agreed with the lenders and if the Greek government undertakes to run large enough budget surpluses every year in the future that Greece might have a chance of paying back the money the creditors have lent it.

The Greek government says there is no possibility of it ever paying back all the money it has been lent and the creditors need to accept that, write off some of the debt, and not insist that Greece runs large surpluses (predicated on the fantasy of paying back the debt) or cuts back on pensions or enacts other similar measures that run contrary to the Greek voters’ will (as expressed in the last election).

Most commentary still appears predicated on the idea that there will be some last-minute deal – either because the creditors will back down and give Greece some more money without requiring it to be paid back or because the Greek government will back down if it understands that not doing so would ultimately mean leaving the euro.

I, on the other hand, don’t believe either side is particularly interested in achieving a deal.

The Eurozone does not want to make any compromise with the current Greek government because:

( a ) they don’t believe they need to because Greek threats to leave the euro are empty both because internal polling suggests Greeks don’t want to leave and because if they did leave that doesn’t really constitute any threat to the euro;
( b ) because they (particularly perhaps Angela Merkel) believe that under enough pressure the Greek government might collapse and be replaced by a more cooperative government, as has happened repeatedly before in the Eurozone crisis including in Italy and Greece itself; and
( c ) because any deal with Greece that is seen to involve or be presentable as any victory for the Greek government would threaten the political positions of governments in several Eurozone states including Spain, Portugal, Italy, Finland and perhaps even the Netherlands and Germany later.

The past 24 hours have seen an alleged “Take-it-or-leave-it” proposal from the Eurozone, which reports indicate appears to involve no debt relief at all, no material change in the demands for economic reforms, and primary surpluses of 1% in 2015, 2% in 2016, 3% in 2017, and 3.5% thereafter.  Since the Greek economy has deteriorated further through 2015 with the political turmoil, a 1% target might be difficult to meet and at this stage is no kind of “compromise”, whilst the 3.5% longer-term target continues to reflect the narrative of placing the Greeks in a position to repay their debts, which the Greek government refuses to accept.  It is hard to see how Syriza could accept that without collapsing.  If it really is “take-it-or-leave-it” then if Syriza wants to contemplate it at all that might mean a referendum – which would presumably lead to a rejection.  I suspect they will simply start the defaulting on Friday by not paying the IMF.

On the other side, the Greeks made their own counter-proposals.  The German finance minister Wolfgang Schaeuble — who publicly said some time ago that no-one had any idea how a deal could be reached — said public statements of optimism were not justified and that his impression of the Greek proposals was that talk won’t be over soon.

And yet, even if all the current excitement about an imminent deal, within hours or a few days, were justified, what would it really mean?  They are still only debating the conditions for the disbursement of the final €7.2bn from the previous Greek bailouts!  Even if they agree to that, which would cover the €6.5bn or so that Greece needs to get through June, that would still leave Greece with no way to pay its large debts to the ECB and others that are due in July and August.  To get through the summer, there would need to be another whole bailout agreement, covering around €30-50bn more given to Greece and including a whole additional set of economic reforms and surplus targets! Which Eurozone Parliament is going to vote for that?


I read carefully your articles regarding the Eurozone crisis and I like your style. Sharp writing, strict to the point and full of passion. The problem in this situation is that governments they don’t want to understand that Greece is only a small piece of the puzzle and the Eurozone will be collapse really soon from inside. It was a game of power from the very first day before the Lehman sequence. They lost the control of the game because they didn’t realise the power of the people of South and developed a game without rules. For those who playing games there are consequences. That’s the nature of life, It’s all about balance. For me, the most important thing in life is first “the freedom to choose” and second, “to living by your own rules”.
Bottom line, regarding the current situation. It was a game without rules from the begging. Life without rules is life without balance, and balance is the basic element of the nature. 

No worries, life delivers lessons 24/7, no exceptions, to all. 

My friend, if you allow me, You wasn’t born in Greece but I have a strong feeling that Greece was born in you, somehow.. and flourished.


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