Monday, July 13, 2015

Greece update

If I were to grade my prediction easily, I guess we're still muddling through (or as Churchill would say, KBO). From the BBC this morning:
The bailout is conditional on Greece passing agreed reforms by Wednesday. 
These include measures to streamline pensions, raise tax revenue and liberalise the labour market. 
An EU statement spoke of up to €86bn (£61bn) of financing for Greece over three years. 
Though it included an offer to reschedule Greek debt repayments "if necessary", there was no provision for the reduction in Greek debt - or so-called "haircut" - that the Greek government had sought.
Well, we shall see if the Greek parliament passes these measures. Any bold predictions? I suspect that they won't pass it, but we shall see. 


  1. My not so very bold prediction is that there is going to be a lot of shouting and maybe a few scuffles in the parliament after which the package will pass. Tsipras will be ousted as a result of a revolt within his coalition and street protests. People will riot a bit and then the banks will open so most of the rioters will line up for withdrawals (they need to eat, too).

    Within a few weeks the society will resign to sucking it up and the economy will resume its slide toward oblivion. Since the debt cannot be paid there will be another round of negotiations and another "bailout". Eventually some European politicians will read the IMF reports and understand the term "hair-cut" as referred to the loan principal. In a couple of cycles it will be more like a close shave. The politicians will brag how they showed maximum of good will while actually showing minimum of leadership.

    The recession in Greece is already as deep as the Great Depression was in the US and it is now longer. The negative consequences of the previous two packages were three times stronger than their authors predicted. Let's see if they corrected their models. My wild guess is 50% reduction of GDP at the bottom in 3-5 years.

  2. These developments have taken me by surprise - I figured the EU bankers had had enough, and so had the Greek public (of austerity measures).

    I wonder what role the re-balancing of the Greek debt towards countries already threatened with problems of their own (Spain, Italy) had in forcing the EU's hand in this.

  3. My prediction echoes that of SJ.

    The whole incident will be a wonderful example of a politician (finally) being held to account for election promises which s/he can't carry through on.

    1. And perhaps more poignantly, the eventual resignation of the public to the same realities.

  4. An analysis in NYT by Steven Erlanger calls this deal "a triumph of hope over experience". The article also points out that the deal feels like "an exercise of political power and domination" of EU (mostly Germany) over Greece. This is going to create a lot of resentment in Greeks and humiliated nations don't do so well over time. These emotions tend to resurface in times of trouble. There is no need for more trouble in Europe.

    The analysis also points out that UK is watching the Greek treatment as it prepares to vote in 2017 in referendum on leaving EU. I think many smaller EU nations will draw their own conclusions and may want in on Merkel's cell phone snooping.

  5. "There is no need for more trouble in Europe."

    A cynic might note it was overdue...

  6. "There is no need for more trouble in Europe."

    I would say with the recent immigration patterns major cities in Europe will resemble Beruit in 50 years. No wonder everybody wants to live in the US... even the northern Europeans.

    1. That's BEIRUT.

      Also, I differ in my opinion - there are small towns in Texas that are headed that way too. Meanwhile, our major cities are seeing a lot more violent crime than they used to.

      Not everyone wants to live in a one-party nation with a hollowed-out economy, where working for Wal-Mart part-time is "the dream," where education is considered an "irresponsible" pursuit, and the model for interracial relations is rapidly descending into open conflict.

    2. This comment has been removed by the author.

    3. Amen, on the subject of Wal-mart, Texas, class inequality and the 1%.

      Except I have some issues about the education caveat, especially how it relates to the economic outcome of obtaining a doctorate in Chemistry. (we have traveled in a full circle on this blog).

      Frankly, I am now pulling all strings to return to Germany if that's at all possible. If not, then the UK is an acceptable compromise. In either country, the average life expectancy is greater than in the US.

      Finally, back in "the good old days", i.e. well before I was born, my father had a faculty position with the American University of Beirut....

    4. We disagree in our agreement, or agree in our disagreement.

      I don't have much against Walmart - I just don't believe that part-time jobs at Walmart should be "the dream."

      Cartel violence is already in Texas and I fear it will get much worse.

      As for "class inequality and the 1%" I don't believe in this rhetoric. I do have a serious problem with a one-party political system that arrogates benefits to itself above and beyond what the rest of the population enjoys at the (ruinous) expense of that same population.

    5. The one-percenters are not a recent phenomenon. From about 750 BCE, Amos chapter 8, verses 4-7.

      Hear this, you who trample upon the needy

      and destroy the poor of the land:

      “When will the new moon be over,” you ask,

      “that we may sell our grain,

      And the sabbath,

      that we may open the grain-bins?

      We will diminish the ephah,

      add to the shekel,

      and fix our scales for cheating!

      We will buy the destitute for silver,

      and the poor for a pair of sandals;c

      even the worthless grain we will sell!”

      7The Lord has sworn by the pride of Jacob:

      Never will I forget a thing they have done!

  7. The Beirut analogy may be an unfortunate one as it dissolved into chaos that has not settled even now. Europe (and the world) is too divided ethnically or religiously to coexist in that fashion for more than a generation. This is like stating that the US is color blind. There are some people who are color blind and a whole lot of others with 80/20 color focus.

    We are making progress in tolerance, at least in Europe, but the growth curve is just barely creeping up and there are a whole lot of saw teeth up and down. US was bombing Europe just 20 years ago.

    From a personal perspective I was born in Central Europe in a nation that was 100.00% Caucasian, 90+% ethnically uniform, and 90+% catholic. Despite a very tolerant family background when I first saw a dark skinned person (that was in college - one! person) I was very uncertain how to behave toward that guy, a very nice person. I still need to keep explaining my instincts to myself. This kind of adjustment takes time.

    1. Increased proximity and contact does not necessarily improve that uncertainty.

    2. That should have read "Increased proximity and contact do not necessarily improve that uncertainty." That's what happens when you revise a sentence, and your personal proofreader is AWOL.

    3. Actually, what reduces the uncertainty is practice, self awareness, and firm commitment to the humanity of the other person.

    4. ...some of which goes out the window with actual experience.

    5. Always. Also, you always learn something new about yourself and about those around you. Some of these things you cannot unlearn. We are shaped and re-shaped every day.

  8. Today, the bailout passed and there are riots in Athens - I think SJ called it.

  9. So, today the Federal Reserve apparently called on the nation's eight biggest financial institutions to up their credit reserves...