Mohamed A. El-Erian, Bloomberg: Greece Comes to a Sudden Stop. Now What?
Sadly, the “Graccident” has happened.
The Greek economy is now in intensive care, as its parts -- and notably its banking system -- grind to a halt. The economy that eventually comes out of intensive care will be smaller and uncomfortably different in form, but it will also have the potential to prosper over the longer term if some important decisions are made rapidly and consistently.
The dramatic breakdown in bitterness and acrimony of negotiations this weekend between Greece and its creditors understandably panicked Greeks, who are justifiably worried about their financial well-being. Lines started forming at automatic tellers, as depositors rushed to pull out whatever cash they could. Several machines ran out of money, and it became clear that a full run on the banking system would occur when banks opened on Monday.
Commentaries, Analysis, And Editorials On The Greek Debt Crisis
Why Aren’t the Markets Freaking Out More About the Greek Crisis? -- Neil Irwin, NYT
This Is How Grexit Happens -- Robert Kahn, Real Clear World
The next act: what happens now in Greece's drama -- AP
Humiliating Greece -- Telegraph editorial
No Money Left in Greece -- Guardian editorial
Greek Suicide Watch -- Wall Street Journal editorial
The very big risks of the Greek debt crisis -- Mark Thompson, CNN
Greek debt crisis: Why a bailout referendum? -- Laurence Peter BBC
Greece could be biggest national default in history -- Patrick Gillespie, CNN
How much Greece owes to international creditors -- Reuters
'Like a bad dream' – Greeks awake to no money and no certainty -- Jon Henley, The Guardian
Greece's Bizarre Referendum -- Tristram Sainsbury, Lowy Institute
Grexit signs: Drachma, how we’ve missed you! -- John Lloyd, Reuters
Greece stumbling toward default: A game of chicken gone wrong -- Archim Hurrelmann, The Globe and Mail
Greek debt crisis: Is Grexit inevitable? -- Paul Kirby, BBC
What a Grexit means for you: What's happening in Greece - and how does it affect Britons as debt default looms? -- Daily Mail
4 comments:
Grexit seems inevitable.
1. Under Syriza, the Greeks are simply not willing to live within their means. The Greek position is, essentially, that the EU must subsidize their deficit spending forever.
2. The EU and other creditors have finally concluded that loaning Greece more money is simply throwing good money after bad. The creditors now realize that Greece will never repay their existing debt, let alone live within their means in future.
3. The Syriza Government bet all of its chips that the EU and other creditors would blink, and continue to subsidize Greece indefinitely, because the damage to the EU project and other EU members from a Grexit would outweigh the cost of the subsidy. That bet is proving wrong.
4. Greece faces harsh austerity no matter what happens now. If they submit to the creditors, Greece will have few Euros to spend. If Greece issues drachmas, they will experience austerity through inflation.
5. The referendum is substantively irrelevant for the negotiations but politically brilliant.
a. With regard to the negotiations, if Greece's electorate votes "no", the vote changes nothing. The vote won't eliminate one euro of Greece's debt or improve Greece's economy. Tsiprias would return to the negotiations with a fresh mandate, but the creditors would simply shrug. Greece still owes the money.
b. If Greece's voters vote "yes", the result is the same with regard to the negotiations.
c. Politically within Greece, the vote has massive effects. If the Greeks vote "yes", Tsiprias may split Syriza to negotiate a deal acceptable to a Syriza rump and other parties, or maybe resign and allow the other parties to negotiate a poisonous deal. If the Greeks vote "no" then Tsiprias can say that the Greek electorate voted for whatever horrible things happen during and after the Grexit.
I completely concur Publius. You are right about 5(c) .... politically speaking for Tsiprias he has now insulated himself on what happens next.
I also agree with this analysis, but I have a caveat. On #3 the story isn't over and Greece may still win (i.e. the EU blinks), but it can only be short term relief for it is what it is and no narrative can change the reality.
I think pundits have over emphasized the economic side to this while ignoring the political. It is the political realm that Tsiprias is operating in, therefore to him it's a legitimate gamble, and he may pull it off. Saturday is a long way off. I still say none of these people give a rip about the regular Greek, but the regular Greek voted for this before and now they're goning to have to live with it.
I don't think this is a bet by Syriza, at least not by Tsipras and the other higher ups. It's much more likely that they know exactly what will eventually happen when they continue to ask for a blank check - a ticket out of the Euro and a financial crisis.
The real bet is that Greeks will direct their anger at Europe rather than their current political leaders. As Rahm Emanuel would say, "never let a serious crisis go to waste", direct the peoples anger towards somebody else and use the crisis to gain more power.
Post a Comment