Max Ehrenfreund, Washington Post: Why a deal might be too late for Greece
Greece and Europe have reached a deal. The goal is keeping Greece in the currency union, but it's unclear whether the plan will really do what it's supposed to do -- even in the short term, and even if the agreement is ratified, which it might not be.
The Greek banks are nearly out of cash, and confidence is in short supply among the Greek people. The deal agreed to Monday morning will do little to restore that confidence, since it will likely further dampen the Greek economy in general. To prevent Greeks from making a run on the banks with the hope of getting their deposits out, the limits on withdrawals at banks imposed last month might have to remain in place for "a long time," as Dan McCrum writes in The Financial Times.
Update: After "Deal", Here's What's Next For Greece -- Zero Hedge
WNU Editor: For most Greek citizens this is their reality today .... Greek banks to stay shut for now, finance ministry says (Reuters). But I will agree with the following observation that as more details of the agreement become known, many Greeks are not going to be happy .... Relief -- and much anger -- in Greece as Tsipras clinches deal (Reuters) .... especially when they realize that they have been made to look like a bunch of fools .... Greeks see 'humiliation' in harsh terms of eurozone bailout (AFP) .... doubly so when their assets are then sold off (I am sure) at very cheap prices .... What Assets Did Greece Just Hand Over To Europe: "Airports, Airplanes, Infrastructure And Most Certainly Banks" (Zero Hedge).
As to the other details of this deal .... this is just an agreement to have talks .... the EU and the Greek governments are still far-away from a completed deal. And the big problem still remains .... if the past is any indication I have doubts that the Greek government will respect its word. They have broken it so many times in the past year .... especially in the past few months .... that to have a quick change in philosophy and commitment (all within a week) stretches the imagination. But the banks are closed, and hundreds of thousands of government employees are expecting pay-checks this week .... faced with these options .... what choice did the Greek government really have? As for the long term .... yup .... life is going to be very difficult for the average citizen in Greece.
4 comments:
They were fools to agree to the deal although just as with debt they can default if it appears to be too much. Strange that after getting a mandate from the people to say no they are saying yes without another mandate. This guy will/should be finished.
Better to tell the creditors to stuff it and go bankrupt. Then as a debt free country there will be some other sucker, maybe China/Russia who will lend to them, a little bit to start out in trade for a sea port or in China's case an island since they seem to love islands so much.
This is an ominous result. Today euphoria has swept the markets, but as time passes the negatives of this deal will become clearer.
1. Tsiprias had terms two weeks ago better than the terms he got last night. He submitted the previous terms to referendum and encouraged Greeks to vote "No", claiming that his negotiating hand would be strengthened. The electorate duly voted "No". Now Tsiprias brings terms hasher than the ones the Greek electorate rejected.
2. Logically, Tsiprias ought now to urge Greeks to reject these terms too. But he will instead urge Greeks to approve them, and the Greek Parliament will likely oblige, although Tsiprias will split his party. The new deal will pass with the votes mainly of the opposition, probably by a narrow margin.
3. The Greeks will rightly feel that their leaders (a) utterly mishandled the negotiations (i.e. why not accept the better terms two weeks ago?) or (b) have no principles and do not tell the truth (i.e. Tsiprias now endorses harsher terms than those he opposed two weeks ago), or (c) both. In the short term (i.e. the coming "snap" elections) Greeks will vote for even more radical parties (e.g. the left wing of Syriza, New Dawn, Communist, etc.) who at least have been consistent. The Government seated after the next election may refuse to carry out the deal, or renege on it.
4. The deal increases taxes and reduces spending. While the EU may be able to monitor these "top line" measures, it will be difficult to monitor whether Greece actually reforms their economy and state, which reform is a condition precedent to growing their economy. In other words, the Greek economy will not recover, and in a few years Greece will require a fourth bailout.
5. This result creates dark shadows that will intensify, not dissipate, as time passes. This is a bad day for Europe. The EU avoided Grexit this week, but at the cost of imposing terms that will not improve the Greek economy and will embitter and divide the Greek electorate. Much of the blame should be laid at Syriza's feet. Their abrasive style and loud assurances to the Greek people that they could manipulate the EU misled the Greek people regarding their true weakness. That weakness finally became visible last night. Tsiprias and his cabinet must have known better.
Publius,
"This is an ominous result." and "This is a bad day for Europe". I could not possibly agree more. The seeds sown with these moves by both sides will bear a bitter fruit of appalling magnitude.
"Tsiprias and his cabinet must have known better."
Of course they did. Holding on to power even for a few months more was their only objective. I cannot think of a situation where I despise all the participants more than this one. Though I'm sure the future has a surprise or two for me.
Have a new lower tax, a flat Tax. Have a tax amnesty or tax forgiveness.
After the tax forgiveness or amnesty passes be ruthless.
America has been, parts of it are now and it is getting that way as corrupt as Greece.
There was Tammany Hall. They pocketed money to clean the streets and never clean them there were rubbish and manure pile as tall as a man in NYC. America has been there. The corruption extends to the people. when 600 some out of 900 some people say they are blind when most of them are not, Greece ca afford to cut spending.
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