Saturday, January 31, 2015

As Greece and EU Clash, Clues on Deal Emerge

Despite Finance Ministers’ Frosty Exchanges, Prospects Seen for Sharing Pain Between Athens and Creditors

The Wall Street Journal

By MARCUS WALKER,  STELIOS BOURAS and NEKTARIA STAMOULI
Jan. 30, 2015 7:10 p.m. ET
41 COMMENTS
ATHENS—Greece’s finance minister and a representative of its European creditors exchanged grimaces, tough rhetoric and a frosty farewell on Friday, capping a week in which Athens’s new antiausterity government roiled its eurozone paymasters almost daily.

Friday, January 30, 2015

Greece really might leave the euro


By Matt O'Brien January 30 at 7:41 AM

The Washington Post

The world's worst portmanteau is back: Grexit.

That's short for "Greek exit," as in Greece leaving the euro. And it's once again a possibility now that the left-wing, anti-austerity party Syriza has won power in the latest elections. The risk, as I've said before, is that the rest of Europe is in good enough shape that Germany finally thinks it can let Greece leave, and Greece's budget is in good enough shape that it finally thinks it can leave too. Neither of them wants that, but neither of them doesn't want it so much that they'd do anything to avoid it—so both might call each other's, as it turns out, non-bluffs if Syriza tries to force Germany to renegotiate Greece's gargantuan debt.

Cue the market freakout in three, two, oh, it's already here? Why yes, yes it is. Greek stocks fell 11 percent on Tuesday, another 9.2 percent on Wednesday, before stabilizing up 3.2 percent on Thursday. Three-year borrowing costs shot up to 16.9 percent. And worst of all, Greek banks collapsed between 30 and 45 percent in just the last week. That's enough, as we'll see in a minute, to make it much more likely that Greece leaves the euro.

Now, as far as panics go, this one is pretty well-justified. That's because Syriza hasn't just taken a hard line against austerity, but picked the equally hard line, though right-wing, Independent Greeks as its coalition partner, ahead of less confrontational but more ideologically simpatico alternatives. The game of debt chicken, in other words, is very much on.

But the weird thing about Greece's debt, as Dan Davies points out, is that it doesn't really matter. Greece, you see, owes €317 billion, or 175 percent of its GDP, but that might as well be eleventy billion kajillion euros—it's about as meaningful and likely to be paid back. Why? Well, the first thing you should know about Greece's debt is that 75 percent of it is held by the "official sector." That's an alphabet soup of lenders that includes the IMF, ECB, EFSF, and European governments. And unlike private sector lenders, they don't care about maximizing their returns, but rather looking like they're maximizing their returns. That means that under no circumstance will they reduce the face value of what they're owed ... but they will reduce interest rates to almost zero and extend maturities to infinity and beyond. So suppose, for example, that you lent me $100 for 10 years at a 5 percent interest rate. If you were Germany, you wouldn't take anything less than that $100 back, but you might give me 30 years at just a 1 percent interest rate to repay it instead. That's still a big help.

The good news is that Greece's debt payments have already been cut a lot. The bad news, though, is that Greece's debt payments have already been cut a lot—so there's not much left to do. Greece, economist Zsolt Darvas explains, only owes 0.56 percent interest on a big chunk of its debt, doesn't owe any on another for 10 years, and gets paid back all the interest it sends to the ECB. Not only that, but most of its debt is already pretty long-term. That's why, despite its 175 percent of GDP of debt, Greece only has 2.6 percent of GDP of debt payments.
So all they can do now is fiddle some more with the interest rates and maturities. Maybe turn 0.5 percent rates into 0.2 percent rates, and 30-year bonds into 50-year bonds. That's not going to free up a lot of cash, though. Maybe 1 percent of GDP. Maybe a little more if the ECB starts buying more Greek bonds as part of QE. This last part is actually pretty clever. The ECB can only buy a country's bonds if it owns less than 33 percent of them, but it owns 34 percent of Greece's right now. That means Greece should want to pay the ECB back right now, so that the ECB can buy more of its debt. After all, when the ECB buys Greek bonds from Greek banks, that turns debt that Greece had to pay interest on into debt that it doesn't have to. So, in Greece's case, QE trades debt payment for debt relief.

This is a deal Europe could, and probably would, support. Indeed, even Finland's Prime Minister, who's been more opposed than most to debt forgiveness, has said he'd be okay with giving Greece more time to pay back what it owes. Europe's dirty little secret, though, is that more time will eventually become all the time in the world. Today's 30-year bonds with 0.5 percent rates will become tomorrow's 50-year bonds with 0.2 percent rates, and then, at some point, zero-interest perpetual bonds, aka debt that you don't have to pay interest or principal on, aka not debt at all. Everybody knows this, but nobody can say it, because German taxpayers wouldn't like hearing that Greece will never pay back what it owes, that everyone's debts will be thrown together when there's a United States of Europe. (Oops, pretend you didn't hear that). And that's why Greece's debt is pretty irrelevant. It's a big number that Greece can't pay back, so who cares how big we're pretending it is?

Well, Syriza does. They say they want to cut Greece's debt in half. The only problem is that's not going to happen, and even if it did, it wouldn't help much. The question, then, is whether a deal that just cuts interest rates and extends maturities would be enough for them. Another 1 percent of GDP of spending wouldn't save the Greek economy, but it would save a lot of Greek people from extreme poverty. Syriza would have enough money to give food stamps to the hungry, healthcare to the sick, and electricity to people who can't afford theirs anymore, just like it campaigned on. So would this be enough? Maybe not. Greece's austerity is bigger than its debt payments, so just reducing those payments might not reduce its austerity as much as Syriza wants. That leaves one last question. Why is Greece, with 25 percent unemployment, cutting more spending than is absolutely necessary? Easy: Because Europe is making it.

Greece, you might be surprised to learn, doesn't need Europe's money to keep its budget afloat anymore. But it does need Europe's money to keep its banks afloat. And that, as Paul Krugman explains, is where Europe's leverage comes from. It goes something like this: Not-so-nice banks you got here, be a shame if something even worse happened to them, if, you know, you don't do all the austerity we tell you to. It's an offer Greece hasn't been able to refuse, because if the ECB pulls the plug on the emergency lending its banks need, the only way Greece could keep its people from losing their money would be to print it. And the only way Greece could do that would be to leave the euro.

But it's an offer Syriza thinks it can refuse. It just doesn't believe the ECB would really kick them out of the euro and risk contagion in, say, Spain, where a one-year-old anti-austerity party has surged to the top of the polls. Markets, though, aren't so sure. That's why, as you can see above, Greece's banks started falling right after it became clear there would be early elections that Syriza would probably win, and started free-falling after Syriza did, in fact, do so. And why Greek depositors are pulling their money out of banks at a record pace right now. Better to get your money out now, while you'd still get euros, than to wait and maybe get drachmas that wouldn't be worth as much.

This is how the euro ends. Yes, with a bang, actually, and a bank run. This isn't how it was supposed to, though. It wasn't supposed to end at all. The euro, Barry Eichengreen argues, is irreversible, because even talking about leaving it would set off the "mother-of-all financial crises," stopping you from doing so. But what if, Krugman asks, you're already having the mother-of-all financial crises? Maybe it's because, even though you say you want to stay in the euro, markets think your policies will force you out of it. Well, then there's nothing keeping you in, because you're already on the way out. (Freedom's just another word for no banks left to lose). So what we might get here is a failure to communicate. Europe might say, look, you can't afford to leave the euro because your banks would collapse even more than they already have. And Greece might say, look, we can afford to leave the euro because our banks have already collapsed. In the worst case, this brinkmanship could get us what nobody wants: a euro that is very much reversible.

Saving Greece is a Herculean, but not a Sisyphean, task. Difficult, but doable. First, Europe should lower the interest rates and extend the maturities on Greece's debt. Then, it should give Greece more time to hit its budget targets, like France has given itself, as a way to discreetly divert austerity into a future that never comes. Taken together, this could cut Greece's surplus, before debt payments, from the 4.5 percent of GDP it's supposed to be down to, say, 2.5 percent. That wouldn't make a difference to Europe, since it still wouldn't have to put any more money in, but it would make a big one to Greece. Indeed, Krugman's back-of-the-envelope calculations show it could boost Greece's economy by something like 5.2 percent.

Europe could live with this, because Greece would at least be reciting the austerians' favorite chant. Specifically, Greece would be agreeing to play fiscal make-believe about paying the full face value of its debt, and not to renounce its austerity program. Still, Europe would need more than this. It would need Greece to cut more regulations if it's going to cut less spending. There should be no shortage of things to do, since Greece's markets are the reason the word "sclerotic" exists. It could mean going ahead with the privatizations it's stopped. Or turning the state's procurement system into something other than an excuse for graft. Or, as the new finance minister ambitiously put it, trying to "destroy the Greek oligarchy system." (As Alan Beattie points out, that's just as much a "structural reform" as making it easier to fire people). It just has to be something. That way, Europe can say it let Greece spend more because it's reforming more.

The point is that Europe should do whatever it takes to keep the Pandora's Box that is Grexit closed. You just never know what other portmanteaus might come out, like "Spanic." (That's short for Spanish panic). Real ugly stuff.



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

Greece says will not cooperate with troika or seek aid extension


ATHENS Fri Jan 30, 2015 10:05am EST

Jan 30 (Reuters) - Greece's government will not cooperate with the EU and IMF mission bankrolling the country and will not seek an extension to the bailout programme, its finance minister said on Friday.

Jeroen Dijsselbloem, head of the euro zone finance ministers' group who is in Athens for talks with the new government, said the two sides would decide what would happen next before the programme ends on Feb. 28.

Thursday, January 29, 2015

Syriza Is Limited in the Promises It Will Be Able to Keep


Desmond Lachman 
The New York Times

JANUARY 27, 2015

Greece’s New Leaders Act Swiftly to Reverse Austerity

Measures to Halt Privatizations, Rehire Public Workers Trigger Greek Market Selloff

The Wall Street Journal

By MATTHEW KARNITSCHNIG and  STELIOS BOURAS
Jan. 28, 2015 5:46 p.m. ET


Greece’s new leaders moved swiftly to reverse the reform course imposed on the country by its creditors, dashing hopes in Europe that the leftist government would soften its approach and triggering a steep selloff in Greek stock and debt markets.

Wednesday, January 28, 2015

Sanctions Are Now Syriza's Bargaining Chip

JAN 28, 2015 8:47 AM EST
By Leonid Bershidsky

Bloomberg

“…I predict the Greek government will ultimately trade its sanctions vote for debt relief. If so, it will be revealed to be another bunch of cynical horse-trading politicians rather than a force for change, even as Greeks rejoice at seeing their national debt shrink…”


Greece's Crazy Leftists Have a Good Idea

172 JAN 27, 2015 12:01 AM EST
By The Editors
 Bloomberg
Amid the populist rhetoric that propelled the far-left Syriza party to victory in Greece's parliamentary elections, there's one idea that Germany in particular should take to heart: revive growth in the euro area by giving the hardest-hit countries a break on their debts.

Greece Puts Mind Over Money

6 JAN 28, 2015 12:01 AM EST
By Justin Fox

Bloomberg

“…More often than not, though, what makes a person an interesting thinker isn't what makes a good political leader…”

“…To make those things happen, though, he would need to be finance minister of Germany, not Greece…”

Why Europe Will Cave to Greece

45 JAN 28, 2015 1:00 AM EST
By Clive Crook

Bloomberg

A prediction for you: Greece and the European Union will split the difference in their quarrel over debt relief. What's uncertain is how their respective governments will justify the new deal, and how much damage they'll inflict on each other before accepting the inevitable.

EU governments, with Germany in the lead, are saying that debt writedowns are out of the question. Debts are debts. Greece's newly elected leader, Alexis Tsipras, calls the current settlement "fiscal waterboarding" and says his country faces a humanitarian crisis. His government won't pay and wants much of the debt written off. Neither side is willing to give way. 

Tuesday, January 27, 2015

Το Σύμφωνο Τσίπρα-Καμμένου

ΠΟΛΙΤΙΚΗ 12:45
Πάσχος Μανδραβέλης
Εφημερίδα Καθημερινή

Αν ο κ. Γιώργος Παπανδρέου είχε χιούμορ θα έκανε μια πολύ πιο λιτή δήλωση: «Ανθ’ ημών Πάνος Καμμένος». Το αναφέρουμε, όχι επειδή «Το Κίνημα» θα μπορούσε να είναι ένας λογικός Αριστερός εταίρος του ΣΥΡΙΖΑ, αλλά διότι -αν το καλοσκεφτούμε- και οι «Ανεξάρτητοι Ελληνες» είναι επίσης κόμμα από διάσπαση. Παρ’ όλα αυτά έδειξαν μια αξιοσημείωτη αντοχή. Αυτή είναι η τρίτη εκλογική αναμέτρηση που τους βάζει στη Βουλή. Δεν γνωρίζουμε ποιο κομμάτι της σοφίας του ελληνικού λαού παράγει τέτοιες επιλογές, αλλά το πρόβλημα δεν είναι μόνο αυτό. Ο ιδεολογικός αχταρμάς των ΑΝΕΛ επικονιάζει και ευρύτερους χώρους, με πρώτο αυτόν του ΣΥΡΙΖΑ.

Greece: Think Flows, Not Stocks

 JANUARY 26, 2015 7:26 PM

Paul Krugman

The New York Times

How should we think about the bargaining that may or may not now take place between the new Greek government and the troika? (No bargaining if the troika basically says no concessions.) Most discussion is framed in terms of what happens to the debt. But as both Daniel Davies and James Galbraith point out — with very different de facto value judgments, but never mind for now — at this point Greek debt, measured as a stock, is not a very meaningful number. After all, the great bulk of the debt is now officially held, the interest rate bears little relationship to market prices, and the interest payments come in part out of funds lent by the creditors. In a sense the debt is an accounting fiction; it’s whatever the governments trying to dictate terms to Greece decide to say it is.

This Man Will Make Greece Leave Europe





The victory of Alexis Tsipras and the Syriza party in Greek elections is the stuff that dreams are made of. But economies? Not so much.

By Barbie Latza Nadeau

Monday, January 26, 2015

Syriza’s Post-Election Challenge: An Empty Greek Treasury

Victorious Antiausterity Party Led by Alexis Tsipras Has Limited Time to Strike Deal With Greece’s Creditors

The Wall Street Journal

By MARCUS WALKER
Updated Jan. 25, 2015 8:11 p.m. ET

The clock is ticking for Syriza—the victorious antiausterity party in Greece’s elections—to strike a deal with creditors to keep Greece solvent and in the euro.

Η ανατομία μιας ήττας

ΠΑΣΧΟΣ ΜΑΝΔΡΑΒΕΛΗΣ

ΠΟΛΙΤΙΚΗ 26-1-2015 13:12

Εφημερίδα ΚΑΘΗΜΕΡΙΝΗ

"... η συγκυβέρνηση έτρεφε την ίδια αλλεργία στις μεταρρυθμίσεις και απλώς δεν μπορούσε να το πει δυνατά..."

GLOBAL MARKETS-Far-left victory in Greece bruises European markets

Mon Jan 26, 2015 4:17am EST

Reuters

* Syriza victory in Greece stokes concerns over Europe instability

* ECB QE, hopes for compromise with lenders limit market reaction

* European shares fall, periphery borrowing costs rise

* Euro stabilising after hitting 11-year low

By Marius Zaharia

Despite Initial Tremors, Markets Shake Off Greek Election Results

By DAVID JOLLY and NEIL GOUGHJAN. 25, 2015
The New York Times

PARIS — Financial markets on Monday took in stride the result of Greek parliamentary elections, which handed a decisive victory to the left-wing Syriza party a day earlier.

Syriza and its outspoken leader, Alexis Tsipras, had campaigned against the austerity measures imposed on Greece by its international creditors.

Tsipras Wins and Sets Greece on Collision Course With Euro Partners

By Nikos Chrysoloras and Marcus Bensasson  Jan 26, 2015 9:42 AM GMT+0200
Bloomberg
Greek Prime Minister-elect Alexis Tsipras set up a confrontation with his European peers as he prepared to form a coalition dedicated to ending austerity, saying the era of bowing to international demands for budget cuts is over.

Tsipras issued the challenge to Greece’s euro-area partners after his Syriza party won a historic victory in Sunday’s elections by harnessing a public backlash against years of belt-tightening, job losses and hardship. Tsipras, who is two seats shy of an absolute majority in Greece’s 300-seat chamber according to the latest results from the Interior Ministry, said his priority “will be for Greece and its people to regain their lost dignity.”

U.S. Futures Slip as Euro Fluctuates on Greece; Oil Falls

By Nick Gentle and Yuko Takeo  Jan 26, 2015 8:53 AM GMT+0200
Bloomberg

U.S. equity-index futures slid and Treasuries rallied as the euro fluctuated near a more-than 11-year low after Greek voters handed victory to a party that’s pledged to renegotiate the terms of an international bailout. Asian stocks dropped with crude oil and industrial metals.

Standard & Poor’s 500 Index futures sank 0.6 percent by 3:51 p.m. in Tokyo and the yield on 30-year Treasuries fell to a record. The 19-nation euro dropped to as low as $1.1098, the lowest since September 2003, before gaining 0.1 percent. The MSCI Asia Pacific Index (MXAP) lost 0.3 percent. U.S. crude declined 1.6 percent and nickel slid 2.2 percent in London. China’s yuan headed for its biggest two-day drop since 2008 versus the dollar.

Euro, stocks slip as Greece set to reject austerity

BY HIDEYUKI SANO
TOKYO Mon Jan 26, 2015 1:26am EST

(Reuters) - The euro skidded to an 11-year low and stock prices fell on Monday as Greece's Syriza party promised to roll back austerity measures after sweeping to victory in a snap election, putting Athens on a collision course with international lenders.

The euro fell to an 11-year low of $1.1098 EUR= on the vote outcome before recovering to $1.1186, still down 0.2 percent from last week.

Sunday, January 25, 2015

Greece votes on whether to dump austerity, take on lenders

BY ANGELIKI KOUTANTOU AND JAMES MACKENZIE
ATHENS Sun Jan 25, 2015 9:58am EST

(Reuters) - Greeks voted on Sunday in an election expected to bring to power the radical leftist Syriza party, which has pledged to take on international lenders and roll back painful austerity measures imposed during years of economic crisis.

Barring a huge upset, Syriza, which has led opinion polls for months, will be the biggest party and aims to form the first euro zone government openly committed to cancelling the austerity terms of its EU and IMF-backed bailout program.

All eyes on Fed, Greece after ECB fires bazooka

BY INGRID MELANDER
PARIS Sun Jan 25, 2015 4:39am EST
(Reuters) - After the surprises from central banks which rocked markets at the start of the year, the U.S. Federal Reserve will be watched as closely as ever this week to see that it doesn't stray from its own policy path.

The atmosphere will already be tense as the fallout from Sunday's snap election in Greece settles and concern has grown in some quarters that central banks, which played such a big part in guiding economies through the financial crisis, are becoming less predictable.

Greece Is About To Make A Leap Into The Unknown

AFP
GUY JACKSON, AFP
JAN. 25, 2015, 12:31 AM
Business Insider

Athens (AFP) - Greece votes Sunday in a snap general election that could bring the radical left Syriza party to power and pose the most severe challenge yet to austerity policies in struggling eurozone countries.

Electing Syriza and their 40-year-old leader Alexis Tsipras would represent a leap into the unknown, but many Greeks appear prepared to take a chance after years of hardship.

Saturday, January 24, 2015

Greece: Austerity, Relief or Exit?

9:26 AM EST JAN 23, 2015
By Marcus Walker

The Wall Street Journal

Greece’s elections on Sunday take place against the background of rising tensions between the small nation and its main creditors, eurozone governments and the IMF, about the country’s strict bailout regimen. Polls point to a win for leftwing opposition party Syriza over the ruling conservatives of New Democracy. Would a Syriza-led government start a game of chicken with Germany and other creditors that could lead to havoc and a Greek exit from the euro? Or can a compromise be found? Here’s our crystal ball.

Q: Who will lead the next Greek government?
Very likely Syriza (whose leader, Alexis Tsipras is pictured above), the leftwing opposition party, unless the conservative incumbent, Premier Antonis Samaras, pulls off the biggest upset victory since Harry Truman in 1948. Syriza might win an absolute majority in Parliament, but polls suggest it will fall just short, requiring support from another party. A pact with centrist To Potami (The River) or center-left Pasok could make the government more pragmatic in talks with Greece’s international creditors. A pact with the nationalist Independent Greeks could make it more hardline.

Syriza’s Rise Fueled by Professors-Turned-Politicians

Party in Lead in Greek Election Polls Hones Economic Platform With Cadre of Left-Wing Academics-Turned-Politician
The Wall Street Journal

By CHARLES FORELLE
Jan. 23, 2015 3:32 p.m. ET
159 COMMENTS
NAOUSA, Greece—Wearing suit pants and a jacket, Costas Lapavitsas stood Wednesday afternoon on the floor of a steel-fabricating shop here and addressed a few dozen workers and small-business owners who smoked while sitting in plastic chairs. “I am not a career politician,” he began.

Indeed. Mr. Lapavitsas ’s political career is only a few weeks old. In Greece’s elections Sunday, he is a parliamentary candidate for the leftist opposition party Syriza, which leads Prime Minister Antonis Samaras ’s conservative party in the polls and could roil politics throughout Europe if it wins.

Friday, January 23, 2015

Eurogroup chief Dijsselbloem issues warning to Greece before election: magazine

BERLIN Fri Jan 23, 2015 5:15am EST

 "And that also means: any country that need support to finance its economy and public expenditures must stick to those conditions."

Tsipras urged Greeks to give Syriza an outright victory in Sunday's vote so the country could turn its back on four years of austerity under the terms of the EU/IMF bailout.

Thursday, January 22, 2015

How Greece and Germany Brought Europe’s Long-Simmering Crisis Back to a Boil

A Game of Chicken Between the Greek Government, Creditors Helped Put Radical-Left Opposition Party Ahead in Polls

The Wall Street Journal

“…the austerity Europe has imposed on Greece as the price of rescue loans…”
“snap elections Sunday, … could return the country to the brink of exit from the euro…”
Mr. Samaras, a suave conservative who swings between statesmanship and populism…”
“…Wolfgang Schäuble …wanted to boot Greece out of the euro…”
“…Mr. Samaras faced a younger, left-wing version of himself: Syriza leader Alexis Tsipras , who blamed the crisis on austerity, not austerity on the crisis…”
“…Eurozone finance officials now think Greece will need a longer bailout. Sunday’s election winner must bridge an even bigger gap….”

By MARCUS WALKER and  MARIANNA KAKAOUNAKI
Updated Jan. 21, 2015 9:17 p.m. ET

Wednesday, January 21, 2015

What Good Are Economists?

Robert J. Shiller



NEW HAVEN – Since the global financial crisis and recession of 2007-2009, criticism of the economics profession has intensified. The failure of all but a few professional economists to forecast the episode – the aftereffects of which still linger – has led many to question whether the economics profession contributes anything significant to society. If they were unable to foresee something so important to people’s wellbeing, what good are they?

A “Merkel Plan” for Europe


JAN 19, 2015

By Bill Emmott


LONDON – Ever since Europe’s economic crisis erupted more than four years ago, politicians and pundits have clamored for a grand solution, often invoking the example of America’s postwar Marshall Plan, which, starting in 1948, helped to rebuild Western Europe’s shattered, debt-ridden economies. But the political moment has never been ripe. That could be about to change.
Europe’s situation today bears some similarities to the 1940s. Burdened by the public debts resulting from past mistakes, eurozone governments know what they need to do but not how to do it. They mistrust each other too much to collaborate. Meanwhile, demand in most of the European Union is weak, ruling out the economic growth needed to repay debts and offer hope to the 25 million unemployed.

Samaras Adrift as Syriza Lead Widens Before Greek Vote

By Nikos Chrysoloras and Paul Tugwell  Jan 20, 2015 1:48 PM GMT+0200
Bloomberg
Syriza widened its lead over Prime Minister Antonis Samaras’s New Democracy in three opinion surveys just days before the general election, prompting one pollster to say the race was all but decided.

Syriza, an acronym for Coalition of the Radical Left, led by between 4 percentage points and 6.5 percentage points in separate surveys conducted by GPO, Alco and the University of Macedonia based in Thessaloniki. That’s up from about 3 points last week.

An impasse in Paris, a gamble in Athens: how Greece returned to crisis

Wed Jan 21, 2015 1:00am EST

* Political uncertainty weighed on bailout review talks

* PM Samaras had little room for more austerity

* Failed talks, uncertainty prompted PM to call forward vote

By Renee Maltezou, Lefteris Papadimas and Deepa Babington

ATHENS, Jan 21 (Reuters) - After four years of economic sacrifices, Greece bet it could agree an early end to its international bailout. Instead a stand off with creditors in a Paris townhouse led to new political uncertainty and another euro zone storm.

Monday, January 19, 2015

Greece’s Syriza Leads in Polls as General Election Looms

Leftist Opposition Party Widens Lead, According to Survey in Newspaper To Vima

Wall Street Journal

By STELIOS BOURAS
Jan. 18, 2015 9:48 a.m. ET

ATHENSGreece’s leftist Syriza party is holding its lead in opinion polls a week ahead of a key general election, amid signs that political uncertainty is taking a growing toll on the economy.

Lessons from the 2012 Greek debt restructuring


Miranda Xafa 25 June 2014

The 2012 Greek debt restructuring was the largest one in the history of sovereign defaults. This column discusses the lessons from this historically unprecedented episode. Delaying the restructuring implied that externally held debt remained higher than it would have been otherwise. Supportive crisis management is necessary for smooth restructuring to take place in a currency union.



The Real Social Challenge Is Kickstarting Growth

19/01/2015 by George Pagoulatos


It is impossible to meaningfully address Europe’s social challenges for the present, medium and longer term without addressing the central challenge of economic growth. We are now in a situation where adverse longer-term trends are nested in a highly unfavourable current and medium-term economic environment.

Friday, January 16, 2015

Greece's Alpha Bank, Eurobank applied for ELA funding-source


ATHENS Fri Jan 16, 2015 4:34am EST

Jan 16 (Reuters) - Greece's Alpha Bank and Eurobank were the two lenders that applied for emergency liquidity assistance (ELA) from the Greek central bank, a banking source told Reuters on Friday.

A Eurobank investor relations executive confirmed it had applied for the emergency funding. Alpha Bank declined to comment.


Increased deposit outflows since Greece called snap elections slated for Jan. 25, coupled with government T-bill issues have squeezed banks' liquidity levels. (Reporting by George Georgiopoulos, editing by Deepa Babington)

Politics Risk Tripping Up Greece on Debt Relief

Greece’s debt looks fairly manageable. It’s politics that makes it problematic.

By STEPHEN FIDLER
Updated Jan. 15, 2015 5:26 p.m. ET
2 COMMENTS
Does Greece need debt relief? Alexis Tsipras, leader of the left-wing Syriza Party and the man who could be Greece’s next prime minister, says it does.

“There is no single sensible person in the whole of Europe who seriously thinks that Greece’s debt is sustainable and must be repaid in full,” he said in a speech on Tuesday.

Thursday, January 15, 2015

Αδημοσίευτο μνημόνιο: Τι προβλέπει για δαπάνες, δημόσιο, ιδιωτικοποιήσεις, χωροταξικό, μεταφορές


 (Σ.Σ..Πρόκειται για κείμενα που περιγράφουν τα μέτρα που προβλέπονται από την σύμβαση του Ελληνικού κράτους και των δανειστών τους και την πρόοδο που έχει η εφαρμογή τους. Είναι μακροσκελή.)
Πηγή:www.capital.gr

Φρένο στις δαπάνες για να επιτευχθεί πρωτογενές πλεόνασμα

Του Αλέξανδρου Κλώσσα

Απόλυτη συγκράτηση της κρατικής δαπάνης ώστε να μην ξεφύγει από τους στόχους που θέτει ο προϋπολογισμός και το πρόγραμμα δημοσιονομικής σταθερότητας προβλέπει το μνημόνιο, αφήνοντας ωστόσο περιθώρια αύξησης των δαπανών εφόσον υπάρξει υπεραπόδοση εσόδων, ενώ προαναγγέλει αναθεώρηση των στόχων του Μεσοπρόθεσμου Προγράμματος Στρατηγικής που ψηφίστηκε στη Βουλή, ώστε να ευθυγραμμιστεί με τους στόχους του μνημονίου.

Wednesday, January 14, 2015

Πριν 20 έτη

του Αθαν. Χ. Παπανδρόπουλου
Το καλοκαίρι του 1993 δεν θα το ξεχάσω εύκολα. Ήταν ένα από τα πιο κρίσιμα για το μέλλον της χώρας και, τελικά, από αυτά που δρομολογήθηκαν τότε, το κόστος τους καταβάλλεται σήμερα –εντόκως. Και είναι πολλά τα γεγονότα που αποδεικνύουν ότι, αν η τότε κυβέρνηση του Κων. Μητσοτάκη δεν είχε πέσει άδοξα, η σημερινή Ελλάδα θα ήταν διαφορετική.
Με υπουργό Εθνικής Οικονομίας τότε τον Στέφανο Μάνο –τον οποίον όχι λίγοι κοινοτικοί θεωρούσαν τον καλύτερο που είχε ποτέ εκπροσωπήσει την Ελλάδα στο EcoFin– η ελληνική οικονομία βρισκόταν σε καλό δρόμο και η κατάσταση θα γινόταν ακόμα καλύτερη αν η Νέα Δημοκρατία κέρδιζε εκ νέου τις κανονικές εκλογές που θα γίνονταν τον Απρίλιο 1994 –δηλαδή ένα εξάμηνο μετά την ανατροπή της.

New Europe’s Old Ghosts


JAN 9, 2015 6
Mazower Marc
http://www.project-syndicate.org/commentary/europe-nationalism-russia-germany-conflict-by-mark-mazower-2015-01

NEW YORK – The past stalked Europe in 2014. When the year started, the centennial of the Great War’s outbreak attracted much commemorative energy. But, as it progressed, disturbing parallels appeared – not to 1914, but to some of the nastier features of the interwar years.
From Scotland and Catalonia to the borders of Ukraine, the politics of nationality flared, while Europe’s economy stagnated – hostage to a German inflation phobia that dates back to 1923. And, as the year unfolded, a new geopolitical tug of war between the continent’s two early-twentieth-century giants, Germany and Russia, became apparent, while Europe’s amnesiac political elite seemed to be fumbling on one front after another.

Euro Slumps to 9-Year Low Against Dollar on ECB Easing Expectations


Currency Hits Lowest Point Against Dollar Since Late 2005
By JAMES RAMAGE
Updated Jan. 13, 2015 4:42 p.m. ET
The Wall Street Journal

The euro slipped to a new nine-year low against the dollar on Tuesday as investors bet the European Central Bank would announce broad measures to lift the economy and consumer prices at its meeting next week.

Moody's: Greece exit from euro zone unlikely, less risk of contagion than in 2012

ATHENS Wed Jan 14, 2015 1:54am EST


Jan 14 (Reuters) - The likelihood of Greece leaving the European single currency remains relatively unlikely than during the peak of the euro zone crisis and the risk of contagion to other countries is lower than in 2012, rating agency Moody's said on Wednesday.

Tuesday, January 13, 2015

Gold Rises to Highest Since October as U.S. Rate Outlook Weighed

By Laura Clarke and Glenys Sim  Jan 13, 2015 12:23 PM GMT+0200

Bloomberg

Gold extended gains to the highest in almost 12 weeks as investors assessed the timing of higher borrowing costs and the strength of the U.S. economy amid slumping oil prices. Silver climbed to a four-week high.

Bullion rose for a third day after U.S. data last week showed falling incomes even as hiring accelerated. Fed Bank of San Francisco President John Williams has said raising rates in June would be a close call amid “strong momentum” in the labor market and weaker wage gains.

Greek leftist: German taxpayers have nothing to fear from Syriza gov't

Tue Jan 13, 2015 4:55am EST

* Germany says Greece must stick to bailout conditions

* Tsipras' party ahead in polls, wants end to austerity

* Tsipras says Greece needs growth to repay debts

BERLIN, Jan 13 (Reuters) - German taxpayers should not be afraid of a Greek government led by the left-wing Syriza party, its leader Alexis Tsipras wrote in an article published on Tuesday in a German business daily.

Speculation is growing that if anti-bailout Syriza wins Greece's Jan. 25 parliamentary election, it will try to renegotiate European Union loans and conditions, possibly provoking a crisis between Athens and its euro zone partners.

Here's What A 'Grexit' Would Cost Europe


RICHARD LEIN, AFP
JAN. 11, 2015, 8:40 AM

Business insider

Paris (AFP) - A Greek exit from the eurozone would certainly come at a cost to Europe, but just how expensive would it be?

The amount Athens owes its partners is equivalent to just a tiny fraction of the eurozone's economy, but some analysts are still worried that a 'Grexit' could ultimately cost Europe its single currency.

No Exit for Greece

By JOSEF JOFFEJAN. 12, 2015

The New York Times

HAMBURG, Germany — Another Chapter 11 for Greece, the third in five years — and no exit in sight. The Greeks won’t do the eurozone the favor of absconding from the common currency. Never mind that they should never have been accepted in the first place, when they cooked the books to look prim and proper.

Not even Alexis Tsipras, the leader of the radical leftist Syriza party, wants out. Apparently on track to win the snap elections on Jan. 25, he has vowed: “We will stick with the euro, no doubt.”

ECB Warning to Greece Deploys Tactic Honed in Crisis

By Jeff Black and Nikos Chrysoloras  Jan 13, 2015 9:56 AM GMT+0200

The European Central Bank is threatening to choke off funding to Greece’s lenders in the hope it won’t actually need to.

Parliamentary elections on Jan. 25 hinge on whether Greek voters are willing to accept a strings-attached successor to the country’s international bailout package. Under President Mario Draghi, the Frankfurt-based ECB has made its position clear: No program means no guarantee of cash from us.

Friday, January 9, 2015

Why Grexit would not help Greece - debunking the myth of exports

by Guntram B. Wolff on 6th January 2015
http://www.bruegel.org

The genie is out of the bottle: Europe is again discussing the possibility of Greece leaving the euro. With it, the debate has re-emerged whether this would be helpful or not for Greece and whether there would be contagion to other euro area countries. A big question is, of course, how the Greek financial system would survive an exit with a debt restructuring; how long it will take until Greece would regain access to financial markets; and how big the benefit of a debt restructuring is given the relatively low interest load. The absence of external help would be a further factor weighing on Greece. All these factors speak clearly against an exit from the point of view of Greece but they are not discussed in this blog.

Greek Elections, Democracy, Political Trilemma, and all that


08/01/2015 by Dani Rodrik

From the site http://www.socialeurope.eu/


Two-and-a-half years ago I wrote a short piece titled “The End of the World as We Know It” which began like this:

Consider the following scenario. After a victory by the left-wing Syriza party, Greece’s new government announces that it wants to renegotiate the terms of its agreement with the International Monetary Fund and the European Union. German Chancellor Angela Merkel sticks to her guns and says that Greece must abide by the existing conditions.

Greece: this time is different. It just isn't any less dangerous

by  Geoffrey Smith  @Geoffreytsmith  JANUARY 8, 2015, 12:18 PM EST
Fortune


Greece and others have tired of austerity. Do Berlin, Frankfurt and Brussels still have the will to face them down?

It’s fair to say that this iteration of the Greek debt crisis is different. But that doesn’t justify the kind of complacency financial markets are showing.

Things may indeed be different in the details from 2012, when Greece nearly left the currency union, dragging half a dozen other countries with it. The problem is, the big picture has changed, if anything, for the worse. This time is just as dangerous as last time because the Eurozone still doesn’t have the political institutions to back its currency, and probably never will have.

Euro sinks to fresh nine-year low


 BBC
8 January 2015 Last updated at 15:52 GMT

The euro has hit a fresh nine-year low against the dollar, in part after a surprise decrease in German manufacturing.

German factory orders fell by 2.4% in November compared with the previous month, worse than expected.

A crowded field


Syriza edges closer to victory, but with uncertainty over its coalition partner
Jan 10th 2015 | ATHENS |
The Economist
THE far-left Syriza party continues to hold a small but steady lead in the polls ahead of Greece’s election on January 25th. After such a long period ahead of the ruling party, this lead seems unlikely to be overturned in just two-and-a-half weeks, say pollsters.

Thursday, January 8, 2015

Don’t Believe the Hype: Why Germany Needs Greece to Stay in Euro

By Simon Kennedy  Jan 8, 2015 1:08 PM GMT+0200

Bloomberg

Don’t believe the hype.

A reading of the German press suggests Chancellor Angela Merkel is at peace with the idea of Greece quitting the euro. Der Spiegel says her government views that as a manageable outcome; Bild reports that officials are preparing for the prospect. Lawmaker Michael Fuchs says Greece is no longer a threat to financial stability.

All that is mostly posturing for an electorate tired of the aid and angst Greece has demanded since 2010. In fact, Germany has no interest in risking the dissolution of the single currency that a Grexit could entail.

Greek Opposition Still Holds Slim Lead in Polls Before Elections

Syriza Party Ahead in Voter Surveys, but Narrow Margin Shrinks


By ALKMAN GRANITSAS
Updated Jan. 7, 2015 4:15 p.m. ET
The Wall Street Journal
ATHENSGreece’s leftist opposition party continued to hold a narrow lead ahead of this month’s national elections, although it appears to be shrinking, two public opinion polls showed Wednesday.

The polls show the Syriza party, which opposes Greece’s financial bailout and its economic reforms, garnering between 28.5% and 31.6% of the vote, placing it ahead of the governing New Democracy party, which has been implementing the economic austerity measures.

New Democracy would get between 25.3% and 28.6% of the vote, according to the two polls, for the Mega television channel and the weekly To Pontiki newspaper.

Monday, January 5, 2015

A Weary Greece Considers Its Options

By THE EDITORIAL BOARDJAN. 3, 2015
The New York Times

The human toll of the economic crisis in Greece has been significant: Rates of hunger, suicide and unemployment have increased sharply, thanks to years of misguided austerity policies. So it is hardly shocking that polls are showing that voters are likely to give control of Parliament to the leftist political party Syriza in an election later this month.

Samaras Warns of Euro Exit Risk as Greek Campaign Starts

By Leon Mangasarian  Jan 5, 2015 9:46 AM GMT+0200
Bloomberg

Greece’s political parties embarked on a flash campaign for elections in less than three weeks that Prime Minister Antonis Samaras said will determine the fate of the country’s membership in the euro currency area.

Samaras used a Jan. 2 speech to warn that victory for the main opposition Syriza party would cause default and Greece’s exit from the 19-member euro region, while Syriza leader Alexis Tsipras said his party would end German-led austerity. Der Spiegel magazine reported Chancellor Angela Merkel is ready to accept a Greek exit, a development Berlin sees as inevitable and manageable if Syriza wins, as polls suggest.

Friday, January 2, 2015

The odds of Greece leaving the euro have never been higher

By Matt O'Brien December 29, 2014
The Washington Post


Beware Greeks bearing the same political crisis over and over again. Because eventually this will be how the euro crisis ends: not with a bailout, but a ballot.

It's a tale as old as Homer, or at least it seems that way. The Greek government, you see, has once again collapsed under the weight of the country's austerity program, and anti-bailout parties are leading the polls ahead of new elections. This time, not that it really matters, the ruling coalition led by the right-of-center party New Democracy fell apart after it couldn't get its presidential nominee, a largely ceremonial role, confirmed in three tries. What does matter, though, is whether New Democracy, which is still running a close second, can hold on to power in the snap elections scheduled for Jan. 25. If it can't, then the far-left party Syriza will get its chance to lead Greece in a high-stakes game of chicken with Germany.