Unlikely Winners of Greece's Surrender

FEB 26, 2015 2:00 AM EST

By Mark Gilbert

Bloomberg

The Greek government's apparent capitulation in debt negotiations with its euro partners makes it less likely that Athens will be forced out of the common currency. The real winners, though, are the European governments who have stuck with spending cuts in the face of mounting domestic opposition. They don't have to worry about a successful austerity renegade giving ammunition to their opponents.

ECB’s Draghi Defends Policy Toward Greece

Draghi Says ECB Is Willing to Accept Greek Bonds as Loan Collateral If Athens Sticks to Pledges

By TODD BUELL And  BRIAN BLACKSTONE

Updated Feb. 25, 2015 4:13 p.m. ET

The Wall Street Journal

FRANKFURT—European Central Bank President Mario Draghi defended the ECB against criticism that it acted in a heavy-handed way toward Greece during the country’s bailout negotiations with creditors, saying the central bank was simply applying its lending rules.

The Reason Austerity In Greece Didn't Work

2/26/2015 @ 4:13AM 71 views

Tim Worstall

Forbes

One of the little puzzles of the past few years has been why was the reaction of the Greek economy to austerity so much worse than that of other countries? For it is true that other countries (I think particularly of Spain and Portugal) had the same sort of shrinkage of the government budget, had the same (entirely wrong and inappropriate) monetary and currency policies but they did much better. Or at least not as badly. So what was the secret to that Greek economy that made the out turn so awful? And awful it is, Greece has had a fall in GDP akin to what the US had in the Great Depression of the 1930s. The answer, it appears, is that the underlying structure of the Greek economy is such that it just couldn’t take advantage of the meagre benefits that austerity did provide.

What Greece Needs

By ARISTOS DOXIADIS

FEB. 25, 2015

The New York Times 

ATHENS — The depression ravaging Greece is always framed as an issue of macroeconomics: fiscal policy was tightened too quickly; government debt is too high; the tools of currency devaluation and monetary expansion are not available inside the eurozone. But this is overly simplistic; local politics and microeconomic factors are just as important in explaining the depth of the crisis.

What Greece Can Learn From Israel About Tax Cheats

4 FEB 24, 2015 12:55 PM EST

 Bloombergview

By Stephen Mihm

Among the most closely watched commitments made by Greece to obtain a four-month extension of aid from its official creditors is a promise to overhaul its notoriously inefficient system of tax collection and administration.

Skeptics, particularly among the law-abiding citizens of other European countries who believe their tax euros will be wasted on the continued bailout of Greece, will have hard time buying this pledge.  

Greece debt crisis: Eurozone backs reform plans

BBC 

Eurozone finance ministers have approved reform proposals submitted by Greece in order to obtain a four-month extension of its bailout.

The Eurogroup said it had agreed to begin national procedures - parliamentary votes in several states to give the deal final approval.

The measures offered by Greece include combating tax evasion and reforming the public sector.

After Bailout Plan Approval, Greece Faces a Balancing Act

By JAMES KANTER and NIKI KITSANTONISFEB. 24, 2015

The New York Times

BRUSSELS —

Eurozone finance ministers on Tuesday approved Greece’s plan meant to ease the hardships created by its international bailout, extending that loan program by four more months.

In revising the terms of the bailout program, the new Greek government pledged to take a disciplined approach to budgets, spending and tax collection, while remaining committed to relieving the “humanitarian crisis” caused by years of economic hardship and high unemployment. Many Greeks blame the austerity-budget requirement of the bailout program, agreed to by a previous government, for those privations.

What The Eurogroup Demands Is Absurd

by Paul Krugman on 19 February 2015

Paul Krugman was interviewed by Evan Davis on the BBC’s Newsnight programme on 17th February. The following is a transcript of the part of the interview dealing with the negotiations for a new deal for Greece.

I don’t know what you think but how far should the Eurozone go, the European Commission, in helping yield to what Syriza is asking for?

GREECE'S FUTURE IS ITS PAST

Posted by Rebecca Harding on Feb 23rd 2015,

A deal was done at the last minute: Greece’s €172bn debt bailout was extended for a further four months after a turbulent week of bluff and counterbluff. Even now, there are no formal agreements on the required reform process ahead and without these agreements the deal will not be ratified. It appears that the Greek government is keen to demonstrate its willingness to reform by focusing on tax evasion and civil service reform, but it is unlikely that this will be sufficient for either Germany or the ECB.

Grexit: Was Germany ready to pull the trigger?

A temporary deal largely on German terms has been struck to avoid Greece crashing out of the euro. A key factor may have been that Germany was ready to contemplate Grexit - Syriza wasn't.

23 February  2015+

As we predicted and noted in our instant response to Friday’s deal to keep Greece in the euro, as things stand, Syriza spent an awful lot of political capital in return for limited result.+

There are several reasons why  Syriza’s bargaining hand is relatively weak. At the end of the day, Syriza isn’t yet prepared to contemplate Grexit, with over 70% of the Greek public still in favour staying in the euro. In contrast, it may well be the case that the German government genuinely was ready to let Greece go, absent a deal. You can credit Syriza for acting responsibly on that point. However, it also meant that in that epic stand-off between Wolfgang Schäuble and Yanis Varoufakis, only one of them had a nuclear option.+

Greece sends comprehensive reform plan to lenders: EU source

BY ROBERT-JAN BARTUNEK

BRUSSELS Tue Feb 24, 2015 4:56am EST

(Reuters) - Greece sent a list of economic reform plans to European institutions and the International Monetary Fund around midnight that was "a valid starting point" for talks over its bailout, a source close to the European Commission said on Tuesday.

Grexit for the Good of the Eurozone

Posted: 02/23/2015 8:28 pm EST Updated: 02/23/2015 8:28 pm EST

Russell Green Become a fan

Will Clayton Fellow for International Economics at Rice University's Baker Institute for Public Policy

http://www.huffingtonpost.com/russell-green/grexit-for-the-good-of-th_b_6737680.html

If the Greeks leave the Eurozone, it would be awful. Both Greece and the remainder of the euro area would experience damaging volatility and uncertainty. But "Grexit" does not have to be all bad. In fact, if the Eurozone countries use the crisis to push through long-needed reforms, they could wind up in a much stronger position in the long run.

Greece Delays Submittal of Its Overhaul Plans

By NIKI KITSANTONIS and JAMES KANTERFEB. 23, 2015

The New York Times

ATHENS — Greece on Monday delayed the submission of the proposed reforms that European creditors have made a condition of the country’s financial aid.

European and Greek officials spent much of the day exchanging drafts of the proposals paring back austerity and ensuring Greece can still meet its budget targets. While they underscored the progress made, Athens will now present the list Tuesday morning, after the original deadline of Monday night.

Eurogroup statement on Greece

 (http://www.consilium.europa.eu/en/press/press-releases/2015/02/150220-eurogroup-statement-greece/)Original document

_______________________________________________________________________________

The Eurogroup reiterates its appreciation for the remarkable adjustment efforts undertaken by Greece and the Greek people over the last years. During the last few weeks, we have, together with the institutions, engaged in an intensive and constructive dialogue with the new Greek authorities and reached common ground today.

The Eurogroup notes, in the framework of the existing arrangement, the request from the Greek authorities for an extension of the Master Financial Assistance Facility Agreement (MFFA), which is underpinned by a set of commitments. The purpose of the extension is the successful completion of the review on the basis of the conditions in the current arrangement, making best use of the given flexibility which will be considered jointly with the Greek authorities and the institutions. This extension would also bridge the time for discussions on a possible follow-up arrangement between the Eurogroup, the institutions and Greece.

The Greek authorities will present a first list of reform measures, based on the current arrangement, by the end of Monday February 23. The institutions will provide a first view whether this is sufficiently comprehensive to be a valid starting point for a successful conclusion of the review. This list will be further specified and then agreed with the institutions by the end of April. 

Only approval of the conclusion of the review of the extended arrangement by the institutions in turn will allow for any disbursement of the outstanding tranche of the current EFSF programme and the transfer of the 2014 SMP profits. Both are again subject to approval by the Eurogroup.

In view of the assessment of the institutions the Eurogroup agrees that the funds, so far available in the HFSF buffer, should be held by the EFSF, free of third party rights for the duration of the MFFA extension. The funds continue to be available for the duration of the MFFA extension and can only be used for bank recapitalisation and resolution costs. They will only be released on request by the ECB/SSM.

In this light, we welcome the commitment by the Greek authorities to work in close agreement with European and international institutions and partners. Against this background we recall the independence of the European Central Bank. We also agreed that the IMF would continue to play its role.

The Greek authorities have expressed their strong commitment to a broader and deeper structural reform process aimed at durably improving growth and employment prospects, ensuring stability and resilience of the financial sector and enhancing social fairness. The authorities commit to implementing long overdue reforms to tackle corruption and tax evasion, and improving the efficiency of the public sector. In this context, the Greek authorities undertake to make best use of the continued provision of technical assistance.

The Greek authorities reiterate their unequivocal commitment to honour their financial obligations to all their creditors fully and timely.

The Greek authorities have also committed to ensure the appropriate primary fiscal surpluses or financing proceeds required to guarantee debt sustainability in line with the November 2012 Eurogroup statement. The institutions will, for the 2015 primary surplus target, take the economic circumstances in 2015 into account.

In light of these commitments, we welcome that in a number of areas the Greek policy priorities can contribute to a strengthening and better implementation of the current arrangement. The Greek authorities commit to refrain from any rollback of measures and unilateral changes to the policies and structural reforms that would negatively impact fiscal targets, economic recovery or financial stability, as assessed by the institutions.

On the basis of the request, the commitments by the Greek authorities, the advice of the institutions, and today's agreement, we will launch the national procedures with a view to reaching a final decision on the extension of the current EFSF Master Financial Assistance Facility Agreement for up to four months by the EFSF Board of Directors. We also invite the institutions and the Greek authorities to resume immediately the work that would allow the successful conclusion of the review.

We remain committed to provide adequate support to Greece until it has regained full market access as long as it honours its commitments within the agreed framework.

Greek reform list to comprise mainly structural actions: government source

BY RENEE MALTEZOU

ATHENS Sat Feb 21, 2015 12:41pm EST

(Reuters) - Greece's list of reforms to be submitted to the euro zone on Monday comprises pledges on structural issues such as tax evasion and corruption over the next four months without specific targets, a government official said on Saturday.

Athens clinched a last-minute deal late on Friday to avoid a banking collapse by accepting a conditional extension of its bailout program. The accord requires Greece to submit by Monday a letter to the Eurogroup listing all the policy measures it plans to take during the remainder of the bailout period.

Tsipras declares victory as Greece dodges financial ruin

BY GEORGE GEORGIOPOULOS AND KAROLINA TAGARIS

ATHENS Sat Feb 21, 2015 3:13pm EST

(Reuters) - Greek Prime Minister Alexis Tsipras declared victory on Saturday after agreeing a conditional financial rescue deal with Europe and despite making big concessions to avert a banking collapse within days.

German-Led Bloc Willing to Let Greece Leave Euro, Scicluna Says

by Paul TugwellNikolaos Chrysoloras

11:34 AM EET

February 20, 2015

(Bloomberg) -- Germany and its allies are ready to let Greece leave the euro unless Prime Minister Alexis Tsipras accepts the conditions required to extend his country’s financial support, according to Malta’s finance minister, Edward Scicluna.

Has Greece's 'Lehman moment' finally arrived?

Matt Clinch     | @mattclinch81

2 Hours Ago

A key week for Greece's economic future drew to a close on Friday with the country facing the very real threat that it's running out of money and key analysts warming to the idea that it could be on its way out of the euro zone.

Euro zone finance ministers are set to meet Friday to discuss Greece's latest proposals to extend its loan agreement. But with Germany already rejecting the plan, there is very little hope that an agreement will be announced. Another meeting in Brussels for next week was already being touted before Friday's meeting even began. The main problem for the fiscally disciplined countries like Germany is that, despite the ground Greece has given up in the last week, it is still asking for the bailout loan without all of the strict austerity conditions that come with the money.

Greek economist Elena Panaritis, former member of the Greek Parliament and the World Bank, drew comparisons with the collapse of the Lehman Brothers in 2008. As with the fall of the big U.S. bank, market-watchers feel euro zone policymakers want to show the world they will only be pushed so far — with the result being Greece would be allowed to exit the euro zone.

Panaritis thought there was a "political statement as well as economic statement" being made during the negotiations. Randy Kroszner, a former U.S. Federal Reserve governor and the professor of economics at the University of Chicago Booth School of Business, agreed that there were comparisons between the two events.

"I think there a parallel, but the tools exist if the European Union wants to keep Greece in and if Greece is willing to stay in," he told CNBC Friday. "Even though it may be quite ugly, the likelihood of complete chaos is much lower. So that gives policymakers more willingness to say 'Hey, we'll take that risk'."

http://www.cnbc.com/id/102441576#.

Varoufakis Meets Euro Partners as Greece Seeks to Avoid Default

by Paul TugwellMarco Bertacche

11:34 AM EET

February 20, 2015

(Bloomberg) -- Greek Finance Minister Yanis Varoufakis returns to Brussels for a third meeting in two weeks with his euro-area counterparts in an effort to strike a deal that will let Europe’s most-indebted country avoid default.

This is the eurozone risk investors are ignoring

Published: Feb 20, 2015 3:21 a.m. ET

Financial contagion gives way to political contagion

http://www.marketwatch.com/story/this-is-the-eurozone-risk-investors-are-ignoring-2015-02-19

NEW YORK (MarketWatch) — Greece, as you may have heard, is hurtling toward potential default and a potential exit from the eurozone. Investors are largely taking it in stride.