Greek Referendum

Papandreou says

“We have faith in our citizens, we believe in their judgment and therefore in their decision,” Mr Papandreou said after rejecting a call for early elections by some socialist politicians. “All the country’s political forces should support the [bail-out] agreement. The citizens will do the same once they are fully informed.”

Does he believe this? What are the implications for the euro?

143 replies on “Greek Referendum”

It seems to me to show strength of character. Perhaps Papendreou has decided on a decision path, either solve this problem with a democratic mandate in the method proposed by the EU elite, or leave the Euro and try an alternative solution. Is that not a credible decision strategy? For a continental politician in the EU, it shows an unusual faith in democracy. The Greek elite (at least in the guise of Papendreou) have not abandoned democratic principles for such an important national decision, which to me seems appropriate.

No chance the greek public are going to pass this….and I think it is only right that they have their say. The unravelling of the euro is going to go into superdrive now….it’s a scary prospect but maybe it’s for the best in the long run

Hi Karl,

my spontaneous thought was, it won’t happen, I consider it diplomatic trickery:

Referendum = 100% default, back to drachme? = much higher EU Recap -> Merkozy up shit creek

Result >=75% haircut instead?

@Karl

“Does he believe this?”

I most certainly hope he does because I dont fancy the thought of looking at a Hellenic version of Pinochet making an “announcement” in a few weeks time.

IMHO the Greeks should have thier say and the rest of the EU should support them no matter what the result.

” …..implications for the euro?”

If it is sustainable it will survive if it is not sustainable it will not survive. Either way democracy and the European Project take priority over a currency .

Sometimes it seems to me that some people think the Euro is the European Project . It is not ! There was an Economic Union in Europe before the Euro .

The fact that Greeks can have a referendum on this issue is a positive sign for democracy and the European Project. When Ireland joined the EEC(and the concept of a Euro did not exist beyond a few intellectual chats over a few pints) military power governed Greece .

the FG /LAB Goverment missed the boat when elected
the first item on the agenda should have been a Referendum
on the Bank EU/IMF bail out but alas not be

ironic in a way to see the FF party coming out today not to pay
Anglo Irish Banks unsecured senior bond holders after the led the charge
in selling people of Ireland down the perverbial

“Does he believe this? What are the implications for the euro?”

No he does not believe it.

He wants’ to let the Greek people take responsibility for his ignorance.

He should have defaulted long ago.

He’s going to “get out of Dodge”.

Just like Fianna Fail did.

He’s hoping the social unrest won’t be so violent that he ends up with his head on a spike.

He’s hoping he can just retire to the Dacha somewhere in “Europe” and watch with amusement.

The Greeks intentionally falsified their figures, that is theft. They also have a lazy public service, with jobs down to nepotism, that is corruption.

If the Greek people decide to go it alone, I say boot ’em from the EU, in any case they are borderline Europeans, with tendency to street violence and terrorism – much more akin to the Middle East than Western civilisation.

@Gregory Connor

Cicero would approve.

Democracy must triumph or the EU isn’t worth the candle. Who follows next?

In geo-political terms there are powerful cliques in the US, NATO, the military-industrial complex, Russia, organized crime of the non-financial system variety, [to say absolutely nothing about financial system crime] who might prefer to see a weakened Europe.

p.s. glad to hear you discoverd Hegel in Maynooth – he was banned for a long time … any first editions? ‘Spose you’ll be on about Kant and Marx next (-:

It looks like a political decision that was forced on Papandreou by New Democracy who have been unrelenting in demands for an election.
The key question is…were the Troika informed? I would guess not.
I would venture to suggest that our own government strategy is now unravelling and I would doubt if there is a plan B.

@ Desmond Brennan

“The Greeks intentionally falsified their figures”

Did they get any help from Glodman Sachs?

Is the ISDA helping Goldman Sachs?

Are Goldman Sachs one of the 15 members of the Determination Committee?

It seems the situation in Greece is evolving rapidly….

“Opposition parties accuse PM of ‘blackmail’

New Democracy leader Antonis Samaras is to meet with President Karolos Papoulias on Tuesday, when he is expected to repeat his call for snap polls
New Democracy rejected Prime Minister George Papandreou’s call for a referendum on the debt deal Greece agreed with its eurozone partners, saying that it was tantamount to blackmailing the Greek people.

New Democracy leader Antonis Samaras is due to meet with President Karolos Papoulias on Tuesday, when he is expected to repeat his call for general elections to be held. Sources said that the conservatives were on Monday night considering ways of forcing Papandreou’s hand so he would call elections rather than go to the polls.

One of the options being considered was for all ND lawmakers to resign their positions and boycott Parliament.

“Mr Papandreou is dangerous,” said ND spokesman Yiannis Michelakis. “He has tossed Greece’s future in Europe in the air like a coin.”

The Communist Party (KKE) had a similar reaction, saying it was opposed to a referendum being held. “No to the blatant blackmail and the ideological terrorization of the people,” said spokesman Makis Mailis.

KKE leader Aleka Papariga had earlier repeated the party’s call for elections to be held.

A few hours before Papandreou called for the referendum, the Coalition of the Radical Left (SYRIZA) met with Papoulias and asked the president to use his powers to convene a session in Parliament to discuss the debt deal agreed with the eurozone. Later, SYRIZA leader Alexis Tsipras dismissed Papandreou’s initiative as a “trick.”

Democratic Left chief Fotis Kouvelis also dismissed the referendum idea. “The question of ‘yes’ or ‘no’ to a new loan deal refers to fiscal matters and it is questionable whether the constitution allows such a referendum,” he said.

While it was not clear what question Papandreou would like to pose in the referendum, Papoulias would have to give his approval. Also, for the result of the vote to be considered binding, at least 40 percent of registered voters would have to cast their ballots.”

From the political standpoint I think this always looked the most obvious way to go. He is not going to bulldoze through stuff the opposition will claim is unnecessary and then be the fall-guy for the probable political fall-out.

He has put the opposition on the spot. They now have to campaign for the alternative – not a fake alternative like the one FG and Labour campaigned on – an alternative that the opponents of his referendum would probably be forced to adhere to, so how loud will their campaign be? They won’t be able to bullshit about renegotiating while campaigning on policy promises which undermine any potential negotiating position they might have had. They will have to answer the question about what if they don’t take the credit line.

60% against in recent polls is not that big a hurdle when you consider the actual decision to default in a few weeks and how that prospect might focus attention, so GPap probably thinks he will prevail in the vote.

I think though this may wake up a few market participants located some distance from Europe and not near any coasts.

There is also the possibility that if it looks like they are heading for a ‘no’ vote, suddenly the friendship of all thoise clubbable bank boadr members might start to look a little less important to the core EZ politicians.

Fantastic and courageous decision by Papandreou. He knows what the answer will be. An exit from the euro and pretty much 100% default including to European ‘official’ funders.
Greece will start with a drachma and very little debt. Of course they will get a lot of angst from Merkozy but Greece will trade in the Southern Med and Middle East.
They can live without Mercedes and Christian Dior perfumes.
‘Poor but proud’ as they in Laois.

Next Summer Greece will be filled with tourists.
I bet O’Leary is already looking for landing strips.

@ David O’Donnell

Wouldn’t worry to much about that.

He’d say the same of the Irish if it suited him.

@ Desmond Brennan

“That they did, but the issue at hand is the Greeks”

I will leave aside your idiocy.

The issue at hand is debt.

Nothing more nothing less.

If you do not understand that you will continue to misconstrue what is happening.

I do hope you don’t invest your own money.

“The Greeks intentionally falsified their figures, that is theft.”

And the Irish banks on September 29 2008 – they didn’t even know what their exposures were. And they railroaded the Govt into a guarantee. Was that theft or just incompetence?

“They also have a lazy public service, with jobs down to nepotism, that is corruption”

Hello Kettleopolous. This is Seamus Dubh McPot

@all re Desmond Brennan

I am disgusted at what that poster wrote.

IMHO those comments do not reflect the mood of Irish people who know how to differentiate between dodgy Government leaders and the people they are supposed to “serve”

The privilege to express ones views freely should be valued and not devalued in this way.

@Seafóid
We are paying our debts, the cost of our sinful bubble binge as it were. The Greek people wish to avoid paying their debts, and their politicians seem slow to structural reform.

Desmond

The Irish people are paying the debts of the developers and “taking one for the team”. The deficit is manageable but the bank collapse tipped it over into bailout territory.

@Grumpy

I think he will be forced into an election. He’s bound to come under fierce pressure from the troika. The FT reporting an EU official saying…” it came like a bolt out of the blue”.

I wonder how the markets will react am?

Most interesting development, as Ceterisparibus says things are evolving rapidly.

One point strikes me…

It was Greek Political corruption / Political incompetence which got Greece into the mess it is currently in. Fair enough the euro project never suited Greece, but the damage came from the political establishment itself, not from Europe.

If Greece does vote to opt out from the euro project, there is no guarantee that the citizens of Greece will return to a stable and just political governance. Greek politicians today are just as incompetent and corrupt as they were 10 years ago.

Perhaps Papandreou is firing a political shot across Mr Sarkozy’s bow after the rather undiplomatic comments he made recently about saying Greece should never have joined the euro.

Greece leaving the euro is one thing, however the country is risking self destruction and I feel we could be looking at the end of civilization for Greece.

@ Desmond Brennan

At best you are an idiot Brennan.

You might want to consider educating yourself.

Debt, and the manner in which it is created, would be a good place to start.

In the meantime. Could you possibly keep your racist opinions to yourself?

@Seafóid
The CB/FR regulated the banks,swore they were solvent, thus we got a huge influx of funding.

Banks funded developers, acting as hedge funds style risk takers…massive windfall taxes funded a Public Expenditure increase of c €30bn p/a 2002-2008. The developers have been wiped out, ditto the banks.

Bertie backed all of this, the people loved him and voted him in for more ‘giveaway budgets’ ‘ps pay rises’ ‘sw rises’ etc. So it is right and proper that Ireland pays said money back.

Similarily the ‘man on the street’ in Greece, is the one who voted in the lying corrupt governments – and the one who benefited from the theft.

@Seafoid re Desmond Brennan

I do not know why you are debating with that poster. IMHO the earlier comments remove any value from any subsequent arguments that poster may make until they are voluntarily withdrawn.

@ Livonian

Fair enough but it’s not the first time I have heard it about Greece. The Portuguese are workshy and lazy and I can’t remember what the markets say about the Irish. That conf call withn BLTD RIP had a flavour.

Anyway fair play to Greece. They won the Euro football once so they know about timing. Let’s move on to the inflation, shall we ?

@ Desmond Brennan

“The CB/FR regulated the banks,swore they were solvent, thus we got a huge influx of funding.”

Is there no beginning to your understanding of debt?

Regulatory capture?

Bill Black?

I might be wrong, but I do not believe this G-pap stunt for a second!

As I said, I consider it diplomatic trickery, I do not think they will have a referendum. Merkozy thought they had it wrapped up until 2012, and he just ditched the ‘solutions’ brought to him, 3 days before the next G20.

It’s a political stunt.

@ Georg R. Baumann

Yes he is as slippery as Bertie.

But if he now fails to give the referendum he will have Civil War.

Seafóid; ”… the Irish banks on September 29 2008 – they didn’t even know what their exposures were. And they railroaded the Govt into a guarantee. Was that theft or just incompetence?”

Indeed. But hasn’t Eamon Ryan recently come out and said that the ECB let them know in no uncertqain terms that they were not to let an Irish bank fail, when questioned specifically about Anglo.
I think there may have been more behind it than solely FF protecting the Boys.
The figures owed to European Institutions seem to dwarf all the others.
Qui bono, etc.

I was wondering where the moral high ground had got to, I see it has moved here.

The interesting question, what happens if they vote yes?

The no case is pretty much baked in, leave the euro, disorderly default, CDS triggered, banks emergency recapitalised, all over in a month at most. A bit like Iceland. Greece is neither big nor systemic. Anyone invested there is a fool.

On the other hand, if they vote yes, there are alarming implications for european sovereign debt, and not just in the periphery. The austerity program is only unsustainable from a debt perspective. From a year-to-year accounts perspective it makes sense. If you accept that in return for debt forgiveness there must be economic restructuring, then basically you are baking in debt forgiveness… (since there seems to be a lot of economic restructuring to be done).

“The Bundestag voted last week to upgrade the EU’s bail-out fund (EFSF) to around €1.2 trillion but only on condition that the ECB steps back from its support role. This pits Germany against much of the world. The US Treasury, the International Monetary Fund, and most leading economists fear the fund will fail without a central bank prop.
“There is great scepticism. The evidence from the bond markets is that they don’t see the EFSF as credible,” said Silvio Peruzzo from RBS.
Investors have grave doubts over plans to leverage the fund fivefold by insuring “first loss” tranches of new debt, which concentrates risk and threatens France’s AAA rating.”

The wheels are coming off the wagon. Italy in the firing line now and if France loses its triple A then it is game over. Four days for the summit deal to crumble even before it is formally enacted.

I hope MN has a plan B and is not relying on the kindness of strangers.

@Georg

re: political stunt.

You may or may not be right but if it is a “stunt” it is a pretty good one.

A week ago the ” Euro can was still being kicked” and it looked like “G-pap” would be making an announcement on the evening of Monday 31st. Except we all suspected it would be to announce a default.

Maybe the “press slot” was still reserved so the Greek Government decide to go ahead and use it anyway.

Domestically it is probably good politics, internationally it is probably shrewd diplomacy and as for the “markets” 1st of November was probably already pre- programmed to be a “sell” day because of suspected Greek default so no real harm there either.

It certainly demonstrates much more statesmanship than any Helenic version of Pinochet could have managed.

@ceteris

“He’s bound to come under fierce pressure from the troika.”

The Troika can hardly publicly disparage the defining act of democracy, much as they would like to.

I think this is for real. He knows that the Greeks will not endure 10+ of austerity. He and Greece have a lot more to worry about from their own fundamentalists (i.e the generals, 30 years out of office), than they have from crazy ECB, German or French economists.

This referendum is about uniting Greece for a decision that it is clear they must take. Leave the Euro and default big.
Continuing on the current path will split Greece into the ancient city states of old, a veritable European Somalia. The army will not allow that.
So the choice is exit the euro and default or welcome the generals.
What would you do.

There were the rumours a few months back that Papendreou had gone to Merkel with Greek exit as one of a number of possible scenarios, but was told that they would not allow thsi (!)
Perhaps either (i) The rest of the EU would be happy to let them go with whatever schemes they have since set in place when this was frst mooted, and it’s being couched as a voluntary exit rather than a kicking-out, or, (ii); Papendreouis actually protecting Greece; any punitive action taken will be rightly seen as the EU vs democratic will.

Beyond my normally dazzlingly astute powers of perception to tell which, if either, of course…

@Joseph

It’s hard to know, but I agree that austerity out past 2020 appears unbearable and membership of a club that imposes such draconian terms seems like folly. The intriguing question is why did the gathering of uber-brains at the ECB and the EU and IMF not realize this?

Re Joseph Ryan ”The Troika can hardly publicly disparage the defining act of democracy, much as they would like to.”

I’m not so confident – have you seen some of Barrosso’s recent speeches about the arrival of ”un moment federateur” ?
”The democratic model has failed” etc.
He was speaking primarily about the desire from whatever faction he belongs to to establish a single decision-making structure and get rid of the vetoes, etc, but it doesn’t take a huge leap from this type of ideology to see them trying to put a recriminatory spin on any decision reached by a Greek referendum.

@ hoganmahew

“The no case is pretty much baked in, leave the euro, disorderly default, CDS triggered, banks emergency recapitalised”

I disagree. I don’t think the no case is baked in the cake.

It has been the position of the EU that every serf state and controlled politician would go along to get along.

If CDS are triggered “Get ready little lady, Hell is comin to breakfast” @ 1.55

http://www.youtube.com/watch?v=ZX56rbqZhto

That’s why the sellers of CDS, who are also the Determination Committee of what constitutes a default, have decided that there is no default.

I am sure you are familiar with the list.

http://www.isda.org/dc/committees.html#EMEA

I am of today.

http://www.zerohedge.com/news/isda-says-50-greek-bond-haircut-appears-voluntary

If any of those banks allow an “event” all are bankrupt and they know it.

Let’s leave aside that there is no longer any point in buying CDS. No event will be allowed. The yield on all market debt will rise significantly because the hedge was a fraud. Just like all the CDO’s and MBS’s.

Then all of a sudden no more free money from selling snake oil.

“On the other hand, if they vote yes, there are alarming implications for european sovereign debt, and not just in the periphery.”

If the EU takes on the false promises of the sellers of CDS the EU is dead.

Plain and simple.

The Germans and the Greeks seem to have a sense of this.

It’s finally coming down to national sovereignty versus european ideology.

Greeks will go for the former.

Carnage will ensue.

Greece will be kicked out.

Euro survival will come down to the remaining countries giving away more sovereignty.

Ireland will vote against this in any referendum unless we’re given sweetners re Anglo rebate etc (the people will demand this rather than the passive government because of our national insecurity with growing a pair).

Ireland will bring back the punt and it won’t be the end of the world.

Discuss……

@DB

‘So it is right and proper that Ireland pays said money back.’ HUH!

U musta learned dat in good_body – but you have exceeded my breakin..er.. bearingpoint. Nuff said.

Blind Biddy’s Arab friend would like to meet you!

The EU should make a path for Greece to exit the euro. Would pegging a new Drachma to the Euro prevent total depreciation of the economy?

@ all people in this blog

I’ve been reading for the past 20 minutes your views and thoughts on the Greek matter and before I get to my point I have to say two things: 1) I like (and respect) Irish people and 2) I’m Greek.

Once I made these clear I get to to point:

First of all I take Brennan’s comments not as an insult to me or my Nation, but as a drug this man has to take and a drug he can’t live without. It seems like for the past two years many people in Europe have been using this new drug witch brings happy thoughts, so the global crisis can be forgotten momentarily and the effects of it on their lives and their psychology can seem less dramatic. It brings thoughts such as:

“Greeks are lazy, violent, corrupt, Middle-Eastern, old, smelly, hairy, dirty, uncivilized, from Mars, responsible for Global Warming and for the extinction of the Brown Bear in Hawaii, SO it looks like….I’m superior!…as of that in a much better shape now that I think of it again….bless you God”.

Of course many seem to have forgotten these days that Greeks are proud, democratic and civilized people that EVEN under all this pressure forced on them from global markets are still trying to make something good out of it, reshape, change to the better, help preserve the European idea AND the Euro, instead of so easily defaulting, getting out of this mess but unfortunately…bringing the rest of the world economy down in flames!

Greeks DENY their own personal and national interest by implementing all these measures that have as a goal to turn Greece into a protectorate, not help a “neighbor” through a bad time. Kill the neighbor or he WILL infect us all! Oh and by the way, “do” him before you kill him.

What people forgot in the process is that Greece is an independent state that happens to be a democracy and in this country people have a “say” on matters that affect their lives one way or an other. And when there are times that politicians choose to forget this, we have other, more drastic ways of showing them what we “say” so they’ll never forget!

…so, to wrap this up, THIS is what has finally happened to Papandreou after two years and this is why he cannot avoid a referendum any more. And make no mistake he WILL take it. The man believes in democracy, we all do. This still doesn’t take away the fact that he is an idiot and his reckless and inconsistent (to say the least) governance has brought Greece into this mess and we Greeks, amongst all other things, have to put up now with other people’s “happy drug” thoughts and arrogant behaviors.

We have asked for help, money in form of loans that will be repaid with interest, not free money in expense of our pride and dignity. If this is the case, we don’t want the money and the answer to the referendum will be NO. We do know (very well) what’s at stake make no mistake, but we’ve been around for 5000 years, I think we can manage.

A boneheaded move for sure. The “Markets” are writing off Greece and adjusting accordingly. The settlement will be rejected and the uncertainty both political and economic will seriously undermine the EU with knock on effects on other areas worldwide.

It is not over ’til the fat lady sings, Maria Callas died and Angela M is a bit too slim for that role.

As the Chinese curse goes “May you live in interesting times.”.

If Dr Merkel decides to permit her ‘subjects’ to express their opinion (she might decide in her infinite wisdom a no deal as referendum was not in the cards which makes the referendum redundant, she might make her own blackmails) and we have a referendum I think that the answer will be a yes to the ‘rescue’ because the consequences of a no will be depicted as harsher than the austerity. Personally, I am not sure about that and I believe that Euro is the real disaster (in spite of the deep structural problems of the Greek economy and the awful political system of corruption and nepotism). It does not suit the southern economies and it’s better that we go out now that we can default on our debt held by the private sector, than to do it later under worse circumstances. However, I think that if no prevails will be because of the lost sovereignty issue (this hurts more and the rhetoric coming from Germany, nothing unusual there, and recently from that short guy in France and perceived humiliation does matter), not the economic one. Either way, this country has passed worse disasters, enormous loss of life, bloody civil wars, hundreds of years of occupation, thefts of her wealth and dignity (and many defaults that no-one seem to remember! was reading about them in newspapers, I bet that the vast majority of Greeks did not even know about these) and she survived. We will overcome the difficulties.

@ Mickey Hickey

“A boneheaded move for sure. The “Markets” are writing off Greece and adjusting accordingly.”

But the markets, gosh! My golly! Oh dear. The markets. Sigh.

@ Joseph Ryan,

+1

@ Desmond Brennan,

“If the Greek people decide to go it alone, I say boot ‘em from the EU, in any case they are borderline Europeans, with tendency to street violence and terrorism – much more akin to the Middle East than Western civilisation.”

Nice! Also a wee bit ironic, considering they’re engaging in that most civilized construct, i.e. democracy, unlike the nob-ends who clearly populate your wall of fame.

But I like it, this plain speaking.

@do
I am not a market aficionado nor am I an Ayn Rand fan.

The fact remains that “Markets” speak loudly and clearly and after PM Papandreou’s announcement of a referendum the unmistakable signal emanating from stock exchanges was that we are in a period of uncertainty which is and will be damaging to economies far and wide.

Whether Greece or Ireland for that matter, stays in the EZ or leaves the EZ they will both labour under a mountain of debt. It is not a darkness and light scenario it is a dirty, depressing and murky grey.

I feel sorry for the Greeks, like the Irish the Greeks tend to blame their past colonial masters, the Ottomans in their case, for all their problems. According to Greeks tax evasion was rife under the Ottomans and simply continued under the Greek Monarch and now the Democratic Government of Greece.

@ Mickey Hickey,

“The fact remains that “Markets” speak loudly and clearly and after PM Papandreou’s announcement of a referendum the unmistakable signal emanating from stock exchanges was that we are in a period of uncertainty which is and will be damaging to economies far and wide.”

So nothing has really changed then.

“Whether Greece or Ireland for that matter, stays in the EZ or leaves the EZ they will both labour under a mountain of debt. It is not a darkness and light scenario it is a dirty, depressing and murky grey.”

That’s assumes the euro can survive one, two, or even multiple withdrawals, and is conditional on maintaining debt servicing. I wouldn’t bet on it.

“I feel sorry for the Greeks, like the Irish the Greeks tend to blame their past colonial masters, the Ottomans in their case, for all their problems.”

I think the situation is a little more nuanced than that. I think there’re probably many, many Greeks, who blame their current elites as much as the historical legacy they’ve inherited. I think the average person has a pretty clear view of things, both here and in Greece. It’s the elites that need to get a grip, or indeed loosen the grip before it’s pried off for them. I think Papandreou understands that threat. Does Enda? No society that calls itself democratic or civilized can bear this sort of stuff for long.

“I am not a market aficionado nor am I an Ayn Rand fan.”

Glad to hear it. The markets are nuts. The markets are the banks and insurance companies and asset funds that on the one hand scream out for defaults, and even actively engage in coercive activities with an atomised view of success, and on the other hand are going to be on the receiving end of such defaults. They call for austerity and hammer a country for engaging in it. They are a self-obsessed oxymoron, a non-sequitir that negates itself by its contradictions and lack of logic and to some extent or another are going to be nationalized. We’re just the vanguard.

Greeces total debt comes down by easily less than 20% a figure many commentators say is not enough. Their debt was trading at a 60% discount in the markets. People still expect this extent of a writedown to happen eventually – the price of Greek government debt has harldy risen.
This deal is aimed at trying to reinstill confidence in banks (French or others) by putting a floor under their exposures to Greece, wheter direct or indirect.
It is not aimed enough at growth in the Greek economy.
Basically all policies by the troika are not aimed enough at growth in the periphery, rather at ‘ringfencing’ them.
It will be interesting to see how the Greeks vote.

My guess is that he’s playing a fairly complex game under which he has chosen a strategy that is favourable to Greek interests whatever the outcome.

At one level, he’s playing a very effective “give us a better deal now, or else”, that may produce changes sufficient to justify calling off the referendum.

If the referendum is won on the current deal (probably improved in the interim by a lot of under-the-counter sweeteners from the EU), he reconciles the goals of pursuing the existing strategy and protecting the consent of Greek society to being governed.

If the referendum is lost on the current deal, the timing will coincide approximately with the planned move to a positive primary fiscal balance, when more austerity is required only to pay off creditors. At that point, whatever the balance between upsides and remaining downsides, at least the economy will be protected from the effects of a sudden stop in government spending and the need to immediately reintroduce the drachma to fund spending.

All that, and a refreshing dose of democracy too!!

great move by papendreu. it is highly unlikely that greece will vote against the deal. vote against the deal is a vote in favor of default. if greece defaults the consequences to greeks will be severe. greece imports 400,000 barrels of oil per day. greece has a current account deficit of 25 billion eur per year. the day they annouce default, they will be forced to pay for all their imports in cash, no more credit lines. greece as a country will come to a stand still. no gas to run your cars, actually there will be no new cars in the first place!
for papandreu, if the country votes for the deal then the opposition has to shut up. if the country votes against then all debt is written off, but, but, but there will be no country worth left to administer! i think there is a very strong probability greeks will vote for the deal.
from the merkel sarkozy perspective i think this move is good as well. if greece votes in favor then good they have short to mid term stability atleast. if greece votes against then greek banks, institutions will collapse like dominoes. and that will be a lesson for italy, spain, portugal. bottom line it is a win.

This proposal by the Greek PM is freighted with the most delicious historical, political and economic ironies. It pits Greece, the cradle of democracy, against Germany, one of the newer ‘model’ EU democracies – with its Basic Law drafted by US and UK constitutional lawyers after the war. In the blue corner, we have Angela Merkel, hiding behind the Bundestag, whose members are seeking to channel constructively the anger of their voters about the extent to which they have been gulled about the nature of both the Euro and their most recent ‘economic miracle’, refusing to grant the ECB the authority to use its firepower to blow the naked shorters in the sovereign bond market out of the water and failing to sanction the shoring up of core EZ banks that recycled export surpluses to lend blindly to the periphery, rather than investing in the core, so that they could buy the output of the core.

In the red corner, we have George Papandreou exposing this accumulation of folly, seeking to secure a sensible deal for his country and aiming to pursue the structural reforms required to establish a better-governed polity.

My money’s on George.

This is a high risk move by Pap. If it comes off he gets the political legitimacy to push ahead with austerity and it should calm the unrest in Greece somewhat. If it fails, Greece risks being completely ostracised not just by the EU, but by the US as well given the impact it will have on the global economy. It may be democracy at work, but it risks the complete implosion of the Greek economy and you could argue Pap is doing it for selfish political purposes as much as democratic ones.

@Wellington
“I disagree. I don’t think the no case is baked in the cake.”
Sorry, I missed out some words, I meant to say “the consequences of the no vote”. I agree with you, which is why I posed the question, what if they vote “yes”?

@Ceterisparibus
“The FT reporting an EU official saying…” it came like a bolt out of the blue””

The Yanks in the Middle East and now the Germans in Greece run the same dumb numbers based analysis that takes no account of what really drives people in their own country- vague concepts that outsiders often have difficulty understanding .Of course “it came like a bolt out of the blue”- if you don’t understand what you must understand you can’t succeed.

Scott Atran explains

http://www.guardian.co.uk/commentisfree/cifamerica/video/2011/oct/31/scott-atran-us-foreign-policy-video

It is no coincidence that US power in the Middle East is waning at the same time as the Euro goes through its spasms of crisis

@Mr. Bond,

For politicians everywhere it is always about “selfish political purposes” and the acquisition, retention and exercise of political power. The primary function of democracy is that it grants voters the opportunity to eject those who have governed badly – or to replace those governing with those who offer better governance. The Greek PM faced a situation where his authority was constantly being eroded and where power was moving to the streets where those making the most noise and causing the most disruption would exercise it.

This move allows all Greek voters to have a say – and if it shores up his (and his government’s) authority, so what?

It’s what you do with political power that matters; and it is for the Greek people – and for all of the Greek people (not just those shouting loudest) – to decide how much power to delegate and to decide how this power is exercised.

The last two comments are right on, and may even prove decisive!

Papandreou’s DNA is American (born in Minnesota!); a bit of Swedish learning; and admitting he wants Greece to emulate Sweden (his own words!). His father was Berkeley economic professor before he dethroned the Greece Colonels and set up PASOK.

Papandreou elder said, during Masstricht process, he wanted to *milk the EU cow*. He actually used EU Structral Funds to underpin his political base and PASOK – ie. not national structural reform and economic development (eg. Murcia region in Spain, at same time).
…………

Now, I believe (son) Papandreou is calling the bluff of ND (his old classmate from Harvard). Because normally under such pressing political emergency one usually runs a nation under a government–of-national-unity – in order to get through the difficult economic decision-making process and mainatain law and order.

If he can really get into the nitty gritty details on what EU decision-making means to Greece and how long it will take (+10yrs!) to get back to sovereign bond market….he’ll most likely succeed in getting *Yes* from the electorate and, thereby, putting ND on its backfoot (reason why their leader is today personally appealing to Grrece President against the referendum).

Bottom line, may be, Cameron’s (UK) attempt to silence his (+80) back -benchers on EU Referendum opened up the pandoras box for Papandreou – to test the democratic will of Greece and to prove Athenian Democracy is still alive and kicking.

BTW neither Merkel nor Sarkosy believe in referendums….

the Greek people have the right to say Yes or No to this Referendum
that will determine if they stay in the Euro or leave the Euro if nothing else this strenghtens G Paps hand in getting better concessions to the deal last week that has not been fully worked out and the small print yet to be applied

not to forget that the crazy actions of the European elite who have bankrupt half the Euro Zone who might just awaken to the carnage that they are creating but i don`t think so

So much will happen between now and the vote. Can Italy hang on for another 2 months ? Will France lose its AAA rating?

No, he does not believe this. It’s the ultimate double bluff…

Beware Greeks bearing debt, a truism at this stage.

Papandreou wants to live in his own country (possibly), I guess he’s realised that letting them eat brioche is the only sane way out for him!

@Constantine

“What people forgot in the process is that Greece is an independent state”

Yeah, right! Keep smoking that good stuff, if you can still import it!

@Lord Wellington,

But if he now fails to give the referendum he will have Civil War.

Tanks on the streets of Athens, what better excuse could he deliver to himself.

It is amazing to think that Greece recently held the Olympics. How much did the white elephants of the sportsfest contribute to the debt ?

The real question is the effect of a Greek ‘no’ vote to this referendum, which everyone should expect, on the March meetings of the European leaders to change the terms of the overall Euro area agreements hammered out in the last weeks. 20+ States looking to increase fiscal integration, and the leaders of Greece, who will probably still have a vote on the issues at play there, stood firmly opposed to it with a strong mandate from their electorate. There is a potential for maximum disruption in such a situation.

If Greece leaves the Euro and defaults on its debts, then the next logical choice for the markets to focus on will be Ireland, as the weakest state in the Eurozone. Bond yields will climb back up, the government will spend most of its time fighting confidence fairies, and we won’t access the markets, even in a small way, for the next 2 or 3 years as the crisis works itself out. Imho this is bad news for Ireland in the medium term.

It should also be noted that the post-independence history of Greece contains a debt-default cycle, more information here: http://video.minpress.gr/wwwminpress/aboutgreece/aboutgreece_history.pdf

@ Stephen

interestingly, i was talking to a Greek economist/strategist this morning, and he says that he reckons it’ll actually end up being a Yes vote, once people realise the downside of voting No. He said there’s huge amounts of anger in Greece right now, but behind it all there’s a reasonable level of pragmatism in most people, and that the TV pictures of social unrest only tell a small portion of whats really going on. He said that a lot of people are in fact angry that the government is pushing the decision making back onto the people just so they can create the political cover for themselves. That said, other Greek anecdotes suggest certain parts of Greek society are on the point of collapse, so complete implosion isn’t a bizarre outcome.

The Italy – Germany spread has been halting at resistance around 4% for quite a while with the ECB in. Italy has gone today, it is about 4.35% and the effect of these sort of technical breakouts on psychology is analogous to a quantum event in physics – the framework of arguments alters distinctly.

The half-baked efsf deal plus the potential input of non-bank enthralled Greek voters may have put Italy firmly in play.

In case any one has forgotten, Italy is the key to potential Euro breakup.

It’s a brilliant high stakes gamble. In one move Papandreou drew a line for Brussels and dared his opponents and supporters to throw out the package.

If they refuse to hold a referendum he gains stature and credibility.

If they hold a referendum and vote yes he has drawn a line Brussels will need to be mindful of (want more concessions from us, them you’ll get more referendums) and his domestic opponents will loose authority to criticize him.

If he looses the opposition will be stuck with the ensuing mess and Brussels will be blamed for pushing too far; Greece will default unilaterally, and the French and Germans will need big $ to save their banks, while the Greeks will decide how much or little they owe them…

win-win-win for Papandreou in each case…

@Grumpy,

I agree. Greece, Ireland and Portugal, given their limited economic heft, are sideshows that can be managed. But Papandreou’s initiative has shone a bright light on the nonsense that’s being conjured up. Typical of the markets to go for the jugular – Italy. I don’t think Italy can remain united. Hello Padania and Mezzigiorno. It seems the end-game is coming more quickly than most people thought.

@ Stephen

A while back MK allowed that we ‘should’ put our own house in order (tax income = gov spending), which implies no excess spending of credit obtained from ‘markets’. Presdumably, although he did not specifically say so, he had serious doubts about future ‘growth’ – hence the ability of gov to repay the excess they had borrowed.

Could some person/s run a “What if?” – we did decide to balance things, and made it clear that we would attempt to pay back some of the principal, but no interest. What would be major fallouts?

Also, has anyone any idea how much of this credit we got (public and commercial) is actually virtual money: that is, it was created using a spreadsheet – hence never existed prior to the event. What legal justification can be advanced for this behaviour? Its hardly ‘intellectual property’, like a book or a software programme or a patent. Just curious.

Brian Snr.

G-Pap’s stunt is more obvious now!

The referendum’s date has not been set. The debt deal specifics are not yet on the table, as soon as this has been delivered, he claims to call a referendum.

So what does that mean?

It is simple really, it pushes the ball back into Merkozy’s side of the playing field, to go back to the banks and demand a higher hair cut, this is what I mean with Result >= 75%

This move was threatened before, and of course Merkozy want to avoid it at all cost.

The next act of this tragedy unfolds rapidly.

@Eoin, the referendum won’t be until January and it kind of looks like it will be a vote on a bailout that hasn’t been agreed yet. From speaking with a few people in Greece it looks like there are 3 constituencies: the rich, who will get hammered in any change over, the highly unionised parts of society, and everyone else. The first two are predictable in their reactions to the referendum, the last fairly unpredictable. The choice will be stark, and put in very nationalistic terms, which may ignore or underestimate any potential downside. Given the choice between more austerity for sure and inflation and higher unemployment (and currency uncertainty obviously), I think the third cohort will vote no and that leaves the Eurozone and the Euro area in quite a bind.

@ All

Two links worth reading.

http://www.ft.com/intl/cms/s/0/c4886f7a-03d3-11e1-bbc5-00144feabdc0.html#axzz1c5fPdDgx

http://www.ft.com/intl/cms/s/0/c4886f7a-03d3-11e1-bbc5-00144feabdc0.html#axzz1c5fPdDgx

In a nutshell, why should anyone help the EZ out of the hole in which it finds itself if the main beneficiaries – and notably Germany – are unwilling to do so?

The dogged and capricious pursuit of PSI in order to make the wicked bankers pay is, however, the straw that has broken the camel’s back. Even the man in the street can recognise that asking your creditors to take a haircut of 50% and then expecting them to lend you more money is simply daft. Certainly, any Greek worker who contemplates the impact of this on his pension fund will have no difficulty in understanding. German and French leaders either do not understand, or are unwilling to accept, that the fate of countries and that of their major banks are now inseparably intertwined.

This crisis could best be described as that of the illusion of the free lunch on the part of all concerned. That and finger pointing with regard to placing the blame everywhere except at one’s own front door.

Paradoxically, the luck of the Irish seems to be holding. Nothing could be more sobering than to have a wide audience hear a former Greek finance minister spell out the harsh realities as just now on the Pat Kenny show.

I agree with those that consider the action by Papandreou as nothing more than a dangerous stunt at the head of a totally discredited party. How the Greeks handle the matter is, however, up to them. The consequences of them taking the wrong decisions, unfortunately, are not confined to them.

In fact, it seems inevitable that matters will play out as Wllem Buiter suggests. Implicit in his analysis is a major economic downturn in Europe and globally but that this should negate any risk of inflation, the great German bogeyman.

@ Paul Hunt

It’s bigger than what the market thinks. Occupy Wall St won’t go away. Lex in the FT 2 weeks ago was very dismissive. Can’t find the link.

Martin Wolf last week says its time to listen to what they are saying

http://www.ft.com/intl/cms/s/0/86d8634a-ff34-11e0-9769-00144feabdc0.html#axzz1cRZVYVnG

Some massive questions are being thrown around. If Italy is thrown out of the Euro the whole neoliberal project is dead. Berlusconi is the embodiment. The deal – you shut up . I’ll entertain you and I’ll deliver prosperity. Massive transfers of wealth upwards ensued. Same thing in the States. The system is broken .

And there is plenty of money in Italy

@Brian I had a go at a ‘what if’ in a back-of-envelope way in the Guardian some months back, but didn’t look at the issue of bonds at all. It’s in 2 parts, this is the second part. http://www.guardian.co.uk/business/ireland-business-blog-with-lisa-ocarroll/2011/may/11/morgan-kelly-plan-deflate-economy

On the ‘virtual money’ thing, I’m working on a book chapter on that exact issue now, I’ll post it when there are more actual sentences and less bullet points 🙂

@Mario Draghi

I wish you luck in your first day on the job. By declaring UDI at the ECB, exceptional circumstances etc., you could have all of this sorted out by close of business today.

The run on Greek banks has probably already started.Everybody will dump the Greek securities they still hold.The ECB will have to decide if it can still supply liquidity to the Greeks (which I doubt). It is very unlikely that the default will wait until February.Joseph Ryan will have the opportunity to observe in vitro what would be the likely outcome of an Irish default.

We should take note that our own Minister for finance said he did not think it was a good deal for Greece as it would leave them outside the markets for the next 10 years.

The rhetoric from Sarkozy and stance of French officials undermines the entire European project as it shows France views Europe as a zero-sum game.

At the same time, Greece is acting up at a peculiar time. Firstly, they are getting more money in than they are paying out. Secondly, they keep getting better and better deals so there has to be hope that this deal can be imporved. Thirdly, they are throwing a bomb under Italy and the whole financial world at a stage whent here is huge economic and geopolitical instability.

The arrogance and aggression of the big powers, and particularly France, is pushing the smaller countries to desparate actions. It would be hard to justify such brinkmanship without the rhetoric of Sarkozy ringing in the world’s ears. That man is a most dangerous fool.

@Zhou,

“That man is a most dangerous fool.”

That man has a big national gallery to which he must play if he is to have any hope of re-election. Remember, all politcians are interested only in the acquisition, retention and exercise of power. The fate of the world becomes irrelevant if their piece of the action is threatened.

@ Paul Hunt

*FITCH SAYS GREEK REFERENDUM IS THREAT TO EURO AREA STABILITY

ITALY’S BERLUSCONI SAYS GREEK DECISION TO HOLD REFERENDUM WAS UNEXPECTED, HAS CREATED UNCERTAINTY, WEIGHED HEAVILY ON MARKETS

DUTCH OPPOSITION LABOUR PARTY SAYS GREEK REFERENDUM A POTENTIAL DEAL BREAKER FOR EUROZONE RESCUE PACKAGE

Not fans of democracy in action obviously…

@Bond. Eoin Bond

Theoretically, with the handcuffs off, do you agree that Mario Draghi, in his first official day in the job, could sort all this out by end of business today – and restore sanity and stability to Europe. Course it would cost a few bob, but collectively, Europe can relatively easily afford it?

@ All

developments in Greece – calls for unity government, push through reforms, then hold fresh elections. These would be as an alternative to referendum. Senior PASOK MP asks for Greece President to take action. Being treated as a serious suggestion.

FITCH SAYS GREEK REFERENDUM IS THREAT TO EURO AREA STABILITY

As if it was stable the day before yesterday

@Stephen Kinsella
“If Greece leaves the Euro and defaults on its debts, then the next logical choice for the markets to focus on will be Ireland, as the weakest state in the Eurozone. Bond yields will climb back up, the government will spend most of its time fighting confidence fairies, and we won’t access the markets, even in a small way, for the next 2 or 3 years as the crisis works itself out. Imho this is bad news for Ireland in the medium term. ”

This, IMO, will happen anyway, Greece or no Greece. The problem is the attempts at solutions are not credible beyond an initial knee-jerk “that doesn’t sound too bad”. If you are in a bad situation, any solution that doesn’t sound ‘bad’ is not likely to be good enough.

“I think the third cohort will vote no and that leaves the Eurozone and the Euro area in quite a bind.”

On the contrary, I think there is a self-obsessed, semi-blind cohort both within and without Greece that think Greece leaving the eurozone is the perfect solution and will magically vanish all the other troubles away. First it was Lehmans, then it was Iceland, then it was Ireland, then it was Greece – the solution for a simple single answer leaves no tree unclimbed.

@ zhou_enlai

The arrogance and aggression of the big powers, and particularly France, is pushing the smaller countries to desparate actions. It would be hard to justify such brinkmanship without the rhetoric of Sarkozy ringing in the world’s ears. That man is a most dangerous fool.

So if you were a taxpayer of a core country, would you support an acceleration in transfers without strings attached? We Irish would have been so different if we had a had a prudently run economy.

As for those who flinch at unpleasant truths, so Greece isn’t a kleptocracy?
In Germany, a stent for heart operations costs about €500. In Greece it costs €2,000 to €2,500. The fault lies with corruption – – so said the Greek prime minister.

Greece should be allowed paddle its own canoe. It feels aggrieved that outsiders have arrived to make race horses from mules.

It’s a stupid endeavour if there is no support for it.

As for fools who believe a collapse of the economy would be some sort of nirvana, the well off like the well off defaultists at home, likely have their bases covered.

Sarkozy maybe a dangerous fool but it’s easier to sit in the ditch.

This is another great example of the dynamics politicians have to deal with in thie crisis. It is right up there with Deauville.

Announcing a referendum changed the dynamics so much as to possibly render such a referendum academic. It is very difficult for politicians to formulate, enunciate and implement policies to deal with this economic crisis as they would normally do in other situations.

With that said, it is a reasonable assumption that the politicians are aware of these dynamics which often pertain in economic crises (e.g. in our devaluation when Bertie said he wouldn’t budge until he budged). Accordingly, every announcement which does not achieve its goal must be seen as wither having another intention or as a blunder.

It is hard to imagine that Deauvillle was a total blunder. It is also hard to imagine that this referendum announcement is a total blunder. Just as default was put firmly on the agenda by Germany, now wholesale default and Euro exit has been put firmly on the agenda by Greece.

@Michael Hennigan

There is an old maxim that one should use soft words in hard arguments. Sarkozy can look for all the strings he wants behind closed doors without having to come out and insult and inflame a nation of critical importance to the whole world.

It is Sarkozy’s job to tread the line of satisfying his electorate without endangering their critical interests with loose talk and rhetoric. If he can’t do that then he is not fit for the job. My view is that he cannot keep his trap shut and he is not fit for the job.

This is a nice article on CDS
Basically 5 US ‘wall street’ Banks hold about 65% of CDS liabilities on EU periphery debt.
They ramped up their insurance sales in 1st 1/4 2011.
This market is so untransparent. US Banks are claiming they have much less CDS exposure to their clients than regulators are estimating, like add 3 zeros to what the banks say their exposure is.
The US banks who sold the insurance on Greek debt should pay out in case of a no-vote. So the Fed prints another trillion dollars to bail them out, the dollar is the world reserve currency.

http://www.bloomberg.com/news/2011-11-01/selling-more-insurance-on-shaky-european-debt-raises-risk-for-u-s-banks.html1

@Michael Hennigan

You keep going on about well off defaultistas. Do you have any evidence to back-up your contention that the defaultistas are well off or is this just how you imagine it to be? It strikes me that the well off will be well off whether there is crippling austerity or not, and that default/inflation scares them more than is scares anyone else.

This referendum is a big risk to the EZ. Besides a more generous package, their choices look limited. I’m not sure threatening the Greek people will work.

Should the referendum goes ahead, the pro-package interests will hope that ‘pragmatism’ wins out. I’m not so sure. My problem is that post-package, the Greeks will still have an huge national debt. This would be played up by anti-package folk in the lead up to a referendum.

So I guess there’ll be a lot of behind the scenes EZ pressure to stop this democratic stunt.

Does anyone commenting know much about Greek society ? Ever lived there or speak the language ? If a group of Venezuelans had an online discussion about hurling and the mentality of hurlers would it be worth reading?

Wait for all the scare tactics to come out now as people of Ireland start asking can we have a referendum. Wait till you see how the Greeks are treated over the next few months in our equal Europe.

@ All

G-Pap has just called an emergency cabinet meeting. Things could get very ugly very quickly.

“Geithner keeps asking Europeans to fix their shop, but he doesn’t do anything to rein in the risk-creation at home through these derivatives,” –

Christopher Whalen, managing director of Institutional Risk Analytics, a Torrance, California-based bank-rating firm.

This simple sentance by a knowledable American sums up the clear unfairness of the situation in the EU Perhiphery.

The reason the fincial system is so vunerable is beacuase of unregulated over the counter derivitives. This has been admited by both politicans and banks who are desperate to avoid a dreaded ‘credit-event’ triggering CDS payouts. So then why is it practically business as normal in this area?
1. Money in politics in the States – a bought congress.
2. The overdependence of economies like the U.S., U.K. and France on finance and the subsequent drop in living standards for the citizens of these countries in a ‘fairer’ and more regulated global finacial system.

What they should do is solve the source of the problem urgently and properly and regulate or even temporarlily ban OTC derivitives – in Wall street, in the City of London, in Berlin, Paris.

@seafóid

‘If a group of Venezuelans had an online discussion about hurling and the mentality of hurlers would it be worth reading?

I’d welcome them here – local clubs running out of hurlers in their 20s – most of them in Australia, California, Britain, and Canada.

@Chris

I’ve had a hunch for some time that the ‘block’ on triggering CDSs has a certain Timmy Geithner at full back with AIG_neu and The Squid in the corners -and a lorry load of prime cement blocks clogging up the goal line.

@Greeks on the Blog

In solidarity. Yes – you have problems; as we do; both, albeit of different hues, stem from dodgy capital flows within the EZ for which no-one appears to be accepting responsibility. Why should citizens, Irish-Greek-Portugeese-German etc etc pay for the bets of casino capitalists in dodgy financial system? We pay some – such if life – but not all.

@Bond

6 of his advisors have requested his resignation. He cannot back down now – but he can be fired by his own. The political pressure from outside must be INTENSE …

@Stephen/Zhou

The dynamics have changed all right. Whatever amount of trust Papandreou commanded before the bombshell last night, he has succeeded in reducing it to zero with the people that matter in this crisis, Nicky and Angela. Reports to day suggest that the French were “dismayed” and Angela is keeping her counsel but must be fuming. I believe that Pap can expect a typical Germanic response in due course.

For a small country, Greece has succeeded in reducing the worldwide value of stock markets by many trillions….more than enough to sort the problem properly. But the half arsed EFSF and leverage convinced nobody, so it would appear that there is more than enough blame to go around all concerned.

I agree with Grumpy that Italy is the one to watch. Currently trading at 6.3% despite ECB intervention…..Ireland is only a side show.

@all
Heating up. Pap majority reduced to 2.

“Six members of PASOK’s national council drafted a letter on Tuesday afternoon demanding the resignation of Prime Minister George Papandreou, creating more discord in the ruling Socialist party.

The move came just hours after the resignation of PASOK MP Milena Apostolaki, which brought the government’s Parliamentary majority down to two votes, and a call from PASOK deputy Vasso Papandreou on President Karolos Papoulias to form a national unity government that would serve for a fixed period of time before elections are held.”

@ David O’Donnell,

“6 of his advisors have requested his resignation. He cannot back down now – but he can be fired by his own.”

Assuming this is a way of avoiding a referendum; even if he gets the boot, what message will it send to the Greek protestors? The protestors will play the ‘denied democratic freedom’ card and things could get very fiery.

If the political opposition is anything like their Irish equivalents, they must be cursing Papandreou. Ideally he would have pushed through the package, then a quick election and the new government blame Papandreou’s bunch and move on. What happens if an election occurs before this package is pushed through? Do the opposition run a No-to-the-bail-out campaign? Where would this leave the EZ and how does it extend the timeline? Greece is supposed to run out of money in a few weeks.

@ All

re accounting error on Irish debt

*IRELAND SAYS REMOVING DOUBLE COUNT CUTS GOV. DEBT EU3.6B

= 2.3% of GDP

These events give Draghi the excuse to bid up the price of Gold – if he does not the Euro is toast and the Dollar wins again.

Its clear that Euro austerity is just transferring consumption elsewhere (US & China) – its completly pointless unless you are a banker which is a problem when bankers run the shop.

I hope Mario Draghi makes a better job of the ECB than his former boss Jon Corzine did with MF Global.

@Ahura Mazda

Key metric is the massive 16-30 unemployment rate amongst Greek men – the other metric refers to all those tanks and submarines etc that the Greeks bought from the French and Germans with dosh from French and German banks. Volatile simply doesn’t describe it …

Jon Corzine? Ah yes – an X-co_chair of the Squid. Lots of them around – everywhere one looks ….

Perhaps the ‘Germans’ strolling around the Dept of F. might count it again – 36 billion would be neat.

Only Hope is Mario.

Fair play to the Greeks! Now, let the people tell the banks where they can offload their losses. Let the people decided who must pay for the bondholders gambling debts. ΜΟΛΩΝ ΛΑΒΕ

If this leads to the collapse of the euro or indeed the EU, so much the better. An EU dominated–financially or otherwise–by France and Germany was not the gig anyone signed up for.

And if this leads to the collapse of banks or markets, then we will all be saved from the Tyranny of the Banking Putsch once and for all. Onward to the ballot box!

@BEB: thanks. Game’s up then. Brad DeLong is right. A timid lender of last resort is an invitation to disaster.

@David
He is probally a US treasury man given the fact he is a Goldman man – unless they decide to move their base of operations .. but I am not sure they even have a base now – why would you when you control the worlds sheep
HA HA HA HA.
http://www.youtube.com/watch?v=RP_az7U7YjI
Economics makes no sense now that currencies are so plastic and goverments bail out credit agents so they they can recoup their losses by speculating on Goverment debt.
Imagine giving these agents credit licences ???? – it boggles the mind.
Its hard to escape the notion that the Euro was created simply to indulge banks in the final speculation of all time – when exactly civilisation will end – you can make a shitload of money up until when the event actually happens.

@Disgruntled Observer
A majority being in favour of immorality, doesn’t transmute said immorality

If the Greeks vote no, that will mean sudden and immediate default, of scale beyond what is presently necessary – that will be grand theft, plain and simple. Just because “little people” do/support theft, does not make it anymore acceptable. Greece is currently living way beyond its means, lied to get that money, and has root to branch corruption. Time to be nice/euphemistic is long past since.

Greek Referendum may not happen as the politico class are are non too pleased and G Paps Pasok Socialists Party are falling like flies others in the
in the party are calling for his head

Ambrose in full flight….
“15.19 More analysis on the Greek referendum, this time from international business editor Ambrose Evans-Pritchard, who has labelled the move by the Greeks a Revenge of the Sovereign Nation:
Greece’s astonishing decision to call a referendum – “a supreme act of democracy and of patriotism”, in the words of premier George Papandreou – has more or less killed last week’s EU summit deal.
Unless the European Central Bank step in very soon and on a massive scale to shore up Italy, the game is up. We will have a spectacular smash-up.”

JCT has left the Euro zone in great shape with Italian yields on the way to 6.5% . Au revoir M Trichet and let’s hope posterity is kind to you.

Nom de Dieu de putain de bordel de merde de saloperies de Price stability de connards d’enculé de ta mère

@DOCM

The dogged and capricious pursuit of PSI in order to make the wicked bankers pay is, however, the straw that has broken the camel’s back. Even the man in the street can recognise that asking your creditors to take a haircut of 50% and then expecting them to lend you more money is simply daft.

The logical consequence of your position is that you believe the IMF to be capricious and daft. It was the IMF that forced the 50% haircut, with their latest debt sustainability analysis. There isn’t really a troika any more – instead there is more of a “two plus one”. The latest (draft) Greek review from the EU Commission/ECB was published without the “debt sustainability analysis” box, since there was no agreement with the IMF. The IMF then published their own, and this was the basis last week’s PSI deal. The IMF stated:

Deeper PSI, which is now being contemplated, also has a vital role in establishing the sustainability of Greece’s debt1. To assess the potential magnitude of improvements in the debt trajectory, and potential implications for official financing, illustrative scenarios can be considered using discount bonds with an assumed yield of 6 percent and no collateral. The results show that debt can be brought to just above120 percent of GDP by end-2020 if 50 percent discounts are applied.

This was the baseline adopted, although the €30bn sweetener did not figure in their calculations. I presume that the USA, who can veto any IMF Executive Board decision, and others, decided that to put the IMF’s name to a repeat of the EU Commission/ECB July 2011 “debt sustainability analysis box” would just be so absurd and ridiculous that the loss of credibility to the organization would be quite damaging in the long run. The EU July text said “Fiscal discipline and privatisation receipts will achieve sustainability.”

To be consistent you would also have to call Chopra’s Kenmare speech capricious and daft too, since that really provides the medium term framework the IMF are looking at, and within which their current position on Greek PSI makes perfect sense.

——————-

Looks like the Greek government won’t last the week, or even another day. Papandreou didn’t even consult with his own cabinet before the referendum announcement, and there have been a couple of defections already to bring the majority down to +1. There are too many Greeks that understand that “Greece is not Argentina” to allow the referendum – i.e. Greece isn’t a commodity based export driven economy that could deal with a default/devaluation – it is a services/public administration driven economy that would simply implode.

I see this as a large stick to wave at the banks who believe they own the globe and democracy means nothing i.e. Goldman Sachs. The Greeks have figured a way to hit back and get a better deal. Much better than our spineless idiots who hope for a clap on the back from the EU.

The last straw was probably Sarkosy saying “they should never have been let in the Euro”. Sarkosy is only elected in France and has no right to speak about another countries finances. He and Merkel cost us dearly when speaking about our finances or lack of them.

It is the ultimate double bluff. No more fudging the issue on the banks. It will also leave Germany and France staring down the barrell of bailing out their banks directly instead of the current smoke and mirrors method currently employed. Welcome to the PIIGS folks. No more snearing at the rest of us. Not sure what we will call it then.

I have difficulty seeing the reasoning behind bashing Germany and France. Germany’s Konrad Adenauer and France’s Charles DeGaulle were the prime movers, shakers and founders of the EEC (European Economic Community) which later became known as the EU. The vision was an economic community from the Urals to the Atlantic when the treaty of Rome was agreed to in 1957. Charles De Gaulle was vehemently opposed to the British being included in the EEC and in 1965 took an over my dead body stance in Brussels. CDG saw Britain as being joined to the hip of the Americans and their entry to the EEC did not fit with his plan to establish a counterweight to the USA and Soviet Russia. CDG was a General who understood that economic power was as important as military power. After 1945 everyone in Western Europe understood that another major war was likely within 25 to 50 years if economic nationalism was to continue as before.

Today we are living in unimagined prosperity resulting from the vision and drive of the leaders of Germany and France. We were bribed, cajoled and threatened by the EU into becoming a modern and prosperous country. Of our own volition we elected politicians that catered to all our whims and we got the mother and father of all property booms as well as ill advised investments in foreign property. Our Gov’t, yes, the Gov’t we elected then opted to support privately owned failed banks at taxpayers expense. There were no Leopard tanks from the Wehrmacht or regiments of Infanterie Francaise from France on O’Connel Street. There is no way we can say we were coerced, threatened or intimidated into agreeing to anything that we disagreed with.

The ECB has kept us afloat since 2007 in an act of generosity that has no precedent in our long and tortured history.

And still we whine, point fingers and bite the hand that feeds us.

Wake up, take off the green tinted glasses and try to see the world as it is.

Lots of speculation about whether a referendum could even happen and lots of inaccuracies being reported about the mechanics of it.

The facts are that under a recently amended law, a referendum can be called by presidential decree on issues of grave national concern, if it is proposed by the cabinet and approved by absolute majority in the 300-member parliament.

finally !!!!!!!!!!!!!!!!!!!!!

someone asked people what they want!!!!!!!!!!!!!!
democracy is born there(Greece )
hear people’s voice
let them decide what they want

fu£%^&u all

Power to the people

@ Mickey Hickey

Hold on their a sec.,

I was enjoying your clarion call for European Unity until I got to:

“The ECB has kept us afloat since 2007 in an act of generosity that has no precedent in our long and tortured history.”

I don’t think the language of generosity or punishment is useful – though the ECB used it when imposing high initial interest rates on the bailout funds.

Surely the ECB has simply concentrated on keeping the banking system afloat at all costs? Unlimited liquidity to the banks and all senior bondholders repaid: grudging bailouts and secondary market bond buying for the sovereigns?

“The Greeks intentionally falsified their figures, that is theft. They also have a lazy public service, with jobs down to nepotism, that is corruption.”

Die Herman and Les Pierre did a great job underwriting those loans. That’s the thing about this sort of reasoning, lying on a loan application is expected. If an applicant successfully lies either the underwriter is the one with the personal and moral failings, or is colluding with the applicant. I will leave resolving the incompetent underwriter vs the colluding underwriter hypothesis to more diligent persons than lazy lying me.

@all The Last Supper at Cannes!

“This referendum has changed the psychological situation massively,” Dr Merkel said.

“We want to help Greece. We want Greece to remain a member of the euro area but there is this unilateral decision taken by Greece that has changed the situation significantly,” she added.

“This is why we’re saying very clearly the sixth tranche can only be dispersed once Greece has adopted all of the parts of the decisions of the 27th of October and, additionally, any doubt as to the outcome of the announced referendum are removed. That is to say there is a positive vote on this referendum.” ….. “This referendum needs to be in its very core about the question: does Greece wish to remain in the euro area, yes or no?” the chancellor said.

http://www.irishtimes.com/newspaper/frontpage/2011/1103/1224306980869.html

I don’t think Angela has studied much social psychology – this will absolutely infuriate the Greek citizenry through its collective 20th century memory …..

….and there is a rumour going around Athens that the Neu Greek Generals have hired a poltroon of eight Irish mercenary 5*_attorney_Generals to engineer a NO Vote with the Island of Crete as the down payment.

Georg R. Baumann Says:
October 31st, 2011 at 9:48 pm
Hi Karl,

my spontaneous thought was, it won’t happen, I consider it diplomatic trickery

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