Pawn to King Four

The ECB has tonight withdrawn the eligibility as collateral for ‘normal’ liquidity provision of self-issued Greek bank paper guaranteed by the Greek government, effective February 11th. The banks must henceforth rely on ELA from the Greek central bank, permission for which is reviewed fortnightly by the ECB, next meeting February 18th. The ECB statement contains this sentence:

‘The Governing Council decision is based on the fact that it is currently not possible to assume a successful conclusion of the programme review and is in line with existing Eurosystem rules.’

Note that the decision is based on a fact! The opinion formed, presumably today, that the programme review may not be successfully completed, was reasonable yesterday and the day before, but has miraculously assumed the status of a fact this evening.

Surely the ECB would not deliberately encourage a run on the banks (presumed solvent, rightly or wrongly, if they are to be ELA-eligible) in a member state? Whaddya mean they did it before?

124 replies on “Pawn to King Four”

It does seem an odd move – “those pesky politicians cutting a side deal? We’ll show them who’s boss…”

The wording, as you say, is also odd – future facts are assumed and can be, er, de-assumed at any time? Surely it is open to any review to be unsuccessfully concluded? Unless these things are decided in advance? Surely not.

Did the ‘G’overning ‘C’ouncil meet about this? Or was it the incorpoeal Cabinet again…

Sorry for the Shirleys…

Maintaining ideological purity is more important than finding a reasonable solution. Greece truly would be better off leaving the Euro. With friends like these who needs enemies?

As Charles Colson said, “when you have them by the b…s their hearts and minds follow,”
Tsipiras is being offered a route to a deal involving maturity extension and some tweaks to the existing programme or Grexit, This is not what he promised he would deliver.

Seems a tad harsh. However the Greek bank run started in December and accelerated after Syriza was elected and announced a series of unilateral decisions in January. Clearly it was not triggered by the ECB. The question is, should the ECB fund bank runs in member states in order to facilitate political negotiations? The hawks will argue that would be a blatantly political stance. The doves might argue that the outcome of negotiations should not be pre-judged, but they’ll need from the Greek administration – such as not pre-announcing the termination of existing arrangements with no clarity on what will replace them.

A black day for Europe. Could well precipitate a new crisis that will damage the German economy far more than some sensible debt re-structuring would.

“presumed solvent” — they’re the very ones who accredited their solvency!

A de rigueur quote from Goodfella’s; in respect of our very own ECB:

“For as long as I can remember I always wanted to be a gangster. To me that was better than being president of the United States. To be a gangster was to own the world.”

The new Greek government will no doubt have had a heads-up about this move from reading things like this:

so they will no doubt have gone through the implications in advance & only be slightly surprised by the fact that the GC have not waited until that date.

The logic of the waiver (now withdrawn) was that the existence of and adherence to a ‘programme’ meant an official assumption could be /had to be made that the government guarantee (both on the government bonds and the ‘own use’ government guaranteed bank bonds) was fully credible.

Given the negotiating position of the Greek government and their refusal to discuss matters with the Troika as such, viewed from the ECB GC perspective continuing to exercise the waiver would be a bit like pretending not to have noticed that a renewed arrangement with the Troika looks unlikely. If it were the case that the Greek banks couldn’t fall back on ELA from the Greek central bank, then they may have been pressured to leave a decision until the end of the month.

ELA will be allowable in the absence of a 2/3rds blocking majority on the CG (note everyone votes and some of the potential doves are not voting for a couple of months).

The problem for the EU and ECB generally is that Tsipras & co have announced reversals of “reforms” but have so far supplied little or no details of alternative reforms and measures against corruption – some of which I suspect would receive support more widely if they appeared to be credible about actually getting on with them. So far they don’t. However it’s difficult to anticipate both Greece failing to do this and the Germanic core failing to realise blunt austerity has been played out, unless they are looking for an excuse.

The move back to ELA with the local CB taking the credit risk, in the context of a newly elected government with an anti-‘bailout’ mandate raises should ratchet up the perceived re-denomination risk and might get political minds to concentrate – perhaps the ECB, having noted the track record, wanted to get them started a couple of weeks earlier this time…

Democracy, Greek, Irish or other, doesn’t matter within the present EZ Financial System/Deutsche_Ordoliberal Joint Dictatorship.

Not an opinion; merely stating a significant empirical fact!

I didn’t sign up to a dictatorship; time to think some unthinkables.

@Greek Democracy

Stay the course; your Citizenry is in dire straits. In solidarity.

Greece is part of the global debt mess. Punitive measures against the Greeks won’t achieve anything.
Italy hasn’t had a single quarter of positive growth in 3 years.
Retail sales in the US aren’t growing. China is doped out on debt
This is a global problem.

Even to a non central banker such as myself, surely it must be obvious that the one thing that a central bank simply cannot do, and especially in the unique circumstances of the ECB, is concede publicly that it is open to political pressure? This what the Greeks, or at least Varoufakis, have been attempting to do. They now have their answer.

The German, Dutch and Finnish voters would also have a view on a Greek debt writedown. Are they to be ignored?

Syrizia, which is the current Greek govt, elected with minority support has a choice. It can either negotiate a maturity extension, reinstate a series of internal structural reforms, negotiate a losser fiscal policy and a less intrusive monitoring regime or it can leave the Eurozone, EU and default.

Whay it promised to do was get rid of half the debt, wind back most of the structural reforms, get rid of external monitoring and continue to spend on the European credit card within the single currency.
It now has a classic problem of over promising and underdelivering. How it attempts to sell its climbdown will be interesting to watch.

The general consensus among those who actually understand all this (a category which certainly does not include me or, I suspect, 95% of posters here) is that what the ECB have done is no big deal.

‘Relax. Its no big deal.’ says Karl Whelan.

As for those peddling the idea that Greece in 2015 resembles Ireland in 1847, the reality is that real GNP per capita in Greece in 2015 is roughly the same as that in Ireland in 1998 (but with sunny weather and temperatures in the 70s forecast for today). Hardly the hell the leftists are making it out to be.


But institutional pressure from within the banking systems and financial players is ‘not a problem’.

That stuff is a) by definition ‘legitimate’ and b) secretly conducted so as not to discommode ‘business’ and c) spun by privately owned media conglomerates and privately sponsored think tanks.


Here’s the proof that the EZ is not a monetary union. It’s a common currency area ruled by a tyrant given to blind rages overseeing a slow process of generalised deflation that everyone at court is too scared to point out. Jack and the debt beanstalk


‘… ECB, … concede publicly that it is open to political pressure?

Huh! Spose it would not even concede ‘privately’ that it might, just might mind you, be open to any German political pressure?

Shureley not!

This particular ECB(undesbanke) is not fit for purpose for a ‘common currency area’; and certainly not fit for purpose for a future monetary union. Its deutscher-design flaws are terminal for the EZ Citizenry.

@Be a Debaser

For some reason, I’m reminded of a different quote from Goodfellas (suitably edited for those of delicate constitution):

Now the guy’s got Paulie as a partner. Any problems, he goes to Paulie. Trouble with the bill? He can go to Paulie. Trouble with the cops, deliveries, Tommy, he can call Paulie. But now the guy’s gotta come up with Paulie’s money every week, no matter what. Business bad? “F*** you, pay me.” Oh, you had a fire? “F*** you, pay me.” Place got hit by lightning, huh? “F*** you, pay me.” Also, Paulie could do anything. Especially run up bills on the joint’s credit. And why not? Nobody’s gonna pay for it anyway. And as soon as the deliveries are made in the front door, you move the stuff out the back and sell it at a discount. You take a two hundred dollar case of booze and you sell it for a hundred. It doesn’t matter. It’s all profit. And then finally, when there’s nothing left, when you can’t borrow another buck from the bank or buy another case of booze, you bust the joint out. You light a match.

There really is very little difference between what’s described here and how the ECB operates.

The financial institutions may succeed in pressurising Greece via the ECB to “take one for the team” but when the cancer gets to France they can forget it. There is just too much digital money looking for rent. A lot of it is not worth market price. Maybe if the institutions did stuff like investing for growth they’d be seen as coherent.. But they don’t. And they’d prefer le Pen to a democrat if it meant no debt writedowns. Deleveraging hasn’t even started. Growth is gone. Greece is just act 1.
And the Finns and the Dutch are deluded. There is no point in coming out all protestant on this when usury is the issue and coming to them in due course. Deflation will hurt everyone.


I frankly have not the vaguest idea what point Professor Whelan is trying to make. One does not need to have mastery of the technical detail to grasp the fact that the ECB does not negotiate, it decides. This is a reality both in terms of the legal and the market situation. The Greek tail cannot be allowed to be seen to wag the euro dog in any circumstances. Given the published track record of Varoufakis, I am not surprised that he does not grasp this. The question now is whether his Prime Minister does.


In fact, Tsirpas summed up his dilemma yesterday as follows;

“Our goal is to respect the people’s sovereignty in Greece and the clear mandate of our people — at the same time we respect the rules of the European Union,” Mr. Tsipras said at a midday news conference in Brussels with Martin Schulz, the president of the European Parliament.

The Greek finance ministry put it like this;

The one thing no democratic government can do, least of all a minority one, is renege on the international commitments of a sovereign or, if it does, expect to do so with the willing cooperation of those who hold the commitments in question and without adverse consequences.


The intepretation from the Greek finance ministry is interesting. Before this ECB decision, Merkel was apparently dropping hints that it’s OK with her if talks drag out even to June:

I guess Merkel has plenty of urgent issues on her plate besides Greece. The Greek economy and the ECB are the most exposed parties here and most in need a quick solution.

Did it matter that the ECB would not accept collateral from Anglo and other Irish banks in 2010, prompting ELA?.

The ECB move now clarifies the issue. The Greek central bank is part of the ECSB and as such would have to stop ELA if requested by the ECB. Otherwise it would cease to be part of the ECSB, providing ‘Greek euros ‘to its banks

As it’s not been mentioned yet, I’m going to (temporarily) break from lurking mode and post this piece by Frances Coppola, where she points out Varoufakis may have anticipated this move coming a long way off, she links to a tweet dating from six months ago and suggests the monetary Hawks, are in a weak position as it thinks it is…

“Is it possible that this is not an antagonistic move at all, from Greece’s point of view? Could it be that far from kicking Greece, the ECB’s real target is Germany? For some time now, it has been evident that Draghi is no fan of Germany’s “Austerity Forever” stance. Pressuring Germany into negotiating might be his intention. But if so, it is a highly risky strategy. Pulling the waiver is likely to increase capital flight from Greece and raise Greek bond yields still further, putting further pressure on Greece’s fragile finances. How exactly would this help Greece?

Alessandro Del Prete helpfully sent me this piece by Jacques Sapir which explains how weakening Greece’s position could actually strengthen its hand:

In this strategic game, it is clear that Greece has deliberately chosen the strategy qualified by Thomas Schelling, one of the founders of game theory, but also of nuclear dissuasion, as « coercive deficiency »[5]. In fact, this term of « coercive deficiency » was imagined by L. Wilmerding in 1943 in order to describe a situation where agencies enter into expenses without prior financing, knowing that morally the government will not be able to refuse funding them [6]. Schelling’s contribution consists in showing that this situation can be generalized and that a situation of weakness can reveal itself to be an instrument of coercion upon others. He also showed how it can be rational for an actor knowing himself to be in a position of weakness from the start, to increase his weakness in order to use it in negotiation. Reversing Jack London, one can speak in this instance of a “strength of the weak.” [7]. It is in this context that we must understand the renunciation by the Greek government of the last slice of aid promised by the so-called « Troïka, » amounting to 7 billion euros. Of course, having rejected the legitimacy of said “Troïka, » it could not logically accept to take advantage of it. But, in a more subtle way, this gesture is putting Greece voluntarily at the edge of the abyss and demonstrates all at once its resolve to go the bitter end (like Cortez burning his ships before moving up to Mexico) and to increase the pressure on Germany. We are here in a full blown exercise of « coercive deficiency ».

This explains Varoufakis’s “Do ahead” (he probably meant “Go ahead”). He stands at the edge of the cliff, and the ECB says “Do what we want or we will push you over”. His response: “Go on then, push”.

It must be remembered that this game is being played on a global stage. The US President, Barack Obama, has openly sided with the Greeks, warning that “You cannot keep on squeezing countries that are in the midst of a depression. At some point there has to be a growth strategy in order for them to pay off their debts and eliminate some of their deficits”.”

It’s a bit like in the (quite good) Anthony Hopkins/Alec Baldwin film ‘The Edge’, where they use an (apparently) Indian trick to kill a massive man-eating bear, you sharpen a spear, you provoke the bear to raise up and position the spear accordingly.

Put another way, it is in the nature of dying power to overreach.

It’s win-win for Greece, from a point of view that if the ECB is mad enough to risk kicking them out (which ultimately Yaroufakis believes they’re not, as they have far, far too much to lose), then Greece are better off out and they won’t be alone in that fact.

@ skeptic01

I don’t have much faith in Bloomberg TV news when it comes to European issues. (One of the anchors has already, if I am not mistaken, shown himself to be completely clueless).

Simon Nixon, IMHO, goes to the heart of the matter in this comment;

“The ECB hasn’t said whether it would be willing to do this or what restrictions it might require in terms of eligible collateral. If it refused to allow the Bank of Greece to provide emergency liquidity, the Greek banking system would collapse, likely forcing Greece to print its own currency and thereby leave the euro.

Some argue that the ECB would be reluctant to take such a momentous decision on its own. But even if the ECB continued to prop up the banks, the question remains who would prop up the government: Large bond redemptions fall due in March and April, raising the risk of a disorderly default.”

This would fit with the point you make. The question is whether depositors in Greek banks will hang around and wait to be haircut as happened in Cyprus. Tactically, the new Greek government has put itself in an impossible position. Unless, of course, it has a plan to pull Greece out of the euro! I doubt it. Cyprus, of course, also had a loan from Russia! Some posturing in that direction may, nevertheless, also be expected.

By the way, as I am sure is well known to the generality of bloggers, cutting and pasting the title of an article to Google Search will – usually – get around pay walls, at least in respect of comment pieces.

This was a brutal (and entirely discretionary) display of political thuggery but totally in line with previous ECB behaviour (on Ireland, Italy and Cyprus).

A couple of things to bear in mind:

* The action is not only outside of the ECB’s mandate but clashes with it (ensuring financial stability). This has nothing to do with legal requirements or diligence. Nada. Zilch.
* The action is a nakedly political one intended to further the cause of the austerity agenda, the domestic political interests of Angela Merkel and the power of the creditor countries against the GIPSIs, and to remind the little people who is boss.
* It represents, yet again, an unelected and completely unaccountable European Union institution destabilizing and threatening a member state in order to achieve its goals.

Karl’s two medium posts were excellent but he underplays this a bit. This is a really big deal, both for the chain of events it has set in motion and what it lets Ireland know (again) about how dangerous a place the EU is for non client states of Germany.

This is abusive partner syndrome. It has become so normal for the ECB (under German guidance) to attack smaller countries that we now think it is normal. This is not normal, it is not democratic and it is not moral.

@Unfeasibly Charming

The @ECB’s aggressive and politicized position on Greece is not intended to pass the buck to politicians, the actions empower one set of national actors against another, the ECB has its side in the game when it is supposed to be the referee.

Has to be said again and again, this is not about rules, not even slightly. It is about power and a right wing wish list.

Prime Economics has a good primer here: The ECB Has Shaken The Eurozone’s Utopian Foundations

Jens seems to be having a bit of a vintage Bini-Smaghi-logic moment – suggesting that giving a bail-out to Greece will make investors conclude Italy and Spain are probably insolvent also & those negative bond yields might have to go with anticipated risk-sharing. Vice versa presumably if you don’t.

“”ELA should only be awarded for the short term and to solvent banks,” Weidmann, who also sits on the ECB’s Governing Council of decision makers, told business daily Boersen Zeitung.

“As the banks and the state are closely bound in Greece, the economic and fiscal policy course that the Greek government follows plays an important role in this assessment,” he added.

“Governments and parliaments must take decisions about whether and how to keep banks afloat, or wind them up.”

Speaking later in Venice, Weidmann upped the ante, demanding that countries bear the consequences of their own fiscal decisions and warning that any move to bail out a euro zone peer could lead to the spread of solvency doubts.

Singling out Greece’s refusal to cooperate with the troika of inspectors from international lenders, he said there could be no sharing of fiscal responsibility without first ceding sovereignty.

“Member states remain fully responsible for the consequences of their own autonomous fiscal decisions,” Weidmann said in Venice.

“If market participants tend to see the monetary union as a system of mutual financial assistance in the event of serious trouble, doubts about a country’s solvency could spread more quickly to the other member states.”


ECB to Greece: Drop Dead

Posted on February 5, 2015 by Yves Smith
Even by the standards of bank thuggishness, the move by the ECB against Greece last night was a stunner. Americans have become used to banks taking houses under dubious pretexts when both the investors and borrowers would do better with a writedown. But to see the ECB try take a country is another matter entirely. As one seasoned pro said, “If anyone had tried something like this against a country with a decent sized military, the tanks would be rolling.”

The ECB’s bombshell was to put Greece at risk of an intensification of its ongoing bank run in order to pressure it to agree to a deal with the Troika under an impossibly tight timetable, even shorter than the February 28 pre-existing deadline that Greece Finance Minister Yanis Varoufakis had planned to extend until June. As we’ve discussed at length previously, a longer negotiation timetable would be necessary to meet Greece’s objective of restructuring of the relationship with the Troika. Greece wanted that to be based on the recognition that Greece could never pay off its debts and that it was in both side’s interest to let Greece implement more growth-oriented policies. But the message from the enforcers at the ECB was unambiguous: Greece has no rights and needs to accept its debtcropper status.

One of the EU officials said that ELA could continue “for some time,” without giving further details. The ECB has in the past threatened to cut off ELA funding to banks in Ireland and Cyprus to force national governments to agree on a new bailout program with the eurozone.’

@EZ ‘DebtCroppers’

Nothing is impossible; stand up and fight!

“Member states remain fully responsible for the consequences of their own autonomous fiscal decisions,” Weidmann said in Venice.”

Yeah. Germany’s refusal to stimulate demand in the zone by relaxing its own fiscal stance , instead voting for a balanced budget in 2015, is a prime reason why deflation is now hanging over the whole EZ

The ECB has to consider that Syriza is in the position that it is genuinely trying to send the interests of the Greek people. An unexpected turn for a European govt but there you go.

Following from that they must know the alternative is to continue work austerity even though it doesn’t work and Greece is breaking down as a society. So that’s a no no . telling them Greece will fail in 1 months is not going to persuade a country that is along to failure already because of austerity. There is thus little to lose .

The alternative for Eurioe is who will the Greeks vote for of Syriza fail. The KKE – too moribund. Step forward the golden dawn. Syriza are playing for real. The alternative is death slowly and the gap being filled by the XG.

Syriza have no choice but to fail if that’s what Europe forces them to do. It will be no worse than the path Greece is on.

Having had the day to think about it, I am about 90% confident that the ECB has as of last night thrown in its hand. Up to then it had had threats it could make short of kicking Greece from the euro and the EU. Now, all it has is a nuclear option that is getting more painful to exercise by the day, which would take a two thirds majority to exercise, and which they are legally free to avoid taking. No one serious about exerting pressure throws away flexibility in their response like that voluntarily.

Also, by switching its funding mechanism for Greek banks from a mix of lending collateralised by interest-bearing bonds to ELA on which the Greek state can make a margin I think it has somewhat improved the prospective Greek fiscal position. Looks like the ECB is doing more of what it takes …

Mark one up to my (90% confidence) new hero Yanis Varoufakis and his practical application of game theory.

‘It’s no big deal’, says Karl Whelan, but he nonetheless he states ‘I think the ECB Governing Council has today increased the financial stability threat to the Eurozone without achieving anything positive in return’.

John the Optimist is right to draw attention to the fact that Greece remains a relatively prosperous place – GDP per person about $22,000 compared with a mere $5,000 in nearby Albania.

It’s a tricky situation. Yaroufakis met with Draghi on Wednesday before the ECB decision was announced.

I recently finished reading Christopher Clark’s history of the lead-up to WW1, “The Sleepwalkers”. Much of the narrative is a blow-by-blow account of what was discussed at critical government and diplomatic meetings in the years leading up to that conflict. What is noticeable is the gap between what was actually discussed, and what was publicly announced. Maybe about 10-20% of the discussion content was reflected in public announcements. Perfectly understandable perhaps, but something to keep in mind as we watch the unfolding drama.

I see from DOCM’s Figaro link above that Marine Le Pen condemns the ECB’s action, while Putin and Tsipras exchange pleasantries on the phone. Perhaps the forces of the counter-Enlightenment (Fascism, Communism, and blood-and-soil nationalism) are finally uniting!

John the optimist’s point is a non sequitur, Albania is mountainous and run by clans and barely modernised. Greece was brought into NATO and the EU for geopolitical reasons. Just like Spain was taken into the EU fold after Franco died. If Spain gets into trouble presumably JTO will bring out a germane Gdp comparison with western sahara.


If it exits the Euro it heads to Albanian living standarts in the short to medium term.

2 weeks ago after Draghi announced QE in the EZ the FTSE Eurofirst 300 equity index closed at a seven-year high of 1409.92. It’s still fairly close to that.

Meanwhile back in the soap opera the EZ family have gathered around the table for a family dinner to celebrate QE and youngest child Stakis , who has lost a lot of weight, asks Papa Hans for some more porridge. And Hans loses the plot. Again.He seems to have some sort of financial hypoglycemia.

And how will the markets price this ? Will they cop on before it’s too late? Tune in ad nauseum.

Was on my travels yesterday. Glad to see I missed the hysteria of this thread. ECB move entirely predictable and justifiable, and more about taking ECB out of the political process, not the opposite as most of the initial commentators seemed to think. ELA access increased to 60bn, T-bill “limit” also increased, so ECB allowing a full back stopping of Greek deposit system vs current refinancing usage and a bit beyond. This is about making sure ECB is not held to ransom over any decisions that would need to be taken right as we head into the various ‘deadlines’ Greece/EU face later this month, and about making sure that Greece’s government knows that if they want to tell all and sundry that the “troika is gone, the deal is dead” then they don’t get any of the flexibility that came with that deal. Decisions have consequences. The Rock Star is quickly falling to earth.

God! Does history rhyme!

“It is difficult to maintain true perspective in large affairs. I have criticised the work of Paris [the 1919 Peace Conference], and in sombre colors the condition and prospects of Europe. …. …. But in so complex a phenomenon the prognostics do not all point in one way; and we make the error of expecting consequences to follow too swiftly and too inevitably from what are not all [italics in the original] the relevant causes. The blackness of the prospect itself leads us to doubt its accuracy; our imagination is dulled rather than stimulated by too woeful a narration, and our minds rebound from what is felt “too bad to be true”.”

J M Keynes (1919). ‘Economic Consequences of the Peace’, Ch: VII.

Greek debt service costs are between 3 & 4% of GDP depending on whether you calculate gross or net. Greece is probably the 30th richest country in the world. It is not a money lenders rate. The ECB seems to have removed itself from the pitch as an actor if BEB is correct. The ELA has been increased and the govt can roll over T-Bills. So absent a bank run, the situation will be stable.

Greece’s problem is that it cannot seem to collect taxes efficiently and spend the revenue in a similar fashion. A secondary problem is that the private sector seems to be crowded out by excessive regulation.
Thus far all we have seen from Syriza is a proposal to forgive the debt in additon to a list of initatives calculated to raise expenditure and reduce taxes.
If I was footing the bill, I would require a little more from the Rock Star.

“Greece’s problem is that it cannot seem to collect taxes efficiently and spend the revenue in a similar fashion”

Take it down to the level of an individual, Tull and let’s say Greece is a MABS customer.

The MABS advisor at the IMF wrote this in 2012. Note the importance of ongoing support :

“Risks. The program remains subject to notable implementation risks. In general, Greece has little if any margin to absorb adverse shocks or program slippages. In the event that policy implementation takes longer or falls short, the economy takes longer to respond to labor market and supply-side reforms, or fiscal multipliers are higher (reducing the growth path), a deeper recession and a much higher debt trajectory would be the likely result. Political risks linked to the electoral calendar create additional uncertainty about policy implementation (and staff has sought political assurances to ensure continuity in policy implementation; see paragraph 50). The materialization of these risks would most likely require additional debt relief by the official sector and, short of that, lead to a sovereign default. In the absence of continued official support and access to ECB refinancing operations, a disorderly euro exit would be unavoidable, heightening risks to the Fund (see the Supplement to the Staff Report: “Greece—Assessment of the Risks to the Fund and the Fund’s Liquidity Position”). Program design—in particular the even phasing of support and tight monitoring framework—helps to reduce these risks. The euro area member states’ commitment to provide long-term support to Greece on adequate terms is also a key consideration for staff’s recommendation to approve the proposed arrangement.”

There is a viciousness and capriciousness to the Germans that probably isn’t such a feature of MABS programmes.


that was 2012 and now it is 2015. Greek debt service costs are between 3-4% of GDP and rates are not going up for a long time in Europe. In all likelyhood a negotiation will shave 1-2 pts off that through term extension. What of it?

Syrizia wants to reduce burden, and the creditors want something in return. In all probability they want assurance that Greece will not come back with demands for more fiscal assistance.
Thus far Syrizia has offered no such assurance. They appear to want an end to monitoring. They want to raise spending and are talking about tax amnesties.
Syrizia is beginning to look like a coalition of pre Berlin wall commies and neo fascists with a Gra for Putin.
If I was in high political office in a Northern European Capital, I would be beginning to wonder if I should my losses and accept that the best course is for the Greeks to leave the EU. Obviously, I would have to fess up to my voters that 50bn was gone but in the long run it might be the least painless option for me. At the same time I would open the door to Sebia.

Erik Nielsen, UniCredit Chief Economist, today (Erik has been a risk-on, the crisis will end, the Periphery will be fine, Europe will stick together kinda guy…).

“If Greece refuses to compromise, we think that its eurozone peers should allow Greece to exit the EMU, first and foremost as a matter of fairness to the other European taxpayers, but also to avoid weakening reform-oriented governments and boosting populism across the eurozone. In the event of Grexit, the shockwave that would hit the eurozone is likely to be traumatic, but manageable”

It is becoming clearer and clearer than the Rock Star and his buddies have massively overplayed their hand and have confused Europeans sympathy at their situation (which there is in abundance) with a willingness to bail Greece out again (which there is not).


you have probably called it right and shure what the harm of it, if you into the shops here, apart from feta cheese, what greek products do you see?

what of maastricht and solidarity and historical German debt write offs, what of 50% u-25 unemployment and people burning themselves in the streets, what of the abject failure of an ECB to fulfill its 2% inflation remit, what of the undervalued Deutsch Euro and its benefits it has brought to the fatherland, what of moral hazard doctrine being applied with extreme prejudice….

and what of a rock star that actually at least tries to fulfill the mandate bestowed on him throw a democratic process even if he fails. At least he’ll have stayed true to his word unlike the morons i gave 1 & 2 to in teh last election here.


Its not only Albania that Greece is richer than.

Its every country in the region (all of which suffered under socialism from 1945 to 1990).

GDP per capita:

Greece: $21,954
Bulgaria $7,498
Romania $9,422
Serbia: $6,354
Macedonia: $4,838
Montenegro: $7,106
Croatia: $17,607

So, Greek GDP per capita is at least twice the average for south-east Europe.

Looking further afield:

Poland: $13,648
Czech Rep: $19,844
Slovakia: £18,046
Latvia: $15,375
Lithuania: $15,538
Estonia: $18,783

So, Greece still richer than all those – although the gap has been narrowing rapidly since they liberated themselves from socialism.

And even further afield:

Cuba: $6,051
Venezuela: $14,414

Here’s my weekend challenge to readers:

Can anyone find a socialist country that is now or ever has been richer than Greece?

If the rugby goes badly for Ireland this weekend, wracking one’s brain for an answer to this question is guaranteed relieve any resulting pain and suffering.

There will probably be a deal. But the EZ’s crisis fighting competence is pathetic. And when the wolf comes in the shape of Italy or Spain it’ll fall apart.
And the germans will get their hard currency back, while the chf goes to 60 euro cents. 500bn QE will not generate inflation either. The level of complacency between markets and policymakers is shocking.

Great jobs numbers from the U.S. today, and great PMI data from the UK and Ireland all week. Ireland in particular is in a sweet spot right now, great export numbers, public finances improving. Unemployment falling rapidly and all sorts of public and private balance sheets being repaired. Cost of living improving as well. And this is a much healthier boom than any we’ve seen for 50 years because of the structural reforms put in place.

Which is all absolutely terrible news for most economic commentators and academics in Ireland who could not have been more wrong if they’d tried.

“Syrizia is beginning to look like a coalition of pre Berlin wall commies and neo fascists with a Gra for Putin.”

Tull, this is partisan demagogary: It adds absolutely nothing of use or interest. Its juvenile stuff. You are displaying a monumental ignorance of the nature of parliamentary party politics in the second decade of the 21st century. Things have moved on – a great deal, just not for the betterment of democratic politics, since the 1960s.

The number and levels of political complexity have grown and expanded greatly over the last four or five decades. Legislations have an increasingly trans-national dimension and many national policy functions have been delegated to un-elected officials and the supra-national organisations they work in. The voters sense, rightly, that they now have less and less control over the policies enacted by their elected parliamentary representatives – and they have let their anger and frustration be known in public. We’ve seen it. Its not pretty.

So, if a sovereign government arrives with a popular mandate – which will prevail? The preferences of the citizens of the sovereign or the rules of un-elected bureaucrats? I’d say it might be “No contest!”, but lets see what emerges.

@ JtO: John, I’m not too impressed with your data: where did it come from? Not questioning it: just the implications. Lots of other variables have to be provided and contexed to establish a meaningful narrative.

The fact that the ECB is apparently willing to ‘allow’ ELA of €60 billion to the Greek banks, is a red herring.

At the end of Dec 2014, Greek banks already had €56 billion in ELA, and there was a further loss of funds in January, meaning that the 60 billion is well used up.

Any ELA given by the local CB, has to be communicated to the ECB, within two working days. ELA, as has been pointed out, can be cancelled at a whim by the ECB, with a 2/3 majority of the GC.

The so-called ECB Big-Bazooka took five years to get into position and has yet to fire a shot.
The missile launched at the Greek banking system and Greek economy, took about three hours to load. How’s that for efficiency. No doubt the plans were well laid in advance, and people were itching to test the missile.

Long term, not only the Greeks, but every other small country would be better off out of the euro. Any sovereign country whose financial and banking system can be shut down, for causing displeasure to a foreign colonial power, is as defenceless as a stone-age man against a rifle.

Text from Blind Biddy in Athens:

Greek “Rock Star” Cleaning Ladies 1: Troika 0

Defiance and Charm: A Measured First Week for New Greek Leader

By Manfred Ertel, Julia Amalia Heyer, Walter Mayr and Juliane von Mittelstaedt

Syriza’s victory in the recent Greek elections set off a wave of concern in Europe. But even as the new prime minister tries to woo other leaders, his left-wing government is already busy getting down to work. Many of its first moves have been the right ones.

Worth reading; methinks a few lessons for the locals … and other EZ “debtcroppers” and supine serfs.

The constant reference to ‘ a Rock Star’ falling to earth’ is puzzling?
Who could the commenters be referring to and should we be concerned or relieved?


The reference to ‘rock star’ is an attempt to denigrate and ridicule the democratically elected prime minister of Greece. A riposte, all the way from the 1970s.


The great white hope for the anti austerity brigade is a Greek economist. You don’t need to be concerned or relieved, just sympathetic.

@ Vinny,

Simple – it’s Prof. Varoufakis. In some sections of the media, the Greek Finance Minister’s sartorial elegance – leather jacket, open-neck shirt, flashy motor bike etc. – inspires ‘rock star’ comparisons. Others, notably some of the German press, have drawn attention to his superficial resemblance to Lord Voldemort – you know, the character villain of the Harry Potter film series? I think J.K. Rowling’s original ‘Tom Riddle/Dark Wizard’ character was played by Ralph Fiennes in the cinema version (?), so there’s a sort of back-handed compliment in this latter comparison. Anyway, you take your pick among these frames – hero or villain. The fictional Lord Voldemort came to a sticky end; the ‘rock star’ falls to earth. None of it ends well.

@ JF

It all depends on how you look at it. Unemployment is down but so is Labour force participation. That decreases pressure for wage increases . No sign of that changing in the US stats.

Lex recently called wage stagnation part of the “positive headwinds” blowing favourably for the Eurozone corporate sector, for example. It comes down to your framing of what is going on and how comfortable you are with market momentum and whether or not you believe.

If you are in the market wage stagnation is great news for assets. It’s really fabulous combined with ZIRP because it means asset pries can rise even further. The only problem is revenue growth. And who cares about fundamentals anyway ?

Just watch out for those black swans. They hunt in packs.

I sense a growing desperation amongst the comments from our neo-liberal friends here. Varoufakis and Tspiras are doing something right when all I read is ad hominems and dire predictions of Greek living standards going to Albania.

Isn’t Yanis Varoufakis the ‘Rock Star’? At least according to The Sun.

According to the same source, ladies all over Europe are going crazy for him (apart from Frau Merkel) and there’s even talk that, when his political career ends, he’ll become a movie star. He’s now being mentioned as the next James Bond. Whatever the economic statistics show in the next few years, I confidently predict that Michael Noonan will not match that.

If the feta cheese you buy in your local store is actually made in Greece that is only because the EU Court of Justice decided that feta cheese is a traditional Greek product which other countries can’t make and sell under that name.

The supporters of Syrizia emphasise the democratic mandate given to that collection of misfits. You largely ignore the democratic manadate given by the German, French, Finns to their govts. Does this count for nothing?

In is interesting that in the space of a week, Tsipiras has ditched most of his key promises already. Debt haircut has been replaced by adjustment in payment terms. No more loans from the IMF has been replaced by a demand for a bridging loan. An end to austerity has been ditched in favour of a smaller primary surplus. It appears that the minimum wage is to be phased in now. How much more will he ditch and when will his supporters realise that they have been conned.

Tull: Please do not displace the subject – OK? And please ditch the dismissive adjectives. They contribute zero. I not respectfully suggest you read some of the recent, and not so recent election manifestoes, of FF, FG and Labour. Then contrast with their respective performances.

I do not know what species of insects you have both in your bonnet + drawers. Try DDT. Its still the best.

How about our first Interparty Gov? Now they WERE a real bunch of misfits. Martin O’Donoghue TD? or Gene Fitz TD? or Boland? or Haughey? or Richy? Who docked the OAPs 1 shilling? And was there some kerfuffle about VAT on children’s shoes? All Greek to me!

Here’s a few Qs: What is ‘austerity’. Why is it needed? And is it that there will be ‘losers’ and ‘losers’, but everyone actually benefits in the end? And the benefits would be?

@ JR (and others)

Sorry, without being insulting, you need to get your facts straight before you accuse people of stuff. We didn’t come up with the term “rock star” for Varoufakia (not Tsipras). Note a large amount of people positively using this description are euro-sceptic at heart.


I can confirm that the ladies (or at least this one) are indeed rather thrilled by the charisma, determined jaw line and cool clothes of Prof. Varoufakis. And like all plebs, one does glow exceedingly when handsome politicians provide apparently simple answers to life’s complications. I wish the dashing professor well, but I’ve yet to have a hero that didn’t disappoint in the end. Well, except in Jane Austen books. Sigh.

Meanwhile in the big picture Pictet of Geneva which manages 435 bn chf in one branch of the business generated 17 bn in interest over 2014. The bank now has to decide how to deal with negative interest rates. Should it pass on the negative rates to clients? And where do the margins come from?

Neoliberalism and monetarism are at breaking point. The memes do not make sense at minus 1%.

What is the point of a capitalism that has given up on growth ?

@ JtO: John, that’s what you get when you “outsource” (don’t you just love that term!) politicial decision-making to an un-elected, statutory corpus!

You have the ordinary folk on one ditch, a nice void (with an imaginary white line down the middle), the beecrats on the other ditch, with our ‘poor’ pols sitting on the hillside, astride their Foxford rugs, smoking fags, drinking pints, eating their ‘hang sanwitches’ and charging the rest of us for a view of the ‘game’. Don’t you just love it. Hey-up! Valentine’s Day coming soon!


Have you journeyed along the bit of road that has already been “improved” on the way into Anascaul? It wrecks a once beautiful view with cycle paths and metal barriers that are a bigger risk than what was there before. The beauty of the countryside is the asset that makes the journey to Dingle, even by lefty-liberal-elitists, worthwhile.

@ All

Also worth reading!

The one thing that is missing is the distinction to be made with regard to the nature of public spending i.e. is it adding or subtracting to the productive capacity of the economy as a whole? We are almost as good at avoiding both the examination and the resulting answer as the Greeks.

To quote Stephen Collins;

“The reality is that the Irish political class, for all its faults, acted far more wisely in the long-term interests of its people than its Greek equivalent. It helps of course that this country has a highly efficient tax system and an honest public service.”

Without the last-mentioned, wisdom by the political class would have been in short supply.

This paper is of interest in terms of the views being widely offered on the actions of the ECB,

Notably this extract (page 12);

“The Treaty states that “the primary objective of the ESCB shall be to maintain price stability” and that “without prejudice to the objective of price stability, the ESCB shall support the general economic policies of the [European] Community with a view to contributing to the achievement of the
objectives of the [European] Community”. The objectives of the Community are inter alia to ensure “a high level of employment […], sustainable and non-inflationary growth, a high degree of competitiveness and convergence of economic performance”. The Treaty thus establishes a clear hierarchy of objectives for the ECB and assigns overriding importance to price stability (see Table 2). Moreover, the ECB has made public its precise quantititative definition of price stability. The ESCB’s mandate to pursue price stability contrasts with the Fed’s multiple-objective mandate. The latter’s mandate states that “the Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long-run growth of the monetary and credit aggregates commensurate with the country’s long-run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates” (Federal Reserve Act, Section 2A.1). Against this background, it is worth noting that Goodfriend (1999) finds that although the US Congress has not assigned an explicit mandate to pursue low inflation, the Fed seeks to educate the public about the benefits of low inflation and the need to pre-empt it. Hence, the Fed’s policymakers seem to assign at least an implicit ranking to these goals, although in the long run all three are compatible. It has been argued that despite its multiple objectives, the Fed has traditionally
placed more emphasis on achieving price stability and, in recent years, there have been calls for a clearer price stability mandate for the Fed (see Wynne, 1999 and Bernanke, 2003a).”

Some dispute the narrowness of the ECB’s approach. There are no grounds for doing so as the “without prejudice” reference cannot be interpreted in any other way than set out above given that all the institutions must act withing the competences given to them and Title I of the TFEU “Categories and areas of Union competence” states unequivocally (Article 5 TFEU) that member countries need only coordinate their economic, employment and social policies.

Is any Irish economist writing about the Irish economic recovery? Not just the fact of it (which many still deny) but its causes, composition and sustainability. It seems to be of only vague interest to the Tsipras fanboys. If it wasn’t for JtO the recovery wouldn’t be mentioned at all on this site.

For example… whatever happened to the Big Pharma patent disaster and how has our export performance stayed so strong? Where are we on the mortgage default stats? What is the true value of the State’s shares in AIB? Where are with the construction recovery and what will this mean for employment? What are the capital investment priorities for the State?

@ Sarah,

I’m afraid I’d have to leave you to swooning on your own! This ‘auld trout’ isn’t impressed by any politician’s appearances. It’s what goes on in their heads that matters. On that, the real question is about the feasibility of Syriza’s ideas, and Mr. Varoufakis’s model for debt management both in Greece and the EU generally. I have no expertise to judge his economic proposals, but it’s clear that (a) the current model of austerity policy is not sustainable for much longer, and (b) risks creating a major political crisis throughout the EU. February will be a long month.

Two links of interest while awaiting the proposal that Tsirpas is putting to his parliament today and which he undertakes, apparently, not to budge from in “negotiations”.

Not alone do we need the views of the “diasporites”, we also need closer examination of the “polloigarchs”, the name I have suggested for those vested interests across society, far from being confined to oligarchs, getting a larger slice of the economic cake than they merit. The role of the latter in Greece, as the IMF MOU makes clear, is all pervasive.

Tsirpas is caught between various narrowing forces (i) deposit flight (ii) falling tax revenues and (iii) market reaction. It seems that the penny will not drop until he is left without any substantive support from any quarter, apart from the understandable backing of Cyprus.

P.S. Another blogger, versed in the economic literature, referred me to the works of a Nobel prizewinner; Mancur Olson. There seems to have been little interest in his works since his death. This seems a pity. The explanation undoubtedly lies in the range of vested interests that would be impacted were his work to become a guide to actual policy making.


Have you journeyed along the bit of road that has already been “improved” on the way into Anascaul?

Alas, no. I have not been to that area since August 1960 when, as a child of 11, we went on a family holiday to Kerry. I remember it mainly for the fact that my father was insisting to his disbelieving children that one of the diners in the restaurant was Charlie Chaplin. With regard to the actual protest, I haven’t made any comment on its merits, but merely expressed pleasure at the fact that the locals are rising up against An Taisce, coupled with the hope that one day public outrage will result in its leaders having to be evacuated Saigon-style from the roof of their Dublin HQ into prolonged exile.


My take is that the pharma patent business had minimal effect on Ireland’s GNP figures. It had some effect on GDP figures in 2012 and 2013. Effectively, all that happened was that royalties for pharma patents stopped being included in GDP figures, but this was cancelled out in the GNP figures by a corresponding reduction in royalty payments repatriated abroad. This resulted in a purely technical stagnation in GDP in those years. But, based on the more reliable GNP, the economy was growing moderately (2-3% pa) in 2012 and 2013, and this is confirmed by falling unemployment and budget deficit in those years. And, as the pharma cliff wore off, along with other positive developments, both GDP and GNP accelerated sharply in 2014. Construction recovery is well under way, but is still in its early stages. Approx 8k houses were completed in 2013, and this rose to 11k in 2014, still miles below the 25-30k required (double that should net immigration ever return to its 2000-2007 level – whether it ever does is currently impossible to predict). I would expect the fall in unemployment to accelerate once the recovery in construction is fully under way.


According to this, there has been a 67% fall in road deaths in Kerry since FF started building proper roads. My hazy recollection from 1960 is that the roads in Kerry then were a bad joke compared with Northern Ireland. Which was reflected in an astronomical road deaths toll. A vast improvement since then, especially after Bertie Ahern made road-building a priority. But, naturally, nearly every one of those roads was opposed by An Taisce. I dread to think what the road deaths toll would now be if they had had their way.

@Sarah Carey,Authorised=false.html?

It seems a Portugeese socialist MP, one Isabel Moreira, agrees with you.

What’s interesting is that it is perfectly acceptable for her to say this, as she is a socialist and therefore above criticism.

Now, if the Greek finance minister was female, and Michael Lowry said exactly the same about her, there would be massive twitter demand for his immediate imprisonment.


So sorry – me and my sense of humour. I hope when I’m an “auld trout” I’ll still be able to admire a strong featured man.

AFAI can see, the current model of non-governance in Greece is unsustainable and as attractive as Professor Varoufakis’ is – intellectually and sartorially – success is by no means guaranteed. As I said, morally he has a case, but the Irish people might be glad of the opportunity to stand back and observe an experiment in populism and mega-phone diplomacy. If they get their conference – great. We win too. If they have to exit and endure all the chaos of that decision, we’ll see the consequences of rhetoric and undeliverable promises.

I think Noonan said we borrowed 30 year money at 2%. How much are the Greeks paying?


Wonderful. “Actually, both men have the handsome features of film stars, Mr Tsipras looking like Sean Connery in Dr No and Mr Varoufakis like the ageing, shaven-headed boxer in Pulp Fiction, Quentin Tarantino’s 1994 movie. Like that Bruce Willis character, Mr Varoufakis even arrived at his first cabinet meeting on a 1300cc Yamaha and is not short of female admirers. “Damn, the Greek finance minister is sexy,” Isabel Moreira, a Portuguese socialist member of parliament, wrote on her Facebook page.”

I think the Bruce Willis comparison doesn’t do him justice. He’s got much better bone structure.

And the Guardian live blog was it at last week too – “Greek finance minister Yanis Varoufakis is looking terribly smooth at the start of his talks in Italy”

And of course, you are perfectly right. I’ve said before, if you’re left wing, gay or a novelist you can get away with a lot. Bourgeois, blue-stocking, blue-shirts have no such leeway.

As for the double standard, you are bang on too. I thought the reaction to the Lowry note po-faced. We know that’s how men talk about women all the time, and anyway, women are capable of the occasionally lustful remark too! So really, stop pretending we don’t look.

Alas presumably this will have no effect on Mrs Merkel, who perhaps like Veronica, places herself in the auld trout category. Nor will the Greek people be impressed if Syriza fails to deliver on its many promises, irrespective of the good looks of their No. 1 and 2.

All I can think of now is that they may end up better off on their own, if Syriza manages an orderly exit and starts governing. I’m told they have a primary surplus. If they get their tax system sorted out (and take Schauble’s 500 tax collectors!) they could run their country and get themselves out of this mess.

I was chatting to a Lithuanian security guard the other day – a lady – who came here after living in Greece for 15 years. Emigrating from Greece to Ireland. That tells a story.

Greek FinMin is a fan of game theory. He must be playing Kobayashi Maru.

Tsipiras speech tonight promises a raft of extra spending and tax cuts with money he does not have. Clearly, they are on the way out of the EU(ro). The only way they stay in is if they or the Germans capitulate.


‘Mr Adams said the decision of the Government to “line up with the EU elite and put the boot into Greece is shameful”.

“The issues which the Greek government are seeking to tackle are not a Greek problem. They are a European one. This state’s debt problem is not an Irish problem, it is a European one. The debt issue needs a European solution.”


A Syriza MEP, Kostas Chrysogonos, on Saturday addressed a Sinn Féin conference in Dublin on the living wage.

@Greek Citizenry

In solidarity.

@The Irish Government

$ham€ful. Quite”

Graciously accept the award of a Hiberno-Hellenic FIG LEAF.


So Tsipras/Varoufakis are “folding like cheap deck chairs”, eh?

Mr. Tsipras said his government would not seek an extension of the bailout, which he said would be tantamount to continuing the “mistakes and disaster” of the past, and he repeated calls for a bridge program until a “mutually acceptable deal” is found. He said his government needed “fiscal space” for discussion on restructuring of debt.

“We only have one commitment: to serve the interests of our people, the good of society,” he said, noting that it was an “irreversible decision” of his government to fulfill its campaign promises “in their entirety.”

@ JTO and Sarah,

Image, appearance and the artistry of self-presentation have always contributed to the aura of power. They are just as symbolically important in politics as in any other walk of life in which capturing the trust of the audience is vital to successfully delivering the message. Nobody would argue that one! My rather pedestrian point is that beyond the showbiz, it’s the message that counts. And the key ‘audience’ for Greece is now their eurozone peers and the rest of the EU. Showbiz doesn’t count for much in the messy business of negotiation.

@ sarah
2% on 30 years is nuts given the risks out to 2045. Will the EU still exist? How much will climate change cost? When do all the off balance sheet unfunded pension promises come on stream?

Markets are all about optics. Ireland is a good girl and Greece is very bold but
Ireland has been there before and all of the plamas of 2005 was worthless when the wolf arrived. I don’t think the markets can price Irish risk.

The yield on ten-year Greek bonds rose over 11% this morning.
Call your broker!

@ peter stapleton

The greek 10 year yield got to 48% in 2012, around where 3rd point bought in. Markets expect a deal.

I wonder how long it will be before ELA is pulled from the Greek banks by the ECB. Since Greece is insolvent then the banks must be insolvent.


Well, they’re pricing Greek risk. 2% vs 11%

Ireland is not Greece and Sinn Fein is upset about that?


I always put McCoy and Spock before Kirk. But James T did always get away with it in the end. Perhaps Tsipras will make it so.

But look folks, serious question.

Could it be the case that it is in the best interests of the Greek people to default, exit and start over? If that’s becoming the most likely outcome, should we consider the possibility that it’s not the worst?

One angle that is receiving very little attention is the fact that we may be witnessing the creation of that much sought after phenomenon i.e. a European demos; in the sense that (i) the refusal of the Greeks to abide by the general institutional rules and (ii) their decision to stick adamantly to an opposing political agenda creates a common political situation that impacts all countries of the EZ and forces an EU-wide political debate.

Gerard O’Regan in the Independent and Chris Johns in the IT tackle aspects of the new situation.

The really new ingredient, however, is the fact that the two Greek leaders have created a political situation for their opponents on which the latter cannot yield without paying a political cost to the political benefit of the former.

Politics does not work that way. And it is not a game.


It IS probably in the best interests of the Greeks to exit and default, let the currency float to an equilibrium level say down 40% and reform from there. It is probably in the best interests of the rest of the EZ that this happen.

That is not the proposition that Tsipiras put to his people. He wanted to stay in the euro, halve the debt and live off the EZ taxpayer. Fine if you are a Greek voter, not so good if you are a Finn.

yes the reparations issue is worth a try. Next stop, the Romans and the Persians.

@ DOCM: “One angle that is receiving very little attention is the fact that we may be witnessing the creation of that much sought after phenomenon i.e. a European demos; …”

Good luck with that one! Nice Q for a Politics exam though.

“Rather than adapting EU to make it more democratic, we should adapt our notion of democracy to make it more EU-like.” Discuss.

Tull: Still with the programme? Good lad!

To all of the ‘neo-liberal commenters’ on this topic –

– Syriza did not create the culture of ‘non-governance in Greece’ – corrupt pols and their oligarchic masters did – and it has already begun implementing policies to reverse that situation…
– The negotiation positions of Syriza as presented by the hysterical neo-liberal pro austerity media and its commentariat disciples are deeply inaccurate – they are as described by Varoufakis in his interview with the BBC – legitimate, thoughtful and pitched to a level which ensures swift engagement from ECB/EZ
– Of course ‘politics’ is a ‘game’ – and its a ‘contact sport game’ – expecting Syriza to roll over and die, as we did, will not happen
– A deal will be done, and the sooner the better, but posturing and face-saving antics by ECB/EZ/IMF etc will trigger a costly delay
– Noonan and his henchmen will eventually ‘piggyback’ on the Greek deal – as they did before – and then claim a great result due to their wonderful ‘negotiation skills’
– I refer again to the DER Spiegel piece on reforms already happening on the ground for citizens – but that kind of news is unwelcome to the neo-liberal confraternity

A “European Demos” is born! Wow! United in their hatred of swarthy Southern layabouts, right-thinking people are brought together in a beautiful sense of their unity as a non-swarthy, non-Southern, hardworking people.

@Brian Woods Snr.

Pls go aizzy on Tantrum Tull. Your pedagogical patience is admirable … but futile.

The Blind Biddy Group thought of awarding him a ‘gurrier of the week’; the real genuine north Dub gurrier on the panel, however, used the veto: ‘a kingstown southsider who can’t even find his way to Croke Park’!

We then considered a fig leaf; the legal rep. used the veto: ‘we don’t stock such a small size – we would contravene the UN Convention of Rights of the Childer and Mary would hit us with a belt of her crozier in the IT’.

Drawing on one of your many areas of expertise – is it too late for genetic modification? Sadly, methinks it is.


The demos exists if an electorate is reacting in a more or less simultaneous manner, if variously, across Europe to particular economic or political stimuli. I am simply noting that the present situation is unique in my experience. Where it will lead to is another question.

My general experience tells me, however, that in a crisis, the founders of the EU i.e. the original six member countries, tend to remember the reason why it was established in the first place and this trumps all other considerations.

@ Tull

It’s sad to see you standing with the Germans. I remember back around the time of the Irish bailout you observed “If you want a crisis sorted, do not ask the Europeans “.
The EZ is still as dysfunctional now as it was then.

Neoliberals are a joke but German neoliberals with that mix of monetary rigidity and ww2 trauma are lethal.

Anyway did you see this weekend’s FT editorial?

“These are reasons to avoid over-reliance on sub-zero rates as a tool but not to abandon them. The challenge for any central bank is establishing credibility, which translates as confidence that it will do what it claims it will. Normally this has meant convincing the public that the money printing presses would not run amok. The current problem is the reverse: institutions like the Swiss National Bank are suffering from having a currency that is too popular. Despite its infinite capacity to devalue, the markets do not believe it will. In this situation forcing rates below zero helps signal a determination to drive down demand for the currency.

But there are better ways. Central banks should be given more expansionary targets, such as ambitious goals for inflation or nominal growth. Monetary and fiscal authorities can combine, either by financing deficits with money or through straightforward unsterilised transfers of cash to the public. These may appear like wild steps for a staid central banker to take but so too is charging depositors negative interest. If savers want normality to return, they should tolerate some abnormal steps to get there. ”

Are the Germans going to buy this ?
And if they do what is inflation going to do to all those bonds priced at what the markets thinks are logical prices?

Another great quote from Ian Harnett of Absolute Strategy
“If you think yields are going to go to minus 2 per cent then MINUS A QUARTER IS FINE AS A TRADE”

Absolutely fabulous.

I believe this is known as picking pennies up in front of steamrollers.

The reality of the situation is the situation of the reality. There is just too much debt looking for a bloodvessel to leech off and a lot of it is never going to make money.

Portugal 2 years- Portugal just left IMF intensive care- now yield 0.2%
etc etc ad inflation.

Is Syriza About to Score a Tactical Win Against the Troika?
Posted on February 9, 2015 by Yves Smith

Those who were hoping that Syriza would be cowed by the ECB’s aggressive moves to shut Greece out of bond markets and Eurozone finance ministers’ unified resistance to the new government’s proposals are no doubt frustrated by its refusal to capitulate. On Sunday, Greek prime minister Alexis Tsipras gave a rousing speech reaffirming Syriza’s plans. Ekathimerini’s summary:

Read on:

Good graphics & tables

@ Sarah

Ireland is priced as “anything with a pulse” and “no need for a risk margin ”
Greece is priced as “not going to exit but we’ll add a bit of a risk margin just in case”

The combo of German intransigence and Tsipiras election has exacerbated a crisis. But from past experience that will lead to action. If there is Grexit, policy will turn from loose to massively loose and the incipient recovery in the EU, especially in the peripheral economies will gather pace. From the perspective of Ireland, Grexit has many positives.

DOCM: The idea of a ‘European Demos’ is so absurd, that only some political science theorists would hold it. But its actually believable precisely because of its absurdity.

The EEC was the deliberate construction of a small political elite – it was something that none could, or would object to. However its contemporary manifestation is such that it would take the combined imaginations of Shelly and Stoker to conjure it up. Its a political chimera: Frankenstein and Vampire in a sincle corpus. But we’re likely to discover this nasty truth when its finished with us and dictates to us that democracy is merely for dopes, not for the demos.

@ DO’D: Late? Never! Ve haf vays …..

@ Tull

the EZ can’t get out of its deflationary spiral without massive bank recap.
Where is the money going to come from? And who is going to walk over Schaueble’s dead body ?

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