Irish virtue, Irish (or should that be FG?) interests

There has been some talk recently about how Greece should take its medicine the way Ireland has. So here is a chart, taken from the IMF’s WEO database, showing the two countries’ structural budget balances as a percentage of GDP:


Even if you start the clock in 2008, there is a sizeable difference. And if you start in 2010, when the programmes started, there is no comparison in terms of the “fiscal effort” made. (And yes, I know, it would be much better to look at ex ante measures of austerity, but this is what was to hand.) On top of that, the multiplier in Greece is presumably larger than in very small and very open Ireland. The EC estimates that it is almost twice as large in this paper, not that I take their Greek multiplier estimate particularly seriously. And finally, there is this chart which a friend sends me.

So, to summarise: the Greeks have done more “reform” than we have, have endured a lot more austerity, and live in a country where the costs of austerity are likely to be higher than here. Perhaps the Irish government might want to tone down its assertions of relative virtue, and display a bit of solidarity with Greece. Is a less deflationary and less creditor-friendly Eurozone  not in Ireland’s long term interests, assuming that we remain a member of the single currency?

Except of course that it won’t, for party political reasons. And you can see why. Expect to see more ad hominem attacks on dangerous ex-IMF radicals and other fellow travellers in the months ahead (despite the fact that the government is expecting the electorate’s gratitude for…implementing the programme that the self-same IMF and its fellow-Troika members designed! You couldn’t make it up.).

304 replies on “Irish virtue, Irish (or should that be FG?) interests”

Thanks for this – deserves to be analysed by all – particularly the neo-liberal pro austerity commenters….

If you want to discuss fiscal effort then why not present the actual spending numbers? What was the total government spending amount in Greece in 2008? And what was it in 2014? What was % change over that period? Then present the same numbers for Ireland.

“Is a less deflationary and less creditor-friendly Eurozone not in Ireland’s long term interests, assuming that we remain a member of the single currency?”

This nails it.

We now have the governments of Ireland, Spain and Portugal actively campaigning against the interests of their own citizenry in order to save their own political skins. Is there a precedent for such brazen actions in the history of democracy? I doubt it.

What an absolute disgrace!


‘Ashoka Mody, an economist and a visiting professor at Princeton University, … suggested that the debt accumulated by the previous government [FF,pd,gp] was “odious debt” that arguably should not have to be repaid.

In international law such debts are considered to be the personal debts of the regime that incurred them and not those of the State.’ […]

He also said that water charges were symbolic. The financial “burden was borne unequally.”

Minister for Finance has an x-HSBC advisor; Taoiseach has appointed an x-electoral aide to arch neo-kon John McCain as his man in Castlebar. You couldn’t make it up!

Greece needs assistance, other than financial, from its EZ partners.

Austerity is very neo-liberal. This ‘neo-liberl’ label is used for anything lefties dislike. It is used in the same fashion as ‘racism’ to brand just about any opinion not approved by lefties.

Re: A Bailout

IMF bailout programs are to Ireland, what a place known as Cuba, is to the United States of America.

All reason, goes out the window.

So don’t look for any.

The suggestion even in Ireland, to that old political machine, and it’s old leaders, which owes its origins to the 1920’s, that Ireland could loose any component of it’s ‘national sovereignty’, . . . is the same as serving up a bowl of kryptonite, to Superman, and saying, ‘get stuck in their boy-o‘.

It doesn’t wash.

That’s how it works, in this home land.

The strategy, on our home land, has half nothing, to do with management of the European project.

It has an awful lot more to do, with the paranoia of our civil war, political party cubs, who view their mission, as carrying the legacy of 1923.

Simply put, Ireland’s policy, vis-a-vis Greece, has less to do with foreign policy, and a lot more to do with legacy domestic issues, of our own history.

And it would take one very brave, civil war party member, of any shade or hue, to break out, and separate themselves from old Irish history. A very brave one, indeed. BOH.

Noonan point is well made. Mody was chief of mission from 2010. In 2009 and 2011 Ireland sought to burn both senior and junior Bondholders in some of the banks. We are told the IMF was supportive of this but the ECB was against. Just how supportive was Mody at the time? Was he only going throught the motions and is he seeking to distance himself from the issue now?

The Greeks and their allies constantly emphasise their ‘unsustainable’ debt/GDP ratio. But most of the debt is at concessional rates. The relevant metric is the debt service/GDP ratio. This is lower in Greece than in Ireland. Why should we shoulder more of their debt to further relieve them of the burden of their past profligacy?


1. You say they’ve done more reform, but everything I’ve heard is that they didn’t reform their tax system. And what reforms were completed Syriza promised to undo. Are you concerned about any of that?

2. Be interested in your comments on these charts from the Economist today.

3. Being selfish, isn’t it the case that our government has to put Irish interests first, and putting as much distance between us and Greece is in our interests. I can entertain romantic dreams of the revolution as much as anyone, but it looks a lot like Syriza simply made promises on which they cannot deliver and the WW2 references, (which I’ve employed in columns before, but that’s just “journalism”) are hardly conducive to deal-making.

4. And anyway, if we did support Greece, would that really cut any ice? Morally, there’s a case that we should, but practically speaking, who listens to us? All we can do is play the hand we’ve been dealt as best we can so when the next phase of the crisis comes ground, people don’t put Ireland and Greece in the same sentence. We’re Northern Europeans. That may count for a lot in 6 months.

Re: Ball on the other side of the court

Just to develop slightly, upon the point raised above, because there was quite a few sound bites, on national media, in relation to what ball, is in who’s court, at what times.

There are few sins, that can be committed by an old established Irish political party, which are unquestionably punished. One in particular, which is not allowed pass by the electorate, is that of loosing parts of Ireland’s sovereignty.

We saw that in Ireland, in late 2010 and we saw it in early 2011.

What we do see now though, in Ireland, in early 2015, is that particular ball, which had seemed to have been struck over the net, to the other side of the court, . . . threatens, to appear back, on the wrong side, . . . and in the lead up, to the next general election.

There are a ‘core block’ of voters in Ireland, consistent voters, who the winning political party in Ireland, must win the favor of, to win any general election, on the day. Those particular voters, what political scientists refer to, as ‘a base’, are only energized in Ireland, to change and move in a different direction, . . . if something significant, such as questions over national sovereignty, do arise.

Most other things, are side issues. Or they are, as far as political elections go. In other words, there is no way at all, that our government at present, is going to risk, not putting this particular ball, firmly back on the other side of the court, and putting distance, between them and it, in the run-up period, to a general election.

Things are already bad enough, politically speaking, domestically speaking in Ireland, without having that particular hot potato, rolling around, on the floor. BOH.

@peter stapleton: The Greeks never asked the Irish to take on the debt. The extend and pretend wheeze was to bail out core Eurozone banks. It was instigated by the ECB and Merkel. And were you asked when the debt was handed to you the first time?

@Sarah Carey: Karma is a bitch! Be selfish (and short-sighted) now and stay stuck in a low-growth Eurozone for the next decade or two. The US didn’t do any austerity and they have the fastest growing economy.

PS: Nobody buys the schtick about Ireland being North Europeans. What is the debt/GDP ratio for Ireland again?

Well said. That point about Greek debt service costs should be made over and over again.
Post the election, Tsipiras announce spending and tax measures that amounted to about 8bn. That plus the shortfall in revenue due to tax dodging in the run up to the election is going to push the Greek deficit towards if not over 5% of GDP. Who is expected to fund that?

Re: The European Project

One, very last thing.

We are used now, in Ireland, to reading columnists, and opinion-makers, in Irish national media, write about Germany.

The columnists in Ireland, always tell us, the problem with the European project, is that Merkel and Sarkosy, cannot separate themselves, from domestic politics.

The columnists in Ireland, always tell us, that if only France, and Germany, could make decisions, that were for Europe’s interests, rather than be guided by domestic political sentiment, in France, and in Germany, . . . then Europe, could do better, by Ireland.

However, what we witness, in the last month in Ireland, . . . is that whenever, a European member state, be it Ireland, be it any other, . . . finds itself, back in safer waters, for a while, what they inevitably do, is start to focus not on the European project, but instead, on the domestic front.

We sit it, at present, most of all in Ireland, and in relation to Greece.

The best thing of all, which could have happened, from a political perspective in Ireland, is that Ireland could have exited the bail-out, and that the Greek can, could be kicked further down the road,. . . or at the very least, until later 2016, and safely out of the critical pathway, of the Irish domestic general election campaign.

That would be the ideal time line, from an Irish political campaign managers, perspective, it most of Ireland’s large political parties.

This also demonstrates, how in the thing referred to as, the European project, it directly conflicts, with the whole traditional notion, of something called, political parties, in each of it’s member states.

And unfortunately, at the moment in early 2015, the Greek domestic political time line, following it’s recent general election campaign, . . . does not synchronize, or match up, . . . in any way, that could be described as convenient, for Ireland’s domestic political election machinery.

It would actually, be outrageous therefore, if a current Irish finance minister, of any of Ireland’s political parties, could do any interview, and say anything other, that what we have heard.

When one is forced, to work it through, from first principles, that is apparently, how it all stacks up. If I was a cub, political party parliamentary seat member, in Ireland right now, with a career ahead of me, I would struggle owing to the political game reality, that I would be stuck in at home in Ireland, to show any genuine empathy for Greeks.

This is the whole problem, with the European project, and why it is quite frankly, a big huge mess. BOH.

Audio of Varofakis press conference:
[An excellent performance on radio, imho.]

What is the point that Varoufakis is making concerning reported Greek GDP growth in 2014, not being real growth, but growth only as a result of price reductions?
Does it mean that Greek GDP actually fell at current price levels, but is adjusted up to account for the fall in the price level?

The reason Greece has had to cut its deficit more than Ireland since 2009 is very obvious from the chart. When the global recession struck in 2008, (as the chart shows) Greece’s deficit was only slightly higher than Ireland’s. But, whereas the FF government took action immediately to cut the deficit, Greece took no action and its deficit soared. By 2009, (as the chart again shows) Greece’s deficit was over twice that of Ireland (20% v 10%). They’ve been trying to make up for lost ground ever since.

If Greece had had a Brian Lenehan and taken action to cut its deficit in 2009, its budget deficit reduction trajectory would have followed the same smooth path as Ireland. ‘A stitch in time saves nine’, as they say.

Michael Noonan’s remark about Ashoka Mody is surprising.

Lots of people can attest that, at the time of the Trichet edicts on bailing out unguaranteed and unsecured creditors in bust Irish banks, in mid-2010 and again in March 2011, IMF officials, including Mody, expressed privately exactly the same view that he has publicised since he retired from the IMF.

The Fund officials could not deliver – the IMF has a politically-appointed executive board and the board appears to have over-ruled the officials. The troika included the ECB which appears to have dictated its line to the EU Commission. The unguaranteed and unsecured bondholders in Anglo and Nationwide, which lost between eight and ten times their equity capital, owe their good fortune to the troika, acting against the advice of its most technically competent members, the IMF officials.

There should be no misunderstanding – the IMF officials objected, ineffectually as it transpired, to the pay-outs to undeserving creditors of bust banks and were distraught that there advice was over-ruled.


Bang on, so..isn’t it unfair of Mody to blame the Irish government for failing to achieve what he couldn’t?

Sarah: seriously? A beurocrat who can provide advice but who does not call the political shots is supposed to have more power than a Minister of Finance?


You’re better than that.

Nor do the IMF have the power to threaten that the ECB possesses.

Noonan knows that what Colm says is true, half Dublin knows it, which is what makes his statement so pathetic. They’re obviously rattled by the fact that a SF government now looks like a possibility. And that is what this Mody statement is about, and this is what the current Irish government’s Greek stance is about. Noel Whelan nailed it.

But they’re not helping their cause politically. This is the kind of FF/FG cute hoor nonsense that has people reaching for SF and the independents in the first place.

On your previous question to me: the Economist’s graphs are what you would expect given the size of austerity in the two countries and the multipliers in the two countries. And, by the way, one of the reasons that austerity here wasn’t as draconian as in Greece was that the IMF fought to keep the size of the adjustment down. They won some fights — they just didn’t win them all.

In an ideal world the burden attributable to the “non-burning” of senior bondholders in 2010/2011 should have shared more equally. Both by the EZ and by the US – whose Treasury Secretary Timothy Geithner also famously objected on contagion grounds. At a cost of several billion euros, it would have a small difference to Ireland.

Since then of course the loans from the EZ, and the infamous central bank promissory note arrangement, have been re-structured, re-packaged and durationed out considerably. The IMF on the other hand, never restructures anything.

IMF officials how are ye!

Sarah is absolutely correct about Mody. At the very least he deserves some of the blame for not winning the bond burning argument just as he may deserve some credit for a more lenient programme in Ireland.
He cannot transfer all the blame to the govt. MN has a point and he is right to call Mody.

Another difference between Ireland and Greece is where we started from. Back in 2008 before the crisis broke, Greek public debt was already over 100% of GDP. By the time they lost access to markets in 2010 it was pushing towards 150% of GDP – a level that Ireland’s never reached. The high multiplier was a surprise to the IMF but presumably reflected the extent to which they had become dependent on government spending of “Other People’s Money”.

The conclusions of the OECD Jobs Study Reassessment 2006 was that it was possible to make a positive difference through structural and institutional reform. And, as I argue in my comment to the blog below there seems to have been general structural improvements in labour markets across developed countries. GDP growth has been job rich (usually described as productivity poor).

My comment was about Greece as that has been the focus of attention. However, the Irish economy has done even better in terms of labour market outcomes in the most recent period.

The %age point change in the Irish employment rate (15-64) over the year to Q3 2014 was according to Eurostat was 1.1 %age points – the same as Greece and above the EU average – and fully 3.2 % points over 2 years. And although there is still more to do as at 62.2% the rate is still substantially below the 70.0% in 2007 it is already back to levels last seen in 1999

Bill Wells

Oh please? Sarah, Tull give me a break. I am all the way with Kevin and Colm on this obe. The previous Greek government managed to renegotiate the bailout in 2012 which Noonan and his ilk rode the coat tails of. They made all sorts of noises about restructuring bank debt. Remember they were elected in 2011 promising to get Ireland a better deal from the troika? In 2012 they crowed about gamechanger declarations and major deals on bank. In the end, the only deal they got was because the Greeks negotiated hard. Their performance had been pathetic. Utterly captured. Pretty much the only Bally move on their part was to shift the promissory notes to the CBI and that was a unilateral move.

@ Sarah
It is fair to blame an (any) Irish Government for not even trying, in any meaningful way.

So classic creditor /debtor clash. Many here and on other Irish forums (and the Irish govt it seems) assume that it is better to be aligned with the “strong” creditors. However, if this goes to mush,, it will be the creditors that take the most significant hit in “real terms”, as is always the case with insolvencies. More to lose. Not saying that the Irish should just openly jump in with the Greeks. Yes, the situation has a strong moral element suggesting that the other PIIGS should be more supportive of Greece. However, it has “again” moved beyond the pure or simple moral imperative to a more “survivalist” equilibrium….hard to blame anyone for “keeping heads down”. This is a dangerous situation indeed.

If the proverbial hits the fan, don’t expect the Germans, Dutch, Finns, etc to be too concerned re good old Eire….it’s not in their DNA (I have worked with them for 25+ years, in finance).

Colm – good post. However, this of course is just politics favoring the creditors….for now. Many are assuming that the creditors are “firmly in control”, but that’s a load of croc. Unfortunately, the creditors will have little “physical” to grab in this virtual international (fiat money) economy. Solidarity will go AWOL if there is Greece default. The issue then is how quickly things “progress”……As in all cr /dr messes, it becomes an issue of “least loss” for individual creditors….solidarity can only be relied upon if enough creditors’ interests are similarly aligned……Who knows. However, it has also been impossible to gauge timing in recent years but my question for Tull, BEB and co. – is the overall global picture really better or worse economically? Here in NYC, senior finance execs are “undecided” but with “downside bias”. Very worried. While for instance corporate earnings have been beating forecasts (easy game), that’s been driven by cost reductions, not growth (bar some bright lights in technology and some limited others). “growth” is still largely absent…and is awaited. With QE ending, the “hidden sores” are already emerging and the negative consequences are beginning to accelerate. Much discussion here but that elusive “growth” is still o/s. As a result, there is increasing “economic nationalism” here also. In some respect, Ireland has been a beneficiary of that, on balance, up ’til now. However that can change in a blink…..Sentiment is fundamentally changing, despite that being denied by Irish officials here recently (at a small dinner, with Min. Noonan in attendance I might add). These Irish govt officials are not as in touch as they think they are……There is huge worry here too about the domestic and international consequences re the Fed raising rates mid-2015…..Despite that, now more likely )for largely ideological reasons it seems) given recent employment gains (although the quality of those gains is dismal versus the employments lost).

I always watch the vulture funds. In the case of Ireland, they have already substantially extracted their profits….

Delicate times for sure but anyone talking it up for Ireland (too positively or negatively) is not getting it IMHO.

@Sarah Carey

I think Stephen Collins may be posting under your name. I’ll respond to his post, please take no offence.

1. You say they’ve done more reform, but everything I’ve heard is that they didn’t reform their tax system.

Does it not seem to be a little churlish to criticize Syria for failing to complete reforms to the Greek tax system in the 21 (rather busy) days since they won the election?

Now New Democracy (the previous incumbents, an EPP bloc party like Fine Gael and the CDU) did not have a good record on tax reform and that suited their constituency just fine. However Syriza is considerably to the left and has a much firmer political interest in a working taxation system. If anyone can do it it is them.

2. Be interested in your comments on these charts from the Economist today.

They would say that, wouldn’t they (I can not face reading the Economist, the panic over Syriza is too much)

3. Being selfish, isn’t it the case that our government has to put Irish interests first, and putting as much distance between us and Greece is in our interests.

The position that the current government have taken on Greece is self serving, unforgivably cynical and not in the national interest. It is also an act of shameful political cowardice and cruelty.

I simply do not understand how anyone could think that Greece gaining debt relief and breaking the German/ECB chokehold on Eurozone economic and monetary policy would not be in Ireland’s interest. It might even be our primary international interest.

I would also add that complicity and cowardice might not have the rewards that Noonan expects, whoever comes out best from the attack on Greece.

4. And anyway, if we did support Greece, would that really cut any ice? Morally, there’s a case that we should,

I stopped reading after “Morally, there’s a case that we should” and I think perhaps that is where you should have stopped writing, Stephen.

No, I lie, I continued reading.

We can pretend to be part of the Deutsche bloc (Northern European is a misleading misnomer in many, many ways. Worth a post.) as much as we like but that will not make our economic or political interests aligned with theirs. As long as that is the case what we need is an EU where policy is not set by the creditor states to our detriment. Without confrontation with Germany and their devotees that is not going to happen.

As an aside, and not directed at the real Sarah Carey, one very useful thing about the arrival of Syriza is how it has caused a massive reveal of right wing fealty with many journos who have done their best to present a face of reason (so many TINAs, so many “difficult reforms”) blurting out how Syriza’s impudence and blatant leftism just can not be allowed to stand.

I have never seen such a unified outpouring of sneering, anger and (whisper it) fear from the right wing press and politicians as has happened since Syriza took power. I quite enjoy it.


Well…..When the IMF “fought” and won they get the credit. When Mody lost the internal battle within the imf that’s Noonan’s fault?

On the subject of a mere civil servant giving advice vs a minister for finance what real power does the minister have? If the ecb/eu/ec beat the imf argument on burning bondholders isn’t the Irish gov a price taker?

I’m not saying any of this is morally upstanding. We lost the argument and that was wrong. But so did Mody. Which presumably is why he no longer works at the imf. Perhaps he left in disgust. But what could we do – realistically. Game theory isn’t getting the handsome professor very far. You either have the cards or you don’t. Sad but….?

I should add….

In a US context, it will be very interesting to see the unfolding of the overall economic impact of the oil prices reductions of recent months. 20-30k jobs gone already. Texas economy slammed and not heading in a good direction. The fracking employment, which represents so much of the US employments gains in the last couple of years…..under real pressure right now (before you ask, I have family in senior oil positions in Texas, while one of my friends growing up in Cork is in a senior position with one of the fracking majors out west).

How things can change……The welcome reduction for consumers in filling their cars and trucks with gas is not fully loading into economic performance. Simply relieving the burning of savings for many (most?).

The relatively drastic reduction of petro dollars in global circulation will have severe negative consequences yet.

It’s the CONDITIONS imposed that are unsustainable and have not only zero but LESS than zero to do with the actual ability to repay the current accumulated debt.

It’s not a difficult concept, really, if one does not operate from an ideological, moralistic perspective and actually understands economic realities.

There appears to be a lot of discussion, and confusion, about ‘an extension’ and ‘a bridging loan’ with different people saying different things.

My understanding is that Greece is looking for a bridging loan whilst in general, but not necessarily unanimously, the EuroGroup is looking for (or claiming the only possibility is) an extension.

I think this is because ‘an extension’ means the current deal stays on the table unless otherwise negotiated and although various parties say this can then happen (eg Noonan), the Greek government is faced with buying a pig in a poke where, when they go to, for example, reduce their fiscal surplus their creditors say ‘no’ and then where are they?

The counter-claim is that the Greek government has simply not put enough enough detail into its ‘bridging’ proposal for it to be a subject of discussion. This though the Greeks have been pretty clear as to their programme for government and the sourcing of the funds required, which are modest compared to the total debts so far. There also seems to be a claim from Eurogroup and Commission that there is in any case simply is not enough time to negotiate a ‘new’ bridging arrangement.

If that’s about right and just looking at this current round of discussions I do actually think there is a potential deal on the table for this week which sets out some kind of ‘transitional’ (or whatever mutually agreeable term can be used) phase in which certain the Syriza led coalition gets enough space to start on certain key policies (for which they were elected) whilst staying in some kind of agreed framework.

But the above implies a certain goodwill and that the ultimate goal, or most pressing concern, of the Eurozone is the well-being of all its citizens and at the moment that is not clearly the case.

Krugman has a strongly negative view of events.

Also worth looking down to his ‘Greece’s Excess Burden’ post on Feb., 14th to see the gap between what the Troika predicted would be the path of GDP and what actually happened. Also worth repeating that Greece has actually undertaken massive austerity measures and, according to the OECD chart linked to by Kevin, is number one in the eurozone for reform measures.

Its very “” on here this morning. I blame the way the post was authored for that, by the way. It sure as hell wasn’t written with an economist’s hat on.

Greek Finance Minister Yanis Varoufakis though looked to play down the situation as a temporary setback: “I have no doubt that within the next 48 hours Europe is going to come together and we shall find the phrasing that is necessary.”

So, its just a matter of ‘phrasing’. That says a lot. While I am not in any way expert on diplomacy, this is beginning to resemble the Stormont peace talks in 1998, which were always predicted to be on the point of collapse, right up until the moment when agreement was reached. A lot of the ridiculous demands by Tsipras and Varoufakis are just bluff for the benefit of their marxist supporters and should not be taken Syriazly.

If they do reach agreement, let’s hope its one that has Syriaz supporters in Ireland screaming: “sellout”, “traitor”, “betrayal” blah, blah, blah. Nothing like a good split among leftists to brig ten one’s day.

“You couldn’t make it up”

It is all made up. Expansionary contraction, quantitative easing leading to inflation and the latest FT chestnut, the benefits of deflation. The only constant is the transfer of wealth from labour to capital. How to spend it.

Well, everyone’s a bit touchy aren’t they today?

My point is this:

The IMF wanted us to get a better deal. Good for them.
Within the Troika, they lost. Shame.
What power did we have to negotiate a deal that the IMF itself lost? (including internally).
Yes FG campaigned and when they got in were quickly informed what way the world worked. So they played what cards they could within the rules of the game.

As for Greece

I’m a romantic. I’d love a revolution. I’m with the Greeks. But they are getting their arses kicked, and if their government falls in a few months because they made promises they couldn’t keep, and end up falling out of the euro, we may end up very glad that we’re not being quoted in the same sentence as them.

I want to stress again – I’m not saying ANY Of this is right or proper or decent. But I am saying that maybe we shouldn’t kick the crap out of FG for losing a fight that the iMF itself lost.

It becomes political economy when the models fail 🙂

@ All

Greece fell through the floor after the last bailout.Samaras was the leader of their equivalent of FG, which failed just like Pasok, their equivalent of FF, did.
Ireland is still running on one political engine but there is a lot of plamas holding it up.

Ireland could be in Greece’s shoes in a few years if things don’t pan out with the US divergence theory and the latest UK bubble blows up.

When politics fails

@ Sarah

“Well, everyone’s a bit touchy aren’t they today?”

Oh yeah, aint that the truth. An awful lot of political and reputational capital has been staked on either supporting Syriza or supporting the EU/ECB’s stance on this. As Kevin, probably unintentionally, shows, the Greece circus is a proxy was for many other domestic EZ political battles that are still unresolved.

@Sarah Carey

This is going to sound quite harsh.

Your initial post reads like and apologia for craven subservience to other nations and short sightedness. Your post does not consider what is right for Europe, or what is right for Ireland in the long term.

It repeats the spin about the Greeks not carrying out reforms in the face of evidence for the OECD and others linked by KO’R. Even the rejected Eurogroup statement acknowledged the efforts of the Greeks. This is much like the previous spin in our media from ignorant commentators to the effect that Greece was seeking an immediate write down of nominal debt. How can we have reasoned debate when one side provides evidence and the other side responds with “Well I’ve heard x, y, z” with nothing to back it up?

The fact of the matter is that the reason FG is spinning against Greece is that FG is concerned about its own political future. I have no doubt that FG and other consider that extremists should not be rewarded or else political stability in all EU democracies will be threatened. However, that logic requires us to ignore democratic decisions and to brand as extremists people who rail against illogical, failed and deeply damaging policies.

There is a deal to be done founded on logic and good sense and reform of Greeek tax collection which FG and others should be able to stand over. The EU, including Ireland, needs to take control of the drafting process and to set out a deal. Greece should be given a decision to make other than “kneel before me or be sent to the gallows”.

Even if Ireland cannot achieve progress it may well get future credit for having spoken in favour of the correct option when things go wring in the future. At least in a few years time we, like Ashoka Mody, will be able to say that we did what was right and that we are credible. Surely the economically sensible and morally correct position is the safest position no matter who holds power in the capitals of Europe in years to come?


On an aside, the point that we only have a small voice is an abhorrent justification for irresponsible behaviour. The logic is I am doing wrong but sure my wrongdoing is so small it does not matter. It is a kind of de minimus for political responsibility. It is the kind of logic relied upon by people who won’t recycle and who urinate in the swimming pools. It is no justification whatsoever.

t is fair comment to say that Ashoka Mody should not criticise the Irish Govt for not getting a deal he could not get. He is in no position to suggest Ireland would have been more successful. He might be right to say we should at least have asked for a better deal if we did not. It should be on the record for future reference that we were refused our request. However, Noonan says that we did ask. In that context, Ashoka Mody is not well placed or competent to comment whether it would have been politically wise or productive to fight harder or to adopt a more confrontational approach to negotiations.

Krugman: “I guess it’s possible that they’re just fools — that they don’t understand that Greece 2015 is not Ireland 2010, and that this kind of bullying won’t work.”


You can only be bullied if you let yourself be bullied. How credible was the threat to withdraw ELA in 2010? And, the main question: where in the ECB founding documents does it say that it’s within their remit to issue threats to sovereign governments?

We all owe Greece a debt of gratitude for, finally, being the ones to stand up to the bullies.

Re: Bailout Talks

Yes FG campaigned and when they got in were quickly informed what way the world worked. So they played what cards they could within the rules of the game.

What Ireland’s politicians are afflicted with in recent weeks, is a condition, but one which politicians in Ireland, are vulnerable to, known as Varoufakis envy.

Politicians in Greece, are doing something, which politicians are not supposed to do. They have said one thing, and proceed to do just that.

In Ireland however, the rules, are different.

Politicians, in Ireland, say one thing, and do something else.

This has prompted, the most recent bout in Irish politics, of the dreadful condition, identified above. BOH.

According to that IMF data base (back to 1980) Greece has never run a budget surplus in that 34 year period, with the annual deficit averaging 7.7% of GDP.The implication is that the electorate were happy to pass the bill to future generations of Greeks. Some would blame the electorate for their recklessness while others appear happy to blame the creditors for funding the deficits.

It is always open to economists to claim, when their policies do not work, that they were never implemented properly. The IMF itself identified what it believes to be the culprit for failure in Greece in its last programme review:

“Greece has lagged on productivity-enhancing reforms. Political turmoil in 2011–12 and questions in Europe about Greece’s place in the euro area exacerbated uncertainty and
emboldened vested interests opposed to reforms. As a result, adjustment has been through
recessionary channels (compression of real spending and income) rather than productivity gains. Real output has declined by close to 25 percent since 2007. Unemployment has risen to around 26½ percent, of which over two-thirds are long-term unemployed. The share of the population at risk of poverty increased from 20 to 23 percent over 2009–12, and the income distribution deteriorated slightly (the Gini coefficient rose from 33 to
34 percent over 2009–12)”

Have the Greeks made a bigger effort than Ireland? Their fiscal adjustment has certainly been larger and more painful. Implementation of reforms as detailed in the above report has been patchy at best. By contrast the last IMF review for Ireland begins with the line, “Steadfast policy implementation has been maintained through the final review of the program.”

It is also open to economists to claim, when their opponents’ policies deliver successful outcomes, that their own ideas would have worked better, faster, and more fairly. Both left and right wingers will interpret the results in both Greece and Ireland line as confirming their own prejudices.

The draft Greece would have signed.

The Eurogroup however insist on unconditional surrender.

The Greeks have definitely won yesterdays skirmish, and the Gustav line is starting to break.

“Amid all the frustration, Italian Finance Minister Pier Carlo Padoan said Greece leaving the euro zone remains “out of the question,” in comments to reporters Monday night.

“I am not worried,” Padoan said. “I am convinced that we will ultimately reach a common ground and a common decision.”


Your “” comment is somewhat curious. I have been reading these threads for some time now and find none of the commentary on this issue to be inconsistent in tone with anything that has gone before. As for the post, I thought it was refreshingly authored in the sense that the facts were presented clearly and succinctly. That they were followed up with a transparent personal commentary on what is happening against the factual backdrop was also refreshing. We get enough posts and analysis presented “objectively” on this sight from authors that have definite agendas but either cod themselves or the readers or both into believing otherwise.

@ Ernie

“where in the ECB founding documents does it say that it’s within their remit to issue threats to sovereign governments?”

They don’t issue threats to sovereigns. They issue threats to National Central Banks who are being forced to use extraordinary liquidity facilities, using low rate or non standard collateral, and in ever increasing quantities. Much like a credit card company would “threaten” you if u maxed out and didn’t look like being able to repay. That NCB then asks their government to do something to end the situation which is putting them at the mercy of the ECB. That’s the process.


That’s funny, I seem to remember some letters directly from Trichet to Brian Lenehan…. Oh, well, I’m sure they’re not of any relevance.


It is not just FG that is “spinning” against Greece. For some reason, every other EZ govt is on the same side. This level of unity is probably unprecedented. Even Cyprus has gone rogue, albeit wobbly. It is not obvious yet what the QPQ for this level of unity is. One could speculate that someone has assembled a coalition which is agreeable to kicking the Greeks out and that some of the less obvious allies have been promised something in return.

Reading some of the blogs, it appears the Greeks have offended pretty much everybody on every issue from Bosnia to Turkey to operations of the EU funds, corruption, EU directives & relations with the Troika. They have arrived a situation where they have no friends.


They (the ECB)don’t issue threats to sovereigns.

As Ernie says this is not just Jesuitical argument about why sovereigns feel forced to obey ECB preferred economic polices but historically inaccurate.

It’s also wildly out of whack with the ECB’s posturing over the last three weeks.

Who outside of the financial sector/business press who think that the ECB’s lifting of the Greek collateral waiver was other than a crude attempt to weaken Syriza’s bargaining position with the Eurogroup and Germany?


I don’t know that they have offended everybody, or if, as JtO posits, there is a lot of posturing going on and a deal will be reached.

The Greeks are certainly not perfect. It would appear that they have come to the table with mixed messages and without a proper package of reforms to offer in exchange for official creditor support. They have also underestimated the value of having the Commission pull countries together, and have not realised the difficulty of getting approval for support from countries and politicians who have their own problems, worries and political concerns.

Depending on the accuracy of reports and translations, it appears some of the Syriza rhetoric in Greece has been unhelpful (although Germany should remember that they did go to war in Greece, killed a lot of people and got a write off of their debt to help them achieve economic recovery from an impossible position in recognition, inter alia, of the mistakes made after the first world war and the political consequences for Europe of those mistakes).

On the other hand, the Greek Government has held its nerve despite having come in cold and having had a gun put to its head immediately. Unfortunately, Greece is negotiating with multiple countries who cannot deliver coherent policies and who cannot be led. The Irish Government would do well to see what it can do to help Greece in the EU apart from shooting Greece’s legs off (to mix a metaphor slightly) to teach Greece again a lesson that Greece has already learned.

In today’s Irish Times, John FitzGerald has this to say about the cost of the bank bail out:

“Because of the very favourable deal on the promissory notes, Ireland is currently paying little or no interest on much of the money needed to pay off the debts of Anglo-Irish Bank. With the borrowing to fund the rest of the bank bailout costing around 3 per cent a year, the interest payments resulting from the collapse in the banks probably amounts to around €1 billion a year – while still a deplorable figure it is a small fraction of the total fiscal adjustment of €30 billion.”

The real French finance minister!

This is probably the best the Greeks can expect. While they make up their minds, the market situation in relation to the Greek banking system will continue to deteriorate.

What electorates across Europe are witnessing is how swimmingly it goes when debt is taken as simply a token of possible intent and not an intrinsic building block of the financial system. Other participants in the system not alone are unwilling to accept this but are now reacting to an existential threat to their own well being. Contradictory blather from Varoufakis can no linger hide this fact. But it can probably be accepted without major political damage to Syriza only when the bulk of the Greek electorate also wake up to it. Which may be too late.

“They don’t issue threats to sovereigns.”

They don’t just issue threats to sovereigns they issue them to markets. What was Draghi’s “we’ll do whatever it takes” speech all about if not a threat to markets looking to trade sovereign bonds based on market fundamentals. The ECB’s legal mandate didn’t ever it afford it the power of Draghi’s ultimatum but the market never doubted he would find away to circumvent any obstacle in that regard. It is naive to assume Draghi and co see’s their role to be constrained by law.

Look at your chart again, the huge deficit in 2009, and the improvements starting in 2010. Hmm, what exactly happened in 2010? Right, the Troika came to the rescue! Without them, the Greeks would have been broke and would have had to balance their budget from one day to another!

The Greeks have taken their medicine, and it’s killing them. Unfortunately, no one cares, especially the quacks who prescribed the medicine. Will the Greeks decide that they must revive their economy, and do so by leaving the euro? If so, I assume they’ll eventually pay some portion of their debt in drachma? Or will they stagger on in the oh-so-vibrant EZ, resigning themselves to eternal stagnation?

The Greek military budget is 10 billion euros (Ireland’s is 900 million euros). Much of the military hardware Greece buys comes from France and Germany. It’s just like the banking debts – the core creditor states have acted disgracefully to Greece for selfish reasons and have helped create the completely dysfunctional State we now see. France and Germany are the true parents of Syriza.

The only solution at this stage is to cut the cord and let Greece leave. Go with a hard default, get them out of the eurozone for their own sake, and they can finally start to reform their State from within.

It’s important to note the institutional context that the IMF Ireland staff was working in during late 2010. This is not to say that it’s all about bureaucratic processology. But: consider this IMF press release —

Note the name of the managing director. Note that the position of Director of the European Department was effectively vacant when Ireland’s bailout was being negotiated. That’s the person who might have stood up to the Austerions in the key meetings. Finally, Mr Borges was less than one year in the job, made a a gaffe (i.e. told the truth) about the need for bond market purchases, went back to Portugal, and died of the same affliction as Brian Lenihan a couple of years ago.

There are several ways we could have made a better case for ourselves. But the organization that was most inclined to agree with us was handicapped.

@ Shay

the move on Greek govt backed collateral was in fact an attempt by the ECB to stay out of the politics of this, not get involved.

From a fidicuiary responsibility point of view, they could not knowingly keep on extending increasing amounts of liquidity via non-standard collateral to the Greeks with a growing possibility of default via Grexit looming in the background.

Likewise, they did not want to have to put a hard stop on any increased usage of normal liquidity either.

So they went for the middle ground – increased liquidity, but via a less risky (in theory) route, ie ELA on the Greek CB’s balance sheet, and letting people know how this situation would work before the negotiations reached a critical juncture. They have tried to help the Greeks out by extending the size of ELA available, so that there is more than enough headroom to cover outflows (current usage 52bn vs 65bn limit). The ECB decision is not the one that will cause a Grexit, other dates and decisions will cause that well before any theoretical limit on Greek ELA limit is reached.

As long as there is the potential for a deal, they will meet whatever liquidity requirements are needed, within reason. They are saying to both sides what the ‘rules’ are, and that they will not be used as the pressure point in all of this, ie deal decision first, then ECB acts – not the other way around as happened with Cyprus.

I really don’t think these guys (the greeks that is) are for blinking here. They have some strong cards – they’ve got an electoral mandate to go to the brink and beyond, they’ve already got a balanced budget, they have idealogical belief that if this – to paraphrase an REM song – is what you are offering…they’ll take the rain! They have so much in their favour that to back down without something tangible now would be the act of coward or a fool (a la FG/Labour)….I don’t think these guys are either.

The EU got cards too – but they really can only be played against someone with something to lose…which makes them useless unless their endgame is all about kicking the greeks to touch….which is something we should all be really concerned about if such an agenda is being carved up behind our backs in breach of the treaties we voted for.

I don’t think these guys are gonna blink. No sir….but I’ve been wrong plenty before.

Re: Agreement

Krugman today is quoted.

I guess it’s possible that they’re just fools — that they don’t understand that Greece 2015 is not Ireland 2010, and that this kind of bullying won’t work.

There is one aspect to all of it, which perhaps politicians have not grasped. There is a scene, I can recall, in a recent movie Lincoln, which had the potential to be a lot more. But still, if one does listens closely, it sounds something like this.

We are stepped out, upon the world stage now. With the faith of human dignity in our hands. And you, you gentlemen. You dodge about, like petty, Tammany hall huxsters.

It is like one of those moments, now in Europe.

What they learned a long time ago, however, in America, and it probably goes back all of four centuries, is this. The United States of America, is not a country, or a democracy, or even a place. It is instead, a collection of them.

What they decided to do, was to create, what they called, a house of representatives. A house of representatives. That is, men who would represent, their state in some general assembly, a long ways, away. That is probably where the Tammany hall, fellows, came into it. But so be it.

What we do not find in America however, are members of state legislature houses, who have been elected to manage, it’s department of finance, sitting, in a house of representatives. Rather, we find representatives, who are elected, on narrow two year terms, sitting in a chamber far away. We then see, state legislators, men and women who legislate on behalf of the state, sitting inside chambers nearby.

But these two processes, are never confused.

It may be possible, for a state assembly member, to become elected, and become a representative member. But never both, at the same time.

As much and all, as American media, tries to claim, that it’s country, cannot get anything done. It’s country, is not governed by the distant chamber, but instead, is governed by a local one. And as much as reporters today, might like to criticize the distant one, the fact remains, that four centuries ago, someone across on the other side of the Atlantic ocean, figured out, that they needed such a system.

Here on this side, of an Atlantic ocean, four centuries hence, we cannot. BOH.

@ Nocense

“they’ve got an electoral mandate to go to the brink and beyond”

No, they have a mandate to go to the brink. Remember, 70% of Greeks want to stay in the euro “no matter what the cost”. Tsipras has no mandate to come out with that result.

@Dan McL @10.57am
“Some would blame the electorate for their recklessness while others appear happy to blame the creditors for funding the deficits.”
As you know, a banker gets fired if, having assessed the credit risk in depth and with expertise, the loan goes bad and the lending is deemed to have been ill-judged. There are internal layers (boards, cr committees, credit dept, limits, etc) to check (and check again) that the latter doesn’t happen or at least that there is minimal risk of that happening, all things considered. So, yes, the creditors have significant “blame’ in all this. Simple as that.
It would certainly appear though that many creditors adopt versions of old fashioned slavery as a modern debt resolution mechanism. That is what we are witnessing here. Not much else. Relying on legalities as opposed to recognition of the substance of the Greek (and other) situation i.e. that there is insolvency, is very convenient, but crosses the moral threshold when it adopts debtor prison as the solution for its “culprits”. Load of hogwash. If this was simply a commercial banking matter, it would be write off and move on. The fact that it underpins the politics of the creditors indeed demonstrates how insidious the debate is.

Hollande’s government cannot even rely on its own deputies to pass vital pro-business legislation.

The Greek disease – that of expecting a certain standard of living without creating the economic conditions to provide it – is far from being confined to Greece. The legislation in question has been watered down to the point that it is unlikely to make any difference. Abandonment of the 35-hour week is probably the one step that would represent acceptance by the French electorate of the need for recovery. Even Sarkozy did not dare to attempt it.

Re: European negotiation process

What we do observe in America, in it’s house of representatives, are full-time members, who can concentrate on the objectives of the union, full time.

They owe some sense of mission, to their home state, and a lot, to the state of their ‘union’.

They do not, fly back and forth, on whistle stop trips, like our state-level, finance ministers do, . . . carrying with them, on their backs, an overwhelming burden of state-level, and party political prejudice.

The American house of represntative members, do not go to a distant chamber, in order to gain some political victory, as state-level finance ministers do, in Brussels, . . . to score some victory, that can only be interpreted and de-coded, by some expert in state-level politics, at home in small islands, such as Ireland.

What is the state of, our union, in Europe, one may ask?

What is state, indeed?

When one thinks about it – it does speak for itself.

The audacity on the part of it’s architects, that any sensible union of nations, can be operated where the main concern, is not the union, itself.

But instead, the ‘main concern’ rotates around, with political election campaign cycles, of local states.

It is not the the ‘main concern’ of elected, politicians back home either.


It is rather, the ‘main concern’, as expressed, and written down, by very un-elected, domestic, state-level campaign leaders, managers, and dare I say it, nefarious public-relations consultant executives.

What a truly horrible mess, that in Europe, we elevated the infamous Tammany hall huxster, to a position of overwhelming authority?

And yet, that is where in Europe, we have ended.

That does not happen in America (or at least, it didn’t until recently).

And for good reason. BOH.


they were supposed to have a balanced budget but due to problems with tax compliance and fiscal incontinence that appears to be gone .
Paul W
If you were a banker, you could sieze some collatoral or engage in a debt equity swap. Maybe Greece could hand over Crete again.
I am inclined to agree with Schauble and JF etc that the best thing for Greece is GREXIT. It is certainly hard to justify asking the hard pressed taxpayers of the rest of Europe to finance their constant deficit ad infinitum.

Bloomberg noting from the ECB’s weekly balance sheet that ELA lending has gone up by over €57bn in last few weeks and presuming it is all to Greece.

Does the SSM have a role here?. After all, the four main Greek banks are now supervised from Frankfurt and only banks deemed solvent can get ELA , in theory anyway.

The Bottom Line – Qui Bono?

Greece, Its International Creditors and the Euro
Posted on February 17, 2015 by Yves Smith

Yves here. This is an excellent background piece on how Greece got where it is and how its various bailouts were structured. It also helps explain the past and current roles the various members of the Troika play and discusses the prospects for Greece achieving its aims.

An illustrative snippet:

‘Beneficiaries of Bailouts

[N]o one can debate that Greece’s private lenders in general, and German and French banks in particular, benefited from these bailouts. According to the Jubilee Debt Campaign, 92% of €240 billion Greece has received since the May 2010 bailout went to Greek and European financial institutions. Furthermore, the restructuring of 2012 led to a holder transformation of the Greek public debt. While more than 60% of €356 billion Greek public debt was held by the private lenders at the end of 2011 this percentage was less than 25% at the end of 2012. This percentage fell way below 20% of €315 billion Greek public debt at the end of 2014, with the Troika holding 78% of this debt.

Varoufakis appears right when he claimed that it was the banks that got bailed out, not Greece and that Greece got deformed, not reformed!’

Basically: Financial System 9 Greek Citizenry 1

My understanding is that part of the Greek proposal involves a quasi debt for equity element….Return based on economic performance. Sensible…modern.

You obviously have not accepted that Greece is actually in primary surplus….so your ref to “their constant deficit ad infinitum” is more applicable to Ireland than Greece at this point in time.

from the above:

‘Origins of Greece’s Problems

For an EU country to enter the eurozone, the country must meet the 1992 Maastricht Treaty (the treaty that established the eurozone) limits on debt levels and deficit spending. Despite meeting the Maastricht criteria with difficulty, Greece entered the eurozone in January 2001. From 2001 to 2007, the gross domestic product (GDP) of Greece grew at an impressive average annual rate of 4.3%, compared with the eurozone average of 3.1%. Incidentally, this period intersected with the 2002–07 monetary expansion in the advanced capitalist countries (the United States, the United Kingdom, Germany, France and the like) of the centre. In search of high yields, private capital started to flow from the centre to the periphery which includes Greece, creating excessively easy credit conditions.’

Ring any Hibernian Bells?

@ Tull/Paul W

“If this was simply a commercial banking matter, it would be write off and move on”.

The idea that banks just write off loans, no questions asked, without legal or financial redress, is ever so slightly naïve. Creditors very often take an equity stake in the underlying borrowing entity. Or liquidate it. Not sure these are viable options. Unfortunately, for all the genuine hardship Greece is going through, it is not a poor country by poor country standards. Its still wealthy and capable of repaying much of its debt, the only question is how, how much and whether the political will is there to take tough decisions to retain its best asset – that of Eurozone membership.

Creditors could alternatively chase Greece through the courts for the next decade, ala Argentina. Not sure that’s the best option though either.


“for all the genuine hardship Greece is going through, it is not a poor country by poor country standards”

We should be comparing Greece to other European countries, not to poor countries. Presumably the aim is still convergence and integration?

Also, we should not miss the effect on poorer sections of society and on the middle class by looking at the aggregate wealth of the population. there were plenty of food exports form Ireland and plenty of money made by wealthy men during the famine.

@ Zhou

The phrase “humanitarian crisis” that’s being used at the moment was not coined by the creditors. Compared to genuine humanitarian crises, Greece’s problems are modest.

Re: bursting of the dyke

Several years ago, in a place called New Orleans, the sea walls burst open, and an entire city was submerged by water from an ocean.

A political party, and it’s leader, known as the republican party, received much criticism, as a superstore, from a southern state known as Arkansas, rushed in to help with bottles of clean water, and supplies. That same party, and it’s leader, are still catching hell, in north America, for that.

However, in a place known as the European union, and in a place, called Greece, the walls have burst again, to a dangerous ocean of financial indebtedness. We say, allow them all to sink. And while we’re at it, they can leave the union, while they’re at it, for being all washed up, in the first place.

One question.

What credibility, can the European project, really claim to have, despite claims of Greek finance minister, who happens to posses a thousand megawatt, moon-beam type, level of charisma.

But the real truth is, that Mr. Varoufakis, should not even be in Brussels, in the first place, and definitely not, in a capacity of a local member state, minister for finance.

Where it deteriorates, into a match amongst the finance ministers, to outdo each on, in a match of levels of charisma.

What a European project really needs, is not Varoufakis, or even, our own Noonan, but is it’s own, dedicated and full-time house of representatives. BOH.

If there’s something to recover, the creditors should be working to achieve that. They have legal means to do so, as you say. However, it is not naïve to say simply that legal recourse has its limits. Obvious. It is clear that the state of Greece is at that point….has been for some time. Windowdressing from crs’ roundtripping increasingly large loan balances is no solution. The state is insolvent i.e. without support, incapable of servicing its debt obligations as they fall due. The local social conditions /”wrongs” underpinning that situation is another matter altogether. Moral high grounding has nothing to do with it. I therefore don’t agree with you when you say that Greece (the state) is a “wealthy country”, in the context of the legal construct of its debt vis a vis its solvency (again, its capacity to service its debt obligations without significant external support). When you narrowly argue the legal construct, which is always constructed to pre-warn and then protect the creditor first, you are on thin ground in the face of insolvency.

As for your apparent very benign view of banking, I do not meet many bankers who share your views…..most of us know well that “might is not right” and that we participated as employees in a corrupted, self-serving system….which is now significantly broken, much to the detriment of many, including bankers (and now ex bankers).

The basic point is that debt slavery is not a good debt resolution mechanism in the face of insolvency. That doesn’t need your (pointless) qualifications.

BTW how many debt restructurings have you ever been involved in…?


I think Garo asked about GDP.

Greece is around 170-175% right?
Ireland is about 115% and heading south, right?

They got a better deal before because their debt was much much worse than ours.

Anyone want to take that point on?

It is certainly true that the second bailout did reduce the private sectors holdings of Greek debt but at a price. In April 2012 private sector holders of Greek bonds (the ECB and national central banks were not involved) received €29.7bn in EFSF bonds and €62.4bn in new longer term Greek bonds in exchange for €199.2bn existing Greek bonds.
Consequently the nominal value of Greek debt outstanding fell by €107bn. Estimates on the average haircut differ ( depending on what discount rate you use to derive the Present value) but is generally put at 55%-60% which given the scale of the operations makes it the biggest writedown in history.
The Greek government used €25bn of fresh official debt to compensate the Greek banks and in December of that year used another €11.3bn to buy back €31.9bn of the newly issued bonds i.e. for around 35 cents in the euro

I would like to bank with PW just feed him some cock and bull story & keep the asset.
Some of the money for Greece & Ireland came from Slovakia & Slovenia. Poorer than both


Regarding solvency, should the point be reached where there is an evident difference of views between the Greek central bank and members of the ECB GC, about specific bank solvency or suitability of collateral presented for ELA, then ELA issuance can (at least in principle) be blocked by 2/3rds majority vote.

Presumably, as you approach the point where there is real speculation about whether there might be a blocking majority on the GC – or whether there might be one in a week, or a month etc, then people will become increasingly aware of uncertainty over what currency they could actually withdraw from the banks.

If taken far enough, there is the theoretical possibility of a central bank governor allowing ELA despite instructions from the ECB to stop doing so. At that point you might be being paid in “Euros”, or withdrawing funds from a bank account in Greece in something called “Euros”, but who is going to accept payment with those “Euros” or “Euro” credits? That question, along with Target2 access going down is arguably the start of a de facto Greek parallel currency in a Euroized Greece.

If, or as, that scenario starts to appear more likely so do bank runs, capital flight, and precautionary capital controls.

There is a discussion relating to the Irish context half-way down this old thread:

Were the Greek debt to national lenders to be, let’s say, halved, where do posters think the ensuing €175m budget cuts in Ireland might best be made? Libraries? A&E Depts? Step-down care? Primary schools? Maybe even 3rd Level?

After that problem’s solved, try explaining and justifying the consequent debt write-offs required, totalling €100bn+, around the Eurozone.

Oh, and having done that, try and pretend you’re a politician in any non-Greek Eurozone country aspiring to get re-elected (unless you’re from Goatstown, in which case carry on).

With regard to the politics it is surely true that politicians generally prioritise very, very highly the justification of positions they have taken – especially when they are opposed in an electoral process by other politicians who claim that they would have acted differently.

It is also true though that the new Greek government has a mandate which the FG/Lab coalition never sought nor received. Both parties campaigned on a ticket of zero risk to state or bank funding if they were elected. The campaigning was visible to foreign analysts and as a result a bargaining position was not established.

Why is it that so many of the academic economists on the public payroll are so Syriazly (nice one JtO) left wing?

Paul W ,
Taxes collapsed in last three months due to won’t pay. Tsipiras promised spending measure of 4%of GDP on day1. I would say run rate deficit is about 6% now. These guys make Venezuela look prudent.


Meet a real Spinner!

@The Second

How about following George – and provide an ‘insider account’, from your extensive network, on Irish Banking/Financial System Shenanigans?

We have had so few!

Why is it that so many of the bankers/financial system professionals on the Financial System payroll are so ECB(undesbankey) ultra roight wing?

IMHO, the performance of the vast shoal of Irish academics, economics or otherwise, during the odious larceny by the financial system/Capital from Irish Labour, with a very few notable exceptions (some around here), has been ABYSMAL.

Re FG the gaeilge has it

Ni uasal agus iseal ach thuas seal agus thios seal.

Swings and roundabouts and when Ireland needs help in the future it may not be forthcoming. The spin against greece is stunning.

EZ inflation is negative. Debt has won a pyrrhic victory.
They would be better off with 4% yields but they can’t stop and Draghi is their man. The ECB can’t generate 2% inflation which is the only way of keeping smacht on debt. Now the war is lost and debt will suck the life out of Europe. And inflation will be the only way to stop it which will kill debt. Read a disused shed in wexford.

There is no balance in this crisis, it is economic nihilism.

@The Second

What harm if they are? Free speech and all that. This site is at its best when ideas are debated as opposed to the bona fides of contributors (must admit I’ve been guilty of this in the past – trying to reform).

You’re getting the picture alright…..The creditors has much to lose in not doing a reasonable & sustainable deal.

On top of that, the real risk is severe EZ /EU fracture. It is not academic as we have seen with Lehman.

I can at least say that I have run Euro 5-6bn of credit portfolios, with international exposure in up to 40 jurisdictions. Never lost any meaningful amount (would have been fired if I did). Very difficult workouts such as Enron, Turkey, Argentina, etc. come to mind. So, no, you are not in a position to teach me about sucking eggs.

@Bond. Eoin Bond..

I read a good few of the argument that the ECB was staying above politics by withdrawing the waiver early (and increasing ELA) but I found them unconvincing. I am with Karl Whelan on this one, the ECB damaged its reputation and intervened politically.

I think that much of the support for the ECB’s action comes from people wanting someone – anyone – in the EU institutional and political space to be playing the roll of an honest broker and that person is Draghi. The ECB president has assumed an almost totemic importance as the one then good man at the top policy making level in the EU. However this is a comparative thing and the roll the ECB has repeatedly taken the side of the creditor states against the sinning GIPSIs. Draghi aint bad but the ECB aint good.

Hi there Second: Now what do all those Syriazly right-wing, neo-liberal, ideological, right-wingers mean when they use the term “left-wing”?

What information does either “right” or “left” actually convey? Now, being of a nautical mind maybe I should use “starboard- wingers” and “port-wingers” instead. See what I mean?

@Sarah et al

It seems to be impossible to shift people from the lazy use of the debt/GDP ratio to the more meaningful Debt Service/GDP ratio. The two measures give different pictures of the Greek situation.

To quote from a useful commentary that I urge readers to study:

“In 2014 Greece had to devote 4.3% of GDP to pay interest on public debt. This figure is a massive reduction compared with the crushing burden of more than 7% in 2011: debt restructuring has helped. Note also that the current figure is considerably lower than in Portugal and Italy, and about the same as in Ireland. Looking more broadly at euro area countries and further back in time, we see that Belgium and Italy have faced very much higher relative interest rate burdens (5-6% of GDP) in the recent past, while even fiscal paragons such as Austria and Germany have shouldered more than 3% of annual output. None of these figures, by themselves, suggests that Greece is “obviously” unable to service its public debt, even if that debt is high and has risen sharply. Nor, conversely, is it evident that Greece alone faces problems of ensuring fiscal sustainability: a number of Euro Area countries face historically rather high – but not extreme – debt service burdens.”

Paul W,
Am impressed. Don’t meet many FM who never lost money on a position.
We were on side of Angels here. Greece has no friends owing to its mendicant ways. Country has been in default more than 50% of its existence. Not a proper sovereign, never was and never will be. Did my first trade in GGBs over 15 years ago @ 10% yield. Never buy them at a widows and orphans yield.

text from Blind Biddy in Brisbane:

Lovely … and I hear that a Wall Street Vulture Fund has just put in a bid for Greece [some oul hatched up set of ultra dodgy derivatives)! You couldn’t make it up.

Next time Seven_of_9 arrives we will hit the Holodeck in Parkgate Street & Stoneybatter and invite Wittgenstein over a few pints to meet the Joyces.


“Were the Greek debt to national lenders to be, let’s say, halved, where do posters think the ensuing €175m budget cuts in Ireland might best be made? Libraries? A&E Depts? Step-down care? Primary schools? Maybe even 3rd Level?”

Ireland has already paid over 1 billion into the ESM, which is one of the sources for Greek funds. And we are fully committed to pay the ESM up to 11 billion. [Spanish banks got the biggest amount of funding from the ESM, up to 40 billion, but I think some or all of this may now have been paid back].

See ESM annual report 2013. See Note 15 (page 85 approx) to see member contributions.

In a contribution that did not receive much attention, Regling, the head of the ESM which is sitting on a lot of unused money, is clearly hoping for a deal with Greece and commented;

“An exit from the eurozone would be “the most expensive solution both for Greece and for the euro area,” said Klaus Regling, the head of the European Stability Mechanism, in a transcript of an interview with German broadcaster Phoenix. “That’s why we try to prevent precisely this.”


Do you really think a write down of Greek debt will lead to budget cuts in Ireland (or anywhere else)? It’s makey-uppy money. A deal can be done to lodge some notional Greek bonds with the ECB and all the creditors can get their money back – no one has to lose anything.

@Paul w
Good point about oil. I think markets are far too complacent. Oil seems to be more about demand deficiency than anything else.
Non farm wage increases are also well below where market optimism says they should be. And revenues are stagnant. Not a great trio really.

@Dan McLaughlin
“It is certainly true that the second bailout did reduce the private sectors holdings of Greek debt but at a price…..”

The holders of the ~206 billion Greek debt, less the approx €56 billion owed to the ECB, did experience a haircut on the nominal vale of their bonds, but the experienced a significant profit on the market price at the time, even allowing for the fact that the market price was inflate due to the anticipated bailout.

Another very pertinent observation in the above paper is that the post-haircut maturity profile of Greek debt was not helped at all by the bail-out. The result is what we see today and the insistence that Greece increase its primary surplus to over 4%, in order to meet the completely unchanged and unrealistic debt maturity profile written into the bailout
“The main message from Figure 2 is that although the exchange significantly lowered the flows to investors as a whole, they did not
significantly shift the payment profile into the future, as the longer maturities of Greece’s new bonds (compared to most of the old ones) was offset by a bunching of payments due to the EFSF notes at the short end of the maturity profile. In addition, Greece’s debts to non-
participating investors –holdouts (€6.4 billion) and the ECB and national central banks (€56.7 billion) –were bunched at the short end (see Figure 3), and continued to exceed Greece’s new long term bonds (€62.4 billion) in face value.”



so further to that…

I was asking around today and was told that a lot of Greece’s debt has been effectively parked. A little bit like the split mortgages that were being proposed here. So a chunk of debt got warehoused; they are paying no interest on that, and though no one SAYS it, there’s little expectation that it will be paid off. So that’s what makes their debt servicing figures healthier looking than the standard debt/GDP ratio [and from whence the argument comes that they get a better deal than us and therefore we are wimps, as opposed to they got a better deal than us because they were worse off and deserved it].

So if the northern europeans are saying – hang on a second you GOT a deal. You got an effective write down – isn’t that a fair point?


I made a few comments from the phone today but think they didn’t get through. Wanted to make the point that you are right about Syriza and tax collection. They are committed to it and its fair to give them a chance.


You criticise a “self-serving” approach I think. Do you really think the Irish people would be thrilled if we exposed ourselves to attack by positioning ourselves with the periphery when there’s a chance to put clear blue water between Ireland and the basket cases? Cynical yes, but I’ve learned the hard way that principled naivety rarely goes unpunished.


We’re covering this on the show on Saturday. You are (almost) uniquely qualified to contribute. You make a good case. You have the numbers and the authority. Don’t you think you should make your case in a forum other than this rarified blog?

@ Ernie

“Name these allegedly left-wing economists”

Given the blog’s DNA I supposed that it was dominated by this species. Of course, I may be entirely wrong, possibly most posters are inner city unemployed.

btw, I think we should pay more attention to Gavin’s comment about “bridging” versus “extension” as I think that’s where the real spin will emerge at the weekend.


K-dude was on Newsnight with Evan Davis earlier (the subject of this thread was touched on very briefly).

“ninap Says:
February 17th, 2015 at 9:12 pm

Do you really think a write down of Greek debt will lead to budget cuts in Ireland (or anywhere else)? It’s makey-uppy money. A deal can be done to lodge some notional Greek bonds with the ECB and all the creditors can get their money back – no one has to lose anything.”

All money is makey-up. Agreed.

Now tell your bank that the next time your Visa bill comes due. And if you still have call credit, due to the stupidity of your mobile provider, please pass the message on from me.

Wahoo! With one bound our hero is free of the oppression of those to whom money is owed! What shall I do next, secure in this knowledge? Repay or spend?

@ Tull
Believe me, there have been scary moments. I should add that the timeframe was 20 yrs in total with my having direct board accountability for approx. 10 yrs of that. Board would cut one’s balls off without blinking if one gave them the opportunity. In that context, most bankers /ex bankers understand the score – it’s political now, without much else.

Which brings me to another point – those tasked with negotiating debt ? (whatever) for Ireland. Mostly accountants /bean counters of one sort or another (long history of accountants and bean counters in Ireland), or academics such as Mr. McHale (sorry John, but you’re the best example I can think of), who have never ever done this stuff in the trenches. Also, with little personal to lose (certainly not their jobs…but maybe some DoF or similar organizational “reputation’ damage). Hence my posts of some years ago re the Fiscal Compact /Treaty….cringeville when confronted by the non-experienced (albeit academically intelligent) who dominated that debate in “the best interests of Ireland”. Not-so-expert experts, which has been a fundamental part of Ireland’s problem in approach…..Fyi, they have been re-showing that pat on Enda’s head here again this week on Bloomberg. Cringe.

On the other hand, I have witnessed and experienced how the Germans and Dutch do things re debt. Scary in a completely different way. More religion than economics at the end of the day.

Sarah – “hang on you [Greeks] got a deal’ is just not what has happened/not what is happening. The Greeks with their “fiscal waterboarding” is far more accurate…. What part of “insolvency” is not understood? Creditors sending money around in circles, with burdens to be borne “ad infinitem” by future generations is not how credit should work in capitalist societies. Another fundamental problem in Ireland is the “shame” associated with insolvency…’s in the genes, so few Irish recognize or accept the malaise that exists, even those with impossible burdens…but particularly the official apparatus of Irish society. We all suffer from it. The result is not an Irish capitalist society, but rather a predominantly “welfare” society…..with even those doing well benefitting (net) from or ultimately dependent on the EU and other Irish begging bowls (eg tax base erosion for others). Understandable given the country’s and people’s history. Sad though in many (most) other ways.


Hell, I think I’ll spend. If you’re right, I won’t have to repay. If you’re wrong, I won’t be able to.

But sure it’s all makey-uppy anyway. Such knowledge is so liberating.


Eurogroup wants veto over things it and the various electorates would consider counter-productive. They also want Greece to stick to the existing programme partly so that they can demonstrate to their electorates that Greece can be trusted to stick to its agreements – including another programme. They don’t want to commit more funds if they think the policies enacted make the eventual return of those funds even more unlikely. Extension.

Greek government want to take control of what measures will or will not be taken as per their pitch to their electorate. Really it is the next programme or arrangement that is more important, but if they can ditch the programme now and still get the funds released it puts them in a much stronger negotiating position for future negotiations. Bridging loan.

The percentage play is to expect negotiations over the next few days to find a neutral position which gives the Greek government some concessions while allowing broad adherence to the current programme to be enforced by the Eurogroup – ie can-kicking of the power struggle.

There is though, the question of implications for other programmes along with off the record expectations that sooner or later further write-downs (at least on an NPV basis) will be necessary anyway. Those could ease the pressure on some core countries to be accommodative.

@ Tull

clearly Paul W is upset with some of our suggestions. That we are not in awe of his vast experience of 5-6bn, 40 jurisdiction, no-loss portfolio management and debt restructuring skills is an outrage tbh.

I just might draft a budget involving a makey-uppy deficit of, let’s say, €20bn. Then I could run as an independent, resurrecting Oliver J. Flanagan’s “Monetary Reform Party” minus, naturally, the anti-Semitism.

Any technical problems with our Euro-area co-colleagues could be easily overcome with a shamrock-shrouded box of Maguire & Patterson matches.

BTW the Germans and Dutch have very unforgiving (religious) approaches to “money”…..and the word ‘barbarian’ comes from their part of the world. Memory – there was that NA court case where one of the Canadian majors would have been brought down on the back of a multi-billion derivative position. The Canadian’s blinked, despite the weak legal hand of the N. Europeans involved. The latter pleaded “lack of sophistication” in buying the product…and essentially won….!! Public record stuff I should add. You could not make it up on that either.

@ Tull
Some of your /others’ posts are coming through late, presumably due to “moderation”……apologies for the resultant breaks in debate.
“Taxes collapsed in last three months due to won’t pay. Tsipiras promised spending measure of 4%of GDP on day1. I would say run rate deficit is about 6% now. These guys make Venezuela look prudent.”
Cause and effect being mixed up here. If you are seriously afraid that you won’t be able to feed your kids and elderly parents, you wouldn’t be paying your tax bills either. However, that is a symptom, not a cause, of the underlying. Again, if we want to debate the legalities of credit, leave morals at the door. Dry legalities won’t solve much here. Creditors (and EZ /EU…plus ?) will take a serious bath if this isn’t sorted in some manner, which may need to include wider resolutions for others(don’t close your minds now!).

“Burn the bondholders” is so 2010.

Let’s try some alliterative “Light the Latvians” instead.

Paul w,
You are way too smart to believe that the Greek middle upper class are starving and have to choose between paying taxes or eating. This is strategic default by taxpayers ahead of an election. Don’t pay in the knowledge that the promised tax cut is coming. Sure, might even get a write down from Germans as well.
Someone raised the point earlier that Greece owes French 40bn, Us 360m, the poorer Slovaks and Slovenes a few euros as well. The debt forgiveness crowd will have to stand up and argue that services and taxes will have to be adjusted to accomodate this. Moreover, given that Greece has rarely run a primary surplus , except under adult supervision, this is going to recur again.

The argument that a more positive Irish attitude to Greece would risk being costly is ridiculous.

With a view to the longer term, Ireland needs to expand its horizons and improve on its poor indigenous exporting record beyond the English speaking countries.

It’s not an easy task as the effort to diversify FDI shows – Europe has been the biggest recipient of Chinese outward FDI in the past 5 years with Portugal in fourth placing receiving an estimated $6.7 billion while Ireland isn’t on the radar.

It took Ireland about a quarter century to reduce significant tax evasion and on economic policy, recall one of the world’s biggest housing busts!

The myth that poor European countries can aspire to become as rich as the leading countries in a few decades should be recognized as nonsense while the the economic prospects of France and Italy will remain the main challenges if growth remains low in the long term.

Italy’s debt servicing costs have fallen by half from 12% of GDP in the early 1990s but Japan shows that near zero rates are no panacea.

Greece had a very low household debt to income ratio in 2000 and it added 30% since 2007 to 75% as incomes plunged but that contrasts with Ireland’s current level of about 175%.

In 2010 Jean-Claude Trichet used to answer question’s about Greece leaving the euro with an expression of astonishment while claiming that it was “inconceivable.”

It’s time for an orderly mechanism for a country to depart.

What people need to realise is that, as far as left-liberals are concerned, Greece is simply a proxy for what they hoped back in 2010/11 Ireland would become.

Ireland’s Left-liberals live in a permanent state of rage and fury. Spending half an hour on twitter will confirm this. Look at Vincent Browne, Fintan O’Toole and Gene Kerrigan. Have they ever exhibited any mental condition other than rage and fury about this, that or the other?

Back in 2010/11 Ireland’s left-liberals had high hopes that the Irish economy would crash in flames into utter ruin and despair. Lots of economists assured them it would. How they looked forward to 2015 when they’d be strutting around the ruins of the Irish economy, telling everyone how they’d been right about capitalism all along, and demanding that the ruined Irish economy be rebuilt according to the marxist principles they’d been advocating for decades.

Alas, Ireland has let them down big time. Instead of the hoped-for economic ruin, they find that the Celtic Tiger has returned. Their disappointment is palpable. Boy, are they angry. They seek solace and comfort in the distressed state of the Greek economy, which allows them to posture to at least some extent in the manner they would have done if the Irish economy had lived up to their hopes and expectations and was now a smoking ruin.

But, their concern for the Greeks is just that, posturing. It is shallow. When did they ever exhibit any similar concern for the Serbians, Bulgarians, Romanians, Latvians, Lithuanians, even Poles, all of which have far lower living standards than the Greeks? But, they show no concern for these people because the world and its mother knows that it was marxism/socialism that destroyed their economies. Compared with these countries, Greece is rich.

Some telling statistics – the number of PPSNs issued in Ireland to foreign nationals in Q4 2014:

Romania 2,212
Poland 1,846
Lithuania 491
Latvia 310
Bulgaria 261
Greece 108

So, the vast majority of economic refugees from eastern Europe are from the former marxist countries and relatively few from Greece. That says it all.

Not only should there be a mechanism for a member to depart but there should also be a similar mechanism to eject.

German attitudes on the sacredness of money are not compatible with the core heads I win tails you lose meme of neoliberalism. The markets do not believe the Germans which is why the CHF is close to par with the Euro, down from 1.7 in 2007. Rules don’t work when capital safety is paramount and risk free is meaningless. Schatz yield -0.22%.
The system is incoherent. Dieselboom defending deflation. What will it mean for Dutch workers if their savings are protected at the expense of their earnings?

Re: Different hats

I blame the way the post was authored for that, by the way. It sure as hell wasn’t written with an economist’s hat on.

Yesterday, this particular mind, began looking at the entire question about Greece, and the Eurozone, putting on what can be described as an economic hat. And what this particular mind, has observed in the last single day, are the very many people, who do the same.

However, for some reason in the middle of yesterday, and it was quite late, it also made sense to try on the political hat and find out, what light it could shed, on this subject.

Indeed, imagine if traders, in New York after New Orleans had been flooded, stood there and debated about the price impact, that it would have, upon New Orelans debt.

And imagine indeed, if traders in New York, had done so openly.

We here in Europe, endeavor to calculate the yield, from Greece like it was an open season, mathematics festival.

We do so openly, and without any shame, and many of us, without having ever even stepped foot in Athens.

The fact that I have observed, or learned, at least since yesterday, is that the political system in north America, . . . and what one state-level minister for finance, interviewed at the meeting of twenty-eight, state-level ministers for finance, . . . described as ‘the European democracy’, whatever on earth, that actually means, . . . other than being a nice ‘sound bite’.

The fact that I have learned, since yesterday, is that the political system in north America produces one response, to a large scale humanitarian disaster, and for some reason unknown, the one that exists amongst the member states, in Europe produces quite another.

Imagine if some trader, in Wall Street in New York, had described debt paper issued by New Orelans, using phrases such as windows and orphans prices.

And imagine what newspaper columnists, in America, having discovered that, would have written then.

Imagine the idea too, that because a financial professional, bought, or sold, Greek debt paper, a decade and half ago, that it confers upon that individual, the status of a veteran, who has some sort of wisdom in all of this?

And what is astonishing, is that here in Europe, in the gigantic void, that has been created, or left, from lack of true and genuine political representation, or any chamber, albeit it ‘far away’, instead of nearby.

What is astonishing, is that here in Europe, the political commentary, simply picks up the ball, that has been created by a community of financial bond traders, none of whom are very old, and known of whom seem to have read that much of political history, . . . and our political commentators, here in Europe, run with the ball, as it was presented to them, by it’s economic, and financial minds.

Indeed, imagine if that had happened, after New Orleans.

We don’t have the money. They must leave the union. New Orleans, must create it’s own currency.

Imagine that.

And imagine for just one minute, what our European project has become.

Because, it has become really hard to fathom, at all. BOH.

@ JtO

Your best yet! I would go further, the gentlemen you cite and I suspect many on this blog convince themselves that they are ideologically driven. In fact it good old fashioned resentment that society would give greater rewards to anybody whom they consider their intellectual inferiors.

@Sarah Carey

“You criticise a “self-serving” approach I think.”
I criticise an approach which serves the interests of FG and the Dept of Finance ahead of Ireland and the EU.

“Do you really think the Irish people would be thrilled if we exposed ourselves to attack by positioning ourselves with the periphery when there’s a chance to put clear blue water between Ireland and the basket cases?”

I don’t think we would be exposed to any attack by supporting a new deal for Greece. We would not be positioning ourselves with the periphery. We would be positioning ourselves at the heart of Europe, and also with the USA. I think that a lot of Irish people, including perhaps the 300,000 who have had to go to MABS for assistance over the last number of years, might indeed be thrilled if we stood up against debt slavery and long term penury in Europe.

As the fictional Charles J. Haughey recently said of the Department of Foreign Affairs, we don’t need Britain to oppress us when the Dept of Foreign Affairs will do it themselves. The same can be said of our current Dept of Finance.


“Not only should there be a mechanism for a member to depart but there should also be a similar mechanism to eject.”

Do you believe such a mechanism should be derived through the democratic process or would a process derived by unelected bureaucrats be suffice for the purpose?


I always enjoy your posts and agree with most of what you say.

However, I think that some sympathy for those hundreds of thousands crippled by debt and unemployment in Ireland would not go astray. 300,000 have had to resort to MABS over the last few years and there are many others in dire situations who have sought help elsewhere. The podcast from the Sean O’Rourke show on RTE Radio 1 re mortgage difficulties on 11 Feb 2015 is worth a listen. Leaving aside the utter misery and destitution of the people involved, the reporter was traumatised by the bitter cold of the houses she had to visit.

I am not attacking the basis of your prognosis of economic improvements, and I think there is a real (though not definitive) argument that we have taken the optimal course so far (mostly thanks to FF) notwithstanding how politically and socially poisonous it has been. I just say that all of the people of Ireland should be taken into account in any assessment of where we are at. We should not divide our Society as Enda Kenny has said must happen.

Look, just so we’re clear, I fully agree that Greece should be helped remain in the Eurozone, and flexibility should be granted on current program, debt maturities, overall debt burden etc. But anyone who either asks for or expects an ‘easy’ deal (in relative terms) for Greece is living on a different planet.

Any deal that the Eurozone offers or is willing to accept has to be tough, optically as well as financially, and has to be granted, politically, on the Eurozone’s terms, not the Greeks. Syriza’s repetitive and pointless mentioning’s of their “democratic mandate” only works in terms of what they can suggest, not what the Eurozone can offer or is willing to accept.

Given the current real-politick within the EZ and the unfortunate history of Greece not adhering too well to previous promises or debts (something Varoufakis himself admitted was a ‘credibility problem’), anything less than a cast iron set of promises from Greece will be unsalable back in domestic political environments.

The whole Greek political management of their side of the process has been shambolic, their whole “you have more to lose than us, our exit will cause contagion, the Troika is terrorising us” of last week created enemies rather than friends, when they mistook genuine sympathy at their plight for an expectation of a free ride.

More than anything, they have completely and totally misjudged the mood in the rest of Europe. Europe wants to finally get out of this crisis/prolonged recession, and they (we) are yet again faced with having to “save” Greece from itself, and the political and economic ramifications that come with any deal. More than anything, that is why many within the EZ are willing to let Greece leave the EZ, simply so they don’t have to deal with it any more. That might be harsh, but its also reality.

The Eurogroup would be the forum.It comprises the MoFs of the democratically elected MS of the EZ.

Both Mody and Chopra support Greece. I would listen to them before taking advice from anyone trading bonds, frankly.
Markets meanwhile soar on rumours of a deal. Markets can’t price political dysfunction. Pat Spillane has more credibility.


Stunningly good employment and wage data out of the UK this morning. Unemployment rate is now 5.7%. And average weekly earnings up 2.1%, which, in the light of the very tame inflation data, is fantastic news for your friend and mine, George Osborne.

Let’s never forget, as we get increasingly obsessed with the tedium of EZ/EU failure, that the Anglo economies got it right, and that Europe could still save itself if it just opened its eyes and looked to London.

From the TASC thread,

Chris Johns nails it in this contribution.

The great benefit of the detailed availability of the data is that the general public is waking up to the reality of the level of social transfers actually taking place. This goes a long way towards explaining IMHO why public reaction in Ireland to “austerity” has been so different to that in Greece.

As to Mody and Chopra, what both are overlooking is a fact that will strike the average taxpayer in Europe as rather obvious i.e. their opposite numbers in Greece, and Ireland for that matter, had the enjoyment of expending the borrowed money. The rest is by the way. And the politicians representing them know it.

Re: Education system

Obviously, here in Ireland, and for all I know, in many other parts of the European region, our education system(s), have collectively failed us, in that they have failed, to produce a present crop of citizens, who can understand, both finance and what democracy, really is.

It forces one, to provide what could better be termed, elementary civics tutorials, in such a limited medium, or space for text messaging, at one another, only.

America, has one thing, which Europe, does not. There are various words, used to describe this one thing, that it has and Europe doesn’t. But instead of relying on one of those words, I will attempt to explain.

In Europe, the Irish, speak about those Greeks.

The Greeks, speak about those Germans, and generally speaking, there is more than enough share of the blame, for inability to understand, to be share around nearly everyone.

We all need, to take a bite of the very bad sandwich.

Europe is still made up of many different tribes, who have no sense of a together-ness, for lack of a better term.

In America, at least (and despite countless different political illnesses and kinds of malaise), they still at least have one thing.

They do still have, a sense of their together-ness.

In other words, and to the best of my awareness, albeit it has its vast limitations, those who are New York-ers, try as best they can, to not speak about New Orlean-ser’s.

You get the general drift.

In America, they are all Americans.

In Europe, on the other hand, we are seldom all Europeans, in any real and true sense, of what that could mean (some day, perhaps).

In Europe, we try, but seldom succeed, in doing what many Americans, take as a given.

Make absolutely no mistake about this, and those who have studied history may know, as Varoufakis, himself has mentioned about, what he called, a Serpent’s egg, in Greece. The Greek Markist’s, as inconvenient as they are, to our Anglo-American, capitalist’s sentiments here in Ireland, are also, a very last chance saloon, for the entirety of what is referred to as, a European project.

They are, all that is remaining, now.

True, it is not ideal.

But it also does strike one as ironic, that an institution, a collaboration, which began in the aftermath of one war, involving one political dogma, at it’s first real hurdle, may end up being the very cause, of producing the same, such dogma, only half a century later.

That would be ironic, but it would also be true.

As inconvenient, as it may now seem, what is known, as a European project, has a much larger mission to achieve at the moment. It is far, far less to do with numbers, calculations, bond yield spreads or finance.

It is a whole lot more, indeed, to do what Varoufakis, mentioned above, as I said. All that Varoufakis, has in fact done, is presented the European project, very succinctly and on no un-certain terms, with its first real and overwhelmingly faithful test.

And rather than embrace that challenge, that challenge, what we actually do, in Europe, is we try to take what is an un-solvable, political equation, with no exact or precise mathematical answer, . . . and still, we attempt to find that boiled down formula, . . . which may, square, the circle.

This is our major failing, in Europe, it would seem.

The European project, as a whole, will either rise, or fall, on this, one can only predict in February 2015. BOH.

Zsolt Darvas of the Brueghel Institute runs some numbers on options for helping the Greeks:

The conclusion seems to be that to reduce Greece’s primary surplus to 1.5% or even just to 3% will require many more billions of euro of new loans from the EZ for years to come. (Assuming Greece continues making payments on its IMF/ECB and remaining privately held debts). Schauble and Varoufakis will learn to love each other by the end of it all!


“Europe wants to get out of this crisis/prolonged recession.”

It is a managed depression with debt at the heart of it. More debt is not the answer. Putting the
interests of creditors before those of voters won’t do it either. Growth needs 2% inflation. Debt wants deflation. Greece is a sideshow.
Debt will only yield to writedowns when all optimism is spent. We are not there yet.


“But, their concern for the Greeks is just that, posturing. It is shallow. When did they ever exhibit any similar concern for the Serbians, Bulgarians, Romanians, Latvians, Lithuanians, even Poles, all of which have far lower living standards than the Greeks?”

There is plenty of concern for low or unequal living standards in the countries you mention, but there is one distinct difference with Greece.

Greek GDP fell by 25%, consequent to an imposed Troika programme, that forecast a fall of 5%. Unemployment rose to 26%, when the Troika forecast that the imposed programme would result in 15% unemployment.

Krugman predicts that the imposition of of the >4% primary surplus, that the Troika programme calls for, will cause Greek GDP to fall a further 8%.
That would be a 34% fall in total, if the Troika get their way.

Yet, the new Greek government, elected to get rid of a failed Troika programme, is being faced with the ultimatum of ‘unconditional surrender’ or you are out.

Ironically, a Grexit now suits the political agenda in the Eurozone. The reason is simple, the turmoil from the outcome which will inevitably result in a further slide to recession, can be blamed on Greece, rather than on the failed Troika doctrine of the past 7 years.

Grexit is the Eurozone cover for austerity failure.

The latest position courtesy Reuters.

The decision to impose capital controls would be a matter for the Greek government. Such a step would, of course, be an enormous blow to the political credibility of Syriza. It would, however, alert the Greek people to the left-wing alliances’s “makey-uppy” world. (This is a world that has a much wider appeal than just for those to the left of the political centre).

The legal issues have already been teased out in the context of Cyprus. But the economic consequences for Greece would be much greater.

Definitely senior hurling!

I’ve just had an email very nicely telling me I’m on the wrong side of history. I’m getting a bit cheesed off now. I’ve asked questions and put the other side of argument because rather than blindly accept what the great and good here say I want the popular argument tested. I do the same thing with the government reps when I talk to them. When people get all shrill and angry when I put fair points to them I start to get suspicious. I’ve got skin in this game too. I’m a freelance worker with an unemployed husband. getting lectures on the immorality of austerity (from the safely tenured ) isn’t the way to convince me. It’s very easy outside government to say what must be done but yes my sympathy does lie with those who are accountable. Saying it’s all for FG is reductionist. The fact remains that those who predicted doom have been disappointed and therefore I’m obligated to listen seriously to the government and not simply dismiss the strategy out of hand. (Hope this cones out right – am on a phone…)

There is a very good example of the political economy of the moment in the UK.
Gideon and Sancho Carney missed their deficit target because their Phillips curve spreadsheet failed and earnings refused to grow in line with falling unemployment. 5% deficit instead of 0% so the Tories are going to take a hatchet to welfare spending. The biggest component of welfare is pensions. Pensioners are organised and more likely to vote Tory. So pensions spending is ringfenced while everything else is cut. Obese people may have sickness benefits cut if they refuse cheapo treatment run by the likes of Capita. Welcome to the future.

@ Joseph

“Greek GDP fell by 25%, consequent to an imposed Troika programme, that forecast a fall of 5%. Unemployment rose to 26%, when the Troika forecast that the imposed programme would result in 15% unemployment.”

This is only really a relevant issue if you consider pre-crisis Greek GDP levels as real and sustainable (ie did they really grow by 140%, in real terms, between 1996 and 2008? Ireland, with a massive productivity miracle, massive real inward investment and a credit bubble on top, only grew by 99% in the same period). I would suggest they were nowhere near being so.

Re: Predictions of doom

Sarah writes,

The fact remains that those who predicted doom have been disappointed and therefore I’m obligated to listen seriously to the government and not simply dismiss the strategy out of hand.

To quote a well known pop music ballad, you ain’t seen nothing yet.

You just ain’t.

Wait a while, and while we are all waiting, in addition or our political, our economic, our civics hats, why don’t we try on a geo-political hat in Europe too, just for the fun of it.

In recent times, in north Europe most especially, we have witnessed some new developments, which I tend to analyze in my own simplistic way, as some small groups of European, society seized what they perceive to be a moment.

We’ve seen things in several northern European urban centers, at this stage.

But let us stand back also.

Pretend, in fact, that we aren’t in Europe, at all, but somewhere else, say flying up high in the sky, where we can see the entire geo-political map now, and how it looks, and how even Ireland, fits in to all of that.

We observe things happening, all over the place.

We observe them happening, in northern Africa, in the near or middle east, in fact on the most eastern shores of the Mediterranean shores.

We see, indeed, what has happened in near eastern Europe.

And somehow, with all that is going on, at this moment in all of these places mentioned above (which for clarity sake, we treat as separate and distinct phenomenon), . . .

In the middle of all of that, we happen to run into a thing called, a Greek bailout re-negotiation, in Brussels.

This is where, I hope that everyone, can remove their economic hat, for one moment, and try to fit on, a geo-political one instead.

Our solution, we are almost proposing from an economic and prudent fiscal supervision point of view, is to suggest to a small south-eastern Mediterranean EU member state, is that they might ‘exit’, the Euro currency area.

In the middle of all of that, what hasn’t happened is the following.

No one, it appears, has managed, instead of treating everything that is happening at the moment, as separate and distinct geo-political, or geo-spatial developing phenomenon, . . . and instead, tries to connect, some separate dots.

It would be a poor far eastern revolutionary indeed, who would fail to do, what I suggest.

And it would be a fairly poor, European geo-political scientist indeed, who would fail to do the same.

This is why, outside of a purely economic and prudent financial sense (which in fairness, north European EU member states, may excel in), this whole meeting of the twenty-eight financial ministers, is so absolutely ridiculous, it would seem to me.

Brass tacks, okay.

Europe, no longer has got a luxury, that it may still assume it has, of only wearing one hat. It must have more than twenty-eight financial ministers, now sitting around together. It must, in summary, wear many different hats.

Over and out. BOH.

@BEB, Tull

Any deal for the Greeks will of course be tough but surely not along the lines of the completely unsustainable nonsense that the current program represents. It was the current program too which brought the socialists to power. Ironic. So who actually ’caused’ /forced this crisis……

The conservative last crew were at the root of Greece’s ‘credibility issue’. The socialists have at least agreed to address the various monopolies, tax dodging, etc. They should at least get their chance. I’m no socialist but the costs and damage that a Grexit is likely to cause is not something to be accepted glibly.

Putting aside sentiment, a realistic and sustainable deal needs to be done. The creditors have fully participated in the present situation and will also be hit in resolving the situation for now. They too will know better about how they should lend to Greece in the future….If as you say Tull it will happen again, then they are great fools. However, the creditors enjoyed the financial upside when it lasted… they will (and should) participate in the downside they have co-created. Caveat emptor for investors and creditors. When did downside risk disappear or become the sole responsibility of borrowers? Rubbish. The creditors (even poor ones) cannot say they didn’t know what they were doing…..although in my story above about the Canadian FI blinking, that’s exactly what their N. European counterpart pleaded in court!

Machiavelli might tolerate the immorality of austerity if it generated growth. But it doesn’t. The end doesn’t justify the spin.

I saw 2 books about France the other day. “The long suicide” was one and the other was about France’s shady dependence on Qatar. The social and political costs of the failing status quo are mounting.

“The social and political costs of the failing status quo are mounting.”
The Irish govts since the 2007/2008 crisis have been successful in maintaining the status quo for many; but not for many more, obviously. Should the latter be happy about that? Also, the maintenance of the status quo for many has been achieved by borrowing at low cost. The govt support says, great, better than not being able to borrow, or borrowing at high cost. However, that is self-interested and short sighted. What happens now if Grexit takes the wheels off the cart? Is ‘burning’ half the population the only solution?
I agree with MH’s “The argument that a more positive Irish attitude to Greece would risk being costly is ridiculous.”
The general lack of standing up for what is right by the “I’m alright, Jack” brigade is simply cowardly and wrong. Ok, the Irish have never been collectively strong on moral courage…..but that doesn’t make it right either.

Whatever the Greeks are supposed to submit for consideration, it has been delayed until tomorrow.

The wires are obviously buzzing. The desire of 70% of the Greek electorate to keep their euros may be fulfilled; as long as they keep them in Greek banks. And place their country in the same effective economic quarantine as Cyprus.

The WSJ says the style of their MOF irks his colleagues. I would think that it is his near total lack of substance that irks them most.

@ seafoid

I think the difficulty Sarah alludes is that Ireland implemented austerity, and yet it does grow. (Eppur si crescit!)

Hi Sarah.
Just coming to the thread now.
I saw you asked a question about or debt to GDP falling a couple of days ago.

We were up to 125% debt to GDP and are now back down to 115% according to official figures.

The vast majority of the reason for this was down to government using Cash in hand to pay down IBRC debt. Other small things also helped such as adding the economics of sin to the GDP figures and a little game in the dept of finance called lets move everything that we can off balance sheet.
However the fundamentals are as follows. We added 7-8 billion in debt last year because we spent more than we took in from taxes and our interest payments for debt were 8 billion. The GDP did grow last year but not enough to keep up so without the accounts trickery our Debt to GDP increased.

The thing keeping us and the rest of the Periphery in the game is the willingness of the Gov bond buyers to buy at unbelievably low rates that ignore the level of risk they are taking. This is a political move too by the elites that are the main players in the market in order to prevent default.

FG trying to distance itself by scolding the Greeks is not just a simple matter of tuppence halfpenny looking down on tuppence, its clearly a political move. If the Greeks were to get any further concessions it makes the FG policy of best boy in class look silly and reasonable people might start to look at alternatives. Michael Noonan isn’t just trying to help Ireland, his first loyalty will always be in defending elites of every nationality. The exact same thing is happening in Spain Portugal and Italy and other euro countries where the ruling parties are dead against any Greek concessions, in direct contrast to their citizens who agree with Wolfgang Munhcu’s calls for debt write downs and public investment.

Dont underestimate what Varoufakis and Tsipras are trying to do. They are challenging the authority of all of Europes elites and that is why a hard line is being taken. The body language is very telling. Wheather its Noonan or Dijssenbloem or Schauble. They don’t think Syriza deserve to be in the same room as them.

@ Eamonn

“We were up to 125% debt to GDP and are now back down to 115% according to official figures.”

We peaked at 123.3%, and we’re at 110.5% at end 2014, according to the NTMA.

Further, on a net debt/GDP basis, given large cash buffers still above €20bn, we are estimated to be 90.8% at end 2014. This is less than Belgium’s net debt/GDP figure.

Further still, Irish government bonds held by the Irish banks and the CBI right now, given the circular flow of coupons payments. This situation is set to (49bn = 43.5% of total bonds = 23.5% total debt), are more or less ‘free’ expand and improve further with the ECB QE program, which should see another 12-15bn in Irish govt debt essentially financed for free and much reducing their true NPV cost and increasing the ease with which they can be serviced.


So Varoufakis has a “total lack of substance,” eh? As opposed to whom, now? Dijsselbloem? Schäuble? Noonan?

Never mind that their “substance” boils down to having been and continuing to be “substantially” wrong.

The claim that Varoufakis lacks substance is about as credible as claims that Obama is a moron and overmatched in the job voiced by those who supported George W. Bush. When this kind of hysteria is voiced, one has to ask who is giving the marching orders and what are they panicking about.

@ Ernie Ball

Interesting link to TN. But it kinda proves my point.

This looks like a revolt by the grass roots against the Establishment. It never happens that way. You will find that the second rung are fomenting this subversion. I have no quibble with the lead economists in our academic institutions – they’re as sound as a euro. But just beneath is a seething pinko constituency and they are the ones which I suspect populate these parts.

BTW what is the Feminist school of economics?

Hi skeptic01: “I think the difficulty Sarah alludes is that Ireland implemented austerity, and yet it does grow.”

Grow? Yes, but in what manner? See the fundamentals listed below. How are they doing? Austerity is more correctly know as ‘downsizing’. So, we have less folk employed; folk have reduced incomes; we have increased revenue takings; welfare services are curtailed. So what in Jove’s name is ‘growth’? ??? Extra vehicles on the M50? I love it!

@ Sarah: “The fact remains that those who predicted doom have been disappointed and therefore I’m obligated to listen seriously to the government and not simply dismiss the strategy out of hand.”

Bit ‘wild’? But continue with those ‘searching questions’.

I might be one of the aforementioned – but I predicted nowt other than; since the economic fundamentals (proportion of working age in employment; residential property prices; incomes; credit and energy) were not in good shape and since all are fundamental – in somewhat varying proportions to that nice, annual, compounding percentage “steady state” we so desire, then that aforementioned state was unlikely to rise up and be restored: dead cat bounces excepted.

Chanting “growth”, in whatever tempo, does not guarantee its literal existence. One can ‘wish it’; one can ‘believe it’ – but that’s simply known as “wishbeling” thinking. Common as the common cold it is.

@Eamonn Moran

Good analysis.
In un-diplomatic language, the Euro elites believe the Greeks have goat s$hit on their shoes, or at least treat them as if they did.


This is just aping a similar ‘revolt’ by the scions of the elite at LSE. I remember doing something similar myself back in the day at Trinners. Kept me out of the pub for an afternoon.

@ Ernie

In fact, I was referring to “substance” as his colleagues might assess it in terms of the qualities required of a MOF, a point that has certainly occurred to many but which the WSJ refrained from making explicit. A MOF that goes around telling journalists that his country is bankrupt when trying to negotiate the terms of a bridging loan – or whatever he wants to call it – would not fit the normal pattern.

No doubt he has other talents.


The Irish state is no longer dependent on support from official bail-out lenders, its debt levels have stabilized, it has regained access to private markets, employment is growing again, the drain on the state to support the unemployed is slowly falling, the government deficit is now low and manageable, we have probably seen the end of contractionary budgets…
In terms of “successful” IMF-style bail-outs, that’s about as good as it gets. It is true that the Troika has not fixed all of our problems relating to demographics, property prices, energy sustainability etc. Maybe we should bring them back for another go round?

If I may sum up the discussion so far. The majority on here is as follows
*the Greeks should get a debt writedown because it is the moral thing to do
*above also justified because it is their democratic wish that this happen
*they should get more money to finance a fiscal stimulus ( more =?)
*the combination of said write down and fisal stimulus will unleash massive growth
*stuff like microeconomics aka structural reform has none or negative impact on the outcome
*award should be uncondiitional and unsupervised
*we should not bother consulting anybody else in the EZ who might have to fund said writedown and stimulus,they are conflicted and selfish
*in fact we might not have to consult them as the money can be found at the base of a MM tree.
Anybody who opposes the above agenda is selfish, right wing, member of FG, neo liberal, misguided, pig ignorant, possibly Finnish tax payer.
Have I left anything out?

Re: Getting the sequence correct

One thing, in this, which interested readers, scholars and brains in international finance, may choose to consider, is something that I will mention.

It is something that I will mention it, for the basic reason, that it has not been mentioned anywhere else above, as far as I can ascertain.

There has always been this question, which arises, when it comes to a subject of sovereign states (which may be considered to be legitimate ones, or not considered legitimate, as has been asked about the state of Greece overhead).

It is this question, of what does one want, what does one need, to get right, first.

A professor, who has spent a good deal of time, in universities in Great Britain I believe, but who originally grew up in India, is Amartya Sen. He is someone, who from my understanding of things, had observed over many years, as the United Nations (because the continent of Africa, doesn’t have anything like a European Union, or a United States), discussed the affairs of many failed states, in Africa.

The professor, often observed, something like a statement: we need to get the economics right first, and then we’ll worry about establishing some kind of political system.

In fact, the logical way that the human brain works (and it is demonstrated in numerous instances above, as argument by a great many educated and logical contributors to the Irish economy), is that it thinks, it can be done in that order.

Fix the finance.

Then fix, the politics.

However, at some point in his career, Amartya Sen got an idea, to challenge the conventional wisdom (a term, which McWilliams in today’s daily newspaper in Ireland, attributed I think to Galbraith).

Professor Sen, asked the question, if whether we should help to get the political system to work first, and then try to solve the economic riddle.

In fact, this is not so much a new idea, so much as it is, a quite old one. Researchers have observed, that before the British empire, in it’s heyday, decided to colonize any place (presumably, to extract some economic benefit, for the same empire), that the British empire, also operated by a similar sequence. They would first encourage the religious missionary orders and so on, to venture into distant lands first, and establish a basic level of order, and political regularity to the place.

Then of course, having developing that level of order, the empire would proceed to develop the place, from an economic point of view. That may now seem, like a strange example to take, and one that relates to a different time in history.

However, we can also observe, that in a place known as Greece today, the sequence, which I refer to, is still important to observe. This is a major part of the reason, why I attempted to the articulate some of the arguments, which I did overhead and share them with the reader.

When we host any discussions, about Greece, it’s future and the Eurozone, here in Ireland, I would finally submit, that part of a condition for any such debate, is that all it’s participants, ought to consider the points raised by Amartya Sen, in his thesis, . . . which the professor Sen based, on an experienced observation, that across a great number of attempts made, to improve, some situation, in some developing African nation, . . . and in one’s where there may have been a lot of goat’s manure around, . . that those same attempts, would fail consistently, and fail badly.

The thesis, which professor Sen, developed for his novel, Development as Freedom, was one in which he questions, directly, that most logical of assumptions, which the human brain always tends to make. And it is an assumption, which I have observed, has been repeated numerously above, in relation to the situation of Greece, and it’s place in Europe. BOH.


You might add

*Elections in Ireland, Germany, Finland, Netherlands etc do not count because the electorate voted for the wrong parties.

@ Tull

You forgot one point:
* if these conditions do not come to pass, the Greeks will vote a neo-Nazi party into government and it will be the fault of the Germans that this happened.

“This is still less than belgium’s net debt/gdp figure” goes to the heart of the problem, however unintentionally.
The EZ is drowning in debt, as is the UK, as is the US. The EZ is laughably distant from 60% , the maastricht figure. The EZ can’t meet its own inflation target meaning the real value of all the debt is increasing. And there is no growth worth talking about. Last year earnings for the Eurostoxx 600 index of shares were up 14%. 13 % cost cutting, 1% revenue growth.
Market pricing is broken.
The only way to keep the show on the road in the uk is fiscal deficits. In the EZ even this is forbidden. France gets slapped for 3, 3%. Monetary policy is ineffective.

And we are supposed to believe policy is a success. As Eamonn Moran says above, Dieselboom and Noonan are defending elite failure. The other point to go with that is that they are afraid of upsetting the markets. And the continental banks that are stuffed with overvalued piggy sovs. Without change deflation will topple the whole house of cards over. And politically Europe is looking at huge volatility. Because you can’t fool all of the people all of the time.

Re: The cross hairs

if these conditions do not come to pass, the Greeks will vote a neo-Nazi party into government and it will be the fault of the Germans that this happened.

The conditions, on the ground, in Greece are only one aspect of the problem. Only one.

As you mention, possibly, in a next election, the serpent’s egg, may actually hatch.

But whatever.

We are talking about the possibility, of the emergence of a vulnerable and unstable area, on the periphery of mainland Europe, which appears at the same time (as if it were, almost in a cross hairs, of so much other stuff, which is happening at the same time).

At an intersection point, between so many other large geo-political, and spatial movements, that we can observe every day, simply by switching on a news broadcast, or reading in a newspaper.

North Africa, Europe, Middle East the former USSR, and indeed scattered events also in northern European locations.

Let’s be honest about it, the eastern Mediterranean, at a crossing point, of very large and significant things, that have happened in Europe.

And we are at this point, discussing finance?

Taking a mile-high view, which I suggested, combining together the different strands, which I indicated, I get the feeling I am like that weatherman guy, in a movie, called A Perfect Storm.

Yes, of course, the observations about domestic factors, on the ground in Greece are relevant.

Not nearly as relevant though, as an observation of that, combined with everything else, that can happen around it.

Europe should be putting in a greater effort, if Europe really was, security aware, at the moment.

I.e. Trying to do a lot more than having get-together’s, between 28 finance ministers (we have diagnosed at length, these finance ministers are just carrying to their meeting, on their backs, the colossal burdens of dealing with state-level economic and domestic political conundrums, of there own).

These 28 men, are capable, of taking a mile-head view on affairs, at all.

Maybe Varoufakis, and perhaps, not even he.

Does anyone believe, at all, that there exists in this 28 member meeting of finance ministers, anyone who deeply considers the consequences from a geo-political dimension point of view, where the Greek situation, is concerned?

And what message, does that send, to the region surrounding Greece?

There is an old saying in Chess.

Don’t give away one’s pawns, too easily.

The pawn which may not look like much to a healthy, and strong European continent right now – it might find, was given away far too cheaply, at some point henceforth. BOH.

@ skeptic01: Thanks. I would place our situation as – “We are no longer falling.” And this may be as good as it gets.

Standard, long-term, rate-of-growth is considered to be 3%. However, ‘recovery’ from a downturn (where rate-of-growth was below 3%) requires 4% or greater for between 3 and 5 years – in a row. If our current rate-of-growth is less than 3%, then we are bouncing along the bottom.

The ratio of median home price to median income (by region) is still too high. How will this be ‘gapped-down’?

You forgot
*the last bailout was a stitch up
* the imf pointed out at the time it was cr@p
* Third Point made 500m buying in at 17 cents

Add ‘austerity kills citizens, jobs and economic growth’
Add ‘ Schauble and Djesselbloem are austerity fanatics’
Add ‘ireland’s pols and senior bureaucrats are protecting themselves’

More to come..


Actually, it’s the eurocrats who decide when Irish elections (and Greek ones and Italian ones) do or do not count.

How quickly we forget…

Re: Greek exit

BrianH wrote,

USA to ultimately bail out Greece after they exit the euro?

Matthew Lynn’s marketwatch, article.

This is probably that mile-high, weatherman’s perspective, which we might be paying a lot more attention to.

Good to see, there are capable brains out there, who do put all of the pieces together.

We should remind ourselves, by the way, of what John Fitzgerald, a contributor to this blog on occasion, said to a parliamentary banking inquiry in Ireland quite recently.

One of the failings, as he defined it, of the Irish central bank, during the last decade, was that it did not have a model.

It could look at one dimension yes, and analyze that somewhat. But what the Irish central bank, did not do (and in fact, at one stage, it even had Allied Irish Bank’s upper management spooked, enough to talk to Mr. Fitzgerald about it), was to look at a number of factors, in terms of a model, with several moving parts.

Matthew Lynn’s article, is the first really decent analysis on Greece, and on Europe, that I have read so far. Much appreciated. BOH.

Guardian publish article adapted from 2013 lecture:

‘Yanis Varoufakis: How I became an erratic Marxist’

“In 2008, capitalism had its second global spasm. The financial crisis set off a chain reaction that pushed Europe into a downward spiral that continues to this day. Europe’s present situation is not merely a threat for workers, for the dispossessed, for the bankers, for social classes or, indeed, nations. No, Europe’s current posture poses a threat to civilisation as we know it.”

@ Gavin K: Morning!

I got about two or three lines into the piece then – BINGO! – W. H. Auden’s “The Unknown Citizen”: – which our Hellenic FiMin most certainly is not. Seems the chap has a few functioning neurons.

But our ministers? If I alleged that they were ‘invisible’ – would I be incorrect? I know Cameron wrote something. But what?

This am, listening to the Radio (RTE), the newsreader intoned – in solemn tones, about the Leftist Gov of Greece. Now perhaps someone can correct me, but I do not recall anyone on RTE using the phrase: “The Friedmanite Finance Minister of the right-wing, neo-liberal Irish government has issued a statement (through a spokesmodel, of course!) ….”

Are ideological labels only to be pasted onto those we dislike? Seems so.


Yaroufakis worries about a bloodbath:

“To me, the answer is clear. Europe’s crisis is far less likely to give birth to a better alternative to capitalism than it is to unleash dangerously regressive forces that have the capacity to cause a humanitarian bloodbath, while extinguishing the hope for any progressive moves for generations to come.”

Rudy Rummel is a social scientist who collects stats on bloodbaths and why they happen. Unfortunately for Yaroufakis the number 1 factor for mass-killings is… Marxism!

@ Brian Woods
“This am, listening to the Radio (RTE), the newsreader intoned – in solemn tones, about the Leftist Gov of Greece.”

I heard “far leftist Gov of greece” when listening to Morning Ireland and had the same thoughts as you.

@ Tull
Look at what they are actually demanding of Greece.
A 4% surplus every year for the next 10 years at least.
Has that ever happened anywhere before?
Any economic historians out there?
In the context of the last few years in Greece, wages down 25%, Suicide doubled, GDP down 25% Unemployment 25-30%, Youth unemployment over 50%. No health care if out of work.

Now compare that with your hyperbolic points above about how unreasonable people are being for asking for a Greek write down.

Either this is a very odd piece of game theory or that does indeed look like complete capitulation by the new Greek Gov.

HI all

I had a long meeting yesterday with one of Noonan’s people and a lot was said that would be worthy of discussion here.

2 quick points:

1. Why are people complaining that Ireland hasn’t supported a debt write down when Greece isn’t asking for one?



The entire debt write down debate is the WRONG debate.

The actual debate SHOULD be about the bloody Fiscal Compact. It is the constraints of THAT that ties our hands. As long as our economy grows we can’t use that money for stimulus because any extra money has to be used to pay down debt not hire nurses.

So I voted Yes. DAMN. EFF. And everything else.

The fiscal compact: how to undo that.

Can we talk about that please? Because that appears to be the real problem.


Talking Point 1pm on Saturday Newstalk 106 Move the Dial Don’t Hold Back bla bla bla
Colm McCarthy
Harry Browne
Brian Hayes

to trash it all out if you’re interested.

Here’s the podcast of the last one around the elections to set the scene.

I havent read all the comments yet but so far (half way through) I think people are getting a little carried away in their responses to Sarah Carey. From what I can see (and she can correct me if wrong) she’s not saying how it ought to be but how it is. (from her perspective) It’s an analysis, not a statement of personal prefernces.

@Eamonn Moran

The IMF has a paper on historical debt consolidations, and the role of the fiscal surplus in reducing debt (compared with other factors, such as economic growth, lower interest rates, etc).

At the link:

And go to page 36 to see their data. They use “structural primary balance” instead of fiscal balanace – the latter is adjusted to take account of economic cycles.

Their sample includes 26 recent consolidations. The average duration is 8 years, and includes periods of both recession and growth. The average structural primary balance is 3.1% of GDP. Extreme cases include Canada (12 years; SPB 6.7%) and Denmark (4 years; SPB 8.5%). They observe that the primary balance is usually lower during the early phase (which is often recessionary) and gets higher later when the economy returns to growth.

– Or rather, the former statistic “structury primary balance” is adjusted versus the economic cycle.

The reportage and commentary on the new Greek Government would appear to consistently overstate how radical the Greek Government is. One might suspect that the other EU Governments realize that they will have to execute a climb down and bow to some of Greece’s demands. Portraying the Greeks as asking for the sun moon and stars gives their counterparts to say that the greater compromise was on the Greek side, thereby saving face for the other leaders. It also gives them a stronger negotiating stance insofar as the Greeks will realise that refusal is a politically easy option for the counterparts.

On the other hand, I note the Italian Minister’s comments after the last Eurogroup meeting to the effect that he was not worried and that he was confident a deal would be done. To me that read as a warning to the rest of Europe that a deal had to be done or Italy’s position could be prejudiced. The unanimity amongst all but Greece which Schaeuble claimed may be illusory.

Tullmacadoo’s above post (February 18th, 2015 at 6:24 pm) where he sets out what he understands others to be saying is illustrative of that quirk of the human intellect which causes people not to hear what is said to them but rather to hear what they expect others to say (being that which they find easier to contradict and dismiss).

The said quirk of the human intellect is a key factor in how disagreements which should be resolved with a bit of common sense and compromise become intractable, and how seemingly intelligent people do not respond to reasoned argument. It is a dangerous trait in an unstable Europe.

@Sarah Carey

The fiscal compact is indeed a real problem, as flagged at the time by Kevin O’Rourke and Varoufakis. Varoufakis said that FG and Ireland were blackmailed into it, and I think that is how everybody felt. For my own part, I voted NO.

This reference to “debt write-down” seems to be an oft-repeated canard. Where has the new Greek government asked for or proposed a debt write down? They want new terms and conditions. Ireland is all for new terms and conditions a la the promissory notes. Why is there still talk of a debt write down from Noonan’s people?

@ Sarah: Thanks for that illuminating update. What can one say except – “READ THE SMALL PRINT – before you sign anything!

Mind you – if our government and their Dáil majority demanded it – we could, citing “essential and fundamental national security considerations, etc.” shove the FC into the back of the bottom drawer of a filing cabinet. Pres Bush did!

“Oh! You mean we’re NOT the US! Aw shucks!”

@Sarah Carey

Apologies! I misread your post. I note that Noonan’s people were agreeing that no debt write down has been asked for. I am glad that they recognise that the debate is not about debt write down.

@ Sarah,

I’ll look forward to your Saturday programme, since there should be a lot more clarity as to how the ‘Greek challenge’ is likely to play out by then. I would have thought a discussion between two economists, say one from the ‘liberal’ persuasion and another coming from the social democratic perspective, and two political figures from similarly competing points of view might make for a more fruitful discussion? But your current line-up should make for some lively exchanges!

As for the FC; I opposed it because I thought it was too restrictive. So I voted against it and tried to persuade others to do likewise. But I’m not sure I fully understand the point your interviewee was getting at? First off, I thought the FC has largely been overtaken by events in the meantime and is politically redundant at this stage? Second, I always get a sinking feeling – especially a few months out from an election – when political advisers start waxing lyrical about ‘stimulus’ or hiring extra nurses etc., especially when they were to the fore in campaigning for including the FC terms in our constitution in the first place.

As for you being on “the wrong side of history”; that’s just a turn of phrase and I’m sure no personal offence was meant by it. It’s also a patently ridiculous phrase, since I’m sure every tinpot tyrant who got his (usually) mitts on the levers of power anywhere in human society was convinced he was on the “right side of history”, even long after the statues had been pulled down in the village square. However, for reasons argued on a previous thread, I think the EU is facing into a political crisis to compound the EZ economic crisis. That’s irrespective of whatever reasonable fudge may yet be agreed to deal with the problems of Greece.

Update – for Gavin K:

Read that Haldane article – but he referenced a prior, so I will have to access that as well. I’ll have to think carefully about a response. He covered a lot of ground. Thanks.


Even total capitulation is not enough for Germany. Where have I seen this movie before?

And why, exactly, is _Germany_ the party refusing?


I don’t remember a lack of enthusiasm among Noonan’s people during the Fiscal Compact campaign. Nor did the government tell the electorate that they were opposed but were being blackmailed into it.

Is this a bit like the 2008 banking guarantee where first of all it was all in the national interest and then later on the country was blackmailed into it – all foreigners’ responsibility?

There were plenty of discussions about the Fiscal Compact on this site – if you want to see what contributors said a quick:

“Fiscal Compact” “Name” “specific point”

on the Google will get you there.

The German reaction is likely to be:

“WTF – you only just voted for it!!!”

@ Tull

“The Eurogroup would be the forum.It comprises the MoFs of the democratically elected MS of the EZ.”

Based on today’s evidence the mechanism you propose for kicking members to touch could well already be there…..and no “group” will be required….unilateral ejection rights are now in the offing…..provided you’ve got big enough boots!


Did they blink – or did they know this would Germany’s response to their proposal? Are they dividing and conquering….Maybe not. But maybe Rock Star’s second album could surpass his first in critical and selling terms.

@ JR

bad blood has clearly been created following last weeks repeated spats. But I still think Germany is acting more bad cop than just bad.

Re: What now for the rock star?

I hope all the shouting was worth it. What now for the Rock Star?

Well, you did ask.

China, I guess.

It could chomp that quarter of a trillion, that Greece has right now, and whilst cleaning their teeth, with a wooden tooth pick ask, got any more?

Put a nice bright red one, up there beside the blue and white. Why not.

Game, set and match.

How about that, bond traders?

How about that?

Your boy Wolfgang, can wag his finger all he likes.

The question, that I have for you is as follows.

Does it really take a Chinese flag, flying over the crucible of European democracy, no less, to make you finally see, how small your bond markets are, in the greater scheme?

And because I know you will also ask.

The reason that China, hasn’t gone and done that already, is probably, because it is hoping that people here, will finally become mature, and put their hands in their own pockets. Because in fairness, it would be less embarrassing, for everyone, not least of which, for Wolfgang.

We own this, we broke it. We can fix it. Let’s move on, and if if the bond yielding, calculators can’t deal with it, then let’s invent a new one. BOH.

Re fiscal compact:
In the US many states have a balanced budget law which can obviously exacerbate local economic downturns. The Federal government can and does offset this ,however, as in 2009, because of the size of the Federal Budget.

The Euro has not such central mechanism (the EU Budget is about 1.5% of EU GDP) so if every euro member pursues contractionary fiscal policy at the same time the result is bad, as we have discovered’. Yet we probably need some fiscal rules ( as I noted Greece has never run a fiscal surplus in 35 years) or we simply let profligate states default . If the former, simple is best ( e.g., a balanced current budget over a 5-year period ) as the current proposal is unworkable- the structural deficit is too hazy in practice to be of any use. Of course one can work it out mechanically but we do not know what the sustainable growth rate is at any point in time and hence estimates of the output gap can be high wide and handsome. Just look at the EU’s current estimate of Ireland’s output gap for 2013 at what they thought it would be in 2012.

I believe Greece is being reasonable in its attempts to renegotiate this failed programme, Germany is being unreasonable in insisting that failed policies continue, and Ireland is acting against our own interests. But here’s the rub: how, as a voter, do I make my views known? And to whom? The EZ is being run in a manner than I despise as intellectually bankrupt (if something fails, repeat), but who gives a toss what I think? This is the big, big problem I have with the EZ and the EU—they have disenfranchised me.

Could someone more knowledgable help me with a question here ?

What were Ireland’s other options other than to join the Euro ? Put aside the politics for a minute, how could Ireland have managed monetary policy outside the Euro, would not being in the Euro have prevented the worst of the crisis, and what would our options have been in response to the crisis that we werent available because we were in it ?

“bad blood has clearly been created following last weeks repeated spats. But I still think Germany is acting more bad cop than just bad.”

Plenty of experience on both fronts so will be interesting to see which….

@Mary Feely

text from Blind Biddy in Brisbane during an innovative bazooka-firing tutorial with Paul Stirling: “Fight back!”

Update for Gavin K: OK, got through those Haldane articles.

Like I said – he covered a lot of ground, however most if not all of which is irrelevant to this thread. So, some other time.

But, he never mentioned ‘energy’ once. Big miss! See ya!

@ Mary Feely: Have you read Peter Mair’s “Ruling the Void: the hollowing of western democracy”?



The FC was a victory for the politics of fear- it sits up there with the vote on scottish independence but of course has far big reprecussions. The people, including your good self must take responsibility for it – you knew it meant what you now say it means when you voted for it….surely you knew that is what it meant.

Lucinda (remember her)…was the main protagonist for the fear merchants if remember. We didn’t just vote it in because we needed more money btw, we voted it in but because we were told IF we needed more money from our friends to pay back our friends, then we had to vote for it….courageous lot the lot of us, eh!

With regard to Dan’s point, fiscal rules resolve tomorrow’s problems but not so much today’s. Deep, rules-based sovereign default can resolve both today’s and tomorrow’s problems, whether by making the eurozone liveable or by dismantling it.

You will have ample chance at the next GE inside a year to vote for parties that agree with you -SF, Shane Ross and Minger’s crew. Maybe a few others.
Syrizia campaigned in their GE for a debt write down and Rock Star has been clear it is his preferred option. I think they will look for it in next stage of negotiations on new programme, if we ever get their. They would almost certainly get re-profiling just as we got over two or three goes. Problem is that interest rate is very low and payment terms stretched out. They would also have good case for lower PD. But they have cocked it up spectacularly in the last week.

I don’t think there will be a Grexit yet, Syrizia will surrender unconditionally in next 24 hours. Grexit would be catastrophic for them – no banks, no money.

Longer term, Greece has to leave the Euro , devalue 30-40% and run a tight fiscal policy, open markets up, slash public expenditure and bring in a few hundred heavies from the inland Revenue to collect taxes. The correct role model for Greece to follow is Turkey. Maybe it should go the whole way and reunify with its former colonial power.

@ Sarah
Trash it vs thrash it out

I think the troika did the former to Greece. The EZ needs democracy and a dose of the latter.
One of the features of the EZ crisis is that there is no end to it. There is no equilibrium. It keeps on morphing. Imagine that in 2010 Sarkozy told his people that he wasn’t elected so that France would suffer the pain of Ireland. Quel con ! And now it is 2015 and France is in trouble. And 2 trillion in bonds at negative yields. It is very like the emperor’s new clothes. With DOCM marvelling at the stitching.

Slovakian PM on FT website – inter alia he says

“This is a red line for us. It would be impossible to explain to the public that ‘poor’ Slovakia . . . should compensate Greece,” Mr Fico told the Financial Times in an interview in his office on Thursday. “To explain to people that we have to give money to Greece for their salaries and pensions? Impossible. Impossible.”

While governments may tend to be lavish with other people’s money by times, they are, sensibly from their point of view, usually only lavish on those who can re-elect them (or help get them re-elected).

The apportionment of blame for how the Greek situation came to pass, and the impracticality of Greece being able service or repay monies already lent, are interesting, but secondary to the (I hate the term) realpolitik concerns of the creditor nations.

@Sarah Carey

The actual debate SHOULD be about the bloody Fiscal Compact. It is the constraints of THAT that ties our hands. As long as our economy grows we can’t use that money for stimulus because any extra money has to be used to pay down debt not hire nurses.

Why would the economy need a fiscal stimulus when it is growing by 5-6%

Paying down debt is normal and prudent during periods of growth.

During Celtic Tiger 1 debt was paid down to the extent that, when the 2008 global recession hit, Ireland’s debt/GDP ratio was around 25%. This is one of the key differences between Ireland and Greece. No one knows when the next global recession strikes. Maybe next year, maybe not for 20 years. There was a 25-year gap between the most recent global recession and one before it in the early 1980s. Hopefully, the same will happen this time. Regardless, it is essential that Ireland’s debt/GDP ratio be as low as possible when it comes.

Of course, growth during Celtic Tiger 1 was so strong that it was possible to pay down debt AND cut taxes. Hopefully, the same will happen in Celtic Tiger 2. It has already happened, albeit on a more modest scale, in 2015.

No one who supported the Fiscal Compact should apologise. It was a key building block in restoring confidence, which in turn has led to Ireland having record low borrowing costs and the highest rate of growth in the developed world.

I am glad that there is an external constraint on politicians indulging in exorbitant public spending and borrowing. In fact, I’d go further. A law should be passed whereby TDs should pay €1 out of their own pocket for every €100 of spending they authorise above the limits set by the Fiscal Compact.

Greek citizens owe 76bn in taxes to their own govt. Collecting that money either by enforcement, attachment or amnesty would reduce GREECE’s debt by 20% . How about trying to collect that debt before defaulting on its debts to other sovereigns.
Tsippy might even consider factoring that debt to the EU?

Re: The 1950’s Nicolas

Imagine that in 2010 Sarkozy told his people that he wasn’t elected so that France would suffer the pain of Ireland.

The memo, that I have read, suggests that open season, on small states, with their feta cheese and goat manure, was yesterday. It’s time to look for new horizons.

We had people in Ireland, at one I time apparently, who really understood what foreign direct investment was all about. In Ireland, we probably even wrote the play book. But we seem to have stopped reading it lately.

The new thing, apparently, is not to speak American, and facilitate US companies, in Ireland. Now it’s speaking Mandarin, and facilitating companies from China, in the southern Europe. I’m assuming that our FM got the update? BOH.

@ Nocense

Recent research on risk evaluation points to people selecting and favouring information made available through public discussion of politically contentious issues in terms of (a) its perceived relevance to their own immediate life circumstances; and (b) the extent to which it accords with whatever group identity they aspire to. Referendums are a blunt instrument for political decision-making and it’s generally accepted that they’re hardly ideal for making decisions on complex issues, although they have other benefits. Most follow-up studies on why Irish people voted the way they did in one referendum or another point to the complexity of people’s reasoning for going with ‘yes’ or ‘no’.

Sure enough, fear of what might happen in the event of a ‘no’ result was identified as an important factor in the FC referendum. But in all the circumstances of the time who’s to say that the decision to vote ‘yes’ was not a rational choice for the individual voter? Nor does it reflect either on individual or collective ‘courage’, whether or not you, or I, liked the outcome.

What annoys me, I guess, is political advisers retrospectively bemoaning the FC as a constraint on their freedom of action to promise a BMW in every driveway and one outside on the roadway and a lobster in every pot, when it suits them. Especially so, when they loudly beat the drum for an FC ‘yes’ vote only two years earlier.

I tend to agree with what Tull says about what Greece has to do over the long run, but if they are going to do all that they would be far better off getting the pain out of the way faster by doing it immediately. They would also do the rest of us a big favour by slicing through the Gordian knot that the euro has become.


“say one from the ‘liberal’ persuasion and another coming from the social democratic perspective, and two political figures from similarly competing points of view might make for a more fruitful discussion?”

No. That’s what every other show does. I get very tired of contrived polarised discussions between the usual suspects that just ends up in a shouting match with people saying predictable things. For that reason, I very rarely have politicians on the show. We all know what they’re going to say. I’m making an exception this week because I think the government line needs to be explained and Brian is on top of it; Harry is a regular on the show and I know can put the left wing side of the debate in a really nice global and historical context, without cheap slogans. And Colm can tell us the truth 😉

@Nocencse (I think)

on Lisbon. Yes I voted Yes. Because a) I thought “fiscal responsibility” would bring an end to the budgeteering of “When I have it I’ll spend it” which seemed to make sense. No more FF election buying and massive unnecessary transfers to the middle classes. and b) a no vote seemed to bring major instability with it and c) I approved of the EU project in principle. Europe has been very very good for Ireland – eh, up to a point. So no, I didn’t foresee ending up in a massive recession with big debt that had to be endlessly paid down and that even when he reached the “preventative phase” we would still be restricted in

On the basis of my conversations this week, it appears I was wrong. This does happen from time to time. In fact, I would go further than saying I was wrong. I didn’t understand.

Finally, I’m still not buying into the line that the *only* reason the Irish gov is not supporting Syriza is out of electoral panic. As Tull I think has said, Ireland is not alone. Europe is actually united on this point, especially the Baltic states. AND as my chap in DoF said, Ireland has NOT rejected or not supported Greece, because Greece put nothing on the table bar “give us the bridging loan AND the right to do what we want”.

On the domestic politics you could turn it around and say the populist parties are incandescent because tonight we have proof that campaigning on unachievable promises ends in tears. They are the ones exposed, not FG.

At least, that’s how it looks tonight. Things change.

Whoever said I was describing the world as it is, rather than how I would like it to be was right. Most of the time I’m trying to understand rather than describe.

Right now it looks like Syriza made a bloody mess of it. They have a moral case and the f*cked it up. So much for Game Theory. The Irish government method of back-channel diplomacy and back stabbing seems to have achieved more than war jokes and big talk.

As far as I can see it is unlikely that the fiscal compact will require the government to use funds to pay down debt. The compact requires the debt-to-GDP ratio to be reduced towards 60%, by at least 1 twentieth of the current excess over that level per year. E.g. if our ratio is 110% currently then to meet the terms we need to reduce it by 2.5% per year.

Since our economic growth currently exceeds 2.5%, the government does not need to send any taxpayer funds to reduce debt to meet the target – it will happen by itself, just so long as we do borrow another big pile of money. Economic growth also generates additional tax revenues. These extra revenues can be spent in their entireity on hiring more nurses, if the government believes that it is desirable – the fiscal compact does not require one cent of the extra revenues generated by growth to be spent on paying down debt.

In actuality the government is still running a non-negligible deficit and is projected to not quite achieve the required reduction in the debt-to-GDP ratio this year ( The fiscal compact prevents them from borrowing more money and running an even bigger deficit … but that is a different thing from “not being able to use growth to hire nurses”.

oops! hilarious Freudian slip there!

Back SLAPPING. Not stabbing.

What does THAT say about my unconscious mind. 😉

The problem for Syrizia is that leaving the euro is not what they promised to the electorate. Neither is continuing with the current arrangement.

Clearly the terms on which they won the electorate, writedown, end to primary surplus, spending OPM on welfare, no labour market reforms, etc etc. so which ever way they go is problematic.

@Sarah Carey

The Eurogroup and the EZ Institutions do appear to be united against Syriza but for the most part it is about domestic political concerns and what you might like to call the “appalling vista” aspect of accountability rather than reflecting genuine national interests.

Finland, Germany and the Netherlands are against any easing of Greece’s debt burden or austerity because they share a bizarre Calvinist economic philosophy part of which involves viewing debt is a sacrament. In addition the public has next to no understanding of how savings get interest (why were they lending) and how demand choking at home caused inflation to be exported. Opposing the reduction of Greece’s debt burden (or austerity) is part of their national character.

Finland and the Netherlands have in addition the need for a foreign scapegoat – they have both doggedly followed the way of the Merkel but despite privatizations, balanced budgets via austerity and structural reforms the economic results have been poor. Finland has had had stagnant or negative GDP growth for 8 out of the last 12 quarters. In the Netherlands they have the highest personal debt to income ratio in the EZ (250%). Syriza and the rest of the GIPSIs are a convenient explanation for why things have gone so badly – the Greeks are dragging us all down.

In Portugal, Spain and little Ireland the ruling right wing parties face left wing challengers and diminishing the power of the left in the EU as well as defending their own sad legacy of submission is vital to careers.

Other countries have a mixture of these problems but almost all of them share one big problem.

For the last five years the governments and institutions of the Eurozone have promoted austerity as a solution to economic troubles. Social welfare benefits and public services have been cut, there has been stagnant growth, dropping real wages and a whole generation of young people left on the scrapheap of unemployment. It has been a miserable experience for a majority of the population and there has been no payoff as yet.

The admission that reducing austerity was the correct policy for Greece would raise the question of how a continents entire political and technocratic elite went along with the wrong policy for six years. As Lord Denning said failure of the establishment on that scale would be such an appalling vista that it has to be assumed that it was not the case.

The entire EU establishment has been complicit in the crimes of austerity but Greece getting a changed deal (and worst of all prospering) would be the evidence for a conviction.

Tull, Syriza were elected on a platform that included keeping the euro among many other objectives. I don’t think it has a special priority above all the other promises they made that are turning out to be incompatible with it.

I think they are approaching this from the principled perspective of what is best for their country, rather than from a party political angle, but even so I expect they will continue to be well supported at home if they are pushed out of the euro despite a plausible show of being reasonable.

It sure is, but it is only useful in the context of a coherent goal.
I don’t think the moderate euro political parties realise how bad the economic situation is. And they were already weakened in the eyes of the public in 2011. The PTB deposed Berlusconi in Italy but it made no difference to the debt dynamics. Renzi is no miracle worker.In France The UMP is a mess and the Socialists are polling dreadful numbers. In the UK the Tories are under serious pressure in key marginals from the UKIP whose support are reportedly very worried about the future. They are the ones bearing the weight of adjustment.
I wouldn’t assume continued indefinite political accommodation for failed economic policymaking.

Sign-off by Gavin Jennings (RTE -08:12)

“Lots of ‘soap opera’ today. The Greek one is next.” – and we pay for this drivel comment!

failed to mention that our ‘soap-opera’ is taking place in Castlebar.

Perhaps the real ‘soap opera’ is that, it is actually Germany that needs to exit the Euro economic straightjacket. And they have located a plausible exit strategy. Their intensive manufacturing and production would then be protected (somewhat) from the festering global economic stagnation. That is, someones have actually done their economic homework rather than rely on faith-based prognoses and media trash.

The EU has a responsibility to co-ordinate with Greece. There are 2 paths they can choose.
1. More help with their debt and more investment continuing to reform and progress their economy with help from the European Investment banks and other funds. Also speed up plans for a EU fiscal union including more fiscal transfers.
2. Just stick their head in the sand and after a few years Greece leave the Euro. Looking at the current high unemployment and debts and low levels of international credibility it must be said that the Greeks made a mistake to vote to stay in the Euro a couple of years ago.

As for the current situation – the worlds current imperial leaders the US have through their all powerful secretary of treasury instructed both sides to make concessions so a watered down version of 1 is the most likely outcome.


Good points but some whataboutery
– what about the Baltic states?
– Is there no acknowledgement that *maybe* Tsipras has handled this badly? That the Irish method of diplomacy – suss things out on the back channels, come to the table with a pre-agreed plan – works. Public rhetoric and a failure to make detailed proposals doesn’t.

Great post 223 but one thing is missing. Austerity for the people and trickle up for finance. Who made all the money on the compression in bond yields ? It didn’t generate any growth but it went somewhere. This increase in inequality on top of economic stagnation is politically toxic when people start joining the dots. Or take the eurostoxx 600. 14% increase in earnings last year. 13% due to cost cutting. Workers take the hit. Who takes the increase in the share prices as profit? Lots of it goes into property investment, driving up prices beyond the reach of ordinary people. And the crisis of youth unemployment across Europe. Who takes the hits and who creams the profits? It’s a big decision in a town called malice.

Syrizia were elected on a populist platform that was constructed in order to win power. That plan has now fallen apart on first contact with the enemy. As of yet there Syrizia has revealed no “plan B.”
As I see it there are three candidates for Plan B
1. conditional surrender to the Eurogroup -essentially Tsipiras has fought for nothing & won nothing. Probability 70%
2. leave the euro, row back on reforms, print money, take the currency down and turn Greece in Venezuela Probability 25%
3. leave the euro, implement reforms, collect taxes, open up labour and product markets and copy Serbia and Turkey. probability 5%
Syrizia shows what happens when an eletroate has a collective brain f*** an elects a populist govt of either left or right extreme or in this case left and right.

The FT has a piece about Schaeuble dissing the latest Greek proposal in 34 words. All down to Angie now. Are the reforms introduced post 2011 robust enough in the absence of a CB with LOLR ? ESM, bailout fund and joke bank stress tests. 2 tn in assets at negative yield says no. Mody and the other guy know the internal wiring of the Euro and what is held together by sellotape.

The Germans can scweam and scweam but the Landesbanken are full of overpriced piggy sov debt. How much weight can they bear ?
I bet the Germans will yield. No Grexit.

Tull, this is quite un-necessary. It contributes nothing whatsoever.

“Syrizia shows what happens when an eletroate has a collective brain f*** ..”

Well, actually Irish electorates may have been doing something along these lines for quite some time. Perhaps you failed to notice. SpecSavers?

@ Sarah

I think Skeptic and JTO are right.

I think your man in the Dept of finance is playing you.

Did he mention that Ireland only needs to reduce their Debt to GDP by 2.5% so from 110% to 107.5% under the terms of the FC and that it will happen naturally once we don’t borrow another heap on balance sheet?
Or we could do another Enron accounting trick if needs be.

When he told you we cant support Greece as they never made a proposal this was a red herring.
The problem is that Noonan has spent the last 2 weeks throwing sauerkraut at them without any provocation.

Re: Time to do the masters

. . . the worlds current imperial leaders the US have through their all powerful secretary of treasury instructed both sides to make concessions . . .

Something like that.

Time for us all now, to become adults.

Not least of whom, are the economics brains in Ireland, who today in newspapers, are writing stuff that already reads like it was about the last decade, actually, the last century even.

It might help a lot in Ireland, if perhaps, we admitted to the fact, it is the 21st century, and not the last.

(Big hint)

Passing by a DVD rental store this morning, I noticed an advertisement for a new Playstation game. It said:

hunt, or be hunted. You make the choice.

Well this morning readers, certain choices have been made.

One one of them, happened to be, the fact that goat herders, who are expected to tighten belts, so that guys in suit can pretend they are doing a job, that’s over.

European bond traders, may not have been goats.

But they were one trick ponies.

And don’t worry about Ireland’s politicians, or those from anywhere else. They’ve all got escape hatches and parachutes to use.

But for the kids behind their monitors in trading rooms, it might be time after half a decade, for some to ‘stretch their legs’ a bit, and go and do their masters.

Free up some of those seats, for the next gang of school kids.

The video game, that you have been playing since 2010, like all such titles will eventually, has gotten old.

Old, old, old.

No one’s doing that, any longer.

History of economics, I’ve heard, is quite a thrilling experience. But I couldn’t know for certain.

All the best, BOH.

Syriza won an election that was called unnecessarily by the Greek FG over the selection of a new president. The previous pm made a bad call and threatened grexit if parliament did not comply.
Greece already had lost pasok and this lost it new democracy.
The political system can’t take more contractionary expansion and dud bailouts. Varoufakis knows where the EZ bodies are. This is a great soap opera.
With deflation off camera.

The ez isn’t ready for Grexit. The institutions don’t have the necessary programs and mechanisms in place. Maybe in 2018 but not now.

Excellent borrowing figures for the UK this morning, must have brought a smile to David Cameron’s face.

Given the record employment numbers, rising wages, low inflation and general sense of a country that is well run, it is fair to say they’ve never had it so good. Ireland’s greatest blessing at the moment is to be located right next door.

The only thing holding the European periphery back at this point is the euro. Best solution by far to the current crisis would be a Grexit. Maybe Noonan agrees and that is his hope. Followed by Ireland?


“The Germans can scweam and scweam but the Landesbanken are full of overpriced piggy sov debt. How much weight can they bear ?
I bet the Germans will yield. No Grexit.”

In this minute (13:34) i agree. It could change by tea-time!


On being played. This is the great dilemma for the likes of me. Whose playing whom? Is it the gov who would benefit from Syriza failure, or the opposition who would benefit from Syriza success?
All i can do is listen to everyone and ask each side to respond to the other’s points.
And watch the body language. That tells me a lot.

New question: Is Grexit containable, or more to the point, do the Germans think that Grexit is containable. My Man in Merrion Street thinks not containable and therefore bad. Or at least that’s what he said. I thought his line when I suggested it was containable was convincing “well, that’s what people thought about Lehmans”.

Ahem – who is this ‘sarah Carey’ that many commenters seem to be so anxious to reply to?

And where hs ‘DOCM’ gone to?


lol. oooooh miserable attempt at passive aggression!

I’m a romantic conservative whose trying to understand. And I like Star Trek, which helps. Most of the lads, actually all of them except Ernie really, here get that and are nice to me. When we disagree, they feel a bit let down. But we make up in the end.

I’m also a bit manic and should get off the site for a while and think about the questions that really matter for the show tomorrow.

Who knows what tomorrow will bring??!! Whoever said they were playing Kobayashi Maru was SO right.

@Sarah Carey
“New question: Is Grexit containable, or more to the point, do the Germans think that Grexit is containable”

This is what Barry Eichengreen has to say:
I believe that it was interview with Die Welt a few days ago:

Berkeley professor Barry Eichengreen, a leading currency expert, said Europe would pay a “very high price” if Greece is ejected from the euro. “I wouldn’t invest a single penny in Europe. The risks are too big,” he said.

“It would engulf other countries. Once Portuguese families or Spanish businessmen see that euros have turned back into drachma, they are going to pull their money out of their accounts. That could turn into a bank run. Investors would then start to speculate on who the next exit candidate would be. It would undermine the whole euro project. Sticking to the rules is not a worthwhile concept when the rules are leading straight into catastrophe,” he told Die Welt.

The ECB will have to get very busy buying peripheral, particularly Italian, bonds and ELA will be turn into the equivalent of an industrial ATM machine for banks.

The bigger issue by far, however, is that if Greece is not deliberately pummeled into the dust, then Italy that has not seen growth apparently since the last appearance of Halleys comet, starts to come completely unstuck, not only in terms of debt dynamics, but in terms of popular unrest.

So post Grexit, how will the dominos fall?
1. Greece and Cyprus.
2. Italy and Slovenia.
3. Portugal and Spain.
[Ireland still proclaiming its Viking / Saxon heritage]
[France still, as usual, not knowing whether to disagree with German or surrender.]

Possible attempt to rally the remainder, if they can find a government in Belgium to talk to.

Recession is Europe now so bad, that Le Pen, is voted in as French President.
France exits, and Germany returns to DM.
Timeframe? About two years.

Good the see the properly governed UK is doing so well, albeit the bit below Berwick on Tweed. Also good to see that 500k WMT hourly paid workers got an 11% pay increase y/day.
Dr Copper also appear to have got back up on his feet in recent weeks.
We got good MArkit PMIs in the EZ and decent industrial orders in ITaly.
I think the deflation story will turn out to be a load of BS and QE in EZ will be pro-cyclical.


The upside to all this is the Irish electorate gets a preview of how things will play out if, after the next election, we end up with Paul Murphy, Mary Lou and Ming trying to play hardball with the big bad Wolfgang.

You are forgetting Lord Ross of Dundrum who wants us to default on our debt, support Syrizia and purchase the Ryanair stake in Aer Lingus.

Shape of things to come

The upside to all this is the Irish electorate gets a preview of how things will play out if, after the next election, we end up with Paul Murphy, Mary Lou and Ming trying to play hardball with the big bad Wolfgang.

Now that does call, for a cuppa, a slice of Swiss roll, and a long pause. BOH.

The UK is a mess too. No mention of the 5% deficit, Johnny. Or productivity.
And that low inflation looks like deflation.

@ sarah
Greece is not containable. A messy exit and a bad set of non farm numbers in the US could sow panic in the markets. They were fairly ropey in January already. Hedge funds have had a bad few years and would love a bit of macro volatility prising Portugal away from the Euro herd. The EZ still has no lender of last resort, deposit insurance or rules on how to wind down dead banks. The hedge funds know this. Draghi knows they know this. The EZ probably needs another 10 years of slow incremental progress, not another failed ultimatum.

@ boh

@ sarah carey

It was a genuine question….not ‘a miserable attempt at passive aggression’…you keep referring to a ‘show’ ….what channel is your show on…I feel I must have a look…

Some of the comments in this thread are peak-stupid. Syriza collapse at negotiating table was so utterly predictable and yet so shocking to many people on here. Tsipras did not have a mandate to risk euro exit, it’s as simple as that. All the Greek shouting and wailing was at best non-effective and more likely counterproductive. The Rock Star will likely be thrown under the bus and become a pub quiz question on worst/shortest lived EZ finance minister everZ


Well, that all ended predictably. Complete and utter Greek capitulation. Maybe Varoufakis will update his game theory textbook? A horrendous humiliation for Syriza but also a great loss for the Greek people – they almost stumbled on the only thing that is going to save them by accident. Now it is back to debt slavery.

Also – to all the people barking about Syriza’s ‘democratic mandate’. What mandate do they have now exactly – given that they have completely reneged on their electoral promises? Answer – the mandate to do the best you can in a world that never looks like a textbook.

Sell long duration fixed income govvies to ECB buy cyclically sensitive assets. Actuaries will go to jail over this next mis-selling scandal

A four month extension is agreed. Very interesting. I presume the Germans didn’t want to frighten the market horses.

Re: Over and out

In fairness, no one here knows for sure.

The value, of the exercise as partaken in overhead, is that in twelve months time, many of ourselves, and indeed, many others and return here and study some indication of the thought processes, that existed in February 20th 2015, and are illustrated in some fashion, above.

Remember, before our melt down, moment, here in 2008, we didn’t have the benefit of any electronic, dis-intermediated, medium to capture any of the same. What we had, in brief, was a couple of Morgan Kelly, article URL’s and no a whole lot more.

I don’t think that Twitter, or smart phones even existed back then, but someone might correct me.

A lot of the thought processes, as reflected above, are ones that reflect people who need, two plus two, to equal four and a half, or four and some indeterminate figure, that isn’t exactly four.

And it is out of that margin, that distortion, that some markets, in Europe have now grown to depend upon, and build their business. And the only question, that you should all ask yourselves now, is whether it is wise to base a livelihood on such certainties. Indeed, was it wise in 1929, or 2008, or is it wise now.

There is a sovereign debt, austerity, bubble that has been inflating in Europe these last few years, and I know, many will not want to know. But you’d better all duck, when eventually, it just can’t support itself any longer. All the best.

Some readers, at this stage may have recognized, both their strengths, and their vulnerabilities, in business, in life and in general after today’s turmoil. Act accordingly, and don’t gamble, or at least try, not to gamble on the gamble. Really. BOH.

I suspect the Rockstsr will turn. Out to be a one hit wonder. No 2nd album here. He can go back to teaching game theory I some small mid west university. He has been exposed as an utter spoofer.
Will Tsippy throw him under a bus

Looks like Germany got its unconditional surrender from Greece, a fact that will go down very badly in Greece.
Perhaps like good debt slaves they will take it.

If only the EU could bring Putin to heel so easily.

Some of the comments here are indeed peak-stupid. That anyone believes a crisis has been averted tonight, that Greece’s debt is sustainable, that justice has somehow been justly delivered to the naive Greeks by their “partners” under the European treaties, has indeed achieved some sort of zenith in P-S. Only the truly naive think this is the end of the matter…but more disconcerting than stupidity is the triumphalism some seem to take in all this.

I’ll think I’ll wait until Monday, when the Greek refrom proposals are sent through, to see if this is a real deal or not. Or maybe for another couple of weeks, which is when the ECB says it will decide on accepting Greek bonds again. Or should I wait until about a month from now, which is when the Greek governement is said to run of cash? Or perhaps until April, which is when all the new “reform” proposals are supposed to be agreed, and then implmented. Or even the end of April when the remaining programme funds will be paid over provided all condiions have been met ..?

The US has many of the traits of Imperial Masters – They have used some new innovation in weapon technology to reach their imperial status (atomic bomb) have military outposts all over their territory (incl Germany and Japan) and use their power or its threat to secure resources (e.g. Oil in Kuwait and Iraq.) They also have the most developed economic and financial system, control key institutions, have the best centers of learning and research and their currency is the worlds reserve currency. Their culture, mass media and traditions are pervasive. It is correct that the post WW2 landscape is changing however we still have the Dollar as the worlds reserve currency (Keynes and others wanted a global reserve currency at Bretton Woods and Russia is still suggesting that) we still have a European no1 and US no 2 at the IMF and we still have a US no 1 at the World bank.

I wonder if the Yanks had a word with Angie. The EU has handled Ukraine very badly and another miscalculation on Greece in Q1 would have been very unwelcome. The financial system isn’t robust enough to digest policy mistakes concerning Greece that trigger chaos elsewhere. That is one of the features of globalisation. Everything is linked.

Surely the Syriaz government should have had more regard for the emotional damage their surrender will cause among their supporters in Dublin 4. Fintan O’Toole, Vincent Browne, Collette Browne, Kitty Holland and scores of others have been peddling the line for 3 weeks that Syriaz are the heroic vanguard of the revolution, through their cunning and bravery chopping down the trees in the forest of European reaction and in the process laying down a path that cowardly Ireland will soon be following. Now they are waking up this morning to find that their heroes have betrayed them, leaving them looking isolated and foolish. All over Dublin 4 this morning trendy leftists will be removing pictures of TSipras and VarouFakis from their bedroom walls and throwing them in the bin. Life can be so cruel sometimes. Thank Goodness the Ireland v England match is not this weekend as the atmosphere would be very muted indeed.

Is this the stupidest headline in the history of the world?

The price falls are due entirely to the 50 per cent fall in world oil/gas prices, which Ireland imports.

Presumably, if OPEC decided to give away oil for free, this would arouse even more fears for the Irish economy?

But, if people genuinely feel oil-driven falls in the cost of living are a danger to the
Irish economy, there is simple solution: increase the water charge to 1,000 euros per month. This should cure deflation and ease the fears the Irish Independent article refers to.

Update on Ordoliberalistan:

Benchmarking the Greece/Eurogroup Bailout Memo and Process
Posted on February 21, 2015 by Yves Smith
Greece and the Eurozone have entered into what amounts to a letter of intent in the form of a memo released yesterday. It’s important to understand, even as a basis for further negotiations, what this document is and is not. Because this is not a definitive agreement, as in it explicitly states that Greece’s detailed structural reform proposals must be reviewed and approved by “the institutions,” the new name for the Troika, as well as approval by the Eurogroup finance ministers before any funds are released, there is still uncertainty as to how its deliberate ambiguity will be resolved.

General Observations

The gloss came off two Special Ones this week, perhaps more due to their supporting casts than themselves.

Why did the price of oil fall by 50%? Why are Coke and AB inbev sales down ? Why is Siemens laying off staff ?

Did someone say “total capitulation”?

Tsipras: “Yesterday’s agreement with the Eurogroup … cancels the commitments of the previous government for cuts to wages and pensions, for firings in the public sector, for VAT rises on food, medicine.”

Meanwhile, here’s Schäuble: “The Greeks certainly will have a difficult time to explain the deal to their voters.”

Some things never change, including the venomous contempt for democracy and for the untermenschen.

John, I think you may be a tad over excited – Angie baby has not started to sing – yet!

Ukraine is the problem. As Winston once said – “We have come merely to the end of the beginning.” – or some such. NATO is no match for Mother Russia – and its her patch they are contesting over. This Greece thingy is a mere doddle by comparison. Bears hibernate – and when they emerge in the spring they can be very tempremental – not to say downright bad-tempered and aggressive. Wise folk keep well clear. Is the EU wise? Is the US wise? Looks dodgy.

A genuine decline in oil price signals the prelude to a serious economic showdown, somewhere. Its counter to the expected. So expect the un-expected – maybe out of Left Field!

The US economic fundamentals are in pretty poor shape – despite the desperate propaganda outpourings that “recovery is confirmed”. Its not.


And how are they gonna pay for that? Almost no additional fiscal leeway will be provided at this point (though possibly some common sense stimulus v-a-v smaller primary surplus later on in the year). But you’re right, my “complete and utter” description of the level of capitulation probably overstated things. “Almost total” would be more appropriate.

From the show:

George Hasidakis from Athens: Why are the media portraying a Greek victory? “You don’t want to upset the government.”

And the panel discussion

funny quality on that – better on this, but skip 1st 6 mins


Your programme: it was a great relief from the FG Conference ‘fest’ on RTE Radio One!

Was a bit concerned, though, that at times that you were having ‘Sarah Palin’ moments; e.g the Lisbon Treaty and the Fiscal Compact are, eh, not the same thing. However, of foot of your skillful marketing of the programme on this thread, I’m sure you may have captured an extra dimension to your audience and new listeners. It was interesting and entertaining too.

What I’m impressed by is the way you put in a lot of personal work on the issues for debate – which isn’t always the case with broadcast presenters. Well done, and best of luck for the future! By the way, I had to beat the road more rapidly than normal to get home from the village in time for your broadcast…but I made it.

@ all

Meanwhile, typically, the media are engaging in a ‘horse-race’ interpretation of the outcome of the Greece/EZ crisis. This is too simplistic. Personally, I think the diplomatic mistake of the Greek PM, and particularly their MOF, was to adopt an aggressive posture from the outset. From a political economy perspective, they had a hugely important, and a domestically empirically supported point to make.

Among the peripheral states, you’re unlikely to win allies, though, by aligning with opposition groups ( such as SF and the AAA in Ireland) and dissing on the political centre, who see themselves as having made the ‘tough decisions’ in the best interests of their respective countries as a bunch of wooden-top eejits. Plus, you need a ‘big country’ ally, as well as several smaller ones like yourself, to have a persuasive influence on overall policy-making, either within the EZ, or the EU generally. In other areas of policy, countries such as Denmark, for example in the area of environmental policy, have succeeded in the past in having their national preference adopted by the EU by virtue of a ‘smart strategy’ that involved an alliance of ‘small’ with ‘large’ states capable of mounting an effective challenge to the institutional status quo.

So while my political instinct is with the Greeks, their politically strategic errors left them with no allies, large or small, when it came to the cauldron of EZ decision-making. That doesn’t mean that Tsipras and Varoufakis, in particular, are wrong.

On Saturday mornings I’m in the habit of going to a fish shop which is directly across the road from the Capuchin Centre. I’ve seen the queues grow longer; their composition change from individuals to family groups. Up the road in Stoneybatter, there are SF people on the streets, handing out leaflets – I cross the road to avoid them. Further up, young men with stony faces holding up anti-water meter banners. Eh, no thanks; today’s ideological clenched fists of protest are tomorrow’s oppressors.

So it’s the faces of the people in the Capuchin queue that have made the lasting impression. Very far removed from ‘the best little country in which to do business’, or patronising b/s about the ‘sacrifices’ of the Irish people, or headline macroeconomic stats about how we have the ‘highest economic growth rate in Europe’. The Capuchin queue is where real life is at; as it is in Dublin and throughout the country.

Representative democracy is the best system of government that has ever evolved in human society. But the social democrats,and the centrists, are floundering badly. They have become caught up in their own sense of entitlement (e,g, in our own case of ridiculous salary claims for so-called advisors; expenses claims for their good selves etc.) and, most conspicuously, in their failure to adapt to the impacts of globalisation of trade, communications and relative power on how they should operate to preserve the principles of national democracy.

I guess all I wish is that the Greek government had exhibited more diplomatic skills and understanding of the broader EU political environment; focused on their national position rather than foolishly assuming that they knew best for everyone else on the periphery of Europe – which they don’t.

Apologies for the long post. The economics of a particular country’s situation, including our’s, is one thing; the personal fury about its political economy are another and tend towards writing one’s opinions at greater length than they merit…

Is a ” total capitulation” by Greece good for the bond market ?
Does it make the system safer ?

@ SC and V

I agree with the view that there is a deep divide emerging in societies across Europe. The question is where on the scale it is to be found. This item by a Belgian senator from Le Figaro will give a taste of the increasingly heated debate.

The developments in Greece in the coming months will be decisive in terms of how the debate develops. In fact, it is down to a simple question; will the Marxist or the moderate elements in Syriza win out? This is leaving aside the role that will be played by the extreme right as represented in the current coalition.

I am inclined to optimism because Greece is not Chile. There is no institutional structure in Latin America comparable to the EU.

@ Veronica: Interesting comments.

” … to adopt an aggressive posture …” – oops! One woman’s agression is another woman’s assertive position. But no matter. How would one characterize Mrs T’s “That’s OUT! – and that’s OUT – and that’s [aka: Harvey N] – OUT!”. Hmmmmm

If the situation requires a display of rage – and it most surely does, then “rage” it is. Mind you it ’embarrases’ onlookers, but that’s merely our social-software default – us humans are genetically hardwired to protect our mates, our offspring and our food supply. With lethal force usually. 3,000 years of so-called civilization does not trump 3,000,000 years of evolution.

Church Street was it? How about the good monks move their distribution centre to Lansdown Road – on the day of a Six-Nations event. Think that might rank as an ‘aggressive’ stance?

“Representative democracy is the best system of government that has ever evolved in human society.”

I’ll buy that; just skip the ‘evolved’ bit. Its a societal thingy. But not this; –

“But the social democrats, and the centrists, are floundering badly.”

Nope. They have carefully, deliberately and successfully distanced themselves from ‘local bother’. Its the polity that is (in part) floundering. Sleep with one eye open.

@ SC and V

This wire service coverage from RTE is informative. (The national broadcaster would be incapable of putting it together itself; and it is a weekend after all!).

Varoufakis continues to career all around the deck but no one seems to be paying much attention to him at this stage. For the recovery of trust, the Greek side must, if it has any sense remaining, clear the list of reform measures beforehand to ensure that the telephone meeting of the Eurogroup is a formality. If not, Greeks will continue, as the author in the link above points out, and possibly stampede, to vote with wallets when the Greek banks open on Tuesday. (It is a long weekend in Greece).


Janey – you are of course completely right on Lisbon/Fiscal Compact. All week I’ve merged the two and the weirdest thing is that I’ve had several conversations and email exchanges with people doing the same thing and no one corrected me. Politeness is dangerous. ALWAYS correct me.

I’m very lucky with the show as I’ve great autonomy and can pick topics that I like and approach them with a fresh, expert driven angle.

@ V SC

Really weird on the Lisbon Treaty/Fiscal Compact confusion.

Sarah gave a trailer before some ad break that the next topic was the “elephant in the room, Lisbon”. I felt sure we were going to hear that Portugal were making waves.

Whilst I initially subconsciously queried the identification of Lisbon with the FC I quickly convinced myself that I must be thinking of Nice. I guess most people were the same, they were not being polite, they, like me, actually accepted that is they who must be confused.

@seafóid – “Is a ” total capitulation” by Greece good for the bond market ?
Does it make the system safer ?”

The “bond market” is a red herring. Greece can’t access it. Why? Private lenders who lent to Greece have taken a bath. Greece already defaulted. Their outstanding bonds – borrowings, in other words – are in large part from other European countries, via various ESM/EFSF/ECB mechanisms. The remainder are the rump of the defaulted bonds.

Greece is five years late, trying to do what might well have worked back in 2010 had Ireland tried it. Then, the various lenders might have blinked – certainly the European ones. My own belief is that they would, and all the noises coming (too late) from IMF sources indicate that the belief is tenable. There was a systemic issue regarding European banks, and many should have been let go to the wall, and their non-deposit creditors should have suffered losses. Unfortunately the interpretation of the reaction to the demise of Lehman at official level, here and in the US, was wrong. The Fed got it wrong, but at least tried to remedy the problem with QE. The ECB got it equally wrong, and QE hasn’t even started here yet.

As things stand now, those countries which effectively signed up to bail out European creditor banks in the post-2007 collapse now have their taxpayers on the hook, and have had for years. They – and it doesn’t matter what the political hue of their government – cannot now take that ink out of the water. The bank creditors who were bailed out – in Germany, Greece, Ireland, Belgium, France….wherever – have GOT their money back. It can’t be clawed back from them (dammit). That bird has flown.

So the entire Eurozone, country by country, is now on the hook for the bank debts repaid. They’re also on the hook for the accumulated (since 2007) non bank-related debts run up by current budget deficits in programme countries.

Back in the depths of the meltdown, in the 2007-11 period, was the time to do what Greece tried last week. Way late, and more than a dollar short. Plus, given the evolution of the financial crisis, Greece is no longer systemic (unless Europe gives them the 43%+ debt writedown they require to get back to a 100% debt/GDP ratio). And I don’t know any European electorate, let alone current government, that wants that (the return of systemic risk, that is). Still less does any government want to explain to its electorate why it has just handed €Xbn of their money to another country, outside of its foreign aid budget.

@ airman@; “The Fed got it wrong, but at least tried to remedy the problem with QE.”

Sure did get it ‘wrong’ – but those QEs have not remedied the matter. They have caused a financial assest price bubble in the US. Housing is still moribund. Retail is sinking. Proportion of working-age population in full-time employment is (reportedly?) below 50%. Median wage has stagnated. Household and corporate debts have increased.

“The ECB got it equally wrong, and QE hasn’t even started here yet.”

How about Negative QE: wipe-out a load of debt? Creating fiat money only debases your currency. Might stimulate some export trade, but it will go badly pear-shaped when energy costs start rising. Three years?

Folk allude to a demand problem. I guess that’s true. But the real problem is the huge productive potential-supply gap: its gapping even wider, just as actual demand either sinks or stagnates. Strong technology gains are accelerating potential productivity – but its the consumers who are constrained. QE for consumers – in the form of debt wipe-outs might help. I have my doubts. But it might be worth a try.

@ aiman

Greece’s debt is held by official lenders but it matters to the bond market as an example of future treatment of Portugal, Italy etc.

The status quo doesn’t work. How to move to something better is the question, as is how to deal with all the excess debt left over from neoliberalism.


Wiping out a load of debt would still leave 2 problems

– debt would still be the driver of growth
– inequality left behind 30 years of trickle up and the lack of investment in skills

@ seafóid: “- debt would still be the driver of growth”

That’s correct – if the “steady, log-arithmetic advance” of economic activity stays at the necesary 3% p/a rate – otherwise the situation inflects into an arithmetic stagnation state. I reckon that’s where we are now.

I’d class it as ‘trickle-back’ – from the east-lands. That’s where the environmentally-costly, but money-costless labour is. And the Tricklers artfully ‘barged’ their technology from west to east. It is not coming back – any time! But deflation is.

Michael Noonan made some interesting comments to Claire Byrne when being interviewed from the FG conference on RTE Radio 1 on Saturday.

Firstly, Noonan focused on how the legalities involved in authorising lending from Eurogroup members worked. The fact of the matter was that those at the meeting did not even have authority to agree new terms with Greece.

The legal mechanics of the various vehicles for lending money and for the different liquidity facilities from the IMF, Eurogroup funds and ECB are numerous and varying. It is very difficult to get a handle on them and hard to remember them if you do get your head around them momentarily. Furthermore, some countries (notably Germany) have to send back any plan to their parliament for approval, with the effect that the Finance minister form that country does not have authority to vary anything until after such a vote.

The message to take home is that the legalities matter hugely. This is where the structural problems of the Euro come in. Economic policies and arguments are subjugated to critically important legal processes which very few of understand, at least for any length of time. This is why, for instance, the Fiscal Treaty was of such momentous importance.

Secondly, Noonan was very disparaging about Varoufakis in a way that was quite surprising coming from a seasoned politician. He commented out that the final deal was reached in bilateral discussions with Tsipras in Athens and not with Varoufakis. He also objectified Varoufakis by calling him “a bit of a rock-star”. However, more seriously, he said that Varoufakis reminded him of academic economists who used to be on RTE with an answer for everything but who did not understand how things worked and who RTE did not bother talking to anymore.

Leaving aside the tender feelings of Irish academic economists, Noonan’s clear message was that Varoufakis turned up and spoke a load of nonsense at the Eurogroup meeting. To me those comments were extraordinarily critical even if wholly justified and accurate. My only deduction is that Varoufakis really annoyed, and probably offended, Michael Noonan in the Eurogroup meetings.


Deflation and then some.

The CBs missing their inflation targets is so important. 2% inflation puts smacht on debt.
0% doesn’t.

Wallerstein hasn’t been featured here for a while

“Premise No. 1 is that all systems—from the astronomical universe to the smallest physical phenomena, and including of course historical social systems—have lives. They come into existence at some point, which needs to be explained. They have “normal” lives, the rules of which need to be explicated. The functioning of their normal lives tends, over time, to move them far from equilibrium, at which point they enter a structural crisis, and in due course cease to exist. The functioning of their normal lives has to be analyzed in terms of cyclical rhythms and secular trends. The cyclical rhythms are sets of systemic fluctuations (upturns and downturns), in which the system regularly returns to equilibrium. However, it is a moving equilibrium since, at the end of a downturn, the system never returns to exactly where it was at the beginning of the upturn. This is because secular trends (slow, long-term increases in some systemic characteristic) push the curve slowly upward, as measured by some percentage of that characteristic in the system.
Eventually, the secular trends move the system too near its asymptotes, and the system is unable to continue its normal, regular, slow upward push. Thereupon, it begins to fluctuate wildly and repeatedly, leading to a bifurcation—that is, to a chaotic situation in which a stable equilibrium cannot be maintained. In such a chaotic situation, there are two quite divergent possibilities of recreating order out of chaos, or a new stable system. This period we may call the structural crisis of the system, and there is a system-wide battle—for historical social systems, a political battle—over which of two alternative possible outcomes will be collectively “chosen.””


You….were……listening……to [sob]….CLAIRE?


btw, I used to live in Smithfield and the window of my apartment looked out onto the Capuchin centre. I know that fish shop.

What always struck me as I walked from there, over O’Connell Bridge, College Green and into the heart of Dublin 2 was that if you didn’t live on the N’side, you would rarely see poor people. The physical and sartorial transition from the O’Connell Street end of Westmoreland St to the far side of College Green hit me every single day. Over around Merrion Square people were better looking with better clothes and it was hard to believe that half a mile away, poverty was the norm. The two extremes of Irish society were so close and so far apart. The outliers were the bloody lawyers around the courts. But I guess they look down on everyone so their poor neighbours were just another blip.

btw, I never ever once felt threatened or insecure as I tramped around the north inner city for the years I lived there. Moved out in 2003. I hear complaints that its dangerous now, but I wonder. I always felt safe in the crowded streets (well, once you kept your head down and didn’t look like trouble). and thought the leafy wide avenues of SoCoDu seemed lonelier and scarier. In those days the homeless were hard core-didn’t want to be housed types.

@ Zhou

I think you are being unfair on Noonan, at least v-a-v how the Greeks themselves have positioned themselves or acted. Very good article in Fortune which has a first hand take on Syriza/YV etc over the last month.

Zhou: He also objectified Varoufakis by calling him “a bit of a rock-star”.

First off, the fans of YV in the media coined that initial description, and some of his close colleagues have no problem using it.

“People in cars roll down their windows to shake his hand, bus drivers stop to salute him, he’s surrounded by kids in the streets.” Varoufakis even stopped for five minutes to reassure a cleaning lady looking for work, his hand on her elbow. “He’s as much of a star as Alexis Tsipras [Greece’s new prime minister],” says Galbraith.”

Zhou: Secondly, Noonan was very disparaging about Varoufakis

Well, its not as if YV has been the most complimentary of his European colleagues.

“As an example of Varoufakis’ unvarnished honesty, he cites his friend’s statement that among those with whom he’s negotiated, Schaeuble, a staunch opponent, is “the only one whom I have found to have intellectual substance.”

@ seafóid: Got that, thanks. Robert Jervis* wrote about the issue of complex systems and how they can unravel – badly!

@ SC: “The physical and sartorial transition from the O’Connell Street end of Westmoreland St to the far side of College Green hit me every single day.”

Try Dun Laoghaire town centre v the Blackrock – Stillorgan Centres axis. Its the numbers and variety of heavy metal vehicles, with ‘blondie’ (sorry!) drivers, that ‘hit’ you! The iDiot texters!

*Robert Jervis (1997). “System Effects: Complexity in Political and Social Life.” Uncomfortable reading.

@Sarah Carey

No offence intended 🙂 I was on the move and the RTE Radio apps are great. I am looking forward to listening to the podcast of your show.

@Eoin Bond

“As an example of Varoufakis’ unvarnished honesty, he cites his friend’s statement that among those with whom he’s negotiated, Schaeuble, a staunch opponent, is “the only one whom I have found to have intellectual substance.” ”

Nothing stings quite like the truth!

@BWS – I wrote a post about Greece, in which I made a passing reference to QE, without in any way giving an opinion on whether I thought it was a good idea. I don’t. But I was posting about the Greek situation, not QE.

The Daily Mail view!

At the time of writing, VF has not yet submitted his homework on behalf of the Greek government. There are suggestions that he may not even meet the agreed deadline, presumably of midnight tonight. The teleconference of the Eurogroup is, nevertheless, going ahead tomorrow. An interesting morning in prospect for the financial markets, especially in Greece!

The two confused participants in the negotiations, from the description in the Fortune report, were VF and Galbraith.

I can’t see VarouFakis staying in his present post very long. A year or two at most. Then, he’ll quit to do what retired socialist politicians excel at: making loads and loads of money. His period in office will be mainly used to build his international reputation among the international media and showbiz set. Whatever about Greece, Yanis’s future looks very bright indeed. If I could buy shares in him, I would.

Hollywood will beckon. And almost certainly a massively well-paid job as host of some news/chat show on American tv. I wouldn’t even rule out him doing an Arnold Schwarzangger. His extreme left-wing economic and social policies would put him in with a good chance of the California Governorship, should he move there, which I am sure he will.

That could work. It’s like a Mayan calendar thing. The doom mongers have to keep pushing out the date of the end of the world…..
Have to go easy on my listeners this week though. The crowd at mass agreed Greece was heavy going. I think rural bus routes…

On that – who can tell me whose subsidising whom? Rural or urban dwellers? Us culchies reckon we’re paying far more for Luas and Dublin Bus…

Finally, counterpoint to all the ‘atavistic’ prole haters on this thread:

‘[T]he figures show [that Greece has] in fact achieved more than any other country under all the cherished troika headings, despite losing more GDP than Germany after the First World War.

Greece had the fastest fiscal consolidation at 4.4% of GDP compared to Ireland’s 1.3%; was the most responsive to growth recommendations in the OECD, with Ireland third; and had lowered labour costs to restore competitiveness more than the EU average and Ireland.

Its government revenue as a a percentage of GDP was higher than Ireland’s in 2012, according to the IMF, while it was now easier to fire workers in Greece than in Germany— though still easiest in Ireland.

There are accusations that €226.7bn has been wasted by the Athens government but the figures show that just 11% of it has gone to cover the costs of running the state and covering the primary deficit — which it has now eliminated.

The single biggest slice, €81.3bn, has been used to pay maturing debt, 19% or €48.2bn has been used to recapitalise Greek banks, while 16% or €40.6bn, has been spent on interest repayments.

But the required engine of growth — exports and present in Ireland’s case —was not part of the Greek economy. And Greece allowed the troika to undermine this area by agreeing to push up taxes on energy for instance. The IMF, in a recent report, acknowledged that mistakes were made and that cutting wages was one of them.’

Quod erat demonstrandum!

Neat finesse by the German/French to filter their dodgy bank loans to Greece via the Eurosystem and onto the lumpen EZ citizenry with a ZERO cut. German Banking System still, imho, dodgy – and the Derivatives Death Star over Frankfurt hasn’t gone away you know!

Very good FT piece from December about Greece

“Yet in certain respects Mr Tsipras is advocating only what a number of perfectly level-headed foreign economists advocate, too. It beggars belief that Athens will ever repay all its debts
What should preoccupy Europe’s leaders and investors is not the parliamentary arithmetic in Athens, or the cuts that the creditors want in the 2015 budget. It is whether Greece has the desire and capacity to continue the arduous modernisation effort begun in 2010 — or whether it will maintain old structures of clientelism, corruption and oligarchy under a façade of obedience to foreign overlords.”

@ Sarah

Any thoughts on why oil fell by 50% in Q4 ?

Meanwhile in the US there has been almost no sales growth for the last 4 years. In other words, earnings have increased but not because companies are doing more business.

Just wondering where the hopey changey stuff is.

On oil – no thoughts at all! I’ll have to look that up.
On hopey changey stuff – well it’s after 4am. Haven’t been sleeping great recently – waking up with a racing heart so I’ll take whatever hopey changey stuff gets me through!

There is an interesting take on the Greek deal in the 20 Feb 2015 podcast of BBC R4’s The World Tonight:
“Greece agrees deal with eurozone
Fri, 20 Feb 15
EU finance ministers grant breathing space to let Athens renegotiate its financial aid package following talks in Brussels. We discuss what the deal means with economist Vicky Pryce.”

@Sarah Carey

Still trying to get your podcast running on my phone so I can listen through the phone. It is not on the Newstalk App so I am having to go through the website which is problematic on a small screen.

I wonder by any chance did the same people who created the todayfm app and website (which I find chronic for podcasts) also do the newstalk site and app.


I know the exact guy to complain to about this. I bumped into him last week and he told me they are launching a new version soon. Use this link
and skip in 6 mins

and the Greek journo George who is fascinating..

@ Sarah,

You are – as the good nuns used say to me years ago – ‘quite incorrigible’ in tapping fellow-posters for themes for your show!

As I understand it, the oil price drop reflects a downturn in global economic activities,; was predictable, but like many such things was missed by the analysts and took them by surprise. Apparently, it’s climbing again now, but predicted to level out at about $60 throughout 2015. I imagine that most people’s interest in oil prices doesn’t really extend far beyond hoping that the fall in the cost of filling the tank will continue, at least for a while. And then there’s the arguments about what it means to the economy should low oil prices persist over the longer term… highly complex and specialised area. Methinks, I’d park that one for a while yet.

As for the rural bus services, I think that’s symptomatic of a bigger problem of ‘east v. the rest ‘ that has defied resolution for generations and particularly since the late 1960s and our accelerated industrial modernisation. It has been exacerbated by the abject failure of successive governments to develop and implement a national spatial strategy that stands any reasonable chance of ultimately delivering balanced regional development. The last NSS, which was sabotaged by the highly politicised and ultimately doomed decentralisation policy, was abandoned by the current administration in 2012, but as yet no replacement proposal has appeared. The recent local govt. reforms, arguably, haven’t helped things either. So even if political pressure secured a post office in every village, or several bus connections a week between towns and villages, or local rural trains carrying three passengers a day etc., outside an overall strategic context such measures are ultimately futile. Plenty of geographers and economists around who might contribute to a lively discussion on all the angles.

Best of luck with picking your topics. To be sure, there’s a pretty endless choice of subject matter!

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