It looks like the the riots in Athens aren’t quite ready to start yet, so let’s do a little LinkSwarm:
Greek voters have voted no on agreeing to austerity measures for additional bailouts. Since Greece is broke without additional bailouts, times in Greece are about to get very interesting indeed.
Also, Greece’s finance minister Yanis Varoufakis has resigned.
A member of the European Central Bank’s governing council says “Greek debt held by the European Central Bank can’t be restructured as doing so would contravene the eurozone’s founding treaties.”
And if Greece won’t be forced to pay its debts, voters in Spain, Portugal and Italy will start to wonder why they should pay theirs.
But without additional loans, things in Greece are going to get very bad indeed. How bad? Greek banks are drafting plans to confiscate 30% of bank deposits over €8,000. Greece’s middle class has spent they last decade enjoying spending other people’s money, only to wake up and find that they are now Other People.
Breaking: Greece votes for invisible money to rain from the skies
— David Burge (@iowahawkblog) July 5, 2015
One bit of good news this week: The charter for one of crony capitalism’s favorite boondoggles, the Export/Import Bank, expired at Midnight June 30.
Hopefully it will stay dead after congress returns from recess, despite attempts to revive it.
If you can’t kill corporate welfare giveaways to Fortune 100 companies, what can you cut?
As part of a plea agreement, former California Democratic state senator Leland Yee plead guilty to one count of racketeering, as did three other co-defendants. Yee, in case you don’t remember, was charged with being involved in a wide web of corruption, including gun running (a special irony for a politician known for supporting gun control), murder for hire schemes, drugs, extortion, and campaign finance law violations.
If he’s only pleading guilty to one charge, my guess would be that Yee is going to flip and testify on Raymond “Shrimp Boy” Chow and other defendants in the sprawling case. However, the actual plea agreement ((via Dwight via Popehat) evidently doesn’t specify cooperation against Chow or other defendants.
It’s great they’re getting Yee to plead, but since Yee (being a state senator) was the “big fish” and given the lengthy list of original charges, the fact they’re only getting him to cop to one count suggests the case may have had some shaky planks. (Maybe an unreliable witness?) Or that there was so much more they could nail Chow on that they didn’t want to keep spending so much time on Yee.
Or that political cronies somehow managed to swing him a soft deal…
Greece’s leftwing Prime Minister Alexis Tsipras wants more negotiations. Because, you know, Europe just hasn’t had enough of those over Greek debt.
Mr. Tsipras said Greece was “prepared to accept” a deal set out publicly over the weekend by the creditors, with small modifications to some of the central points of contention: pension cuts and tax increases.
In other words: Groundhog Day on the Aegean. Yet again.
More Greek crisis links:
Greece lost its financial lifelines Tuesday, as the country missed a crucial payment to the International Monetary Fund amid growing questions about whether it would be able to remain in the euro zone.
Greek leaders had made a last-ditch attempt to come up with the necessary cash, asking European countries for a new bailout hours before its last ones were set to expire, but E.U. finance ministers rejected the request as unrealistic. The missed payment, confirmed by the IMF, was a landmark moment in Europe’s five-year battle to preserve its common currency.
A few more Greek tidbits:
The bureaucrats in Brussels and their counterparts in Europe’s national governments are furious with the Greeks for daring to consult their own people. Daniel Hannan, a British member of the European parliament, sarcastically tweeted, “Calling a referendum is, to Eurocrats, the most offensive thing a politician can do.” Stripped of their veneer, Eucrocrats’ arguments against all referendums amount to saying that referendums are a bad idea because they shift power from small cliques of unelected but wise rulers to an unsophisticated, nationalistic mob that might fall prey to populism
Today is the day Greece defaults: “Greek Finance Minister Yanis Varoufakis confirms Greece will not pay the International Monetary Fund debt due today. The European part of Greece’s international bailout expires Tuesday and with it any possible access to the remaining rescue loans that it needs to pay its debts of about $1.9 billion to the IMF.”
And what happens after Greece defaults to the IMF? That’s when things get interesting. First, on Sunday, July 5, the Greek people vote on a badly worded referendum. If they agree to Europe’s terms, they’ll impose additional budget-cutting measures and pension reform, and presumably get a new loan to pay their IMF arrears.
And if they vote no? Then they’ll have no euros to keep paying for their welfare state, and presumably start printing drachmas. But their debt stays denominated in euros, and there’s no guarantee foreign companies will be willing to deal in drachmas instead of euros, or that European foreign exchanges will even allow drachmas to be traded until Greece comes to some sort of agreement with the European Central Bank and other creditors. (I am largely ignorant of European foreign exchange regulations.) Either way, expect a nice dose of hyperinflation to add to Greece’s myriad coming economic woes.
The Eurozone is far more likely to survive Greece’s exit than Greece is. Then again, Greece now has so much debt that it’s screwed no matter what happens. Deficit financing to prop up your bloated welfare state is a horrific idea that destroys economies, and Greece looks to follow Venezuela in providing this generation’s example.
Other Greek tidbits:
Looks like that optimism over Greece caving in to reality was a bit premature, since Alexis Tsipras is back to his old tricks again, proclaiming loudly that he won’t be “blackmailed.” Because we all know that agreeing to cuts in your bloated welfare state to pay for the loans you already agreed to is “blackmail.”
He’s called for a national referendum on bailout agreement terms. The problem is, that vote is July 5 while $1.7 billion payment Greece owes the IMF is due June 30, and the IMF can’t offer extensions, and Greece is too broke to make its debt payment.
Greek banks are closed until July 7, and the “European Central Bank (ECB) said it was not increasing emergency funding to Greek banks.” ATMs are running dry and withdrawals are bveing limited to 60 euros.”
A few more Greek crisis tidbits:
The bill for Greece’s profligate spending and fake austerity was always going to come due sooner or later. Tsipras’s disasterous term in office merely ensured that it would come sooner and with a maximum of economic pain for the Greek people…