Posts Tagged ‘European Debt Crisis’

Greece Suspends Soccer

Thursday, February 26th, 2015

Greece has suspended their top soccer league due to violence:

The new Greek government suspended competition in the top-flight Super League indefinitely after violence at a weekend match between the top two football clubs in the country.

Sunday’s game between bitter Athens city rivals Panathinaikos and away team Olympiakos was marred by a pitch invasion despite a heavy police presence.

The players and officials of Super League leader Olympiakos were also pelted with various projectiles and flares amid ugly scenes.

Good thing Europeans aren’t completely soccer crazy, or that Greeks aren’t already pissed off at the continuing economic crisis or successive governments telling them precisely the lies they want to hear.

(An aside: This is an actual sentence on CNN.com: “Following these incidents, the ruling Syriza Party has made its decision to impose a suspension, which will be the third team [sic] this season that Greek football has been halted.” That’s some mighty fine proofreading, CNN…)

I think this is footage from the scene:

Evidently Greek government is as incompetent at maintaining a “heavy police presence” as it is at everything else except deficit spending.

Soccer hooliganism is hardly a novel phenomena in Europe, but I suspect this incident gives us a glimpse of the widespread simmering anger in Greece over the perpetual debt crisis. Having been brought to power by that anger, it looks like Syriza is badly underestimating its depth and how to manage it. If they were smart, they’d be far wiser to let some of it boil off in soccer brawls rather than let it keep building without an outlet.

In a country that can no longer afford bread, it’s deeply unwise to start banning circuses…

Groundhog Day on the Aegean

Monday, February 23rd, 2015

Greece two weeks ago: “We will not negotiate this people’s pride and dignity.”

Greece today: “Yes, Master! We’d love to grovel some more if you continue tossing pennies into our cup!”

“As far as we can tell, the Greek government hasn’t achieved even a single one of its aims so far. The bailout was extended by four months, but in spite of a few cosmetic changes to the wording accompanying it (e.g. the ‘troika’ has been renamed ‘the institutions’), it is still precisely the same bailout agreement as before.”

This is an event completely unforeseen by everyone except anyone paying the slightest bit of attention to previous installments of Greek Bailout Kabuki. For all the bluster, it’s not like Greece had many options other than to get down on all fours and really lick boot, since it was slated to run out of cash tomorrow.

Naturally anyone who was foolish enough to believe Syriza’s promises (the technical term for such people is “rubes”) is hopping mad. “It’s as if [Greek PM Alexis] Tsipras, [Greek Finance Minister Yanis] Varoufakis and the others are telling me: ‘We believe that you are stupid…and you will believe whatever lie we tell you.’” The fact Syriza was elected at all is pretty much testament to the well-grounded accuracy that belief. That, and, oh, every single piece of news out of Greece since the Euro debt crisis struck, as long as that lie involved Greece continuing to spend money like drunken sailors with a stolen credit card and never having to pay their debts back.

The open secret, of course, is that Greece will never repay its debt. “We have to be realistic here. Greek debt is now 175 percent of gross domestic product (GDP); it’s higher than it was when this whole business first started.” (Well, by one measure. Another puts Greek debt at 317% of GDP.) Yeah, that’s what happens when you continue to run huge deficits even under your “austerity” budgets.

As I previously wrote:

I’m sure Syriza would love to implement their pie-in-the-sky big spending socialism, but their real goal is to lie to the Greek people long enough for the EU to write at least one more check, and lie to the EU about implementing reform long enough to cash it. Since Syriza only recently came to power, they probably want keep the farce rolling long enough to feather their own nests with Euros before engineering a grexit. After all, center-right parties got their turns at the public graft trough; why not the far left?

And back on December 29 I wrote:

So we’ll see another election, and if Syriza wins we’ll see another round of demands for more bailouts and debt writedowns, with Greece threatening yet again to exit the Euro. We’ve seen this movie before. The most likely outcome is that another cabal of EU-phillic insiders in the Greek government will engineer a last-minute cave-in to demands from Brussels and Frankfurt, ram another toothless austerity measure through parliament in exchange for still more credit (and perhaps even a small symbolic measure of debt forgiveness), dissolve the government again following the inevitable public outrage, then have the Greek bureaucracy ignore even those woefully inadequate reforms, setting the stage for the farce to repeat itself in another 12-18 months, or until mean old Aunt Angela finally cuts up the credit card.

Behold The Amazing Person’s uncanny powers of prophecy! Like Groundhog Day, it’s gotten remarkably easy to predict exactly what’s going to happen. Different people may occupy the Prime Minister’s office, but all them invariably wake up to the political equivalent of Sonny & Cher singing “I Got You Babe.”

It looks like the only I thing I was off on was the piddling four month extension rather than twelve, and the fact that Syriza didn’t even get the tiny fig-leaf of symbolic debt reduction. I guess that request for reparations from Germany rubbed Angela Merkel the wrong way. Too bad Greek PM Alexis Tsipras failed to heed Basil Fawlty’s eminently sensible advice…

Greece Declares Independence From Reality

Monday, February 9th, 2015

Newly installed Greek Prime Minister Alexis Tsipras gave a speech in which he basically declared “Screw your stupid economic reality! We’re still giving everyone a free unicorn!”

Remember that Greece is not just broke, but deeply in debt, has a declining economy, only a few weeks of money left, and the specter of a possible bank run for of people wanting to get ahead of a Euro-exit.

So naturally Tsipras is promising Greeks a T-bone in every pot.

“Syriza’s pledges to the electorate include a freeze on pension cuts, a property tax overhaul, free electricity to those who have been cut off, reinstating jobs and raising the minimum wage.”

“‘The (bailout deal) has been abolished by popular mandate,’ Tsipras said. I’d love to see someone try that “abolished by popular mandate” as a reason to stop making their car payments.

“We will not negotiate this people’s pride and dignity.” Yes, because spendthrift wastrels can have all the pride and dignity they can eat.

The EU is is not amused. How can they, when Syriza’s policies seem completely disconnected from reality?

In a lengthy list of policy actions, Tsipras also said the government plans to restore the tax-free threshold for individual workers to 12,000 euros a year and gradually raise the minimum wage to 751 euros a month through 2016. Both measures would breach the conditions of the bailout.

Tsipras said he’s committed to maintaining balanced budgets and wants to negotiate terms that will make Greece’s debt sustainable.

That’s like saying “I’m absolutely committed to eating eating a 72 oz steak every day, and to losing weight!”

Oh, and he’s also demanding reparations from Germany for World War II. Good luck with that.

Is Tsipras really that disconnected from reality? Well, he is a far-leftist (which in the context of Europe and Greece means that he probably makes Obama look like Dick Cheney). But a little further down in that Bloomberg piece, you get this:

Behind the public rhetoric, the Greek government has shifted to a more cooperative tone in recent conversations with the troika, according to an official representing the creditors. Greece has been told it needs to ask for a formal extension of its existing bailout deal in order to receive financing, said the official, who asked not to be named because the discussions are private.

It’s probably your classic “Clevon Little holding a gun to his own head” bluff. I’m sure Syriza would love to implement their pie-in-the-sky big spending socialism, but their real goal is to lie to the Greek people long enough for the EU to write at least one more check, and lie to the EU about implementing reform long enough to cash it. Since Syriza only recently came to power, they probably want keep the farce rolling long enough to feather their own nests with Euros before engineering a grexit. After all, center-right parties got their turns at the public graft trough; why not the far left?

Will the EU call their bluff? The whole purpose of the bailout regime was for insiders and bankers to dump their exposure to Greek default onto the taxpayer, something that’s largely been accomplished. These days I suspect very few of Europe’s banks hold much Greek debt (some of whcih may have ended up in various pension funds, where unrealistic promises and chronic underfunding may force managers to chase extremely risky bonds for the high yields). A grexit would put an economic hurt on Europe, but probably not one that would last terribly deep or long. A Greek economic collapse following leaving the Euro would be terrible for Greece, but would probably prod the other PIIGS into continuing to get their economic houses into something resembling order.

How bad would a grexit be for Greece? Really, really, really bad. The modern European cradle-to-grave welfare state is unsustainable, and attempts to keep the goodies flowing even after the state is bankrupt will ruin more than one nation. It’s just that Greece managed to get there first.

The farce is going to end very, very badly for average Greeks, but it always was. The only question is just how many bodies will be on the floor at the end of the final act…

Greece’s Insoluble Problem

Thursday, February 5th, 2015

Greece’s left-wing Syriza party was swept into power by promising voters they could have their cake and eat it too. The problem is that not only is there no cake to eat, but Greek already owes more money than it can repay on all the cake they’ve already eaten.

The European Central Bank announced that it will no longer accept junk-rated Greek bonds as collateral. That may be why Greece’s new finance minister is already backtracking on election promises:

His party, Syriza, told voters it would demand a debt reduction; now Mr. [Yanis] Varoufakis says it will settle for a debt restructuring. Syriza said it would end austerity; Mr. Varoufakis now says he will run a primary budget surplus even if that means dropping other commitments in the party’s campaign manifesto.

Will Syriza keep promises made to the EU and the ECB any more than they kept their promises to Greek voters? Of course not. Greece is addicted to excessive government spending the way a junkie is addicted to heroin. In this sense, Syriza’s willingness to shamelessly lie to both voters and Eurocrats is what makes them the embodiment of modern Greece.

Running an actual budget surplus, as Varoufakis is almost pledging, would go a long way toward solving Greece’s problems. (My understanding is that he means Greece will have a budget surplus before debt payments are taken into account, which means they’ve really slowed down the rate at which they’re digging their own grave…) But neither Greece’s voters nor its ruling class want the nation to live within its means. As I have noted time and time again, Greece has never practiced real austerity, which is cutting government outlays to match receipts. Greece’s budget deficit was 12.2% of GDP in 2014. (If it seems like I repeat a lot of this information in many of my updates on Greece’s debt crisis, it’s because I do, mainly because MSM reports seem to omit mention of these centrally crucial facts…)

Greece’s participation in the Euro has harmed it by distorting its economy and making its export uncompetitive. That’s a problem, but that’s not Greece’s central problem, which is a dogged unwillingness to live within its means. It’s that addiction to deficit spending that has Syriza talking of defaulting on its debts. And it’s addicted to deficit spending because the modern European cradle-to-grave welfare state is unsustainable.

But here’s the kicker: Neither leaving the Euro nor defaulting solves Greece’s central problem, or even provides temporary relief.

Leaving the Euro doesn’t solve the problem, because Greece’s debts will still be denominated in Euros. Creditors who hold Greek debt won’t be content to be paid in devalued drachmas, so Greece will still be on the hook for what they’ve already spent.

Defaulting will only make their predicament worse, because then no one will be willing to lend Greece money to continue their ruinous deficit spending.

Doing both and printing drachmas to continue spending will only result in hyperinflation. The Greeks can ask Venezuela how that’s working out for them.

If any Greek political party pledged to undertake real reform, reign in the Greek welfare state and end deficit spending, it’s escaped my attention. I suspect Greeks will have to experience a lot more economic pain, and no small measure of ruin, before undertaking the only obvious path to fiscal stability.

Far-Left Syriza Wins Huge Victory in Greece

Sunday, January 25th, 2015

Greece’s far left-wing Syriza Party has won a big victory there, claiming about half the seats in Parliament.

What does it mean? I took a stab at analyzing it before. Even with a majority, there’s a good chance Syriza will have to continue meeting the EU’s demands (which means pretending to impose austerity measures) if they want mean old Aunt Angela to keep loaning them money. Remember: Greece has never practiced real austerity. Not once since the European Debt Crisis hit has Greece balanced its budget, and its deficit for 2014 was 12.2% of GDP.

But even the fake austerity imposed has been too much for the Greek people, who collectively want a cushy welfare state but don’t want to pay the sky-high taxes required to pay for it. Promising people something for nothing has been the left’s popular electoral strategy for more than a century, but reality can only be held off for so long. Germany is not due for a federal election, so it’s entirely possible Merkel might still underwrite another bailout or two if Syriza is willing to continue the farce. A Greece shorn of the Euro would still be broke and badly in debt, and newly Drachma-backed securities would likely be toxic investments for all but the most speculative of bond traders. (Perhaps Syriza should investigate how well that printing money thing is working out for Venezuela.) “Forgive our debts or we won’t let you give us more loans!” is a proposition Merkel would probably find quite easy to refuse, and I suspect the risk of a Greek exit from the Euro is already priced into European markets. If Syriza insists on anything more than (possibly) a token debt haircut, the EU will probably be willing to call their bluff.

It’s generally best for the driver of a 1974 Ford Pinto to avoid engaging in a game of chicken with a Tiger tank…

Greece Inches Closer to the Endgame

Monday, December 29th, 2014

Just because the European Debt Crisis hasn’t been in the headlines much as of late doesn’t mean it’s gone away.

Greece’s government has fallen again and they’ll be holding general elections next month. “Opinion polls point to a victory by the radical leftist Syriza party, which wants to wipe out a big part of Greece’s debt, and cancel the terms of a bailout from the European Union and International Monetary Fund that Greece still needs to pay its bills.”

The problem is that Greece wants to continue spending other people’s money to prop up a bankrupt welfare state, and the rest of Europe has decided they would really prefer to stop pouring money down that particular rathole. Syriza is against “austerity,” which is to say they oppose the Greek government even pretending to practice fiscal restraint. Because pretending is all they’ve done.

Remember, real austerity is reducing outlays until they match receipts. All those “austerity” street protests were over lowering Greece’s budget deficit from 9% of GDP to 7.5% of GDP. The rest of Europe didn’t ask them to stop digging their own grave, they just asked them to dig more slower. And this year, Greece’s budget deficit stood at 12.2% of GDP. Evidently even fake austerity is too much to ask of them; even the illusion of fiscal restraint is intolerable. This is why all news that Greece has “balanced” next year’s budget should be taken with several grains of salt.

So we’ll see another election, and if Syriza wins we’ll see another round of demands for more bailouts and debt writedowns, with Greece threatening yet again to exit the Euro. We’ve seen this movie before. The most likely outcome is that another cabal of EU-phillic insiders in the Greek government will engineer a last-minute cave-in to demands from Brussels and Frankfurt, ram another toothless austerity measure through parliament in exchange for still more credit (and perhaps even a small symbolic measure of debt forgiveness), dissolve the government again following the inevitable public outrage, then have the Greek bureaucracy ignore even those woefully inadequate reforms, setting the stage for the farce to repeat itself in another 12-18 months, or until mean old Aunt Angela finally cuts up the credit card.

Europe has had several years to acclimate itself to the fact the Greece might exit the Euro, and the possibility of a “grexit” has been priced into the markets for some time now. I do not pretend to understand the intricacies of the European banking system, but my impression is that much of the “stress testing” of European banks this year was to prepare for one or more of the PIIGS leaving the Euro. I suspect that the European elite have minimized their own exposure to a Greek default (which is really all they care about), and that the EU and the European Central Bank has found new, sneaky ways to put taxpayers on the hook for any possible sovereign defaults, strengthening the banking system without addressing Europe’s long-term economic problems (unsustainable levels of debt to support cradle-to-grave welfare states for shrinking populations).

It would be great if Greece actually undertook real structural reforms of their bloated, dysfunctional government, but I see precious little evidence that they’ve actual done so. Expect more pain ahead, and at least one more bailout…

LinkSwarm for December 5, 2014

Friday, December 5th, 2014

Let’s jump into it:

  • IRS cites taxpayer confidentiality in defying a federal judge by refusing to hand over documents showing it violated taxpayer confidentiality by sharing that information with the White House.
  • By 2020, some 90% of Americans will be forced onto ObamaCare exchanges.
  • So left-wing stalwart magazine The New Republic just let several long-time editors go, reduced their publishing schedule from 20 issues a year to 10, and put a former Gawker-person in charge as editor, which is just short of putting up a sign reading “Dead Magazine Walking.” John Podhoretz traces their decline to the age of Obama:

    I think the answer is that there never was any Obamaism to champion; there was no serious vision of America and the world being laid out by the administration that provided fertile ground out for intellectual cultivation, for voices on the outside to make sense of that serious vision and help it cohere into an argument. (In the 1980s, ironically, it was the New Republic‘s own Charles Krauthammer who did just that in explicating the “Reagan Doctrine,” though even more ironically, he did it in the pages of Time Magazine rather than in TNR.)

    What there was, instead, was the increasing reliance on the cheap-shottery of the Internet era—in which TNR and others were driven more by a kind of grinding loathing of the Right than by an effort to create a more effective and serious Center-Left. The magazine foundered because liberals foundered, because Obamaism was a cult of personality that demanded fealty rather than a philosophy that demanded explication.

    Also: I was unaware that The Weekly Standard had twice the circulation of The New Republic. And you should check out the rest of that piece, not least for the perfect title…

  • And speaking of Podhoretz, his New York Post piece on why Hillary’s supposed cakewalk to the Democratic nomination is a sign of party weakness is well worth reading: “Hillary Clinton has no natural claim to her party’s nomination. She’s not even an especially gifted politician. Aside from the spectacular incompetence of her 2008 campaign, she is as gaffe-prone as Dan Quayle and as awkward as Bob Dole.”
  • For the left, the truth no longer matters. “For the Left, this is all tribal, white hats vs. black hats. Fraternity members and police officers are, in their view, by definition on the wrong side of every dispute.”
  • Mary Landrieu isn’t just going to get beat in Saturday’s runoff, she’s primed to get slaughtered, trailing in the latest polls by 24 points.
  • European “austerity” isn’t.
  • The European economic crisis has gotten so bad that traditional left-wing and right-wing parties are thinking of teaming up to thwart newly ascendent Euroskeptic parties.
  • Fracking is kicking Putin’s ass. (Hat tip: Instapundit.)
  • Battles with jihadists kill 20 in Chechan capital of Grozny. I guess December is rerun season in Russia as well…
  • Wisconsin might be getting ready to pass right-to-work legislation. Hey Wisconsin unions: How’d that whole “recall” thing work out for you? “You come at the king, you best not miss.”
  • Evidently teenage boys have too many cooties to be taken in at the Salvation Army. (Hat tip: Instapundit.)
  • How PBS lied about Ferguson.
  • The Rolling Stone story of an alleged gang rape at a University of Virginia fraternity continues to unravel. If there was an actual gang rape, the perpetrators should be arrested and tried. If not, Rolling Stone has some editorial house-cleaning to perform…
  • Breitbart demolishes Lena Dunham’s “raped by a Republican” story. Plus this nugget from a liberal college administrator “‘Asking whether or not a victim is telling the truth is irrelevant,’ Ms. Hess proclaimed. ‘It’s just not important if they are telling the truth.’”
  • On the same theme:

  • Andrew Klavan on #GamerGate and the immense gozangas on display in Soul Caliber. Nice shirt! (Hat tip: Instapundit.)

  • The UK announced they’re finally going to pay off their World War I debt. Governments come and go, but sovereign debt is almost immortal…
  • Another day, another 36 people killed by jihadists in Kenya.
  • In Denmark, “27 percent of male descendant of immigrants from non-Western countries aged 20-24 years were convicted of an offense in 2013.”
  • Shakespeare First Folio found.
  • Newly discovered Ayn Rand novel to be published.
  • And speaking of Rand, her longtime disciple/lover Nathaniel Branden died at age 84. I’m sure he would be deeply offended at the suggestion he’s gone on to the afterlife…
  • Detroit man steals ambulance to go to a topless bar.
  • I have no joke here, I just like typing Vegan Strip Club Riot.
  • Pat Condell on the European Union

    Friday, August 15th, 2014

    Have another Pat Condell rant, this one on why Europe needs a revolution against the anti-democratic EU:

    Protestors March Against UK’s Non-Existent Austerity

    Saturday, June 21st, 2014

    I see that #NoMoreAusterity is trending on Twitter this morning. It seems the usual leftist protest sorts are rallying against the Cameron government’s “austerity.”

    The only problem is it doesn’t exist.

    Real austerity is cutting government spending until it matches receipts. Under David Cameron, deficit spending has merely gone from 11.4% of GDP in 2010 to a projected 5.8% in 2014. So the UK government hasn’t practiced austerity, it’s merely slowed the rate at which it’s digging its own grave.

    For the protestors, this simply will not do. They want government to give them things, and if it means having the moribund economies of Greece and Spain, so be it.

    But unlike Greece and Spain, the UK won’t be able to get Germany to bail them out, nor to hold down the hyperinflation that is the inevitable endpoint of excess deficit spending.

    More EU Election Fallout

    Wednesday, May 28th, 2014

    It’s hard to know just how much weight to put in widespread gains by Eurosceptic parties in EU elections, mainly because the EU decision-making process seems so opaque to outsiders. Even if Eurosceptic Parties had won significant majorities, you get the impression that they would be like Patrick McGoohan’s character on The Prisoner after he got elected #2, issuing orders and flipping switches to no effect whatsoever:

    Even were the Eurosceptics to form a coalition, power would still lie in the Council, or, some feel, in the permanent unelected EU bureaucracy. The entire apparatus seems designed specifically to thwart popular will and keep all power in the hands of the continental elite.

    More reactions to the election:

    Roger Kimball:

    The architects of the EU envision a European superstate in which national identity is subordinated to the abstraction of “Europe.” The regime would be internationalist but only titularly democratic: the real power (as has been traditional on the continent) would reside in a technocratic elite, not the people. But the people, it seems, have just awakened to this reality and it turns out they don’t like it.

    One take-away from yesterday’s election is this: when conservative parties cease providing a natural home for the community-binding sentiments of patriotism and national identity—when, that is to say, conservative parties cease being conservative—those parts of the population not indentured to the apparatus of dependency look elsewhere.

    John O’Sullivan in National Review:

    These results are merely the latest evolution of a very ominous long-term trend for the Tories. As Anthony Scholefield and Gerald Frost pointed out in their 2011 study Too Nice to Be Tories, the Conservative Party has been steadily losing one region of the United Kingdom after another in the last 40 years. It used to be able to depend on nine to twelve Unionist votes from Northern Ireland for its parliamentary majority; it gets none now. It won half the Scottish seats in 1955; the last three general elections each returned one Scottish Tory to Parliament. It wins eight seats out of 40 in Wales. And from the 158 MPs elected from the North of England, the Tories got 53.

    This is a dreadful record, but it could get worse. UKIP is now starting to replace the Tories as the main challenger to Labour in northern working-class constituencies. The new party takes votes in particular from culturally conservative and patriotic working-class men whom both major parties have abandoned in their pursuit of urban middle-class progressives. UKIP may therefore be a threat to both parties, but the local elections suggest that it is a bigger threat to the Conservative party.

    All this leaves Cameron with difficult choices:

    Either he does the electoral deal with UKIP that he now says he won’t do, in which the Tories agree to support UKIP candidates in a given number of seats in return for UKIP’s not fielding candidates elsewhere. In London, for instance, that would give UKIP an electoral base of something just above 40 percent — in Britain as a whole an even larger one.

    Or he contrives to lose the Scottish referendum on independence, which would remove only one Tory from the House of Commons but 41 Labourites and 11 Lib-Dems.

    France’s ruling class are in a panic following the strong showing of Le Pen’s National Front.

    Here’s a piece from the Jewish magazine Tablet in 2011 suggesting that Marine Le Pen has worked to purge the party of the antisemitism her father exhibited. Maybe.

    Could UKIP and Eurosceptic parties even form a majority coalition in the European parliament? Possible but doubtful.

    Then there’s the question of who would lead such a coalition, Nigel Farage or Marine Le Pen. Anglo-French rivalry is not exactly unknown…