Posts Tagged ‘Greece’

Greek Update: Tsipras Out, New Party Formed, Snap Elections Coming, Debt Payment Made

Friday, August 21st, 2015

“Prime Minister Alexis Tsipras resigned on Thursday, hoping to strengthen his hold on power in snap elections after seven months in office in which he fought Greece’s creditors for a better bailout deal but had to cave in.”

Turns out promising free ice cream, only to deliver expensive rotted cabbage, wasn’t popular with Greek voters.

Nor were his actions popular with members of his own party, 25 of whom have broken off to form the new National Unity Party, who will evidently return to the “demand free ice cream and insist others pay for it” strategy Tsipras abandoned in the face of the sinister force know as reality.

On the plus side, Greece just used it’s new bailout fund to make a debt payment to the European Central Bank for the last batch of money it borrowed to prop up its unsustainable welfare state.

We’re in that happy honeymoon period after Greece gets more money and before Eurocrats are shocked, shocked that Greece’s economy is still a festering pile of fail that all those and promised economic reforms haven’t actually been implemented.

Give it another six to nine months…

Greece: Dispatches from the Boned

Thursday, August 13th, 2015

So I haven’t done a Greek update in a while, since after Greece caved into the inevitable (Newsflash: broke people generally do not have leverage over those lending them money), it was all over but the shouting. Now that Greece and its creditors supposedly have a third bailout deal inked, and Greece settles into its clearly defined misery, let’s take a look at exceptionally bankrupt Greece these days, shall we?

  • Via Zero Hedge comes former Greek finance minister Yanis Varoufakis’ detailed review of the bailout agreement. It’s a mixture of self-serving lies (trying to distance his own Syriza party from the horrific economic mess they made acutely worse) and brutal truths (about just how screwed Greece is by the agreement).
  • Speaking of Varoufakis, it looks like he’s going to be up on hacking charges…for preparing emergency plans to float the drachma.
  • Oh: He also says the latest bailout deal won’t work. He’s not wrong…
  • Greece’s economy miraculously grew in the second quarter. But that was before the full effects of the crisis were reflected…
  • Greece’s tax revenues have collapsed.
  • Greece’s manufacturing sector fell off a cliff in July. Funny how that happens when your banks are closed and you can’t pay for goods.
  • Greece faces two years of recession. That part’s probably true. But that primary budget surplus? Yeah, not so much.
  • “Greece’s banks just made the mistake of being banks in Greece.”
  • After all that? Greece still isn’t fixed.
  • To add a cherry on top, Greece’s refugee crisis continues to grow. Because it’s still safer to live in bankrupt Greece than the Middle East…
  • Not Just Greece

    Wednesday, July 22nd, 2015

    Via ZeroHedge comes renewed information of a point I’ve hit home again and again: Thogh Greece is an extreme outlier on unsustainable welfare state spending in Europe, it’s also the canary in the coal mine, as toxic debt continues to rise all across Europe, with several countries exceeding a debt-to-GDP ratios of over 100%, including “Greece (168.8%), Italy (135.1%) and Portugal (129.6%).” Post-bailout (and bail-in) Cyprus is still over 100% as well, as is Ireland, though Eurostat didn’t have Irish DGP numbers, though supposedly the ratio should be trending down. And Spain and France are hovering just under 100%.

    To my mind the great mystery is how Belgium’s debt-to-GDP ratio now tops 111% with such a fat cushion of Brussels Eurocrats to sit on.

    The problem is not Greece’s only. The problem is that the western liberal welfare state, as currently constituted, is economically and demographically unsustainable.

    I’m sure I’ve driven this point home to regular readers of this blog, but I’ll continue driving it home until our leadership class is actually willing to do something about it…

    Fragments of a Greek State

    Tuesday, July 14th, 2015

    The self-inflicted destruction of Greece has been accomplished, but they’re still going to be picking up the pieces for years, if not decades. And there’s no guarantee the heavy manners Germany and the troika are imposing will actually be enough to rescue it.

    So, enjoy a random collection of Greek headlines, since I don’t quite have time to pen a piece on The Greater Meaning Of It All:

  • So Greece is going to get bailed out (again), but the actual mechanisms, and who will do the bailing, are far from clear.
  • And Greece needs $25 billion just to get through August.
  • “In the End, Greece’s War on Debt Is A Morality Problem. A majority of Greeks simply do not believe debt must always be repaid.” And how did that idea work out for them? (Hat tip: Ed Driscoll at Instapundit.)
  • Stratfor says that the Greek referendum backed Germany into a corner, and forced them to come down twice as hard. “The leading power of Europe will not underwrite defaulting debtors. It will demand political submission for what help is given. This is not a message that will be lost in Europe, whatever the anti-Greek feeling is now.”
  • Former Greek finance minister Yanis Varoufakis is not at all happy, saying the agreement makes Greece a “vassal of the Eurogroup.” Hey Yanis: You and the rest of the Greek ruling class are the one who baked the gypsy pie with your reckless spending to prop up your bloated welfare state. You’re just upset that Greeks, not Germans, are the ones having to eat it…
  • Greece may even have to sell some islands and ruins.
  • How Germany Beat Greece In Liar’s Poker.” By having all the cards and not being hopelessly in debt, perhaps? More:

    Many observers are wondering how the left-populist renegades of Greece’s Syriza party, which rose to power in January on the promise of delivering relief from austerity and renewed its mandate with a massive victory in the July 5 referendum, managed to negotiate a bailout deal on Monday that is substantially worse than what was available to Greece before Syriza took office.

    That would be because they were idiots who lied to voters about what they could accomplish.

  • Actual Time headline: “Why European Leaders Don’t Believe Greece’s Promises to Change.” Uh, because they’re not morons?
  • Greece Surrenders to Troika

    Monday, July 13th, 2015

    After six months of jerking around European negotiators, Greece’s far left Prime Minister Alexis Tsipras finally reaped the fruits of his labors: caving in to austerity measures far worse than the ones Greek voters rejected a week ago in exchange for more loans.

    The EU demanded real, demonstrable, non-fake, under-heavy-manners austerity from Greece, rather than the fake kind they were used to pretending to follow:

    For those who missed today’s festivities in Brussels, here is the 30,000 foot summary: Europe has given Greece a “choice”: hand over sovereignty to Germany Europe or undergo a 5 year Grexit “time out”, which is a polite euphemism for get the hell out.

    As noted earlier, here are the 12 conditions laid out as a result of the latest Eurogroup meeting, which are far more draconian than anything presented to Greece yet and which effectively require that Greece cede sovereignty to Europe, this time even without the implementation of a technocratic government.

    1. Streamlining VAT
    2. Broadening the tax base
    3. Sustainability of pension system
    4. Adopt a code of civil procedure
    5. Safeguarding of legal independence for Greece ELSTAT – the statistics office
    6. Full implementation of automatic spending cuts
    7. Meet bank recovery and resolution directive
    8. Privatize electricity transmission grid
    9. Take decisive action on non-performing loans
    10. Ensure independence of privatization body TAIPED
    11. De-Politicize the Greek administration
    12. Return of the Troika to Athens (the paper calls them the institutions… for now)

    Greece must also hand over €50 billion in assets to an escrow fund it can’t control.

    Just think: If Tsipras hadn’t been such an ass, Greece could have reached a far-less onerous deal to continue the farce another year or so, and probably before their banks started running out of money.

    It seems that Yanis Varoufakis’ ideas about game theory don’t work when one side holds all the cards and the other is dead broke. Who knew?

    Greece and the EU Compromise to…Kick The Can Further Down the Road

    Friday, July 10th, 2015

    It looks like we have an actual, honest-to-God compromise, in that Greece, in exchange for not having their economy collapse and descend into anarchy and cannibalism, will pretend to implement real reforms, while the Troika, in exchange for those promises, and not being blamed for the impending global recession, will give Greece still more loans, write down some previous loans, and pretend this actually fixes the problem.

    So expect to see another round of this dance in six months to a year.

    Germany caved on debt relief. Greece?

    A cursory look at the “new” Greek proposal to creditors suggests PM Alexis Tsipras may have sold out the referendum “no” vote in a final, desperate attempt to avert an economic catastrophe and the collapse of the country’s banks which will be cut off from ELA as of Monday morning in the event Brussels and Athens do not come to terms over the weekend.

    And indeed, the austerity outlined in the latest proposal is more severe than the version voters rejected last Sunday. Among the proposals evidently agreed to: No retirement until age 67 or 40 years of paying into the system. Caveat: Pension reforms don’t actually kick in until October, so they’re still kicking the can down the road on that as well.

    Also: “Greece will succeed in transferring bonds currently held by the ECB to the European Stability Mechanism.” If the ESM is truly the euro’s firewall, then they’re about to get an infusion of crappy Communist-era Soviet concrete…

    Other Greek crisis tidbits:

  • Earlier Greece had floated their totally serious compromise proposal that didn’t cut any pensions.
  • Faced with impending national bankruptcy, Greece’s ruing left-wing Syriza Party concentrates on the essentials: investigating reporters who opposed them. (Hat tip: National Review.)
  • People in Latvia and Lithuania sneer at spendthrift Greece.
  • Greece demonstrates 150 years of socialist failure.
  • Greek event timelines.
  • Greece probably wouldn’t do as well after a Grexit as Argentina did after their default.
  • The sneaky return of Drachmas? Of course this was before the latest agreement. But wouldn’t it be hilarious if Greece got one final big bailout, then turned around and pulled off a Grexit anyway?
  • UKIP head Nigel Farge had some advice earlier in the week:

    Not in 100% agreement, but there’s a lot of bracing truth in there. But the problem, of course, is that Tsipras, as all Socialists do, does indeed want to have his cake and eat it too…

  • What It’s Like To Be an Honest Taxpayer in Greece

    Friday, July 10th, 2015

    I came across this comment from a Slashdot thread on programmers leaving Greece (usual online source caveats apply), and thought it was meaty enough to be worth excerpting and highlighting on its own:

    Let me tell you what happens when you’re 100% legal and declare everything up to the last penny you get as a software developer. In 2012 I had 100,000 Euros income paid 86,000 Euros spent on taxes (income tax with surprisingly different brackets than last year, “temporary” property tax, “temporary special contribution” 4% on the total turnover, mandatory social security, 55% of your current income tax as downpayment for next year). The year before I made 74,000 Euros and paid “only” 50,000 or thereabouts. In return I got: no schools, no roads, no pension, more taxes, more family members depending on me to live. The more you work the less you make (unless you have an ever-shrinking business). Crazy? That’s the Greek tax brackets for you.

    Meanwhile: I have to pay for my own hospital plan because in case I get sick I have to notify the public insurance carrier 15 days in advance of emergency surgery (no kidding!) or 3-4 months before booking an appointment with a doctor. I have to get an additional, expensive pension plan on top of the 350 Euros per month I am currently paying as mandatory social security because there will be no money when I’m 67 years old or have worked 40+ years to get the minimum pension of 700 Euros (nominal; actual payment after taxes and mandatory social security is around 480 Euros). I also need to set aside money to get the kids I’m planning on having to a private school because there are no teachers (not even substitutes) half of the time in the public schools.

    If you are wondering why people tax evade you have to first ask the questions: 1. how much does the state take in taxes and 2. what does the state offer for the money it takes from its citizens? If the answers are “most of your money” and “not that much at all” respectively it doesn’t take a genius to see why you get an endemic tax evasion for free.

    Anyway. After three years of battling the system I gave up and moved away. My last tax filing in Greece was 2014 for my income in 2013. I am owed a 13,000 Euro tax return since August 10th, 2014. Of course it’s NOT credited. And we’re talking about money I have paid as a tax downpayment to the state since August 2013. They hold my money hostage for 2 years and they won’t give it to me. Also, don’t make the mistake of asking whether there’s an interest rate for those two years. Don’t be silly. There’s not! Adding insult to injury I’m still a Greek tax citizen which means I get to pay taxes for the dividends I’m paid from my company abroad. Don’t be ridiculous, of course they are NOT offset by the money the Greek state owes me! I have so far paid another 40+ thousand Euro taxes in these two years where the Greek state owes me the 13,000 Euro tax return.

    I understand all this sounds alien to you. Why so much taxation, why no services in return, why the state isn’t punctual in paying back. Beats me, brothers and sisters. I have concluded that one must be outright insane to try and do business if they’re born in Greece.

    And here you have the endpoint of the cradle-to-grave welfare state: benefits are theoretically generous for those on the dole (though good luck navigating the maze of inefficient, corrupt bureaucracy to collect them), while taxes are prohibitively high for those actually work for a living.

    This is why implementing fake austerity through higher taxes never works: It drives out the productive, the social compact is irreparably broken, and those living off the state’s largess feel no qualms about wringing every last possible penny from it.

    Greece Starts Reaping the Fruits of Its Choices

    Wednesday, July 8th, 2015

    The problem with holding a gun to your own head is, sooner or later, someone is going to call your bluff.

    EU leaders have given Greece until Sunday to “Reach a new bailout agreement with its creditors” or “face bankruptcy and expulsion from the euro currency system.”

    The European Central Bank also hiked Greek ELA Haircuts. Translation: Hope you enjoy the scent of burning bridges, Greece, because now your banking system is even more screwed than before the referendum. (Note: Zero Hedge is down as of this posting. Maybe China got tired of him exposing their financial house of cards…)

    And Greece’s leftist PM Alexis Tsipras is still playing his old tricks. “Screw all of you! You suck! Oh, and here’s a new proposal for a bailout that doesn’t meet any of your conditions! Please give us money! Pretty please! Screw all of you!”

    “The Greek people spent part of the weekend in the streets celebrating their status as international deadbeat. They spent the rest of the weekend hoarding food, fuel, and medicine in preparation for the manmade disaster they have inflicted upon themselves.”

    Also: “The Greeks may have burned their bridge to Europe, but the Germans are roasting marshmallows over the flames.”


    The presence of Greece in the Eurozone is the result of a lie: The Greeks pretended to get their deficits and debt under control, and the Europeans pretended to believe them. That was the first act. In the second act, after the advent of the current crisis, the Greeks pretended to enact fiscal reforms, and the Europeans pretended to believe them. Political logic is, not coincidentally, lawyer logic — which is to say, it substitutes consensus for reality. If enough people (jurors, voters) are convinced that your position is the correct one, then you “win.” Maybe the election turns out your way, as with Tsipras and the referendum. Maybe political consensus prevents your opponents from enacting their favored policies, just as conservatives have for decades been frustrated in their efforts to enact entitlement reform by cheap and dishonest images of grandmothers being pushed over cliffs. Maybe O. J. Simpson walks.

    Mark Steyn reiterates the fundamental problem:

    Since Obama took office, it’s been fashionable to quote Mrs. Thatcher’s great line: “The problem with socialism is that eventually you run out of other people’s money.” But we’re way beyond that. That’s a droll quip when you’re on mid-20th-century European fertility rates, but we’ve advanced to the next stage: We’ve run out of other people, period. Hyper-rationalist technocrats introduced at remarkable speed a range of transformative innovations — welfare, feminism, mass college education, abortion — whose cumulative effect a few decades on is that the developed world has developed to breaking point: Not enough people do not enough work for not enough of their lives. In the course of so doing, they have fewer children later. And the few they do have leave childhood ever later — Obamacare’s much heralded “right” for a 26-year old to remain on his parents’ health insurance being merely a belated attempt to catch up with the Europeans, and one sure to be bid up further.

    A society of 25-year-old “children” whiling away the years till early middle age in desultory pseudo-education has no desire to fund its prolonged adolescence by any kind of physical labor, so huge numbers of unskilled Third World immigrants from the swollen favelas of Latin America or (in Europe) the shanty megalopolises of the Muslim world are imported to cook, clean, wash, build, do. On the Continent, the shifting rationale for mass immigration may not illuminate much about the immigrants but it certainly tells you something about the natives: Originally, European leaders said, we needed immigrants to work in the mills and factories. But the mills and factories closed. So the new rationale was that we needed young immigrants to keep the welfare state solvent. But in Germany the Turks retire even younger than the Krauts do, and in France 65 percent of imams are on the dole. So the surviving rationale is that a dependence on mass immigration is not a structural flaw but a sign of moral virtue. The evolving justification for post-war immigration policy — from manufacturing to welfare to moral narcissism — is itself a perfect shorthand for Western decay.

    So welfare entitlement states create a sense of entitlement. Who knew?

    “The European Union is dying before our eyes.” So there is an upside to the Greek crisis…

    Greek Voters to Europe: Screw Your Objective Reality!

    Monday, July 6th, 2015

    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.

    Germany says they’re done talking, and the European Commission says that the previous bailout offer is now off the table.

    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.

    Stop Me If You’ve Heard This One Before…

    Wednesday, July 1st, 2015

    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:

  • “Socialism is a one-way ticket to misery and failure.” Also: “The Greeks are simply the vanguard in a long line of nations who have buried themselves under mountains of unpayable debt.”
  • Greece: “We’re suffering so hard!” Poorer countries in Europe: “Suck it up, you proliferate spendthrifts!”
  • Possible post-referendum timelines in Greece. I hope you like flow charts…