The latest on Greece
France and Greece against Germany?:
You can’t exaggerate the importance of France’s decision to align itself with Greece before this weekend’s crisis meetings. As Wolfgang Munchau correctly notes in the Financial Times, Prime Minister Alexis Tsipras has finally succeeded in dividing the creditors. A split between Germany and France, no less, and on an issue as momentous as this — on the course of the entire European project — isn’t just any division.
Ignore all the expressions of bewilderment over Tsipras’s acceptance of terms he and his country just roundly rejected. That’s all beside the point. He had already capitulated — weeks ago — on the larger part of the fiscal obligations in the creditors’ last offer. He was holding out for a commitment to debt relief now, rather than talks about it later.
That’s the condition he’s dropped, and rightly, because a consensus has finally emerged that debt relief, one way or another, will follow if some kind of deal is done. In return, he’s secured France as an ally against Germany. That’s a pretty good deal for Greece.
Your guess is as good as mine. Actually, maybe your guess is better than mine.
[ADDENDUM: I’m seeing a lot of blinking lately: Merkel blinks, Tsipras blinks, Germany blinks, Greece blinks.]
I’m not surprised that there is a deal as I always thought that it was too important a matter for true Euro believers to allow Greece to exit. I am a little surprised that Greece appears to be agreeing to tougher measures than were rejected in the referendum. However what I think is going on is that its a way of getting the German parliament on board. They have to agree to any deal by a simple majority. I wouldn’t be surprised if debt relief has been agreed on but can’t be added until after the German vote.
Meanwhile the Daily Telegraph reported last week that Tsipras was actually expecting to (and planning on) losing the referendum so that he could hand over to a national unity government that would sign the deal that he decided needed signing bit that he did not have a mandate to sign. Winning was a surprise but has left him having to agree terms to avoid leaving the Euro which he doesn’t believe Greeks want to do.
I ALREADY mentioned that the players lined up:
France and Greece
Germany, Austria, Holland and Spain, Portugal, Italy
It was France that was selling — big time — to Greece to get Athens in deep in the first place.
The Corinthian bridge project immediately springs to mind.
BTW, while it’s a techno marvel, it’s also a money pit. There’s just not enough traffic to make it really pencil out.
(Some of Japan’s marvels have this exact same character, too.)
Its too early to know how this will all shake out. It is hard to imagine any deal without some sort of Greek debt relief coupled with promises from the Greeks to improve in the future.
If Greece were a normal country, I would think that Greece would be better off with their own currency. However since Greece has a strong Communist element they will never make the changes necessary to save their economy voluntarily through regular political processes. This way they are forced to make the necessary cut backs to their reckless spending and will be forced to make sound fiscal decisions which will benefit the country over time.
Zorba keeps Merkel dancing…
What a surprise.
That which is unsustainable will not be sustained. Ashes, ashes, they all fall down. A massive, global reset button, beyond the imagination of hrc, must be pushed. From pain and chaos a new order will, with blood and suffering, a merge.
This item suggests France played everyone for suckers a couple of years ago.
I’m sorry, but Wolfgang Munchau is Wrong. Hollande’s alignment with the creditors has two causes.
1. Marine Le Pen defended Greece. Socialist Party is already below the Front Nationale. Marine Le Pen, who is labelled as far-right, is stealing every no-immigrant vote in the left.
2. French economy is going down the slope, but it keeps the traditional high welfare french system.
The problem right now is that France is keeping social peace through welfare. Cut it loose, and french cities will look like Baltimore last month.
France has a BIG problem with immigration. Of course, immigration is not a problem by itself (US dealt very well with it until WW2, being open but tough and firm at the same time). But when you allow get somebody used to live of welfare and any criticism is silenced and labelled as racist… what you get is basically the same thing you get when you rise a kid as a little prince. And now you have several millions of little princes that think that they are entitled to live of welfare.
Austerity in France… cities will burn.
Yann, didn’t French cities already burn and journalists are put to the sword and bullet on streets much like public urinals or something of that nature?
@Ymarsakar
Nothing in comparison of what could happen.
I seem to recall reading that the French banks bought all those Greek bonds, so if the Greeks default the French banks are going to take a beating. I believe a majority of the French banks are nationalized so the French government has a big stake in Greece not defaulting.
The sad part is that the Greek people (most, anyway) know NOTHING about economics. If they did, they would understand and perhaps care about themselves and their country. Socialism is great until you run our of other peoples money.
Now an example from personal experience. I used to sell wholesale to the retail trade. There was one dealer who ALWAYS ran late with his payments. Funny (at least to me), the crap (getting new loans) that Greece is going through . . . reminds me of one of my conversations with this dealer . . . During one of my phone conversations (trying to collect from a Past Due Invoice) . . .
He asked me, Do you know what my problem with you is? No Robert, What problem is that?
He replied, I don’t owe you enough money.
Hmmm. And I responded by telling him, . . . and you never will.
Well, that’s where Greece is (IMHO). Too small to be of any consequence. And their people will suffer if they don’t agree to AUSTERITY. They too should have learned from the past. It NEVER ENDS WELL. This time will be no different.
IMHO . . . The Greek vote was meaningless. It was supposed to make the Greek people “feel good” that they had a voice. The wealthy most likely have all of their money in foreign banks JUST IN CASE Greece gets booted out of the EU or PM Tsipras decides to leave the EU. So they will retain their wealth. The average citizen will experience great discomfort either way. If they go back to the Drachma, whose going to accept it for payment? They will need to pay with a hard currency. And if they stay with the Euro . . . Tsipras is going to capitulate.