The Ball Is In The Troika’s Court Now …… Greece Says No To New Package!


Well, Greece has called what they believe is a bluff from the Troika, and raised the stakes.  

Greece Appears To Vote ‘No’ In Referendum On Bailout Deal

I find this fascinating because I believe saying no is the right direction for the people of Greece, but, it appears they’ve done it for the wrong reasons …….

“This is an imprint of the will of the Greek people and now it’s up to Europeans to show if they respect our opinion and want to help,” Nikos Tarasis, a 23-year-old student, told Reuters. …..

“If the Europeans really wanted Greece to stand on its feet, then they could have done so without imposing such harsh measures,” 26-year-old Yiannis Gkovesis told the Associated Press. “We don’t want austerity measures anymore. This has been happening for the last five years and it has driven so many into poverty. We simply can’t take any more austerity.” ……

Alexis Tsipras @tsipras_eu

The Greek people made a historic and brave choice. Their response will alter the existing dialogue in Europe. #Greece #Greferendum

It appears the Greeks voted no, not to openly reject the loans and get on with running of their own nation, they simply want the money offered but, with no conditions to the money.  You see, they don’t believe the Troika will simply walk away.  It’s a risky bet.  Personally, I think the IMF would choose to stay at the table and try to work out a deal.  I’m not sure about the ECB, and I know there are several finance ministers in the Eurogroup who already want to walk away from Greece. 

This does put the Troika in a hard position.  If the cave in and agree to (cough) lend Greece more money, without a semi-rational plan to get paid back, they’ll be stating that they’re simply giving Greece more money.

Of course, the Troika never had a semi-reasonable plan in the first place, but, now there can be no pretense.

I really don’t believe most Europeans care enough about Greece to simply support them in perpetuity.  And, that’s the problem with Europe as a whole, but, Greece as a microcosm.  They don’t know how to move beyond printing, borrowing, and taxing money.  

You know what Greece’ budget should be?  It should be the money generated by taxes, tariffs and whatnot, minus the money necessary to pay the interest and some principle on their debt.  If one operates within that framework, then the rest comes easy. 

For those pinheads who don’t believe the Laffer Curve is real, try to convince the Greeks that their taxes aren’t high enough and all will be well if Greece simply raises taxes to get out of this mess.  …… Oh, and if Tsipras has his way, that’s exactly what will be attempted. 

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39 Responses to The Ball Is In The Troika’s Court Now …… Greece Says No To New Package!

  1. Latitude says:

    After I got over the shock…I starting laughing about the entire population of some Greek island that claimed they were blind…so they could get the benefits

    I say but them loose…they really didn’t leave another choice…they voted to be irresponsible and that does not play well on a loan application…

    Plus, a bigger problem, this puts the entire EU in a bind. If they give in, there’s nothing to stop another country from doing the same thing, and on and on…tuff love

    Up to me, I would play it the way it lies…make an example to the other countries

    • DirkH says:

      “I starting laughing about the entire population of some Greek island that claimed they were blind…so they could get the benefits”

      I think that Island was Ikaria; the Greek military regime of the pre-EU times exiled the communists to that Island, they are still living there, it’s a communist pensioner Island hanging like an Albatros around the Greek state’s neck. Ikaria just ran out of gasoline, and probably medicine as well. They have their own gardens so won’t starve for a while.

      What Greece is to Germany, Ikaria is to Greece.

  2. HankH says:

    I’ve always looked at the European Union’s economic system as akin to giving all of your children credit cards that you’ve co-signed on and, while saying they need to make the payments, the children know that if they don’t make the payments you will to save your own good credit.

    This begs the question… who has whom over the barrel?

    • suyts says:

      Well, the Euro players say they’re better prepared for a Grexit ….. we’ll see if that was just bluff and bluster.

      • HankH says:

        It will be interesting to watch and see how the other member nations feel about picking up the extra tab should the Euro players facilitate a Grexit.

        • DirkH says:

          They don’t tell you the whole truth when they say they are “better prepared”.
          There’s no way the Euro can last.
          What they are prepared for is the controlled demolition (and currency reforms).

          The crew that started this mess in 1994 has long gone.
          The current crew has inherited a mess.

          They have been trying to introduce common EU debt for 2 decades, they were never able to push it through because Germany and the BuBa always refused.

          THIS is the victory of Germany. We caused it because we didn’t give in. Now things will be sorted out. There can be no further attempts to fix this. If fixing were possible it would have been easier 10 years ago. It is more impossible now.

        • HankH says:

          Dirk, that is very interesting. And good on Germany for holding a hard stand.

        • Latitude says:

          Dirk, I never understood how it would work.
          We started consolidating states almost from the get go..
          Trying to do that with countries that don’t even like each other seemed impossible.

        • DirkH says:

          Germany agreed to give up the D-Mark only as precondition for france’s agreement to the German unification.
          We were never REALLY that much into the Euro.

        • Lars P. says:

          DirkH says:July 5, 2015 at 5:01 pm :

          …”They have been trying to introduce common EU debt for 2 decades, they were never able to push it through because Germany and the BuBa always refused.”…

          I wonder what will happen if Greece’s national bank starts to print euros as much as they need?

        • DirkH says:

          Officially, they only have the materials to print 10 Euro notes. So it would be quite a logistic effort to supply the country.

    • HankH says:

      OT: I sent you a new draft a little while ago.

    • David A says:

      The old adage, “If you borrow enough money from the bank, you own the bank.

  3. leftinflagstaff says:

    Amazing. ‘I want your money when, where, and how I want it.’

    Don’t think I could have cojones that big even if I was as old as Greece.

    • DirkH says:

      a) IMF doesn’t want more image problems than they already have.
      b) If US influence is behind it, it’s probably about trying to block the Dardanelles for RUssian warships.

  4. DirkH says:

    The new Greek FinMin is Tsakalatos and he’s a huge fan of Che Guevara. And a Keynesian.

    What could possibly go wrong. Heh, a Keynesian without a printing press! Like a dog without a bone!

    German source:

    • leftinflagstaff says:

      I’m sure he’s still counting on using the neighbor’s press.

    • Lars P. says:

      A different take on the Greek issues: banksters did it all – which has some arguments:

      on the other hand we have the Greferendum schocker:
      finally my guess would be: better restart with the drachma instead of re-trying another bail-out, but ok, we may be here in 1 year again …

    • DirkH says:

      Lars P. says:
      July 8, 2015 at 5:59 am
      “A different take on the Greek issues: banksters did it all – which has some arguments:”

      BS. Greeks don’t pay taxes. They pay for favors with a Fakilaki – a closed couvert with some cash in it, discretely left behind as a thank you to your tax collector.
      Not paying taxes is national sport #1.

      A visitor wondered why in a small city there were agricultural trailers parked near major crossings. The locals told him, the dairy farmers keep them there so they don’t have to drive them all the way to town for the next strike, when they block the traffic demanding higher guaranteed prices for their milk by the government (I don’t know whether this tradition has changed during the “austerity” years.

      The state is seen as loot. This mentality developed under Ottoman rulership. It did wreck the Ottoman empire, unfortunately it now wrecks their own state.

      They still have a higher standard of living than e g Slovakia. Slovaks (being rather inept leftists themselves) are justifiably angry about having to help the “poor” Greeks. (who are world masters in complaining only topped by Muslims maybe – see the dairy farmers above)

      Not that the Euro could ever work. But the behaviour of the Greek citizens helped to collapse it a lot.

      • Lars P. says:

        I don’t think this contradicts 100% the other link, depending which way one is looking?

        • DirkH says:

          The “evil banksters” didn’t even take loan shark style interest rates.
          Rather the opposite: Trusting in future bail outs if things go south – as EU politicians practically GUARANTEED them in promises – the banks were happy to lend for interest rates identical to German ones.

          Later they had to get rid of Greek debt as it became toxic (plummeted in value) to avoid being blown up.

          The mistake that the banks made was trusting in an incompetent Eurocrat caste. And look at them. Schulz, Juncker, the communist Mogherini, what a ZOO. The last Commission was a zoo, the current one manages to look even WORSE. Hey can we have a cloned Breshnev to lighten things up!

    • Lars P. says:

      Hey look at this Rosetta pictures:
      Can this perfect parallel flow be explained by the standard “dirty snowball” theory?

  5. Bruce of Newcastle says:

    Tsakalatos is going to have an entertaining, and very short, tenure I think.

    It Begins: ECB Hikes Greek ELA Haircuts; Full “Depositor Bail-In” Sensitivity Analysis

    Its quite technical, but the ECB has just cut him off at the knees.

    Two ways. First they have announced they won’t raise the money support for the Greek banks. Second they have increased the discount they apply to the collateral that Greek banks have pledged for the loans they already got from the ELA program. The discount has been increased just enough to zero out the remaining theoretical line of credit.

    So the ECB has told the Greek banks you are getting no more money from us. The prognosis is they will totally run out of money for their ATMs either today or tomorrow.

    And Dr Tsakalatos will be holding the ticking package.

    • suyts says:

      I would assume that they knew this was coming …. or should have known.

      • David A says:

        Yes, they just want to blame it on the ECB, and not be accused of walking away.

        • Bruse of Newcastle says:

          The EU is trying to force the Greeks into printing money. If they do that they breach the treaty for the single currency (since only the ECB can do printing). If they unilaterally breach the treaty provisions the EU then can legally boot them out of the euro.

          So it is a game of chicken: a Leopard II tank vs a DIM 652.

        • suyts says:

          It’s “Bruse” now?

        • Bruce of Newcastle says:

          I can’t spell my own tag. 🙂

          I set the browser to delete history and cookies, on principle.

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