Sunday, July 12, 2015
You Say Nein, I Say Oui....
Stubb of Finland appears to be saying that a deal has been reached in this game of Greek ball, but the deal will be to throw it back to the Greek parliament for enabling laws, and it seems as if the "No" camp is trying to enforce something in which the state properties to be sold of are put into some sort of legal trust fund which backstops the European advances.
Italy (and Draghi) are fighting tooth and nail to prevent a Grexit, joined by France and others. It seems as if they have won for the time being.
I have a post on Italy coming up.
If the Greek debt owed to the EU were to be made half non-interest bearing, it's possible that the accounting rules could be fudged so that no country would have to take that long-term, non-interest bearing debt as an obligation, which would greatly help matters.
But really, this is about Italy.
Update. from FAZ live-blogging:
Nett zu beobachten: EU-Kommissionschef Jean-Claude Juncker drückt Alexis Tsipras zur Begrüßung einen Kuss auf die linke Wange, legt ihm den Arm um die Schulter. Ein gutes Zeichen?The German press changes direction like a school of fishes, and they are now swimming in the other direction. The above: "Good to see: EU Chief Commissioner Jean-Claude Juncker greets Alexis Tsipras with a kiss on the left cheek, wraps his arm around Tsipras' shoulders. A good sign?"
Per your previous post that there is no support for returning to the Drachma. This is because it was constantly devalued and they cannot borrow in Drachma. But that is just what the Greeks need, like it or not.
As far as I can tell from what I read, the latest proposal would increase Greek debt to GDP by 20 to 30 percent. That is nuts. They should go full BK saying they were forced out of the union so they are not paying any money back. Nobody beyond the troika is likely to lend them any money now anyway.
The plan is to keep removing the weakest links from the chain until there is only one link left! Only then can the chain be strong! ;)
Darwin had a term for this. It's called survival of the fittest, lol. Sigh.
"...an ugly, unmanaged Grexit may help the rest of Europe breakthrough some longstanding structural change roadblocks."
Since the time of the volkswanderung, Europe has never restructured its society in response to something so trivial as a debt crisis. They will continue as they have been until violence threatens Brussels, and maybe longer than that.