ECB and Inflation

[The Minsky Moment]

I don't agree with the chicken analogy.  It's more a contest between reality and fantasy.

It's a contest of two fantasies.
The IMF/EU fantasy is that one can indefinitely put off confronting the reality that some kind of write-down is inevitable.
The Syriza fantasy is that small country can be an EU member and an EZ member and still have full discretion in economic and fiscal policy, on the one hand, and that it can in theory exit those institutions without facing the brutal discipline of the market on the other.

But the chicken analogy works - both sides will be worse off with no deal but domestic political concerns on both sides are pushing in that direction.

the greeks need to learn that the rest of europe will not pay for their happy-time

The rest of Europe already paid but then get bailed out by the ECB-system.  The amounts involved are so small on a European wide scale that if they were simply written off entirely -- effectively monetized -- it would have no discernible effect.

The narrative of zero-sum trade off between Greece "paying" and ROE "paying" is nonsense.  The determination of what Greece should pay is a question of no financial significance.  It is purely a political economy question of incentives and moral hazard.  The purpose of making Greece pay is not to "get money back" that no one has lost; it is a mechanism to compel structural reform.

[Admiral Yi]

It's a contest of two fantasies.
The IMF/EU fantasy is that one can indefinitely put off confronting the reality that some kind of write-down is inevitable.

I haven't seen anything that would support this characterization.  The IMF in particular is on record as stating they view the debt as unsustainable.  The only party that has flat out refused a write down is the ECB, based (in my understanding) on the ECB's existing rules.

[Valmy]

The rest of Europe already paid but then get bailed out by the ECB-system.  The amounts involved are so small on a European wide scale that if they were simply written off entirely -- effectively monetized -- it would have no discernible effect.

Yeah but you cannot do this in a club of sovereign states even if it would make good practical sense. That door cannot be opened.

[The Minsky Moment]

The IMF in particular is on record as stating they view the debt as unsustainable.

They have stated this, yes.  But the last creditor proposal does nothing to address this.  It is still extend and pretend. 

[Zanza]

It's really ridiculous that we even consider the possibility of a total breakdown of public governance in Greece over something like 0.05% of Europe's GDP.

[crazy canuck]

It's really ridiculous that we even consider the possibility of a total breakdown of public governance in Greece over something like 0.05% of Europe's GDP.

[The Brain]

As long as Greece gets kicked out of the EU.

[Crazy_Ivan80]

It's really ridiculous that we even consider the possibility of a total breakdown of public governance in Greece over something like 0.05% of Europe's GDP.

given that the Greek state was -and is- apparently unable to properly collect taxes due I'm wondering if Greece ever had public governance.
Better not give them any money anymore: might as well burn it instead. At least you can enjoy the heat then. Now we got nothing.

[Zanza]

We don't have a failed at at in the South East of the union. That's surely worth a few billions to keep it that way.

[Monoriu]

I think it isn't just Greece.  There are several marginal Euro countries as well.  It is important to send the right signals about Greece to ensure that the rest fall in line. 

[Admiral Yi]

Greece could at any point it pleases unilaterally forgive itself 0.5% of Europe's GDP. 

Unfortunately for Greece, doing so would instantly render Greece's banks insolvent (because their holdings of Greek debt would now be worthless) and illiquid (because they would no longer have collateral acceptable to the ECB).

That's what the Syriza retards forgot about when they campaigned on fucking the troika in the ass.  It also means if Europe wanted to completely forgive Greece's debt it would also have to pay to recapitalize Greek banks, or it would be a relatively meaningless gesture.

[The Minsky Moment]

Unfortunately for Greece, doing so would instantly render Greece's banks insolvent (because their holdings of Greek debt would now be worthless) and illiquid (because they would no longer have collateral acceptable to the ECB).

Unless the default is accompanied by Grexit. 
Then Greece has its own central bank which can accept any collateral it is authorized to take.

[Admiral Yi]

Possibly.  But the Greek banks currently have euro liabilities.  Financing in ouzos might not do the trick.  You would have to accompany it with asset theft a la Peronistan.

[The Minsky Moment]

Possibly.  But the Greek banks currently have euro liabilities.  Financing in ouzos might not do the trick.  You would have to accompany it with asset theft a la Peronistan.

Depositors take a hit. 
Argentina c.2001 may be an attractive model from the worldview of a typical Syriza deputy.

[Savonarola]

We got to fight the powers that be
Lemme hear you say

Greek debt 'illegal, illegitimate and odious'

18 June 2015 Last updated at 09:35 BST

A committee convened by the Greek parliament has claimed much of the country's debt of 320bn euros was illegally contracted and should not be paid.

Following an official parliamentary investigation, speaker Zoe Konstantopoulou described the debt as illegal, illegitimate and odious.

She told the BBC that Greek people "should fight for justice".

Opposition parties have criticised the move saying it was a political tactic by the cash strapped government.

However the evidence marshalled by he debt truth committee could be used in a potential court case by the Greek government, should it seek a legal route out of its massive debts.

The concept of odious debt is established in international law where dictatorships or illegitimate governments have borrowed money and later been succeeded by democratic regimes.

The debt truth committee?