Europe's Populist Left

[Martinus]

Greece's Odd-Couple Only Agrees About Ending Austerity

(Bloomberg) -- The two men disagree on just about everything, except this: for Greece, the time of German-dictated austerity must end.

Alexis Tsipras became prime minister of Greece on Monday by vowing to challenge the budget-cutting policies demanded by the European Union and International Monetary Fund in return for a 240 billion euro ($270 billion) rescue plan.

But his election win on Sunday, though emphatic, left the former communist short of a majority in parliament. To get one, he turned to the religiously inclined conservative party of Panos Kammenos. Their unlikely and potentially fragile coalition underscores how Greeks across the political spectrum have found a common cause after five years of austerity-fueled recession.

Tsipras and Kammenos, who took the post of defense minister, have both vowed to try to write down the country's debt, over the objections of the European Central Bank and IMF.

On most other issues, from foreign affairs to social policy and civil liberties, the two parties are "chalk and cheese," said Yanis Varoufakis, a Syriza lawmaker who was named finance minister.

'Seasoned and Opportunistic'

Greek stocks and bonds tumbled on Tuesday before the cabinet was named. Alpha Bank SA fell as much as 20 percent, while the yield on three-year government bonds surged two percentage points to more than 14 percent.

Syriza won 149 seats in the 300-member parliament. Kammenos's party, Independent Greeks, has 13 lawmakers. Their alliance is based firmly on shared opposition to spending cuts. Beyond that, the leaders' backgrounds and views differ sharply.

Tsipras, 40, is a former member of the Communist Youth. Kammenos, 49, is a religious, conservative economist who, when discussing Greece's German-led paymasters, has evoked his nation's occupation by the Nazis.

The parties have diverging views on taxation, immigration and the role of the church, according to Wolfango Piccoli, managing director at Teneo Intelligence in London.

"It's hard to see how this coalition of strange bedfellows can last long," he said. "Kammenos is a seasoned and opportunistic politician who will not hesitate to leave the coalition whenever it suits him."

Homeland Attacked

Kammenos formed his own group in parliament after being expelled from the New Democracy party by ex-Prime Minister Antonis Samaras for opposing the terms of Greece's bailouts. Last week, Kammenos told party supporters that Europe is governed by "neo-Nazi Germans."

The Syriza-led coalition replaces one led by Samaras since June 2012 that included New Democracy and Pasok, the two parties that have traditionally vied for power in Greece.

Kammenos, an economist by training and a father of five, has been a lawmaker since 1993, according to the parliament website. He served as deputy shipping minister between 2007 and 2009.

Kammenos called those who led Greece into the first bailout in May 2010 "traitors," and said that as a result of the agreement, "our homeland was under attack." He was expelled from New Democracy for opposing the interim government of Lucas Papademos, which arranged the world's biggest debt restructuring and finalized a second rescue in return for more austerity measures.

'German Protectorate'

In 2012, Kammenos announced the establishment of his party in the town of Distomo, the site of Nazi atrocities during World War II.

Tsipras, who has campaigned on a platform of writing down Greece's debt, has been vocal about pursuing Germany for reparations. His first visit as prime minister on Monday was to Kaisariani in Athens, to pay tribute to victims of Nazi occupation.

Independent Greeks, whose lawmakers include former model Elena Kountoura, who was named deputy minister for tourism today, and television actor Pavlos Haikalis, made the demand that Germany pay reparations part of their election campaign in May and June 2012.

In October of the same year, during Chancellor Angela Merkel's visit to Athens, the party called a protest outside the German Embassy, and tried to hand over a petition accusing Merkel of "transforming Greece into a German protectorate."

There's some ideological common ground between the parties, as shown by the past defection of some Independent Greeks lawmakers to join Syriza, said Jens Bastian, an economist and former member of the European Commission's Greek task force. What's more striking about their coalition is the speed with which it was formed, he said.

"What concerns me is that Tsipras did not prefer to talk to other potential coalition partners," Bastian said. "Instead he chose to put a government together as soon as possible."

http://www.bloomberg.com/news/articles/2015-01-26/greece-s-odd-couple-coalition-only-agrees-about-ending-austerity

In other news, Kammenos also said that the Greek debt is a result of international Jewish conspiracy; suports putting the Orthodox Church in charge of the country education system; and wants to kick out immigrants.

I look forward to my "I Told You So" to the Languish Naive Left (tm) in a few months/years just as it happened with Erdogan.

[Crazy_Ivan80]

Things that baffle me for example are that Poland's GDP per capita is 93% of Greece's GDP per capita, but Poland's minimum wage is only 58% that of Greece - yet Greeks think their minimum wage is way too low and Syriza propose to raise it even further.

Things like this make it hard for me to see Greeks in any other way but as lazy greedy fucks.

not to mention the fact that the Left is already shouting that we need to waste more money on Greece because of $olidarity.

I wonder where Greek solidarity was when they were cooking their books, lying to everyone about the state of things in Greece and when they were collectively not paying their taxes and wasting money they basically didn't have.

[Eddie Teach]

Things that baffle me for example are that Poland's GDP per capita is 93% of Greece's GDP per capita, but Poland's minimum wage is only 58% that of Greece - yet Greeks think their minimum wage is way too low and Syriza propose to raise it even further.

You might not be the best-suited to judge whether Poland's minimum wage is too low or not.

[garbon]

Greeks are incredibly unattractive as a people.

Though as men, they have their fair share of hotties.

[Martinus]

Things that baffle me for example are that Poland's GDP per capita is 93% of Greece's GDP per capita, but Poland's minimum wage is only 58% that of Greece - yet Greeks think their minimum wage is way too low and Syriza propose to raise it even further.

You might not be the best-suited to judge whether Poland's minimum wage is too low or not.

In fact I was surprised Polish minimum wage is so high. I thought I am earning around 50 times the minimum wage but it seems like it's only around 35 times.

[Admiral Yi]

Why would they need to borrow money?

They've said they want to renegotiate the bailout to increase deficit spending.  That means more borrowing.

[The Minsky Moment]

Yeah, I'd rather have Greece effectively ruled by Germany and the Troika than hoping Greeks get their shit together for a change. Doing the same thing over and over again and expecting a different result is the definition of insanity.

Thus the policy of Germany and the Troika is insane.

[The Minsky Moment]

Greece has been running a primary surplus for two years.

So?

So it is relevant in respect to this point:

Do you hope this happens?  Would you like Germany et al to lend Greece more money that will not get paid back?

A Greece that runs a primary surplus is a Greece capable of paying off its debts so long as the legacy debt is at manageable levels.

The fact that Greece was able to get to a primary surplus under extremely unfavorable macro conditions also belies the claim that the Greeks as a people are inherently hopeless, shiftless, whatever slur of the day, etc.

Under the circumstances the reform effort was pretty respectable in a short period of time.  The wise policy of the EU should have been to reinforce that.  The predictable result of not doing that would be to undermine the political elements that were pushing to fix things.  And now the policy has reaped what it sowed.

[Admiral Yi]

You know that's not true Joan.  A Greece with a primary surplus is a country that creeps deeper and deeper into debt every year, the pace determined by the interest rate charged on its borrowing.

The fact that Greece was able to achieve a primary surplus had nothing to do with their inherent fiscal probity and everything to do with the conditions imposed by the lenders, which Greece resisted and reneged on over and over again.

And now Greek voters have spoken, and elected a party who's stated aim is to toss out that primary surplus and amp up deficit spending.

That all being said, I still fail to see the relevance of any of this discussion of Greece's primary surplus to the distinction between default and Syriza's wish to increase its deficit, which was the starting point of the discussion between Shelf and myself.

[Razgovory]

And now Greek voters have spoken, and elected a party who's stated aim is to toss out that primary surplus and amp up deficit spending.

I remember when we did that back in 2000.

[Sheilbh]

Except the Greeks didn't backslide they've had to cut far more than any program proposed.

Also SYRIZA don't want deficit spending.

[Admiral Yi]

Except the Greeks didn't backslide they've had to cut far more than any program proposed.

They missed target after target.

Also SYRIZA don't want deficit spending.

I thought I read every explicitly they want to increase the deficit.

But assuming they don't, how do you expect them to finance their increase in public sector employment.

[The Minsky Moment]

You know that's not true Joan.  A Greece with a primary surplus is a country that creeps deeper and deeper into debt every year, the pace determined by the interest rate charged on its borrowing.

The fact that Greece was able to achieve a primary surplus had nothing to do with their inherent fiscal probity and everything to do with the conditions imposed by the lenders, which Greece resisted and reneged on over and over again.

???
A country that runs a primary surplus is by definition transferring real resources to creditors on a net basis.
The only way that can occur and yet the country "crawl deeper and deeper into debt" is if the existing stock of debt is unsustainable.  Which is what the Troika keeps burying its head in the sand about.

Second, of course achieving the surplus involves fiscal probity.  How else could one get to a primary surplus in excess of 3 percent of GDP? The fact that it involves pressure from the EU is not a detracting factor.  On the contrary, it shows the Greeks kept their end up, grumbling notwithstanding.

If one puts aside moral hazard considerations for a second, the current situation makes zero sense.  Greece is one the poorest countries in the EZ and is deep into an economic depression.  Yet it is making net payments to its much more affluent EU partners - payments that are quite significant in size to Greece but totally negligible to the recipients.  This makes no freaking sense at all.

To which one could responds - ah, but moral hazard.  But that IMO is no longer a serious consideration.  No rational country would go through what Greece went through on the theory that after 6 years of horrific abject misery and the eradication of a political class they would finally catch a break.

If the EU were a real political union a la the USA, none of this would be an issue.  Instead of being hung out to dry and forced into austerity, money would have been flowing in to Greece automatically, just as, for example, it flowed into Oklahoma during the S&L crisis of 89-91.  This crisis is in part an artifact of the jury-rigged institutional construct of the EU and the EZ.

And now Greek voters have spoken, and elected a party who's stated aim is to toss out that primary surplus and amp up deficit spending.

That all being said, I still fail to see the relevance of any of this discussion of Greece's primary surplus to the distinction between default and Syriza's wish to increase its deficit, which was the starting point of the discussion between Shelf and myself.

I can't really speak as to what Syriza intends to do, because it appears to be a grouping of somewhat disparate elements, and those manifestos translated into English are borderline incomprehensible.

What sheilbh was arguing is that their rise to power could be an opportunity to reach a restructuring; part of that deal would presumably involve a continuing commitment to smaller primary surplus or at least a primary balance.  That would seem to me a hell of a lot better than either the status quo or default.  Whether Syriza will actually agree to such a deal I don't know.  It would have been far more advisable to do this a while ago and thus not have to test that proposition.

I don't get the argument that a default is superior.  It isn't better for Greece, it isn't better for creditors.  The upside eludes me.

[mongers]

I think Yi's looking for a moral fig-leaf to justify him getting some vulture fund Greek debt?

[Admiral Yi]

???
A country that runs a primary surplus is by definition transferring real resources to creditors on a net basis.

Only if one ignores accruing interest.  That's what makes it a primary surplus and not a surplus surplus.

If the EU were a real political union a la the USA, none of this would be an issue.  Instead of being hung out to dry and forced into austerity, money would have been flowing in to Greece automatically, just as, for example, it flowed into Oklahoma during the S&L crisis of 89-91.  This crisis is in part an artifact of the jury-rigged institutional construct of the EU and the EZ.

Detroit?  Stockton?  NYC?  The US taxpayer is most definitely not on the hook for any bad debts piled up by its jurisdictions.

I don't get the argument that a default is superior.  It isn't better for Greece, it isn't better for creditors.  The upside eludes me.

The only advantage to paying off ones debts is it entitles one to borrow more.  With debt at 170% of GDP, no one will lend to Greece at a reasonable rate anyway.  And it would be the work of five generations to pay down the existing debt.  So default wipes it all clean.  Then in five to seven years they can see if investors think they have learned their lesson.