Europe's Populist Left

[Sheilbh]

What exactly did they threaten them with? As you wise Anglosaxons with perfect foresight and probably everybody except a few dumb Northern Europeans knew even back then, Greece would suffer atrociously from the prescribed austerity. How much worse could any other policy have been? Where the Greeks just as dumb as the Northern Europeans not to see it?

The point is people didn't realise how dreadful the situation would be in Greece - living standards down 40%, economy down 25%, per capita public spending down by more than that. As the IMF have admitted they fucked up on the fiscal multiplier. But that just means the situation's changed and so should the policies.

As Geithner said there was an element of wanting to 'get the paddles out' when it came to Greece (I think he's discussing 2011/12 so after the program had already started and wasn't working) rather than approaching the situation rationally.

And in terms of how much worse any other policy could have been, at that point until Draghi's 'whatever it takes' speech there would have been contagion unless the ECB intervened massively. I think there probably would have been a disorderly breakup of the Eurozone as a whole. So European capital controls, devaluation and inflation of the South, probably an inflated currency and recession of the North. Defaults which would have led to banking crises across the continent. I think it would've been ugly.

That is literally an alternative. Not a good one of course, but worse than the failed German-Troika policy? And suggesting there were other alternatives that were just not offered disregards the immense pressure that Sarkozy and Merkel were under during that time. I know Merkel is perceived as the all-powerful politician that can single-handed decide the fate of Europe, but she is not and certainly wasn't back then.

I think the other alternatives were trying to offer more support to reformist governments, as Varoufakis now says a bit of fiscal space to support the reform process. I don't think that was ever an option in Greece because I think Greece's biggest problem was endemic in their state and Syriza offer the first opportunity of changing that. But the Eurozone have burned through pliable, cooperative Prime Ministers who've received very little support for their reforms and very little offer of fiscal space - that the IMF within Troika thinks they need.

I absolutely get that Sarko and Merkel were under immense pressure and as I say about the whole Germany believes a Grexit is manageable, I can't think of a German statement on Eurozone policy over the last five years that hasn't, ultimately been abandoned under that pressure. But I think that partly her leadership style is to blame. The same cycle happened of categorical German statements of opposition to x, followed by mounting market pressure on the weakest sovereign, then the next weakest until at four in the morning in Brussels everyone agrees to y which is half-way to x. The markets calmed down for a day or two then the cycle began again. I've said before I think this is partly a product of what seems like Merkel's consensual style and I think it would have been better had she got ahead of public opinion and tried to lead it rather than 'three years of flailing about'. We ended up with bailouts, OMT, QE and the start of a banking union anyway it would have been better had those been constructed under less pressure.

I think the France was also a big issue in achieving that and Sarko failed there.

And obviously on both sides they were facing what they thought of as the abyss: disorderly break-up of the Eurozone. That's enough to get Merkel to resile from her various opposition to things and for the Greeks to agree to the Troika program. Personally I'm not convinced that abyss has gone away.

Worse than what they have now? How so?

Do you mean break up then or now?

[Sheilbh]

'We want to entrench and deepen structural reforms.'

Well, that can't be very hard considering their progress so far.

Sure. The problem of Greece is endemic to the system and now there's a party that isn't part of that system in charge.

But it's not as if being a poster-child for reform gets you any more space. Portugal and Ireland have hardly been given the help (in the latter the leading party in the polls is now Sinn Fein and the three parties who've formed every government since the civil war are polling at under 50%) - Renzi is a committed reformer so there should be support, a little fiscal space, a little loosening of monetary policy (which is happening at last but is probably too little too late on its own).

"We are deeply committed to improvement."

How many parties of the 'radical left' have you heard talking about structural reform like that?

[Razgovory]

They can't print their own money.

Yes, they can. They can just not print Euros.

Which country is gong to let them print their money?

[Admiral Yi]

How many parties of the 'radical left' have you heard talking about structural reform like that?

None.  However, that is not a specific proposal.

[Sheilbh]

Interesting point from Paul Mason Channel 4's Economics Editor who is probably the journalist closest to Varoufakis. He's just said that this morning he felt extremely sceptical but now thinks Greece is very close to a deal on ELA and debt.

Edit: And, Yi:

The government planned to present its proposals in detailed form to its European partners before the end of February.

[mongers]

Interesting point from Paul Mason Channel 4's Economics Editor who is probably the journalist closest to Varoufakis. He's just said that this morning he felt extremely sceptical but now thinks Greece is very close to a deal on ELA and debt.

Edit: And, Yi:

The government planned to present its proposals in detailed form to its European partners before the end of February.

Weren't you criticising him for being a closet Marxist a while back? 

[The Minsky Moment]

What now is Fakis puts a debt foregiveness number on the table and tells what he's willing to do in return.

See - we're arguing about nothing.   

[Martinus]

They can't print their own money.

Yes, they can. They can just not print Euros.

Now you are just being dumb. And you are one of the more rational posters here usually. So I can't imagine how stupid the views of an "average German voter" on this must be. No wonder Angela is acting so irrationally.

[Martinus]

Incidentally, speaking of tax evasion, it beats me why the rest of the EU is tolerating the existence of tax havens like Cyprus or Malta within its borders.

Effectively - and I am talking from experience, having advised on various Cypriot or Maltese structures - these jurisdictions allow anyone to set up a group structure allowing one, under certain conditions, to pay no capital gains tax or (sometimes) also no income tax anywhere in Europe - and because these countries are EU members, vehicles created in Cyprus and Malta have unrestricted access to all EU markets under freedom of establishment principle.

Without them (and to the lesser extent, Luxembourg), I don't think the likes of Amazon and Apple would be able to pay, say, no taxes in the UK.

[Sheilbh]

Weren't you criticising him for being a closet Marxist a while back? 

I don't think so. I don't think he's closeted I always thought he was a Trot and proud, and I've always liked him. Though I think his style suits Channel 4 better than Newsnight.

Incidentally, speaking of tax evasion, it beats me why the rest of the EU is tolerating the existence of tax havens like Cyprus or Malta within its borders.

If only someone had told the Greeks they could make a legitimate industry out of it. I mean they're amateurs doing it for love compared, say, Juncker's 20 years as Finance Minister.

It looks like the Troika is over. The ECB is considering leaving in line with the ECJ opinion and Juncker's suggesting something more 'democratically based and accountable'. I think when the minutes are released and memoirs are written there'll be an interesting story in the well-meaning politicisation of the ECB. Hopefully it's over now, Draghi keeps on emphasising that the ECB's job is monetary policy and if the Advocate General's opinion is followed then that line will be drawn more clearly.

Incidentally ECB meets on Wednesday to decide whether to extend ELA to Greece. I think they will. I think some members of the ECB board have been sounding off but it just seems incredibly unlikely that they'll choose to take this massive (political) decision now.

Interestingly one of the Bank of England committee members is being asked about all this in Parliament now:

"My expectation is that Greece and the euro zone members and the IMF will work together for an agreement,"

"We have heard some language in the last day or two that suggests a little bit of progress, a little bit of give."

...

"It looks to me to be unsustainable," Taylor told Britain's parliament when asked about Greece's debt.

"If the creditor nations really do believe they are going to get their money back, we are in an even worse situation than I think we are," Taylor told parliament's Treasury Select Committee.

One of the "tragedies of the European situation" was that Germany was split between being pro-European at all times, and the need for monetary and financial rigour at all times, Taylor said.

"When these come into conflict, the easiest way to resolve it is to claim that monetary and financial rigour is pro-European," Taylor said.

"This conflict needs to be laid bare ... and one just hopes that Germany will come to a coherent solution and I am sure they will," Taylor, a former senior banker, added.

Meanwhile Varoufakis is off to Rome and, after addressing the Cypriot Parliament (mostly on the division of Cyprus, not the economy), Tsipras is joining him. Renzi and Tsipras together at last, as in every Euro-lefties dream

[Martinus]

one of the Bank of England committee members is being asked about all this in Parliament now

Incidentally, what's the point of this? It's not like he can give them anything but the non-answers he actually has.

[Sheilbh]

Incidentally, what's the point of this? It's not like he can give them anything but the non-answers he actually has.

I don't think this "if the creditor nations really do believe they are going to get their money back, we are in an even worse situation than I think we are" is a non-answer.

[Gups]

I'm pretty cynical about Syrzia's ability to deliver what its voters want but it has to be said they are making a good fist of the negotiations.

[The Brain]

Letting Greece be destroyed is important, to encourage the others. From the ashes maybe something can be built. Or not. It's not like I give a fuck.

[Martinus]

Well, admittedly, it's not like everything about Greece that is worth saving is not already safely stored in the British Museum...