Europe's Populist Left

[Sheilbh]

Interesting. Almost everyone on my twitter is now assuming Grexit - people are talking mechanics of capital controls and overstamping.

Still a few who think there'll be a deal.

[Jacob]

Interesting. Almost everyone on my twitter is now assuming Grexit - people are talking mechanics of capital controls and overstamping.

Still a few who think there'll be a deal.

What just happened?

[Martinus]

Also important Tsipras got a very warm standing ovation from MPs and everyone would expect them to win even more seats if there's a new election so that won't solve problems as, say, the ECB have allegedly thought about.

Well, it would be a very incompetent politician who would lose votes 2 weeks after winning an election.

Now, let's see how these people feel about Syriza a year or two on.

[Martinus]

Also important Tsipras got a very warm standing ovation from MPs and everyone would expect them to win even more seats if there's a new election so that won't solve problems as, say, the ECB have allegedly thought about.

Basically the question now is, does Europe have a plan B?

Zyklon.

I actually laughed out loud. 

[Admiral Yi]

Tsipras is sounding more and more like Arafat: one message for the domestic audience and a different one for the international.

I predict this will end very badly for Greece.

[Sheilbh]

What just happened?

The new Greek government was sworn in so Tsipras presented their program to Parliament. But now all the cabinet ministers do it leading to a confidence vote.

The Tsipras speech referred almost every sentence to popular and national sovereignty and independence. Saying the government's only commitment was to the people and the national interest - they will respect every one of their pre-election commitments - as it's a democratic obligation. He argued that the last government was a democratic, economic and moral failure and that he wanted to re-establish confidence in democratic and parliamentary institutions (this morning the Syriza speaker has already been telling people off for not turning up to important debates - on day 2 - she's also said she won't allow 'omnibus' bills of multiple laws anymore etc).

He said he's very confident that negotiations will succeed because they have right on their side. As I mentioned earlier he accused the Samaras government of rejecting a payment in December that would last Greece six months - as the Eurogroup wanted - and instead requesting one that would last two months precisely to make the position of any new government very difficult. The last government have tried to set us up to fail. Then he moved onto the crisis and said it was never Greek it was European and the solution isn't Greece but Europe. They're willing to pay their debts but creditors must negotiate with them for that to happen. But what is non-negotiable is popular sovereignty and the result of the election. They have no mandate to agree to the old Memorandum of Understanding and it would be wrong to agree to a mistake. Therefore Greece doesn't want to extend the program. However they would like bridge financing until June so negotiations can begin. Europe won't make the same mistake again of humiliating and beggaring Greece and the government has a plan that can be implemented.

The first priority is to end the social crisis so the most vulnerable households are able to get their basic needs like food and electricity. They will also re-recruit unjustly dismissed public employees (such as the cleaning ladies of the finance ministry), at no cost because the previous government was already planning to hire more public sector employees, so they're just changing who'll get hired. He talked about reform of the health service and said Greece can no longer be called a civilised country while it has thousands going hungry with insufficient food.

They're going to streamline public administration and remove Ministerial privileges. Wants to improve operations of the government - apparently he was listing specific incidences of what looks like corruption that they've already seen from previous ND and PASOK governments. And he wants to reform public service and take on bureaucracy 'public service is not asking people for a piece of paper from another part of the government'. His government is determined to end corruption and tax evasion - the first step will be cooperating with partners with the various HSBC leaks (the Lagarde list etc), second they'll abolish the immunity for corruption and tax evasion investigations currently enjoyed by members of the privatisation fund and third there'll be a parliamentary inquiry into the causes for further recommendations.

From the Swissleaks last night:


They'll re-establish the state broadcaster and in future private TV channels will have to win their frequency in an open auction - this was one that really excited the Greeks I was following as declaring war on the oligarchs, I dread to think how they used to do thinks if this is novel. They want to redefine the relationship between police and citizen, so the police's main job is to protect civilians from crime. They're going to introduce a law immediately for the naturalisation of immigrant children born in Greece.

They want a fairer tax system. They're going to increase the personal allowance to €12 000 () and abolish the deadly unpopular property tax in 2015, though he called on all citizens to pay their 2014 bill as a contribution to the national effort. It'll be replaced with a tax on higher value properties. The system also needs to be made to work better I think he mentioned that citizens already owe €72 billion to the taxman which is indicative of its failures.

Moving onto labour rights they need to move from 'medieval conditions'. The minimum wage will be restored to €751 (from €500) gradually until 2016. They will limit mass firings again and re-write the laws around collective bargaining with the advice and support of the ILO. There will be no more foreclosure of people's main residence (probably for the best in a country where 40% of loans are non-performing). They will re-establish the welfare state starting with health and social insurance systems. And for pensioners who receive a pension of below €700, they will re-introduce the 13th month. Interestingly at this point he mentioned exploitation of natural resources and setting up a separate fund for pensions and social insurance from natural resources.

They support private investment but will end the fire sale of state assets. They won't continue the previous government's policy of selling assets for pennies. The message here was a bit more nuanced though it seemed to be 'we're not selling out, but we're still selling'.

The rest I suspect was stuff the Independent Greeks got - Greece supports Cyprus (and Cyprus supports Greece), he restated the position on Macedonia name business () and said Greece had a historical duty to request repayment of their WW2 forced loans to Germany.

[Sheilbh]

It's now day two of the government presenting its plans to Parliament.

The Deputy Finance Minister has basically accused the last government of fudging the figures and says there's only a primary surplus of €2.9 billion, not around €5 billion as had been suggested. They want to introduce software throughout the department to better manage both spending and revenue which will both have targets that will be continuously monitored. They are also going to reform public sector pay scales. They're going to introduce new oversight of municipalities and if local governments refuse to monitor spending and introduce anti-corruption measures they'll be cut off. They're going to cut down on waste (apparently the Dep FinMin had some examples) and smuggling to avoid excise tasks especially of fuel and cigarettes. 7 Ministries will be involved in this bit. They're also going to pay more attention to island links which is, apparently, a big issue.

The Justice Minister announced that the government will introduce a law allowing gay couples to legally register co-habitation which will guarantee equal rights

Varoufakis was broadly more of the same. Greece has been bankrupt since 2010, the biggest threat to competitiveness is deflation, the ECB has lost control of monetary policy etc. But re-stated that they'll keep 60-70% of the current reforms. He also said they're planning deep reform and have asked the OECD to help design and monitor those reforms. The OECD delegation arrives tomorrow.

Edit: Still worth remembering how successful the program's been in the past:



And investment down by two thirds.

We're actually in a worse position than the historical trend here:

[CountDeMoney]

I predict this will end very badly for Greece.

It offends you on a personal level that Greece itself just can't be repossessed, doesn't it.  Things would be better if the EU could just haul away the Parthenon as security interest.

[derspiess]

I predict this will end very badly for Greece.

It offends you on a personal level that Greece itself just can't be repossessed, doesn't it.  Things would be better if the EU could just haul away the Parthenon as security interest.

Actually, it would be.  They don't deserve their own history.

[Sheilbh]

I predict this will end very badly for Greece.

It offends you on a personal level that Greece itself just can't be repossessed, doesn't it.  Things would be better if the EU could just haul away the Parthenon as security interest.

Actually, it would be.  They don't deserve their own history.

I used to agree. I've been won over. I'm now positively Byronic in my philhellenism

Edit: Also Varoufakis yesterday announced the bankruptcy of Italy. The Italian Finance Minister was, as you'd expect, livid.

An interesting side note the Greeks appointed Lazard who are now advising them on fiscal management and public debt (they were previously appointed during the private sector haircut). Apparently EU officials are very annoyed at these advisers and their advice.

[Zanza]

Saying the government's only commitment was to the people and the national interest - they will respect every one of their pre-election commitments - as it's a democratic obligation.

Why would anybody even waste time negotiating with him then if the concept of external obligations doesn't even exist for this Greek government? 

He said he's very confident that negotiations will succeed because they have right on their side.

Then he moved onto the crisis and said it was never Greek it was European and the solution isn't Greece but Europe. They're willing to pay their debts but creditors must negotiate with them for that to happen.

About what when he says they don't accept foreign obligations?

Therefore Greece doesn't want to extend the program. However they would like bridge financing until June so negotiations can begin. Europe won't make the same mistake again of humiliating and beggaring Greece and the government has a plan that can be implemented.

That's rather optimistic.

The first priority is to end the social crisis so the most vulnerable households are able to get their basic needs like food and electricity. They will also re-recruit unjustly dismissed public employees (such as the cleaning ladies of the finance ministry), at no cost because the previous government was already planning to hire more public sector employees, so they're just changing who'll get hired. He talked about reform of the health service and said Greece can no longer be called a civilised country while it has thousands going hungry with insufficient food.

He is right about that. Greece is still a wealthy country and there is no need for this suffering. However, that is a domestic distribution problem, not something where anybody but the Greeks can fix anything.

They want a fairer tax system. They're going to increase the personal allowance to €12 000 () and abolish the deadly unpopular property tax in 2015, though he called on all citizens to pay their 2014 bill as a contribution to the national effort. It'll be replaced with a tax on higher value properties. The system also needs to be made to work better I think he mentioned that citizens already owe €72 billion to the taxman which is indicative of its failures.

Hmm, so because tax revenues are lower than they should be, they just abolish the tax that isn't paid? I wouldn't expect a positive effect on tax revenue from that.

[Zanza]

I think the most likely scenario at this point is that negotiations go nowhere. Greece will then unilaterally (with a wink from the rest of the EU) default in a couple of months to lessen its debtload. Unilateral so that the other EU leaders can point their fingers at them and tell their electorates that the evil Greeks didn't pay and alas their money is gone. To limit fallout from this default, Greece will be allowed to stay in the Euro nevertheless.

[CountDeMoney]

Actually, it would be.  They don't deserve their own history.

I used to agree. I've been won over. I'm now positively Byronic in my philhellenism

derweiß only thinks that because, like other greasy eggplant Mediterranean types, they're just too close to being black.

[Sheilbh]

Interesting. Tsipras and Varoufakis are to present an intermediate four year plan of reforms at tomorrows Eurogroup meeting. Varoufakis is apparently going to propose alternate measures for the 30% of reforms that Syriza disagree with.

Tsipras is still positive and optimistic. The Austrians seem to be the most pro-Greek from the public statements after meetings. And private the Commission, IMF and ECB are briefing that the government's being very cooperative. Also from twitter it looks like market analysts are moving back to thinking there's a deal - Deutsche Bank have just released a paper saying they still think a 'balanced' deal is the most likely .

I could be wrong but I think something's on the move.

Two possible thoughts. One Syriza have already said they won't be able to fulfill all their pre-election promises if they can't afford them. Very, very few of their proposals so far necessarily involve increasing public spending and people are prepared that they may renege on some. Two by making it an issue of 'popular sovereignty' and national pride I think Tsipras has made his position easier. If he can sell a deal as Greece dealing with equals rather than receiving instructions from 12 year old Troika officials he can probably compromise a fair bit. It's a little bit Thatcher.

Why would anybody even waste time negotiating with him then if the concept of external obligations doesn't even exist for this Greek government? 

As Pierre Moscovici put it, if elections don't change anything then what's the point?

[Sheilbh]

To limit fallout from this default, Greece will be allowed to stay in the Euro nevertheless.

Yeah. I do struggle with Grexit because it's a decision that can only be made by Draghi. I'm not convinced that he'd get rid of the irreversibility of the Euro or that he'd make that big a political choice without extraordinary circumstances. I get why and how it might happen. I'm just really not sure that the ECB would do it.

And we already have a precedent of a Euro member with capital controls in Cyprus.