Europe's Populist Left

[Sheilbh]

They haven't. It will form part of the larger negotiations. My guess is they'll meet around 2-2.5%.

Greek cabinet approved their list of reforms. No doubt there'll end up being negotiations on them  but they seem positive they'll be acceptable.

Edit: One thought. The ECB may be legally barred from its Troika role. The IMF will (sadly) end their program in 2016. Will it just be the Commission that has the supervisory role in Greece then?

[Sheilbh]

Interesting piece by James Galbraith floating around about his time working with Varoufakis over the last few weeks. He was amazed, as an old Congressional staffer, at the dysfunction of European bodies and how ad hoc everything is. Other interesting point is it confirms the impression that the IMF, EC and ECB were generally working quite productively with the Greeks, but things are far more difficult and fractious with the member states.

[Admiral Yi]

Is that surprising?  The member states were putting up their own money.

[Sheilbh]

Except for Germany and Slovakia that's somewhat true. It's not surprising just nice to have the suspicion confirmed.

It may matter more in the future too. All of those institutions have backed off quite considerably from their positions in 2010. It may matter as I think the Commission role is going to grow and Juncker's far more politically savvy and far, far more federalist than Barroso. I think he's bound to use the Eurozone crisis and, potentially, growing divisions within the Eurogroup to strengthen the Commission further

[Admiral Yi]

What I said is not true for Germany and Slovakia?

[Sheilbh]

Yeah. Slovakia's only contributed money to the common European fund (as has Greece). In the first bailout which was bilateral loans managed by the Commission, Slovakia refused to participate.

German taxpayer money is only on the line if Greece defaults. Germany's loan came KfW the German development bank which issued bonds for the money, which in turn are guaranteed by the German government. So if the Greeks default the German taxpayer is on the hook but not otherwise.

Aside from that the German involvement is through, like the Slovakian and indeed Greek involvement, common European funds. The EFSF is, I think guaranteed by member states, so again they're only on the hook if they actually default (I don't know how the Greek bit of the guarantee would work in this case). Then there's the ESM (to which the Greeks have also contributed and are the 7th largest shareholder) - the ESM is guaranteed by the European Commission with the EU budget as collateral.

[Admiral Yi]

Nobody else is on the hook unless Greece defaults.  It's like a definition of being on the hook.

[Sheilbh]

What?

My point is yes member states did put up their own money for the Greek bailouts with the partial exception of Germany and total exception of Slovakia.

Obviously all member states are liable if Greece defaults - though I'm not sure how that actually works with the EFSF money (which is most of it).

[Admiral Yi]

Well it's a technically correct distinction without any real meaning.

[Admiral Yi]

In fact it could be argued that the Krauts put up disproportionately more of their own money, because they handed the upside away to private bond holders while keeping the downside risk.

[Sheilbh]

It makes it more baffling that the member states are seemingly more indifferent to a Greek default than the technical institutions they've asked to help administer the bailout that have often also loaned the Greeks money (especially the IMF).

Edit: I have always had a simplistic interpretation of 'put up' as pay for

Edit: Also hard-left of Syriza have started slamming the government today. Shouldn't be an issue as PASOK and, I believe, To Potami have said they'll support the deal. But a positive nonetheless and a reminder that lots of Syriza really don't like or trust Varoufakis. He's very much there because Tsipras trusts him.

[MadImmortalMan]

In fact it could be argued that the Krauts put up disproportionately more of their own money, because they handed the upside away to private bond holders while keeping the downside risk.

Also because they save more money and for whatever reason, sovereign bonds have a favored position in their market. Why is that? Why are the Germans buying Spanish bonds instead of stocks, real estate or something else?

I think there may be a need for some tweaking in the reserve requirement rules. If all euro bonds are equal, then all euro nations will have equivalent rates, which happened. If some of those were too risky, then they should have had commensurate interest rates and also been exempt from being considered as reserve assets in banks. With all of the incentives that brings.

[Zanza]

German taxpayer money is only on the line if Greece defaults. Germany's loan came KfW the German development bank which issued bonds for the money, which in turn are guaranteed by the German government. So if the Greeks default the German taxpayer is on the hook but not otherwise.

Eh? Isn't that a completely meaningless distinction? The KfW is a government institution that is by law guaranteed by the German taxpayer. Whether the KfW takes a loan in the bond market or the Finanzagentur (which is another government agency that handles German government debt) seems to be a technicality.
I am sure the other countries have some legal entities etc. that handle their government finances as well. It's not like "the Portuguese taxpayer" or "the French taxpayer" exists as a legal entity that would have loaned Greece money directly.
Looks to me like someone in the Anglosaxon press wanted to make a point about how Germany doesn't expose itself or something, but - as so often - doesn't understand how the German state is organised.

[MadImmortalMan]

I personally don't think I understand it properly, but I've not seen anything that really explains it. Since my German is horrible shit.

[Zanza]

I personally don't think I understand it properly, but I've not seen anything that really explains it. Since my German is horrible shit.

The obligations and assets of the KfW are not shown as part of the government balance sheet, so loaning money to Greece doesn't increase the German government debt figures. That might be where the perceived difference is.