Greek Referendum Poll

[Norgy]

New technology discovered for: Greece
Technology: Taxing the fuck out of the rich
Effects: Getting actual tax revenue
Press TAB for more information or E to return to "EU - Playin' it by ear since 1992".

[Admiral Yi]

See, this is what confuses me.  Yi talks about Austerity working if it actually increases debt, then exactly what is it accomplishing?  Greece could increase it's debt without wrecking it's economy.

I have no idea what you're talking about.

[Razgovory]

See, this is what confuses me.  Yi talks about Austerity working if it actually increases debt, then exactly what is it accomplishing?  Greece could increase it's debt without wrecking it's economy.

I have no idea what you're talking about.

This exchange. 

???
Austerity made the debt problem *worse*

So?  This doesn't change the fact that no austerity means more money is needed.

Conditionality means its not free.
Assuming that there was "free money". Which there wasn't except for former holders of Greek sovereign bonds.

So by conditionality you mean austerity.

And your ECB money would be free.  If you don't earn it or pay it back, it's free.

Austerity makes the debt problem worse, your response was "so".  If it makes the debt problem worse, what the hell is the point of Austerity?

[alfred russel]

Schäuble is now openly defying Merkel and is telling the press that Grexit would have been a much better solution. I wonder if she'll tolerate that for long.

It makes her look better to have some significant dissent that is more hard line than she is.

[Admiral Yi]

Raz, do me a favor and read the post Joan was responding to.  I said "so" because "austerity increased Greece's debt/GDP" is not a response to the question who pays for nonausterity.  It's totally orthogonal.

Second, watch your tenses.  Joan said "austerity made the debt problem worse.  I.e. in Greece's case it did. It does not in every case, which is what is connoted by you saying "austerity makes the debt problem worse.  Bill Clinton austerely raised taxes, and the debt problem did not become worse.  We austerely fell of the Fiscal Cliff and we austerely sequestered, and those did not make the debt problem worse.  We austerely did not repeat Obamastimulus and that did not make the debt problem worse.  Not all austerity makes the debt problem worse.

[Zanza]

So?  This doesn't change the fact that no austerity means more money is needed.

See, this is what confuses me.  Yi talks about Austerity working if it actually increases debt, then exactly what is it accomplishing?  Greece could increase it's debt without wrecking it's economy.

Not really. No one was going to lend Greece any more money when the bailouts were done. The alternative to the bailouts was not just making more debt and continuing as before. The alternative was immediate adjustment of Greece's gigantic state deficit to zero. Or drop out of the Euro and print to bridge the gap.

In hindsight that might have been better or the bailouts could have been done better, but "Greece could increase its debt" was not an option anymore back then.

[Drakken]

And the gift just wouldn't stop giving.

IMF's director Christine Lagarde maintains the official IMF policy that it cannot legally give a cent to Greece until it has repaid its arrieries on IMF debts, despite the current deal stating black and white that any participation of the IMF will have to mandatory. She thus reitered that the Eurogroup, including Germany and Finland, will have to put more money to compensate.

Also, since the IMF still considers Greece's debt to be thoroughly unsustainable, solutions toward erasing part of Greece's debt will have to be considered, whether Germany the Eurogroup likes it or not.

http://www.imf.org/external/pubs/ft/scr/2015/cr15186.pdf?hootPostID=2cd94f17236d717acd9949448d794045

The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date—and what has been proposed by the ESM. There are several options. If Europe prefers to again provide debt relief throughmaturity extension, there would have to be a very dramatic extension with grace periods of, say, 30 years on the entire stock of European debt, including new assistance. This reflects the basic premise that debt cannot be assumed to migrate back onto the balance sheet of the private sector at interest rates close to the current AAA rates before debt levels have been brought to much lower levels; borrowing at anything but AAA rates in the near term will bring about an unsustainable debt dynamic for the next several decades. Other options include explicit annual transfers to the Greek budget or deep upfront haircuts. The choice between the various options is for Greece and its European partners to decide.

[Monoriu]

And the gift just wouldn't stop giving.

IMF's director Christine Lagarde maintains the official IMF policy that it cannot legally give a cent to Greece until it has repaid its arrieries on IMF debts, despite the current deal stating black and white that any participation of the IMF will have to mandatory. She thus reitered that the Eurogroup, including Germany and Finland, will have to put more money to compensate.

Also, since the IMF still considers Greece's debt to be thoroughly unsustainable, solutions toward erasing part of Greece's debt will have to be considered, whether Germany the Eurogroup likes it or not.

http://www.imf.org/external/pubs/ft/scr/2015/cr15186.pdf?hootPostID=2cd94f17236d717acd9949448d794045

The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date—and what has been proposed by the ESM. There are several options. If Europe prefers to again provide debt relief throughmaturity extension, there would have to be a very dramatic extension with grace periods of, say, 30 years on the entire stock of European debt, including new assistance. This reflects the basic premise that debt cannot be assumed to migrate back onto the balance sheet of the private sector at interest rates close to the current AAA rates before debt levels have been brought to much lower levels; borrowing at anything but AAA rates in the near term will bring about an unsustainable debt dynamic for the next several decades. Other options include explicit annual transfers to the Greek budget or deep upfront haircuts. The choice between the various options is for Greece and its European partners to decide.

That's not impossible to solve.  Euro group gives money to Greece so that Greece can repay its arrears to IMF immediately.  IMF then lends a fresh round of money to Greece, part of which is to entirely repay the loan that I mentioned a sentence ago.  Just a few accounting entries.  There, no rule has been broken. 

[Drakken]

That's not impossible to solve.  Euro group gives money to Greece so that Greece can repay its arrears to IMF immediately.  IMF then lends a fresh round of money to Greece, part of which is to entirely repay the loan that I mentioned a sentence ago.  Just a few accounting entries.  There, no rule has been broken.

I feel Lagarde's unwillingness to intervene stems from much deeper reasons that the mere legalism of unpaid arrieries. Behind this, the IMF's position is that it doesn't want to get dragged into the whole mess, and that the IMF isn't a printing press at the beak and call of the ECB and the Eurozone. Both the latter go from the principle that Greece's debt is solvable on the long-term, despite its present and future debt ratio increasing. The IMF does not, and refuses to go further unless the partners consider relieving part of Greece's debt as a long-term solution.

Also, votes in Parliaments aren't even done yet. It takes only one Parliament refusing to ratify to fuck the whole thing up. Lagarde's declarations in interview might be a spark that will make the powerkeg explode in any of the hardliner countries' legislatures. If the IMF refuses to lend, who will put the compensating money forth? And clearily, the IMF will lend only conditional to considerations of relieving Greece's debt in part, which all hardliners so far, Germany on the forefront, staunchily and vocally refuse even to consider.

[Monoriu]

That's not impossible to solve.  Euro group gives money to Greece so that Greece can repay its arrears to IMF immediately.  IMF then lends a fresh round of money to Greece, part of which is to entirely repay the loan that I mentioned a sentence ago.  Just a few accounting entries.  There, no rule has been broken.

I feel Lagarde's unwillingness to intervene stems from much deeper reasons that the mere legalism of unpaid arrieries. Behind this, the IMF's position is that it doesn't want to get dragged into the whole mess, and that the IMF isn't a printing press at the beak and call of the ECB and the Eurozone. Both the latter go from the principle that Greece's debt is solvable on the long-term, despite its present and future debt ratio increasing. The IMF does not, and refuses to go further unless the partners consider relieving part of Greece's debt as a long-term solution.

Also, votes in Parliaments aren't even done yet. It takes only one Parliament refusing to ratify to fuck the whole thing up. Lagarde's declarations in interview might be a spark that will make the powerkeg explode in any of the hardliner countries' legislatures. If the IMF refuses to lend, who will put the compensating money forth? And clearily, the IMF will lend only conditional to considerations of relieving Greece's debt in part, which all hardliners so far, Germany on the forefront, staunchily and vocally refuse even to consider.

IMF's protests are not new.  They have been saying this for a few weeks now.  Lagarde was there in the Brussels marathon meeting.  Hard to believe that she will overturn the entire thing a few days later.  I don't think she wants to be remembered as the reason why Greece left the Euro.  She will at least do the minimum to ensure that the deal won't fall through because of her. 

I am not entirely convinced that the debt ratio is that big of a deal.  It is just a number in the sky.  Greece won't be able to get commercial financing any time soon.  The EU will lend money to Greece regardless of that number.  What really matters is how much interest that Greece needs to pay to service that debt.  I have read somewhere that the interest is really low, way below market rate, and the maturities are already very long, like decades into the future. 

[Razgovory]

Raz, do me a favor and read the post Joan was responding to.  I said "so" because "austerity increased Greece's debt/GDP" is not a response to the question who pays for nonausterity.  It's totally orthogonal.

Second, watch your tenses.  Joan said "austerity made the debt problem worse.  I.e. in Greece's case it did. It does not in every case, which is what is connoted by you saying "austerity makes the debt problem worse.  Bill Clinton austerely raised taxes, and the debt problem did not become worse.  We austerely fell of the Fiscal Cliff and we austerely sequestered, and those did not make the debt problem worse.  We austerely did not repeat Obamastimulus and that did not make the debt problem worse.  Not all austerity makes the debt problem worse.

I think you are using the word "austerity" pretty broadly here.  We are talking about Greece, and did the austerity programs decrease debt in Greece, not a slight decrease in spending in the US or the taxes for six guys in the US going up.  If the question is "can you reduce the debt by not having massive stimulus package every year", then I don't think anyone will disagree with you.  If when we talk about "austerity" we are talking about the programs enacted by the Greek government, you'll have fewer people agree with you.  If it's true as JR says that not only did it increase debt but it was entirely predictable, why the fuck did they do it?  Why did supergovermental entities push it, and why do they continue to push it?  Why should the Greeks be grateful for being put through hell for no good reason?

[Admiral Yi]

I'm using austerity broadly because it's a broad word.  Any decrease in government spending and/or increase in revenue fits the definition.

The US ran a deficit of 14% during Obamastimulus.  The deficit has now shrunk to about 3.5.  Feel free to explain to me how that's totally different than what Greece did.  Or marginally different.

[MadImmortalMan]

did the austerity programs decrease debt in Greece

Yes. Just not in relation to GDP because it crashed that out. 

[Syt]

http://www.nytimes.com/2015/07/15/upshot/the-imf-is-telling-europe-the-euro-doesnt-work.html?rref=homepage&module=Ribbon&version=origin&region=Header&action=click&contentCollection=Home%20Page&pgtype=article&abt=0002&abg=0

The I.M.F. Is Telling Europe the Euro Doesn't Work

It reads like a dry, 1,184-word memorandum about fiscal projections. But the International Monetary Fund's memo on Greek debt sustainability, explaining why the I.M.F. cannot participate in a new bailout program unless other European countries agree to huge debt relief for Greece, has provided the "Emperor Has No Clothes" moment of the Greek crisis, one that may finally force eurozone members to either move closer to fiscal union or break up.

The I.M.F. memo amounts to an admission that the eurozone cannot work in its current form. It lays out three options for achieving Greek debt sustainability, all of which are tantamount to a fiscal union, an arrangement through which wealthier countries would make payments to support the Greek economy. Not coincidentally, this is the solution many economists have been telling European officials is the only way to save the euro — and which northern European countries have been resisting because it is so costly.

The three options laid out by the I.M.F. would have different operations, but they share an important feature: They involve other European countries giving Greece money without expecting to get it back. These transfers would be additional to the approximately 86 billion euros in new loans contemplated in Monday's deal.

"Wait a minute," you might say. "The I.M.F. isn't calling for a fiscal union; it's calling for debt relief." But once a debt relief program becomes big enough, this becomes a distinction without a difference; they're both about other eurozone countries giving Greece money.

Indeed, one of the debt relief options proposed by the I.M.F. is "explicit annual transfers to the Greek budget," that is, direct payments from other governments to Greece, which it could use to make its debt payments. This, obviously, is a fiscal union.

A second option is extending the grace period, during which Greece would be relieved of the obligation to make interest or principal payments on its debt to European countries, through the year 2053. That's not a typo. Under this plan, Greece would make no more debt payments until Justin Bieber is 59 years old. This is a fiscal union by another name, since those lengthy and favorable credit terms would save the Greeks money at the expense of Greece's creditors, most of which now are other European governments or the I.M.F.

The third option floated by the I.M.F., a cancellation of a portion of Greece's debts, has been fiercely resisted by the German government, even though this is the option that least obviously constitutes a continuing fiscal union. Debt cancellation is a one-time fiscal transfer (if I lend you $100 and then forgive the debt, that's much like me simply giving you $100), but at least in theory it would be done only once, with Greece expected to stand on its own otherwise. The important exception is that Greece would still need to rely on European governments to lend it money at favorable rates, though not quite as favorable as under the Old Bieber scenario.

Unfortunately, however, this is not Greece's first bailout rodeo. Previous bailouts have had to be revised and enlarged, and as the I.M.F. notes in the section of its memo about "considerable downside risk," that could happen again. The plans for Greece to regain solvency rely on fast economic growth and sharp rises in labor productivity that outperform the rest of Europe — something that cannot be guaranteed. They also rely on the country's running a large primary surplus for an extended period — that is, collecting much more in taxes than it spends on government services, which typically does not prove popular with the voting public.

In other words, Europeans would have good reason to fear that a debt haircut given to Greece today would not be the last.

The memo makes clear what the real cost to Europe of continued eurozone membership for Greece is: If European governments want to keep Greece in, they're going to have to put up a lot of money in one non-loan form or another, money they will give Greece that they never get back.

Of course, the main alternative to a deal is a Greek exit from the euro, which would also be costly to European holders of existing Greek debt, who could expect to be repaid in devalued drachmas, if at all. That is a reason for European governments to be willing to pay the price prescribed by the I.M.F. to make a Greek deal work.

But the I.M.F. officials are saying they cannot pretend that a bailout deal will lead to an eventual payment in full from Greece. If Greece stays in the euro, it will need much more financial support from the rest of Europe than was admitted in Monday's deal, and the I.M.F. is asking European governments to put that admission on paper.

[Razgovory]

I'm using austerity broadly because it's a broad word.  Any decrease in government spending and/or increase in revenue fits the definition.

The US ran a deficit of 14% during Obamastimulus.  The deficit has now shrunk to about 3.5.  Feel free to explain to me how that's totally different than what Greece did.  Or marginally different.

This is bit too broad, since it can refer to the government at pretty much any time.  By this definition the US has been on a continuous track of "austerity" since it's founding.  We generate much revenue then we did in 1790 or 1890 or even 1990.