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I would also say that they need to present a credible alternative to the voting public. But what exactly would that be? An alternative currency? Do they have the macro economic understanding to implement such a policy?
by rz on Tue Dec 30th, 2014 at 05:14:28 AM EST
[ Parent ]
One of the problems governments face nowadays is that they are unable to change the Central Bank governor before their statutory term is up, so Syriza is stuck with Yannis Stournaras. On whom see Yanis Varoufakis: Greek Finance Minister Confesses: "I turned down the IMF's offer of an alliance in favour of a debt restructure" (January 10, 2014)
This is a stupendous story. Possibly for the first time in its tainted history, the International Monetary Fund had a major change of heart and tried to do the right thing by a `program' country, only to be turned down by that very same country's finance minister!


Mr Stournaras, perhaps unwittingly, admitted to the Financial Times that he informed the German finance minister of Ms Lagarde's and Mr Tompsen's offer before the crucial Eurogroup meetings, thus voiding any surprise-move advantage that an IMF-Greek common position could have enjoyed. As we all know, from the experience of the past five years, when confronted unexpectedly by a determined large `player' (e.g. the IMF), the German position suddenly becomes more flexible. Thus Greece stood to gain at least some benefits from accepting Ms Lagarde's overtures. (But as the main beneficiary of the IMF's readiness to confront Berlin, Greece that is, refused to join in, there was nothing that the IMF could do.)


Yannis Stournaras happens to be a valued colleague and a good friend of mine (see the open letter I sent him upon his appointment as finance minister). It is with great personal sadness that I write these lines. Greece needs a finance minister that will re-negotiate forcefully the terms and conditions of a misanthropic, irrational, unworkable `bailout' package (especially now that a Mk3 version is on the boil). Given the way he, by his own admission, squandered this remarkable opportunity to increase Greece's bargaining power, he lacks the credibility amongst Greece's polity to lead these negotiations. He should thus resign. Effective immediately.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Carrie (migeru at eurotrib dot com) on Tue Dec 30th, 2014 at 05:24:27 AM EST
[ Parent ]
Syriza is stuck with Yannis Stournaras.

Unless he should resign, die or become incapable of fulfilling his duties.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Dec 31st, 2014 at 11:56:49 PM EST
[ Parent ]
Or be dismissed for cause by the new government and charged with some offense.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jan 1st, 2015 at 12:00:25 AM EST
[ Parent ]
Stuck with the CB governor, but not with the board...

... or the core governance structure.

Ram a law through parliament giving the government the power to replace at will the board of the central bank, and devolve all operational powers to individual board appointees, leaving the president as an empty figurehead position.

The entire construction of an "independent central bank" is a bad-faith nonsense, so treat it as such and dare anybody to point to a particular article of the treaties to justify their objection - on pain of strategic default against and confiscations oftheir Greek assets if they interfere in the internal affairs of the sovereign Greek state.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jan 1st, 2015 at 04:00:45 AM EST
[ Parent ]
That would be a significant improvement over having one of your friendly local gangster types do you a favor. And, given how things have been done in Greece, it might not be too hard to find actual self dealing in a Central Bank officer.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jan 1st, 2015 at 09:38:21 PM EST
[ Parent ]
I thought there was a EU rule banning firing the board (or rather giving the board mmebers the right to appeal their firing to the highest member state court). Can't find it though.

What I do find is this:

EUR-Lex - C2010/083/01 - EN - EUR-Lex

Article 130

(ex Article 108 TEC)

When exercising the powers and carrying out the tasks and duties conferred upon them by the Treaties and the Statute of the ESCB and of the ECB, neither the European Central Bank, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Union institutions, bodies, offices or agencies, from any government of a Member State or from any other body. The Union institutions, bodies, offices or agencies and the governments of the Member States undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the European Central Bank or of the national central banks in the performance of their tasks.

Article 131

(ex Article 109 TEC)

Each Member State shall ensure that its national legislation including the statutes of its national central bank is compatible with the Treaties and the Statute of the ESCB and of the ECB.

And this:

The Statute of the European System of Central Banks and of the ECB

Article 14
National central banks
14.1. In accordance with Article 131 of the Treaty on the Functioning of the European Union, each Member State shall ensure that its national legislation, including the statutes of its national central bank, is compatible with these Treaties and this Statute.

14.2. The statutes of the national central banks shall, in particular, provide that the term of office of a Governor of a national central bank shall be no less than five years.

A Governor may be relieved from office only if he no longer fulfils the conditions required for the performance of his duties or if he has been guilty of serious misconduct. A decision to this effect may be referred to the Court of Justice by the Governor concerned or the Governing Council on grounds of infringement of these Treaties or of any rule of law relating to their application. Such proceedings shall be instituted within two months of the publication of the decision or of its notification to the plaintiff or, in the absence thereof, of the day on which it came to the knowledge of the latter, as the case may be.

14.3. The national central banks are an integral part of the ESCB and shall act in accordance with the guidelines and instructions of the ECB. The Governing Council shall take the necessary steps to ensure compliance with the guidelines and instructions of the ECB, and shall require that any necessary information be given to it.

14.4. National central banks may perform functions other than those specified in this Statute unless the Governing Council finds, by a majority of two thirds of the votes cast, that these interfere with the objectives and tasks of the ESCB. Such functions shall be performed on the responsibility and liability of national central banks and shall not be regarded as being part of the functions of the ESCB.

But hey, it is all in the interpretation, and the EU has a lack of gunboats to enforce interpretations.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Fri Jan 2nd, 2015 at 08:09:25 AM EST
[ Parent ]
Well, clearly parliament isn't conveying instructions, and clearly the board members don't accept nor solicit instructions.

However, parliament is permitted to voice opinions, and board members are permitted to form opinions, and parliament is permitted, by the text of the rules, to hire and fire board members at its pleasure, so long as the reasons given for the termination is unrelated to policy.

It's obviously a bad faith move, but establishing the precedent that the central bank acting in bad faith is a violation of the treaties would in itself be a valuable sort of outcome.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Jan 2nd, 2015 at 03:42:31 PM EST
[ Parent ]
At this point, I bring up the question of the 'unexpected' survival of the Euro.

Years ago at the height of the crisis, I was surprised to see many ET regulars agree with Anglo-Saxon analysts like Paul Krugman that a break-up of the Euro or at least a Grexit is imminent. I don't live in the Eurozone so I felt unsure about my judgement and kept silent, but I thought that getting out of the Euro would seem such a step back for a significant part of the population that they will tolerate the austerity measures even if those hurt them and prove to make no economic sense at all. (I lived through enough austerity programmes to be cynical about how much can be forced down people's throats.) As I remember the concern over the Euro was then indeed the key factor in ND's late resurgence and Syriza's failure to win the last elections.

This might prove key again this time: will the introduction of a new currency be an option Syriza can offer to voters? On one hand, there might be many who realised that they would have been better advised to take the risk of Euro exit in 2010 and vote for Syriza to let them play that hand now. On the other hand, with the crisis appearing to be bottoming out, people might have become more risk-averse again. (I emphasize again that this has nothing to do with economic realities or the actual relative merits of the different policy choices, but public perceptions and groupthink.)

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Tue Dec 30th, 2014 at 05:47:55 AM EST
[ Parent ]
In theory, Greece could exit the Euro if it has a primary surplus. Which it does since earlier this year. However... Greek statistics are back: Primary deficit presented as surplus, with Eurostat's seal of approval (April 24, 2014)
Eurostat has just approved the Greek statistical service's (ELSTAT) figures on the general government's primary surplus of around 0.8% of GDP. Were that true, it would have been of great significance. Not because Greek debt would have, magically, become sustainable but, rather, because it would have meant that the Greek government would have acquired great leverage in its negotiations on the impending restructuring of Greece's public debt. Put simply, it would mean that the government could, at least in theory, suspend debt repayments to the troika while the negotiations are continuing , without having to renege on its payments of salaries, pensions, and suppliers. Alas, the Greek government's 2013 primary surplus is a statistical mirage. Moreover, it is a mirage purposely concocted by Eurostat and ELSTAT under the watchful, and conniving, eyes of Berlin, Frankfurt and Brussels. Mindful of how weighty these charges are, I list my evidence immediately below.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Carrie (migeru at eurotrib dot com) on Tue Dec 30th, 2014 at 05:58:54 AM EST
[ Parent ]


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