The Greek deal opens for expansionist e-currency | 115 comments (115 topical, editorial, 0 hidden)

Re: Though if you want an alternative view: (none / 0)

From the end of the AEP column:

Alekos Flambouraris, the government affairs minister, has already begun uttering the fatal word "delay", as if were possible to delay an IMF payment without triggering a total collapse of confidence. Syriza insiders warn privately that default is becoming an alarmingly real possibility. "It is so bad that anything could happen. I can't talk any more, the phones are bugged," said one official.
He blamed the European Central Bank (ECB) for setting off a "self-fulfilling deposit flight" from the banking system by refusing to accept Greek collateral in exchange for loans. This decision was made within days of Syriza's landslide election, and before EMU's elected leaders had issued any opinion.
The ECB's pre-emptive move is seen in Athens as counter-insurgency warfare against the first radical-Left party elected in Western Europe since 1945. It will not be forgotten lightly.
The outflows were brisk even before that. Deposit losses reached €12.8bn in January. This is showing up in the "Target2" payment data of the ECB system. The Greek central bank's liabilities to the rest of the EMU network rocketed from €49bn in December to €76bn in January as capital flight accelerated. They may have hit €100bn by now.
This is double-edged. Creditors have even more to lose if Greece spins out of control. A full repudiation of debt to the EMU institutions and states would cost over €300bn. It would be the biggest default of all time, by an order of magnitude.

I had read the same post by Yves but decided not to quote any of it. She spent years with Nomura and has the perspective and experience of a large bank bank executive. She has much more than that, but that was her home for so many years it is not possible not to be seriously influenced by that mind set. Bankers have never dealt easily with revolutionaries, except when they can easily have them crushed. And what is happening is much more political economics than economics a la 'mainstream' economics, which likes to pretend politics has nothing to do with economics. Yves knows this also, but it is hardly her long suit.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Mar 2nd, 2015 at 11:38:38 PM EST
[ Parent ]

Re: Though if you want an alternative view: (4.00 / 3)

I think her conclusions do follow from her premises:

Greece is running out of money and needs funding right now.

The people who Greece has to convince to get funding is the Eurogroup.

If those hold true then yes the memo was total surrender since they conceded the right to evaluate their reforms to the institutions. This also turns their later communication strategy incoherent.

But do they? On the second point I clearly disagree. I'm more than halve convinced that the Spaniards would advocate blocking the ports and bombing the population centers if they could be seen as doing so. What limits the Euros' action phase is public perception and fear of an exit. At least Schäuble would have no future if he is seen to push Greece out of the Euro and then demands the 300 billion hole in the ECB's balance sheet be filled by fresh tax money. Which he probably would since he is a believer.

On the second I also disagree. A default in and of itself is no problem, except if used by the ECB to force capital controls. And at least in the case of the IMF the Greek position is that the ECB should just hand over the two billion they owe them to the Fund. If the ECB refuses and than uses the resulting default to murder the payment system they really need to be in control of the media narrative. Because otherwise that looks like a carrier limiting move.

Finally I think she puts too much importance on the exact language used since in private sector negotiations everything you say can resurface in court. Here the only court that matters is the one of public opinion.

by generic on Tue Mar 3rd, 2015 at 04:22:23 AM EST
[ Parent ]

Re: Though if you want an alternative view: (none / 0)

For me it was a question of emphasis. I don't doubt she is correct as far as expressing how Greece is viewed by the world banks and their executives. But what matters here is how to deal with that, and giving too much solicitude to those sentiments leads to surrender. Too little MAY lead to default and forced exit, but I think Greece's best chance is sailing as close to that head wind as possible and tacking as it must. The very thought of the ECB filling a $300 billion hole in Eurogroup banks deriving from a Greek default, much as the Fed did with the GFC, would be the end of the world for much of the conservative political elite. The could not but see that as inflation - "Three Hundred Billion Created Out Of Thin Air!!". The only other place the money could be obtained is from those 80 individuals who own more assets that the bottom half of the population combined. They cannot even contemplate such a thing. It would be worse than the Bolsheviks.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Mar 3rd, 2015 at 09:35:29 AM EST
[ Parent ]

Re: Though if you want an alternative view: (none / 0)

The very thought of the ECB filling a $300 billion hole in Eurogroup banks

I think the 300 billion are supposed to be the whole damage, including official creditors and central bank balances. Only a very small part of this involves private banks directly.

by generic on Tue Mar 3rd, 2015 at 09:47:17 AM EST
[ Parent ]

Re: Though if you want an alternative view: (none / 0)

Of course, but it undermines the narrative: "Debts must be paid!" In REAL money, of course. And gives rise to the awkward question of why this can be done for banks and not for the people.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Mar 3rd, 2015 at 09:50:48 AM EST
[ Parent ]

Re: Though if you want an alternative view: (none / 0)

What exactly are "the Eurogroup banks"?

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 Mar 3rd, 2015 at 09:51:03 AM EST
[ Parent ]

Re: Though if you want an alternative view: (none / 0)

I would take them to be all the national central banks supervised by the ECB by treaty obligations, all of the banks they supervise and those new institutions responsible for resolving insolvent banks and stabilizing financial conditions in Eurogroup countries.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Mar 3rd, 2015 at 09:58:08 AM EST
[ Parent ]

Re: Though if you want an alternative view: (none / 0)

Those are not the ones that would take a direct hit if Greece defaulted, I don't think.

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 Mar 3rd, 2015 at 10:03:01 AM EST
[ Parent ]

Re: Though if you want an alternative view: (4.00 / 5)

A nice graphic from the @WSJ On What #Greece owes and when pic.twitter.com/NnQeSKeEal
— Anthony Barton (@antbarton89) febrero 25, 2015

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 Mar 3rd, 2015 at 10:11:25 AM EST
[ Parent ]

Re: Though if you want an alternative view: (none / 0)

The IMF and ECB would take a $15 billion hit this year if they force a default. So, take careful aim and see if you can only blow off a toe or two. Then the question becomes: "who holds the Greek Treasuries and how forthcoming will they be to able to extend and pretend?" Forthcoming I believe. Do you really believe that their principles are worth $15 billion a year? If they take that kind of hit it is a sign that they see Greece's actions as an existential threat to their whole system - which it is. But they only up the ante by calling the debt. That action also raises an existential threat to their own continued wealth and power.

I recall reading about 11% yields for holders of Greek treasuries in 2014. Many of them seemed to be hedge funds. I would bet that a lot of those bills are spread around Eurozone banks. They needed to get returns somewhere. Looks like about $15 billion in Treasury bills all together. More hits to the same suspects in 2016. Of course if they force a total debt repudiation by Greece the entire structure of the new ESFS will almost cerainly dissolve, unless the money to cover those out year liabilities is already in the fund, which I have trouble believing. So another piece of paper ass cover dissolves in the rain.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Mar 3rd, 2015 at 01:48:15 PM EST
[ Parent ]

The Greek deal opens for expansionist e-currency | 115 comments (115 topical, 0 editorial, 0 hidden)

Top Diaries

Energy (and Other) Events Monthly - October 2023

Ireland 13 South Africa 8

UNGA: West Censors the South and East

EU VDL State of the Union -- Managing Decay

Rugby World Cup 2023 Week 1 review

Reactionary Visions and eNtiTiES

Recent Diaries

Energy (and Other) Events Monthly - October 2023

UA Laboratory NATO First Space War

United Nations In Stalemate Position

Biden's Headache in Middle East: Israel

EU as Client State of Joe's America

Canada's Trudeau Honoring an Ukrainian Nazi Collaborator

Ireland 13 South Africa 8

UNGA: West Censors the South and East

A Tale by Benjamin Franklin

Fail in Democracy Return to Authoritarianism

Yemen From Ceasefire to Peace Talks?

Huge Cost Proxy War of Choice

EU VDL State of the Union -- Managing Decay

Reactionary Visions and eNtiTiES

Top Military War Planning Under Joe Biden - Ukraine

Rugby World Cup 2023 Week 1 review

Joe's Fuck the EU -- Showdown

Modi G20 One Earth, One Family, One Future

Conflict In Syria's Deir Ezzor Province

September 2023

Occasional Series