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I'm honestly puzzled by what the Greek Government's endgame is here. It looks like they've won their vote, but what's next? They return to Europe tomorrow and

I'm honestly puzzled by what the Greek Government's endgame is here. It looks like they've won their vote, but what's next? They return to Europe tomorrow and demand a better settlement. Why do they think the other Eurozone governments will accede to that demand? Yep the greek government now have a clear democractic mandate to demand a better settlement, but that doesn't mean the other Eurozone governements have to agree to one. The bit that I've not seen mentioned prominently in many articles on this is that every billion Euros that is forgiven from Greek debt or that is provided in aid, is a billion Euros that must come from the other Eurozone economies, and by extension their taxpayers. From a political perspective what national parliament are going to pass a bill that costs them that money, at a time when their own economies, in many cases, are already suffering. Also AFAIK a new bailout deal needs to be passed in all 18 other Eurozone nations, unanimously...

imaginenore 11y ago
It was all a bluff. The government got elected on bs promises, knew they couldn't keep them, diverted the decision to the citizens knowing perfectly well that whatever they choose will be painful, at the same time urging the citizens for the more painful (NO) option. EU called their bluff and now they are royally screwed. Instead of slowly paying their debt, they will very likely print their own money, which is guaranteed to be very inflational.
jcfrei 11y ago
I assume that Varoufakis gambled that the EU/Troika would never allow a Greek default and ultimately succumb to Greece's demands. However a Greek default (at least on parts of its debt) has been very likely for quite some time now. The burden of this default would be mostly carried by the ESFS and as a consequence EU countries (because they provide the guarantees). In a worst case scenario most countries could probably cover the losses on Greek debt by issuing new government bonds themselves, which would in turn be bought by the ECB, which just further inflates their balance sheet. This is not an improbable outcome because inflation rates are still very low.
- raesene9 11y ago
  I think financially you could be right, and perhaps if this had occurred 6 months ago, it could have flown politically. The challenge with that approach would seem to be that politically in several Eurozone nation there's been a hardening of sentiment around this and so even if the leaders of those nations want to do that kind of deal, they may have a tough time convincing their own parlaiments..
coldtea 11y ago
>I'm honestly puzzled by what the Greek Government's endgame is here. It looks like they've won their vote, but what's next? They return to Europe tomorrow and demand a better settlement. Why do they think the other Eurozone governments will accede to that demand? They don't (assume it). They just know, from the results, that a worse settlement is not acceptable. They can always default, and let the chips fall when they may.
hackuser 11y ago
> The bit that I've not seen mentioned prominently in many articles on this is that every billion Euros that is forgiven from Greek debt or that is provided in aid, is a billion Euros that must come from the other Eurozone economies, and by extension their taxpayers. It's not at all a zero sum game. The other nations benefit significantly: 1) They gain political and economic stability for the institutions involved (the EU, the Euro, etc.) and for Europe in general. 2) They avoid an economic and political meltdown in a European country. Such situations spawn other problems (crime, refugees, political extremism, etc.) and those problems tend to spread across borders. 3) They gain a more prosperous and stable trading partner, which helps everyone. 4) They gain the precedent that when they are in trouble, for whatever reason, other nations will help them. Germany might recall the forgiveness of their massive crimes (and war debts) by their neighbors, enabling them to become the largest economy in Europe today. (EDIT: And all the creditor nations are depending on another country to defend them in case of war.) 5) They avoid Greece forming stronger bonds with other powers, such as Russia and China. 6) There also is the simple moral gain, that the impoverished in Greece won't be driven to further misery. The perspective that all that matters is money, and that it's every nation for itself is unrealistic.
- raesene9 11y ago
  You're point are all at a high level valid, but in raw Euros, countries who are already financially stretched will be asked to write-off tens of billions of Euros, which they will have to finance through increased debt. That's tens of billions removed from their taxpayers. If you're a national of another country who is currently undergoing painful austerity and Greece gets significant debt forgiveness, wouldn't you want the same for yourself? Ireland, Spain, Portugal have all taken significant pain to their economies, do you thinnk their leaders can easily ask their tax payers to take more to bail the Greeks out? And then if they do, would they not want their own debt forgiveness? The rest of Europe can't sustain a large number of countries seeking debt write-downs...
  - hackuser 11y ago
    I don't see Europe as so economically fragile. If it were a nation, the EU would be the wealthiest in the history of the world (with the possibly exception of the U.S.; I'm too lazy to look it up). This is hardly a novel or outlandish situation. The nature of bankruptcy is that creditors get a haircut; many nations have had their debts reduced (including Germany). The nature of civilization is that those with resources help those without. > would they not want their own debt forgiveness? It's theoretically possible, but the same could be said of any bankruptcy (my neighbor had his/her debts forgiven; do I want to go bankrupt too?) or for any program that benefits one region/state/industry more than another, yet these programs persist. Also, maybe the EU or Eurozone does need a program to help all struggling states.

imaginenore 11y ago

It was all a bluff. The government got elected on bs promises, knew they couldn't keep them, diverted the decision to the citizens knowing perfectly well that whatever they choose will be painful, at the same time urging the citizens for the more painful (NO) option. EU called their bluff and now they are royally screwed. Instead of slowly paying their debt, they will very likely print their own money, which is guaranteed to be very inflational.

jcfrei 11y ago

I assume that Varoufakis gambled that the EU/Troika would never allow a Greek default and ultimately succumb to Greece's demands. However a Greek default (at least on parts of its debt) has been very likely for quite some time now. The burden of this default would be mostly carried by the ESFS and as a consequence EU countries (because they provide the guarantees). In a worst case scenario most countries could probably cover the losses on Greek debt by issuing new government bonds themselves, which would in turn be bought by the ECB, which just further inflates their balance sheet. This is not an improbable outcome because inflation rates are still very low.

raesene9 11y ago
I think financially you could be right, and perhaps if this had occurred 6 months ago, it could have flown politically. The challenge with that approach would seem to be that politically in several Eurozone nation there's been a hardening of sentiment around this and so even if the leaders of those nations want to do that kind of deal, they may have a tough time convincing their own parlaiments..

coldtea 11y ago

>I'm honestly puzzled by what the Greek Government's endgame is here. It looks like they've won their vote, but what's next? They return to Europe tomorrow and demand a better settlement. Why do they think the other Eurozone governments will accede to that demand? They don't (assume it). They just know, from the results, that a worse settlement is not acceptable. They can always default, and let the chips fall when they may.

hackuser 11y ago

> The bit that I've not seen mentioned prominently in many articles on this is that every billion Euros that is forgiven from Greek debt or that is provided in aid, is a billion Euros that must come from the other Eurozone economies, and by extension their taxpayers. It's not at all a zero sum game. The other nations benefit significantly: 1) They gain political and economic stability for the institutions involved (the EU, the Euro, etc.) and for Europe in general. 2) They avoid an economic and political meltdown in a European country. Such situations spawn other problems (crime, refugees, political extremism, etc.) and those problems tend to spread across borders. 3) They gain a more prosperous and stable trading partner, which helps everyone. 4) They gain the precedent that when they are in trouble, for whatever reason, other nations will help them. Germany might recall the forgiveness of their massive crimes (and war debts) by their neighbors, enabling them to become the largest economy in Europe today. (EDIT: And all the creditor nations are depending on another country to defend them in case of war.) 5) They avoid Greece forming stronger bonds with other powers, such as Russia and China. 6) There also is the simple moral gain, that the impoverished in Greece won't be driven to further misery. The perspective that all that matters is money, and that it's every nation for itself is unrealistic.

raesene9 11y ago
You're point are all at a high level valid, but in raw Euros, countries who are already financially stretched will be asked to write-off tens of billions of Euros, which they will have to finance through increased debt. That's tens of billions removed from their taxpayers. If you're a national of another country who is currently undergoing painful austerity and Greece gets significant debt forgiveness, wouldn't you want the same for yourself? Ireland, Spain, Portugal have all taken significant pain to their economies, do you thinnk their leaders can easily ask their tax payers to take more to bail the Greeks out? And then if they do, would they not want their own debt forgiveness? The rest of Europe can't sustain a large number of countries seeking debt write-downs...
- hackuser 11y ago
  I don't see Europe as so economically fragile. If it were a nation, the EU would be the wealthiest in the history of the world (with the possibly exception of the U.S.; I'm too lazy to look it up). This is hardly a novel or outlandish situation. The nature of bankruptcy is that creditors get a haircut; many nations have had their debts reduced (including Germany). The nature of civilization is that those with resources help those without. > would they not want their own debt forgiveness? It's theoretically possible, but the same could be said of any bankruptcy (my neighbor had his/her debts forgiven; do I want to go bankrupt too?) or for any program that benefits one region/state/industry more than another, yet these programs persist. Also, maybe the EU or Eurozone does need a program to help all struggling states.