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European Agreement Sets Up Third Greek Bailout
An anonymous reader writes: Euro zone leaders have reached a deal that will attempt to resolve Greece's financial crisis. The deal sets up negotiations for the country's third bailout, and will require the Greek government to give up significant autonomy in financial matters. Experts have estimated that Greece could require almost $100 billion to stabilize once again. While this will be a significant cost to taxpayers in other European countries, the economic repercussions of letting Greece default on its debts would be much greater. "The agreement will call for Greece to raise taxes in some cases, parepension benefits and take various other measures meant to reduce what critics see as too much bureaucracy and too many market protections that keep the Greek economy from operating efficiently. ... Despite the agreement, Greek banks are expected to remain closed this week. The banks are acutely short of cash and Greek depositors may soon find it difficult to withdraw even small sums from ATMs."
I think the point is that they couldn't vote to have other countries give them money.
>> I wonder how Tsirpas will sell this to his constituents who just voted a firm "NO" to a deal without restructuring.
Same way Bush (W) sold a tax increase to those he told "no new taxes"
Same way Clinton sold the Defense of Marriage act to those who voted for him to continue the progress of civil rights.
Same way Bush (GW) sold illegal immigrant-friendly policies to those who voted for him to close the border.
Same way Obama sold the renewal of the Patriot Act to those who voted for him to kill the program.
In short, he's a politician. I'm sure he'll manage.
Silly Greeks you thought your vote mattered.
What? They got exactly what they voted for. The EU offered them a deal, and said that if they didn't take it, the eventual deal they would have to take would be a worse one. And they voted not to take the deal. They got exactly what they voted for, as promised: they still had to take a deal of some sort, and now they've got a worse one, just like they asked for.
And as if that weren't enough evidence that Democracy works in Greece, keep in mind that they are in the position they're in because the position they're in is exactly the one they've been voting for all these years to obtain: they wanted more stuff than they could be bothered to pay for, and wanted to continue to elect socialist politicians who would promise them it would all be OK, and they'd always be able to get other Europeans to go to work each day in order to buy them the lifestyle they wanted. Democracy in Greece has worked perfectly. The problem is that the voters in Greece are fools.
Don't disappoint your bird dog. Go to the range.
No -- the Greek government was thinking that they (Greece) needed to implement serious reforms, and that they have already achieved primary surplus. However, given the state of their economy the would never be able to pay back most of the debt. So what they needed was (1) forgiveness ("restructuring") for a big chunk of the debt (2) a bridge loan until the reforms kick in and the economy recovers enough. Some of the loans would be eventually paid, but much shouldn't be (and the lenders should have known better).
What the EU wants instead is (1) the pipe dream of Greece paying back everything and (2) higher taxes and lower pensions now to help this repayment. In other words, for the EU the goal of any reforms is not to get Greece back on its feet but to extract money from it to pay back the loans.
So, the question was not on whether reforms were needed before any further loans (which was universally agreed upon), but rather on the goals. What Greece capitulated was not on agreeing to the reforms, but on accepting that notion that they will try to pay back loans despite knowing full well that they will never be able to afford to.
First things first: We have to make sure that no banker ever loses so much as a Euro, no matter how bad the investment. That's primary in this deal.
You are welcome on my lawn.
True, Greece borrowed irresponsibly and spent it in wasteful ways. But the banks can not shirk their responsibility.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
The most notable point is the European countries would not face such horrific economic crisis without a unified currency. Greece would be in crisis; the Kronor and Franc and DM and dollar and Pound and Piece would be strong; tourists would show up with pocket change, scraps to throw the Greeks, staying in lavish hotels and buying expensive trinkets and high-dollar food for cheap; the influx of money toward Greek tourism and Greek exports would help support and rebuild the Greek economy; the sudden access to cheap Greek imports would improve the wealth of neighbors (instead of weakening their economy) by the principle of comparative advantage (and its genesis principle, the unifying economic theory which I developed to explain how wealth works); and everyone--Greece and the other Euro neighbors--would experience much less pain (Greece by more rapid recovery thanks to the more dramatic shift in trade advantage; everyone else by sudden access to more import goods for the same outlay of money--a local increase in wealth).
Instead, Greece falters; its currency (Euro) becomes no weaker than any other currency (Euro); exports don't increase because the neighboring countries's currencies (Euro) don't have a higher value than the Greek currency (Euro); the Greek currency (Euro) becomes weaker; neighboring currencies (Euro) also become weaker, thanks to Greece's shitty economy; neighboring countries must raise taxes and outlay expenses to bail out Greece, with associated strain on their economy and no return on their investment (wealth destruction); and everyone's economy stumbles and struggles to get back up.
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What this all demonstrates is that the Eurozone needs to become a full fiscal union. What is happening in Greece, with the effective seizure, or at least oversight, of the Greek government's fiscal powers, is what needs to happen.
Currencies like the US dollar work because, while there may be fifty states that use the USD, there is a single issuing central bank and a federal government that holds core constitutional fiscal powers. That's why you can have economies as diverse, small and large, as Rhode Island, Tennessee, California and New York in one federal state, because there is no "sharing" of fiscal sovereignty. The states are free to borrow money, but they have no control over central fiscal policy.
In other words, as so many have been saying since Maastricht was signed, for the Euro to actually work, the Eurozone needs to effectively become a single state, and EZ members need to surrender their fiscal powers to a central fiscal authority.
The world's burning. Moped Jesus spotted on I50. Details at 11.