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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."
The most notable point is the that there is no firm agreement to restructure (cut) the debt. I wonder how Tsirpas will sell this to his constituents who just voted a firm "NO" to a deal without restructuring.
European leaders keep pretending that they are giving Greece new money, when they are merely shuffling old debts around.
The money that was loaned to Greece has been lost. The whole crisis is about everyone involved being unwilling to accept this reality and thinking that the money will somehow magically come back once the Greeks have been punished sufficiently.
It is the same theory behind debtor's prison. It should be abolished for the same reasons.
Finally! A year of moderation! Ready for 2019?
A very important link was left out: the agreement text (PDF).
...
Read it, it is only 7 pages long and, although it mentions other documents, the gist of it is there.
Commenting on the agreement without reading it is engaging in mindless speculation colored by your own misconceptions and ideological leaning
Oh, who am I kidding, this is slashdot, nobody RTFA.
That brother-in-law that keeps borrowing money, then borrows some more; never paying it back. Why? because they can't generate enough revenue to cover their spending. Finally when they can't seem to manage their finances at all and throw a big party, they still want more. Fiat currency arguments aside, it's probably better to let Greece figure this out on their own, with their own currency because the rest of the EU would be throwing good money after bad. Unfortunately the rest of the EU won't let that happen just yet because Italy and Spain would probably be next; it would give the UK further argument to pull out and that would mean serious trouble for the Eurozone.
Harrison's Postulate - "For every action there is an equal and opposite criticism"
I think the point is that they couldn't vote to have other countries give them money.
banks were mostly saved in 2010 already. the debt is since then public and will be repayed with european tax money, one way or the other.
plus a bit of greek blood, i guess, since they have no money left. this show right now isn't about banks anymore, it's just political. it's about destroying syriza, sending a strong message throughout europe and, well, try to make this failed system last a little longer. doesn't look good.
Some important caveats:
I conclude Germany is destroying Greece to ensure that Spain and Italy toe the line from now on.
What do you mean? Of course it mattered. The Greeks were offered a deal and told it was the best deal they were going to get. They turned it down. Now they have accepted a worse deal. Democracy is politics, not magic, it doesn't magically fill accounts with funds and ATMs with Euros. It doesn't magically erase consequences of bad decisions and unpaid bills.
much of left-wing thought is a kind of playing with fire by people who don't even know that fire is hot - George Orwell
Well, do you think Greece was going to successfully vote for other countries to give them money? Because that was never gonna work.
The problem is Greece's current government came in on the claims they could renegotiate terms with little leverage because they said so. They they had a referendum to say how much they all agreed that other people should give them more money. Then they got told that their vote didn't really change anything.
What's happening now is those other people are pointing out that the vote by the Greeks was pretty much symbolic at best, delusional at worst. Because voting to have someone else give you money is pretty meaningless to that someone else.
Me, I think this is a problem with the whole concept of globalization and open markets in the first place ... you can't pretend that wages, skills, and goods are interchangeable on a global scale without accounting for the relative differences between countries. Which is why they had separate currencies with separate values in the first place.
You can't just slap a common currency on that many countries, leave them to manage their own money completely separately, and then somehow magically assume the price of goods will be uniform across those countries.
When this was happening a lot of people said it would never work.
Honestly, this is like "voting" that the bank, instead of foreclosing on your mortgage should reduce the mortgage, give you lower payments, and give you money to pay your bills.
This has nothing to do with democracy, and everything to do with the fact that once you're bankrupt, you can't pretend like voting it away changes anything. You're still bankrupt, and if your creditors don't want to give you more money, your temper tantrum doesn't mean a damned thing.
Pretending like Greece had the leverage to change the terms to suit them is the failure here.
This is like loaning money to someone who says they can't afford their bills, having them run out and buy a new TV, and then they want to borrow some more money because they can't pay their bills.
In this case, Germany has said it's not getting stuck holding the bag. And I don't really blame them, otherwise the EU becomes a way to move money from wealthy nations to poorer ones.
Lost at C:>. Found at C.
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.
"Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."
-- Charles Dickens, David Copperfield
Seriously, people, don't borrow money from scary international lenders who are just waiting for you to default so they can take control of your country. Don't borrow money from them! And if you do: pay it back! I can't stress that last point enough. It's really the key to the whole Greece problem.
Shutting down free speech with violence isn't fighting fascism. It IS fascism!
The Euro is not a failure (much as the US wishes it was), Greece is a failure. Greece is also not very large with 11 Million citizens, while the Eurozone has 468 Million citizens. That is about 2.3%. And keep in mind the worse the current Greek efforts to not pay their debts backfires on them, the less inclined will other Eurozone members be to try that as well.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
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.
You're joking, but the Greeks have to give away a ton of assets for this deal. It's hard to see where they're going to get the sums necessary without looking at the antiquities.
This is clearly a bad deal and frankly it seems like most of the people at the table know it is a joke. Did you see the deadlines in the article? They're giving themselves basically until the end of the week to completely turn their economy around, for the mere promise that the rest of the EU will consider extending the repayment period of the debts. They aren't even considering debt forgiveness.
IMHO, the correct solution for Greece, painful as it would definitely be, is an exit from the Eurozone and a return to a national currency. The Eurozone has fundamental structural problems that are going to put Greece back in the hotseat in a few years even with this deal. Combined monetary policy with independent fiscal policy is not a sustainable model. It's like giving your irresponsible uncle your credit card on his promise that he will pay you back for everything he charges, even though he has defaulted on every loan he has ever had and is currently tens of thousands of euros in the hole and doesn't have a job.
It also doesn't allow your currency to fluctuate with your economy, which puts a stranglehold on your economy when you have a recession.
Sadly, a unified fiscal policy is politically impossible in the current EU. It would give up way too much sovereignty and be political suicide in most countries. You're talking about the EU itself collecting taxes and spending them on infrastructure. Foreign governments gaining oversight over national governments, an especially worrisome situation when the national government is breathtakingly corrupt. There is no chance you would get even a simple majority of countries to agree, much less the supermajority that would no doubt be required.
I read the internet for the articles.
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
Yes, why not. Play by play below, italicizes are my asides. Sorry but no TL;DR of the TL;DR, it was hard enough to summarize the whole thing.
1st paragraph: asks Greece to keep their promise this time.
To be read with German accent as it was most likely added by Germany. It echoes the statement by Merkel this weekend that says "The most important currency has been lost and that is trust".
2nd paragraph: tell Greece it is either both ESF and IMF or nothing.
Meaning Greece will most likely have to agree to another set of measures imposed by IMF.
3rd paragraph, pages 2 and 3, first item on page 4: sets the first measures to be taken and its deadlines.
Some must be voted into law by 15 July (72 hours after the meeting) and some by 22 July, next week. They are more or less the same measures that triggered the referendum last week but with a notable absence: cuts in the military
pages 4 and 5, aditional measures:
- model for privatization.
Instead of going to the public coffers it will go to a fund (managed by Greece, supervised by Europe). The assets (estimated 50B) will be split: 50/25/25. 50% to recapitalize the banks, 25B to repay loans, 25B for investiments.
- model for the supervision: all draft legislation will be subject of their (EU and IMF) consult and agreement. Greece has until 20 July to ask to be helped.
- reversal of anti austerity legislation: all of them, except the humanitarian crisis bill, must be reexamined and either reversed or replaced by an equivalent measure.
SOP for "troika" (as in group of three, EU, ECB and IMF) technicians to become the fourth power in the country during the program duration. Happened in Portugal and Ireland
end of page 5: states that Greece will need between 82 and 86B, unless it can collect more taxes or privatize better. 7 of those billion euros are needed before 20 July and 5 more before mid August. Also states that greece needs to "clear its arrears" to IMF and Bank of Greece
Sibling post has it right, this part is "Greece, pay denbts"
page 6: states that Greece either accepts the deal or banks won't reopen. Also, that it is syriza's )and whoever was its predecessor) fault by easing the policies during the last 12 months and that Eurozone can reconsider "longer grace and payment periods" but that will be "no haircuts"
Again, "Greece, stop screwing up, pay denbts, all of it"
page 7: states that if Greece accepts the deal the deal will go forward. Also, that in the next 3-5 years 35B will be mobilized to fund investment and economic activity (including SME) via EU programmes
This must be the concession Tsipras is talking about, 35B for investment including small and medium-sized entrerprises not counting towards the loan but via EU investment.
We were more or less forced to adopt Euro. This was the price for France allowing reunification. Switzerland does just fine with their own currency, Germany would be able to do so just as well.
"It's such a fine line between stupid and clever" -- David St. Hubbins, Spinal Tap
A number of Eurozone states, lead by Germany, were at a place where their governments would have been in very serious trouble had they simply repeated the process as it has rolled out to date. There were reports that if there had been another bailout like the last ones, the Finnish government would have collapsed, and Merkel certainly has been feeling intense pressure not to give in to Greek demands. The referendum seems to have been the final straw, however. The attempt to shame the Eurozone into handing Greece more money and forgiving more debt badly backfired for Tsipras.
The world's burning. Moped Jesus spotted on I50. Details at 11.
The only way for Greece to recover is to leave the monetary union. They can remain a member of the EU without using the euro as their currency, the UK is an example of that; but every story you read in the mainstream media implies otherwise, which simply isn't true.
It isn't just the UK; only 19 of the 28 member states of the EU use the Euro currency. Ones that don't include Denmark, Czech Republic, Romania, and Sweden. According to Wikipedia, however, it does seem that most of these are obliged to switch to the Euro when certain conditions are met; the only countries which have specifically opted out are UK and Denmark. But I do think it's interesting that very few eastern European EU nations have adopted the Euro so far (and instead, a couple of non-EU eastern European nations like Montenegro have unilaterally adopted it). If you look at the map, Greece kinda stands alone as a Euro user in that region, with only Cyprus (EU), Montenegro (non-EU) and Kosovo (non-EU) also using it.
Well, my reply to you was meant as a joke - building on your accurate observation that slashdotters rarely read anything beyond the summary.
It's amazing isn't it? We've got so much information available at the touch of our fingers, yet we can't be bothered to spend the *seconds* it would take to find a source document regarding the matter at hand. It's a sad commentary on the status of critical thinking skills among our ranks.
Anywho, it's inspiring to find another of the few here willing to fight the good fight. Maybe one day the impulsiveness rampant on the internet will fade. (I know that's absurdly optimistic.)
Indeed, whether Syriza would implement the reforms is the most important question. Varoufakis was very vocal about the need for the reforms, but he has been forced out (by the EU !). The left-left wing of Syriza is opposed. It's not clear what the majority would do, and like you I would have preferred to see some reforms passed in February and March while the negotiations were ongoing.
However, some of the reforms Germany is asking for (higher taxes, pension cuts) cause me to doubt their bona fides here. The main problem is taxes in Greece is non-payment and the informal economy. Raising taxes is likely to exacerbate this problem by increasing the motivation to evade the higher taxes. Lowering taxes and simplifying the tax system is far more likely to raise more revenue.
Similarly, the main problem with government pensions is early retirement. The solution should therefore be to raise the retirement age for those currently working, which in the long term resolve the problems without creating short-term pain. The German solution (cut pensions now) means asking current pensioners who have no prospect of other sources of income and cannot choose to go back to the jobs they retired from to help repay the national debt.
Greeks are OK, apparently. This is what Wikipedia entry on Greece kinda leads with :
Greece is a democratic and developed country with an advanced high-income economy, a high quality of life and a very high standard of living. ...
Greece, which is one of the world's largest shipping powers, has the largest economy in the Balkans, where it is an important regional investor.
http://validator.w3.org/check?uri=http%3A%2F%2Fwww.slashdot.org Errors found while checking this document as HTML5!
He probably still doesn't understand why game theory does not work in real life.
His party didn't win he election with full majority and is part of a coalition. His coalition partner, Panos Kamennos, is both the founder of the right wing party that allows the coalition to govern and also the Defence Minister.
Yep. The most amazing part is that the EU has been duped to think Greece will pay them back this time for sure!!
2. Forcing the country to either default or accept further austerity is causing a humanitarian crisis in the country
They should have thinked twice before borrowing in the first place.
5. A lot of the money that was 'loaned' to Greece, exited the country immediately in the form of purchases of German/French goods even military equipment
Which Greece wasn't forced to buy. Let's face it. 99% of today's Greece debt comes from loans taken by a democratically elected government since the 80's.
2. Forcing the country to either default or accept further austerity is causing a humanitarian crisis in the country.
Last time I checked Greece was still richer than many northern neighbors from Eastern Europe. A lot richer than southern neighbors from Africa. Why would there be a humanitarian crisis in Greece but not in poorer countries?
Why does the US wish for the Euro to be a failure ?
Because a successful Euro would supplant the dollar as the primary world currency, with an associated loss of control, prestige and commercial benefits to the US.
"But I do think it's interesting that very few eastern European EU nations have adopted the Euro so far (and instead, a couple of non-EU eastern European nations like Montenegro have unilaterally adopted it)."
It's because entrance into the EU is staged. It goes something like this:
1) A country expresses interest to join
2) That country must make political changes to meet EU standards- this means matching EU standards on things like product quality/safety, human rights, law enforcement and so on and so forth
3) The country can, once reaching European standards in this area join the political union promising to advance towards joining the monetary union
4) They must then reform and change their economy towards adhering to the standards required to join the monetary union. If they're a poor country, this means waiting until their economy has grown sufficiently to not be too out of par with the rest of the eurozone countries. The EU gives them financial help to do this, and being part of the political union makes it easier because they have free trade as a result of that with the rest of Europe.
5) When they're ready economically, they must join the eurozone.
Now that's how it's supposed to work. The reason most of those countries you cite aren't in yet is because they were relatively poor, and are simply at the political stage having not grown their economies sufficiently to join.
Of course, Greece was one of the early adopters when they were still trying to kick the thing off and at that point they just wanted as much membership as possible to kick it all off. In hindsight Greece should've been lumped in with the not-yet-ready club, because they were fiddling their figures and lying about the state of their economy.
So those non-members you cite aren't non-members out of choice (that only applies to the UK, Denmark, and Sweden), they're non-members because they're not yet ready. Countries like Romania, Czech Republic, Hungary and so forth aren't yet strong enough to sustain the euro as their currency. In reality neither is Greece, and arguably a country like the Czech Republic is now probably a more suitable candidate than Greece, but it's apparently not an option to return Greece to candidate status.
Greece is alone in the region because most of those members in the region are fairly new entrants to the EU, Greece was alone in being a much earlier entrant to the EU- Most of that is down to the cold war. Many of those poorer nations that are non eurozone members but EU members were stuck behind the iron curtain as part of the USSR whilst Greece was not.
So the idea with the EU is that it's a one-way track, you join politically, then you switch economically. Even Sweden is committed to this, but has quite reasonably said "Not until you get your house in order!". Only the two countries with opt-outs, the UK and Denmark can get away with it indefinitely. I don't know why Denmark has an opt-out, but the UK has it because there was no taste for losing the pound amongst the UK public, and the EU really wants the UK to be an EU member because a) It's one of the top 5/6 world economies, b) It's one of 5 permanent UN security councils, c) It's nuclear armed and one of the best militaries in the world, d) It's Europe's political and economic gateway to America and the Commonwealth. The UK therefore got special treatment.
Most of those countries you mention may not be members yet, but they're legally committed to becoming so as part of their EU membership agreement.
I think it's true that Greece could be dropped back to EU member status without being a euro user, but that would require treaty amendments and keep in mind that even the Greeks themselves don't want this because they don't want to lose the purchasing power the euro affords them (Greece is an import economy, based largely on tourism, so a weak currency doesn't benefit them as much as it would a manufacturing economy). Had Greece said 5 years ago "Guys, this ain't working for us right now, w