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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.
A very important link was left out: the agreement text (PDF).
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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.
I think the point is that they couldn't vote to have other countries give them money.
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.
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
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.
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.