The level of rediculousness coming out of Greece right now with the double speak and the seemingly delusional stances is really beyond what I could have imagined.
Bchad, it’s not just a balance between saving the Euro and saving face for Germany. In my mind it’s more accurately a choice between failing to demonstrate commitment to the Euro on behalf of core nations, or potentially opening a pandora’s box for other peripheral states (or even Greece again in X years) to engage in brinksmanship as the recovery muddles along or thumb their nose at agreements. In a lot of ways I think this became a lose-lose scenario for the Euro as soon as Greece committed to this path of brinksmanship with Greece themselves benefitting from positive optionality.
Actually, I meant that earlier measures were to save face for Greece. I.e. renegotiate their debt so that they could stay in the Euro even though - for all practical purposes - everyone knew that the money was basically gone. Greece was basically given more time, and then everyone prayed that there would be some kind of economic recovery that was broad-based enough for Greece to make good on their now-reduced/deferred obligations. There was never any assurance that such a recovery would come, or that Greece would have been able to clean its act up enough to take advantage of it if it had; but there was lots of crossing of fingers that this might save the day. It didn’t happen.
Yes, it’s brinksmanship on the part of Greece, but they’re in a corner and it’s hard to know what else one can expect them to do. Yes, at many levels, it’s a mess of their own making, but responsibilities of collectives like nations are not as simple as responsibilities that accrue to individuals.
Lose confederations like Europe’s (or the CSA) don’t have a very successful history unless they are small. Switzerland is about the only example I can think of, and even that is fairly federalized by now.
Haha, what I was thinking, WTF are these people doing? Unfathomable.
I just don’t see how this “game theory” or “brinkmanship” or whatever the hell we are supposed to think of this behavior…results in anything good long-term. Greeks have simply added an additional problem to their financial problem – now everyone in Europe is sick to death of them, and will never trust them. Even in the scenario where Tsipiras “wins”, his relationships are crippled, yes?
Having my morning coffee, I see that Merkel says there will be no talks until after the vote. “Sorry Children, you committed to that move, follow thru”. I really like Germans. But I do still think there will be a deal – the clock is now running, Greeks have few moves remaining. So perhaps it’s just one more week of foolishness?
Ah I see, thanks Bchad. Yeah, clearly I don’t understand this stuff, or at least the vocabulary. I wonder if they built the impact on long-term relationships into their model? It seems to me if these people were capable of accurately calculating probabilities, they probably wouldn’t be in this situation.
From Socrates and Pythagoras, to Tsipras and Varoufakis, in 2500 years.
I was wrong. Varoufakis, for one, can clearly calculate probabilities. Everyone is going to be talking about that interview today, try to watch the full 20 minutes. He sounds like me “uhh any junior analyst can model it in 10 minutes, you just run the cash flows out, they clearly don’t work, I’m just the only guy in the room who bothered to do the math, correctly”. LOL. But, I still think he should wear a tie when asking people to restructure 250B euros in debt. Interview: http://www.bloomberg.com/news/videos/2015-07-02/varoufakis-says-he-will-quit-if-greeks-vote-yes-
i think the Greeks see the situation very clearly. either the Germans continue to pay the wages of Greece’s bloated public sector which is largely the result of Germany’s manufacturing and service sector dominance or Greece brings the whole system down. Germany cannot receive the benefit of a weak currency and low barriers to trade, espeically within the EU, without having to pay for it in some way. Greece has all the power in this situation as it knows it would be better off without the EU and the Euro. it requires, and deserves, payment to remain in the EU. this is the game. convincing the Germans that it owes the Greeks something for Greece, and other less dominant societies, letting Germany monopolize EU heavy industry. nothing comes free in this world.
I heard an analyst a few months ago make the comment that the Greeks were certain to default simply because of their hubris. He pointed out that substantially all of Greek savings were still held in Greek banks despite the fact that a transfer to non-Greek bank to safeguad their savings in Euros would be easy and cost free. I’m not saying the conclusion is certian, but the point is a good one.
Well, seems nobody knows how the vote this weekend will go, polls are split, the newspapers “vote yes”, Tsipras of course “vote no”. But I can’t help think the whole thing is a bit pointless. The outcomes seem either zero bargaining power, or little bargaining power (due to capital controls). Creditors wanna get paid, they don’t really care if the deal is untenable. The masses are not able to do basic finance math and thus can not make an educated decision on an intelligent course of action. This kids, is what we call a mega-sized cluster fuck!
I think the bank closures, the fallout over the last few days, and the idea that accepting more cuts to lifestyle is better than a nuclear kaboom on the financial system, will persuade greeks to vote YES. The taste of the last week has got to be pretty dang bad.
I believe historically, a country’s currency will devalue by 50% in this situation.
a devaluation of their currency can actually be a good thing. as stuff gets cheaper and entices other ppl. they can easily restructure their debts by effectively devaluing through printing. euro prevents them from doing this. leaving the euro also kicks them out of a centralized currency which historically significantly lowers the level of trade. its effectively a sanction. a flick of the flicka of the wrist.
If they don’t put Quest’s stupid face into that damn fountain in Syntagma square soon I will personally send all my Greek Euro’s to CNN. That guy is an obnoxious, helpless, loud idiot who does not even now what “No pasaran” means and thinks there are people from Spain there in Greece. He listens to comunist chants in awe…what is it with that guy.
Interview: