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Beware of Greeks bearing gifts: a study in negotiating styles.

by Frank Schnittger Thu Feb 26th, 2015 at 03:29:43 PM EST

I once wrote a diary on the The negotiation Process and even considered making it the topic of a putative Phd. research proposal before deciding that the gulf between academia and practice was too large to bridge: there simply wasn't any good academic literature on the negotiating process that I could find, and no one could be found with the interest and expertise to supervise such a research topic. I raise the topic here because I am fascinated by the negotiating style adopted by Yanis Varoufakis and am still wondering whether he will ultimately be found to have been an effective negotiator on behalf of Greece.

Yanis Varoufakis interview: `Anything's better than austerity'

When asked whether Greece could have achieved more had it adopted a more conciliatory approach at the euro group, as his counterpart Michael Noonan and other Irish Ministers have suggested, Varoufakis delivers an emphatic "absolutely not".

While he declined to respond directly to Noonan's recent comments likening him to a rock star and to academic economists and experts that were very good in theory but not good in practice, he said Greece's previous experience in Brussels meant a robust approach to negotiations was essential.

"My predecessors in this job went along with the eurogroup's policies to the full. They bent over backwards to accommodate the memorandum and the policies of internal devaluation and fiscal consolidation, and the so-called reforms that were imposed on Greece."

And he points to where that has landed Greece. "It has been a complete and utter catastrophe. There's humanitarian crisis is on the boil because they were so `good in practice', this is quoting Michael Noonan. And I hope that I'm not so good in practice."

Regarding Noonan's other criticism that he was too theoretical, the Greek minister says he understands that "my colleagues in the eurogroup were disconcerted that one of their members insisted on talking macroeconomics".

"One of the great ironies of the eurogroup is that there is no macroeconomic discussion. It's all rules-based, as if the rules are God-given and as if the rules can go against the rules of macroeconomics.

"I insisted on talking macroeconomics."

But Varoufakis said he welcomed Noonan's comments, made at a conference in London on Wednesday, that he agreed in principle with the idea of swapping Greece's official debt for growth-linked bonds.

"Michael Noonan is quite right. We need to restructure Greek debt. My proposal for GDP-linked bonds has one purpose: to increase the amount of money we give back to your partners by encouraging them to allow us to grow."

front-paged by afew


I want to stress at the outset here that my interest is in the effectiveness of various negotiating styles in progressing a particular party's interests and not in judging Varoufakis from an economic or ideological perspective. The comments from Irish ministers are apt, because the Greeks have adopted a negotiating style very much at odds with the Irish tradition of negotiation as exemplified in the Peace Process and various EU rounds of negotiation including the seven Irish Presidencies of the EU Council and the more recent post bank bail-out negotiations.

It also matters what your ultimately objectives are: An agreement which is objectively the best possible to further Greek national interests, or a process which shows that the new Syriza Government fought the good fight and did what it could for the Greek people. National morale matters, and had Yanis Varoufakis capitulated, or been seen to capitulate, the gloom, bordering on desperation in Greece would have been very deep indeed.  What can you do when you elect a radically new government, on a radically different platform and nothing really changes?  That sort of setback could have given the fascist right a very big boost indeed.  

So it matters that Yanis Varoufakis is seen to have fought the good fight, and secured at least a partial victory or breathing space, regardless of what you might think of the content of the actual agreement. It probably matters a lot more than maintaining cordial relations with fellow Finance ministers, if the experiences of previous Greek finance ministers is any guide. But has Yanis Varoufakis made enemies unnecessarily, and could he have secured a better deal by adopting a quieter diplomatic behind-the-scenes approach as suggested by Irish Ministers?

First of all, it has to be conceded that the Irish Ministers have an interest in how the Greek negotiations are perceived: The Irish Government has adopted a relatively softly softly behind the scenes approach to its post-bail-out negotiations with what is generally perceived in Ireland as at best limited success.  There is still much bitterness that Irish Taxpayers ended up bailing out bondholders in private banks even where those bondholders were not covered by the infamous bank guarantee proffered by their predecessor Government.

Maturities have been extended, interest rates have reduced, but there has been very little write-down, and no default. The bottom line is that the bank bail-outs have added greatly to the explosion in Irish sovereign indebtedness from 25% of GDP in 2008 to 123% in 2014. The current Government is under a great deal of domestic fire from critics - not only from the left - for not having done a better job of getting the "institutions" to do a greater deal of burden sharing.  If there is one reason why the current government may not be re-elected - apart from the lack of a credible alternative - it is this failure to do a better job of getting the "taxpayer" off the hook of a debt that was never theirs in the first place.

So if the Greeks get a better deal by shouting louder; by threatening Grexit or default, or simply by being more able and robust in the negotiation process, it will reflect very badly on the Irish Government indeed. And the same probably applies in Portugal and Spain as well - looking nervously over their shoulders at the advance of Podemos et al.  So Germany's apparent hardline stance was not lacking in potential allies, even if no one else was particularly keen to take the lead in beating the Greeks down.

Yanis Varoufakis also makes a fair point when he notes that the supine approach of previous Greek governments has yielded nothing but humiliation and poverty for Greece: a dramatic break or paradigm shift was needed to overcome the widespread belief in EU capitals and markets that after a lot of huffing and puffing the new Syriza Government would back down and break their electoral promises.  Business as usual, in other words, had to be shown to be not an option. A great deal of anger, rupture, and attempted shaming is to be expected when you are trying to change the rules of the game. Yanis Varoufakis may have had no option but to break a few eggs and watch a few heads explode.

It helped that Yanis Varoufakis is actually a distinguished economist who could speak a language few Finance Ministers can actually understand - or rebut - and one which their economic advisers knew to be grounded in a lot of mainstream economics: Hence the anguished cries that the Greeks were speaking economic theory rather than just applying legal rules: oh the horror! Michael Noonan is an able, if aging politician, but his background is as a primary school teacher.  He knows all about enforcing class room rules, but economic theory wouldn't exactly be his forte. So we had a clash of paradigms -EU norms and rules versus Macro-economic reality as supported by many independent economic authorities.  Yanis Varoufakis got a deal he could live with not because he could shout and pound the table, but because he could explain the economic realities better than anyone else.

It also helped that there was much common ground between the parties - clamping down on tax evasion by the wealthy, and improving administrative efficiencies. The IMF predilection for neo-liberal labour market "reforms" - i.e mass sackings and race to the bottom wages - was somewhat sidelined by refusing to deal with the Troika as such, and negotiating primarily with the Eurogroup - a good piece of advance planning and strategising by the Greek side. Insofar as you can, a successful negotiator has to map out the pitch s/he is prepared to play on, and the people s/he is prepared to play with.  That "the institutions" aka the Troika allowed themselves to be divided and conquered in this way suggest a considerable degree of amateurism on their side.

So was the Greek negotiating style successful, and can we expect them to make further headway in the future in getting out from under the yoke of austerity? A lot will depend on how the process is reflected in the media and amongst the Greek populace: will the Greek economy gradually improve, and will corruption, tax dodging and administrative inefficiencies be seen to decrease?  The major problem here is that the new Greek Government have a great deal to achieve and very little time to achieve it.  Social change is possible if you have time and the resources required to grease the wheels of change.  I can foresee a huge fightback by the Greek economic elite - threatening an investment strike, a removal of all liquid assets to Switzerland and a withdrawal of services to the Greek Government and people unless concessions are made.

It will be a bitter internal class struggle in Greece. Even the Troika couldn't ensure meaningful reform of the upper civil service, legal and medical professions in Ireland - still the bastions of entrenched privilege, restrictive practices and extremely high earnings by almost any world standards.  But at least there are some signs that Syriza has succeeded in reversing the class struggle, from austerity being an attack on the relatively poor to an attempt at reform of elite structures in Greece.  In this "the institutions" will be uneasy bedfellows, but the dynamics of EZ politics may have changed.  That, more than the immediate outcome of direct negotiations may be the real legacy that Syriza may bestow on Greece and the Eurozone. It is a gift we should all be grateful for. May EZ elites beware.

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... the extent of what Greece had managed to secure in that deal. If Varoufakis' team had managed only half of what they in fact did achieve, I would have considered it a minor miracle.

The argument that they could have gotten more with a more conciliatory approach has at least two more strikes against it than the ones you enumerate:

First, Syriza was playing against the clock before this agreement. Every week by which Athens delayed even a partial retaking of its sovereignty would have killed on the order of two hundred Greeks, and soured several percentage points of the population on Syriza.

Second, at least some members of the Eurogroup either are or do a convincing impression of being flat out psychopaths acting in transparently bad faith. With psychopaths there are no long plays, and trust-building gestures are totally worthless. And Syriza had very little access to the kind of inside knowledge that would have allowed them to ascertain what fraction of their interlocutors fell in that group, or were effectively controlled by others who did.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 26th, 2015 at 06:12:02 PM EST
I agree on both points, excepting Syriza's knowledge of the characters of its interlocutors. First, there was the public record, second, there were the sympathetic Greek leaders who had prior experience in government and passed this on to Syriza, and, third, there was Varoufakis, who has become a public figure and established many bases of support, including the LBJ Center at University of Texas with Jamie Gailbraith, who, it turns out, has long experience with and wide knowledge of the European governments, especially the treasury and finance ministers, as Congressional staff for Democrats in Washington. Upstate New York mentioned this in an earlier post. Similarly with Michael Hudson, who was also involved as an advisor to Varoufakis.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 26th, 2015 at 08:06:03 PM EST
[ Parent ]
The one thing Syriza have going for them is that they were elected by popular vote on an explicit mandate of rejecting the Troika programme - and democracy still matters to even most conservative politicians.  I doubt the Eurogroup even considered the proposals contained in the 6 page letter in detail - beyond noting that it contained the bulk of the Syriza election platform.  The detail will be fought over on another day when - hopefully from a Eurogroup perspective - Syriza's post-election lustre will have faded and the election is but a diminishing memory. Most Eurogroup ministers are looking over their shoulder at more-or-less leftwing oppositions who could make electoral gains if centre-right governments are seen to be acting anti-democratically or are in some way directly accountable for the devastation in Greece.  Their problem is they do not currently have a Vichy Government in Greece to do their dirty work for them and allow them to appear squeaky clean to their own electorates.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 06:08:56 AM EST
[ Parent ]
The problem is that I agree with both of you AND Paul Mason.

I think the Eurogroup realized they couldn't kick Greece out immediately after this gov't had been elected.

So the Eurogroup chose to kick them out 4 months from now.

SYRIZA surely believe this.

by Upstate NY on Fri Feb 27th, 2015 at 08:35:26 AM EST
[ Parent ]
Varoufakis is, by now, IMO, a Greek national hero and deservedly so. As Finance Minister for Greece, at this time and this place, he is the classic right man at the right time. Other factors include:

  1. Varoufakis is highly knowledgeable about mainstream economics while being a harsh and effective critic. Thus he can provide a devastating critique of austerity politics from even the mainstream orthodox viewpoint, which drives a wedge between ignorant Fin-Mins and their own advisers, who know V is right and their minister is wrong.

  2. Varoufakis is a populizer of hetrodox economic views and of neglected, misrepresented economic history, such as the entire economic history of Europe from WW II on, as in Global Minotaur. He can and does explain things in ways comprehensible to the average, interested listener. Contrast this to the ability of most 'mainstream economists' who stand on their purchased platforms of authority and spout incomprehensible nonsense on behalf of the rich - mostly. Suffering Europeans could give a FF about posh economist's incomprehensible and counter-intuitive claims of TINA. It has always been my experience that it is those outside of the mainstream consensus that provide the most cogent explanations, IMO, because they actually WANT their reader's/listeners to understand, while the mainstream guys just want to confound them so the STFU. That doesn't work once they have gotten a clear explanation that does make sense.

  3. Varoufakis' persona, charisma and forceful defense of the underdog in this struggle has to strike resonant chords amongst all who are suffering under current rules of received stupidity, supported as they are solely by assertion and repetition on owned media. He is a man amongst curmudgeons, dolts, dotards, and two bit political posers.

Imagine had John Maynard Keynes occupied Varoufakis' persona and been in a comparable political position. We cannot know how this will unfold, but, at the least, the proponents of the status quo are or should be very concerned. But this brings up my last point:

4) Historically, revolutions succeed against incompetent and/or outmanned governments. I don't think the current leadership of Europe still gets the threat they are under and the refusal of Germany and the other beneficiaries of the current inequitable situation to allow the development of a coherent European state with effective European wide institutions is about to come back and bite them fatally. Even those who get the problem will not have the tools they need to fight against it.

I think the current EPP dominated politics and the existing EuroGroup arrangements, at a minimum, are going down along with the imposed reality that supported them - collapsing under the death of a thousand cuts. The nature of the succeeding regime is less clear and will likely vary country by country. That is better than having one malignant captured structure being used to oppress all in the interests of tiny elites. I believe we are at one of those points in history where the world can change as if in the twinkling of an eye. All is in flux. Interesting times! I am the most hopeful I have been in 50+ years as an adult.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 26th, 2015 at 09:14:17 PM EST
Great comment.
by Euroliberal on Fri Feb 27th, 2015 at 04:35:56 AM EST
[ Parent ]
Agreed on all points.  Unfortunately short term popularity won't insulate Varoufakis from derision and scorn and perhaps exile if the Greek economy doesn't start to improve.  As for the Eurogroup, yes, some of them give the impression of being the self-entitled kids of privileged parents who have never known a days hunger never mind a lifetime of poverty.  

Unfortunately Europe has an aging and angst ridden demographic structure where the nearly poor side with the rich for fear of becoming really poor. The social democratic opposition parties are a joke - sometimes worse than some conservatives and, so far, real alternative parties like Syriza or Podemos are small and relatively insignificant in most other member states. (I don't count sinn Fein in Ireland as an equivalent, even if they are trying to position themselves as hard left).

So the possibility of significant change, yes, but hardly a revolution...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 06:20:05 AM EST
[ Parent ]
Post-austerity Europe also has a growing younger generation of heavily indebted cupboard-dwelling economic no-hopers. The lucky ones have jobs™, the unlucky ones are living at home with their parents and/or dealing drugs or being prostitutes.

At some point, there will be a demographic tipping point. I suspect Occupy was a preview of what happens then.

Of course they could all become fascists, but I think there's enough political awareness to make that unlikely. What's lacking so far is cynicism and rage. Some are still hopeful, and not all of them have worked out just how much they're being abused. As that changes - as they move into their thirties with barely improved prospects, and many fall into outright bankruptcy - Syriza will begin to look like a center-left compromise.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Feb 27th, 2015 at 06:39:31 AM EST
[ Parent ]
There's also the fact that the Irish government is a nice, upstanding old boys' club. Which means they (a) have an ingress into the slimy patronage network of the European wingnut circuit that Syriza did not have. And (b) had something to lose in terms of their personal retirement options if they pissed off the slimy wingnut circuit.

Syriza doesn't have any friends to lose in the Eurogroup, and its program ensures that they would have a hard time building friends no matter the tone they took.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 27th, 2015 at 02:00:51 AM EST
Syriza is also the country of Greece. Whereas the prior Greek leaders and ministers had worked in the commission, and at the IMF and the ECB, and at academic institutes bankrolled by the wealthy, not to mention Goldman Sachs and the like, Greece was always an outlier for other reasons.

Look at its private debt. Before entering the euro, Greek private debt was in the teens-to-GDP. A product also of its cash society. But even after entering the euro, it was only at 60% debt to GDP, and that has probably risen given the crash in GDP and the relative high amount of NPLs.

It is much harder to put the thumb on Ireland when the private banking system is flailing under the weight of 250% debt to GDP in private debt. If you tip things the wrong way, you can't easily come to the rescue with European taxpayer money, not in the way you can put pressure on a sovereign.

I believe Warren Mosler made this point, that the attack on Greece was an attack on private savers and gov't spenders.

by Upstate NY on Fri Feb 27th, 2015 at 08:42:00 AM EST
[ Parent ]
I believe Warren Mosler made this point, that the attack on Greece was an attack on private savers and gov't spenders.
And David Zervos said about Cyprus:
All of us should really take a moment to consider what the governments of Europe have done. To be clear, they initiated a surprise assault on the precautionary savings of their own people.


A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 11:41:46 AM EST
[ Parent ]
I agree with (a) but not necessarily with (b) and like your sig. line. I don't find analyses based on the moral turpitude of political leaders all that helpful - they are generally no worse or better than the people they represent.  IMHO most "succesful" Irish political leaders go straight to retirement and don't aspire to big Euro jobs or in the private sector. They do what they do because they believe it is the right or pragmatic thing to do - based on what they perceive to be the realistic options open to them. They are advised by civil servants dedicated to the preservation of the status quo or as near to that which seems achievable.

Most political and international relations analytical frameworks are based on the assumption that the key actors will pursue their own self-interest to some degree - enlightened, if they are, by an understanding of their longer term best interests as opposed to any short term gains.  Political systems succeed or fail to the degree to which they can accommodate all key interests - not to the degree which they pursue some independently defined altruistic goals. Is that not what economics is about too?

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 10:39:33 AM EST
[ Parent ]
It is now. But it hasn't always been.

That argument puts cart before horse. Lowest-common-denominator politics exists, but it's more of an accepted failure mode than a model to aspire to.

And long-term benefits vs short-term greed are precisely the question. Short-term systems fail often and fail hard, even for those they're supposed to benefit. All they do in practice is provide an economic airbag that makes failure less unpleasant for them than for the rest of the population.

But ultimately that kind of self-interest is an addictive and dysfunctional behaviour, because you can never have enough of it. When you get a million, you want ten. When you get ten million, you want a hundred. When you get ten billion, you want to be the richest person in the world. When you get that you're in a weird bubble where you get treated like royalty, so you want to stay there, no matter how much damage it does to everyone else.

Meanwhile the systems around you fall apart, because spending resources on stupid shit instead of building a future has consequences for everyone.

The revolution will happen when stupid animal egotism is seen for the obsolete throw-back it is, instead of being seen as the heroic success it's considered today.

This isn't idle theory. More and more of the planet is going to become uninhabitable over the next few decades, and not even the oligarchs are going to be immune from the consequences.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Feb 27th, 2015 at 11:30:30 AM EST
[ Parent ]
Eighty rich people now have as much wealth as 50% of the rest of humanity combined

Billionaires are getting richer, according to a new study from Oxfam. Gather together the wealth of the world's richest people, and you now only need 80 of them before there's enough in the pot to equal everything owned by the poorest 50% of the rest of the world combined. Back in 2010, you'd have needed 388 of the world's richest to balance those scales.



When one person owns it all is it game over? I don't know at what point wealth concentration strangles the entire world economy, but assuming there is such a point we are clearly approaching it asymptotically. Another reason I think the current system is going down and soon. I hope not too soon.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 27th, 2015 at 04:02:46 PM EST
[ Parent ]
The problem with almost any system or analytical framework is that it doesn't include costs suffered by externalities to that system. Who represents the environment in the debate over economic development?

If some people in Brazil gain through deforestation (in the strictly short term) but the whole world looses a vital carbon sequestration and biodiversity resource, how is that greater interest represented? Theoretically through international Treaties and organisations.  In practice not v. effectively.

The short term and specific interests tend to trump the long-term and diffused or generalized interests which are much less effectively represented in our political systems.  That is a problem of our political systems design and lack of coherent and powerful international organization which can represent externalities.

In the US there is a concerted corporately driven campaign to deny any legitimate supranational, environmental or justiciable human rights exist. Politics, at is best, is always about trying to strengthen the rights of the many against the interests of the few. But the failure to do so is as much a failure to build the appropriate governmental systems as it is the consequence of individual turpitude.  Greed and "stupid animal egotism" will always be with us.  We need to become better at marginalising those who exhibit it and managing and minimizing its effects.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 05:48:54 PM EST
[ Parent ]
That is a problem of our political systems design and lack of coherent and powerful international organization which can represent externalities.

Political system design?! Who did that and when? I always thought it just grew there, like Topsy. Then the beneficiaries proclaimed: "There is not alternative!" Modifications have been almost certainly driven by wealthy interests who, to significant degrees, cooperated in their efforts and agreed on their goals. But the systems as wholes have almost totally been the creation of happenstance, so far as I can tell. Show me where I am wrong.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 27th, 2015 at 08:12:08 PM EST
[ Parent ]
Well - someone decided there would be voting, and an electoral college in the US, and the UK system would use first past the post instead of proportional representation. And so on.

And in most countries someone had to sit down and draw up a formal constitution, which meant deciding what was going to be in the constitution.

So it's not really happenstance. It's more about a continuing battle of ideas that are used to justify either self-aggrandising or socially literate behaviour.

What's different now is that there's the first faint glimmering realisation that the ideas matter a lot less than the social relationships they create. And that in fact if you want to judge a political system, you have to look at the quality of the relationships it creates, and not on the broad brand-specific labels pinned on those relationships.

The real political challenge is quarantining the minority whose interests are entirely selfish and/or abusive. Current political systems select these people and give them power over others, which is exactly the wrong thing to be doing.

I suspect it's possible, with effort, to create a system run by fiercely competent and entirely well-intentioned professionals who treat a political career as an unfortunate necessity, not an path to personal profit.

But it's going to take the mother of all political revolutions to get from here to there.

And let's be clear - what we have now is simple animal savagery. There are trappings of civilisation, but the core is actually less civilised than the political systems in many so-called savage tribes.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Feb 27th, 2015 at 10:34:57 PM EST
[ Parent ]
Well, the bare basics were included in the US Constitution. There was no mention of parties - most of the founding fathers, probably looking at revolutionary France, found them abhorrent. The bare bones structure of the Electoral College was about it, and it was necessary mostly because of the size of the country and the resultant travel time, especially from rural areas south and west. The whole party apparatus was made up on the go by participants and most of the rules and procedures for the House and Senate also. The Constitution just gave the individual houses control over their own organization. Likewise in the English Parliament. The rules have changed, mostly at the instigation of MPs and Lords, though earlier the Crown had more influence. The structure evolved through conflict.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Feb 28th, 2015 at 02:10:51 AM EST
[ Parent ]
The whole situation in the former colonies was so unique that the best minds were busy scouring Greek, Roman, Venetian and other republics for examples so as to even have much idea what to expect. Until 1789 the only real examples in Europe were the oligarchic republics such as Venice, Switzerland, the Dutch, and, of course, Greece and Rome from antiquity. Aristotle's politics was not far from up to date and Montesquieu had shown the rest of the world was largely variations on the theme wherein direct election of leaders by any significant portion of a population  was the small exception. Athens stood pretty much alone but was seen as unacceptable. Rome was the preferred model - warts and all.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Feb 28th, 2015 at 09:21:44 AM EST
[ Parent ]
Generally major wars have been the main drivers - see League of Nations, UN, EU, Non-proliferation treaties, Test bans, various Human rights treaties.  All require the partial subjugation of individual or state rights in the interests of the whole.  

The US used to be in the forefront of this sort of thing - generally to stop the Europeans destroying themselves and the planet. Now that the US has become the sole superpower, it is at the forefront of trying to destroy everything that has been achieved before and prevent any new more positive developments happening on e.g. Climate Change.  The US still doesn't deport its war criminals to the Hague for instance.

If history is any guide, it will take a major military or economic defeat for the US to bring it back to its senses and for it to rejoin the "comity of nations". US democracy has been so subverted by corporate interests, I can't see its own people having much of a say in the matter.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Feb 28th, 2015 at 04:53:33 AM EST
[ Parent ]
I don't find analyses based on the moral turpitude of political leaders all that helpful

I'm not basing my analysis on judgments of moral turpitude. I'm basing my analysis on the operation of entrenched patronage networks and endemic corruption.

I do, however, insist on pointing out the depth of the moral turpitude required to avail oneself of systematic corruption and semi-feudal privilege. Because I think it is perfectly fair to note that no, there really is not any kind of equivalence in morality or legitimacy between Syriza or Podemos, or even KKE and the Italian communists, and their enemies in the EPP-PES.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 27th, 2015 at 02:49:37 PM EST
[ Parent ]
JakeS:
I do, however, insist on pointing out the depth of the moral turpitude required to avail oneself of systematic corruption and semi-feudal privilege

To which Irish politicians are you applying this? Fianna Fail had a tradition of close links with developers which got blown out of the water in the crash and there were allegations of impropriety against Michael Lowry (FG now Indepedent) during his time as Minister.  John Bruton (FG) became EU ambassador to the US and later a lobbyist for the Financial services centre but few Irish politicians have or aspire to have a career beyond their Ministerial roles.

Two FF Prime ministers used political donations or party funds for private expenses (Haughey and Ahearn). One FF minister (Ray Burke) was jailed for corruption but v. few others have ever been found guilty of anything other than minor irregularities (expenses, phone bills, mileage allowances) or alleged bribes for land rezonings. All in all it's not a huge list for a 30 year period even if any such transgressions would have been unthinkable in an earlier era.

However there has never been even an allegation that any Minister ever adopted a particular policy position to further his career in Europe post his/her retirement in Ireland. Sometimes an EU role (Commissioner or Court of Auditors) may have been used to reward a party hack or get rid of an unwanted senior party member - current Commissioner Hogan comes to mind as he made a hash of introducing water charges and became a focus of Government unpopularity. A lot of stupid things were done because people were.. stupid...but corruption has mostly been pretty small beer.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 05:17:27 PM EST
[ Parent ]
I suppose it depends on where you draw the line between corruption and not-corruption.

If by corruption you refer strictly to brown envelopes, then I don't think there's all that much of it left in Northwestern Europe. But corruption in my view is a continuum, with "networking" at the soft end, progressing through insular old boys' clubs, pork barrel, revolving doors, outright nepotism, and into graft, kickbacks and outright bribes.

In Europe, most of the damage done by corruption is traceable to the middle of the spectrum.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 28th, 2015 at 04:58:11 PM EST
[ Parent ]
What about this? I admit they don't mention the colour of the envelope....
Schäuble behauptete, dass er das Geld in einem Briefumschlag von Schreiber in seinem Bonner Büro persönlich empfangen habe. Diesen Umschlag habe er ,,ungeöffnet und unverändert" an Brigitte Baumeister weitergeleitet; später habe er erfahren, dass die Spende nicht ,,ordnungsgemäß behandelt worden" sei. Nachdem ihm die Ermittlungen gegen Schreiber bekannt geworden seien, habe er die Schatzmeisterin Baumeister um eine Quittung für die Spende gebeten, damit nicht irgendwer später ,,auf dumme Gedanken" kommen könne.
by gk (gk (gk quattro due due sette @gmail.com)) on Sat Feb 28th, 2015 at 05:06:55 PM EST
[ Parent ]
Meanwhile, the next row concerns Varoufakis's interviews in Charlie Hebdo and a Greek radio, in which he told that Syriza's election promise of debt reduction is not forgotten and will now happen in the form of a to be negotiated debt restructuring. So, one could ask about this too, was this wise or not? In my opinion, that's again the wrong question: the players have little room and move by necessity on a collision course. Schäuble expressed outrage during talks with his own parliamentary faction before the Bundestag vote, for him it would have been better tactically if Varoufakis had shut up until after that vote. However, Varoufakis has his own pressing obligation, to convince a home audience (and a government party he is no member of) that something was achieved in Brussels, so there was no room for a tactical delay out of a diplomatic sense.

On the other hand, in his dismissal, Schäuble (IMHO quite consciously) conflated a haircut default and a debt re-structuring the new government's signed commitment to serve creditors. When the parties to an agreement have radically different interpretations, that doesn't bode well for the future of the agreement. In this case, only the next few months will decide whether Greece truly gained something with the agreement Varoufakis and Tsipras got.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Fri Feb 27th, 2015 at 03:34:21 AM EST
"Was this wise or not?"
The Syriza strategy is : say what you do, do what you say. Transparency is the touchstone. "Creative ambiguity" in the negotiated texts is one thing. Being mealy-mouthed in public about the obvious intention for debt reduction is another; and would rather tend to pop the bubble of enthusiasm which surrounds them.

Given the weak negotiating position, straight talk is probably their best weapon (as well as being virtuous in itself of course!)

As for Schäuble... actually I'm rather disappointed that only 20 hard-liners voted against the text in the Bundestag. A larger group, and Schäuble identified with it, would perhaps have more clearly defined the text as positive and progressive. Now the CDU/CSU can still play the game of "we gave you the benefit of the doubt, but now your detailed proposals are significantly different from the austerity accords signed by your previous government, and we are shocked, SHOCKED!"

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Fri Feb 27th, 2015 at 04:22:03 AM EST
[ Parent ]
The endgame here is Greek default within the Euro, and a soft exit.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 04:49:52 AM EST
[ Parent ]
Or reform of the Euro. Which I suspect would be their preferred option, unlikely though it is.

Actually, there's a fun potential diary - what would proper Euro reform look like? Or have we done that?

by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 05:00:54 AM EST
[ Parent ]
As I prepare for the presentation of Wray's book on MMT in MadridI realise that the problem with the Euro is not even institutional or legal but ideological, but it's becoming hardened in jurisprudence (and in the constitutions).

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 05:18:27 AM EST
[ Parent ]
How do you mean? Do you mean that the correct decisions could have been made within the existing institutional and (EU) constitional framework but weren't because we're ruled by nationalist right-wing gold bugs and/or variations on the theme of neoliberals?
by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 05:21:08 AM EST
[ Parent ]
We know this, the whole "can't buy bonds in the secondary market" was a transparent lie in 2010 already, and has been demonstrated to be a lie by ECB actions (including adopting QE).

Institutionally, the US government operates under the same constraints as the EU, but the Fed doesn't think it shameful to cooperate with the Treasury.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 05:23:35 AM EST
[ Parent ]
So the problems with the euro are fundamentally political will and/or understanding?
by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 05:31:52 AM EST
[ Parent ]
Yes, except they get progressively hardened in legal text and convention. And because we operate on a continental 'civil code' model rather than an 'anglo' 'common law' model, it risks becoming irreversible.

Specifically, the US operates under a debt ceiling, constitutional balance budgets for the states, and a prohibition of monetary financing or Treasury overdrafts on its Fed account. However, there is practice of Treasury-Fed coordination which ensures everything runs smoothly, and the debt ceiling is an act of Congress and not in the Constitution.

For instance, on the days that the US Treasury issues debt, the Fed knows there will be extraordinarily liquidity needs for clearing in the interbank market, and so before the auction the Fed increases its supply of liquidity to the system by means of refinancing operations. This is not considered shameful or a violation of the spirit of the laws as it would be in Europe.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 05:41:13 AM EST
[ Parent ]
And because we operate on a continental 'civil code' model rather than an 'anglo' 'common law' model, it risks becoming irreversible.

OK, so it's Napoleon's fault...

Two other features they have in the US of course :

  1. large-scale transfer payments from federal to state level
  2. the willingness to let any given state fail, economically, and just let migratory fluxes do the adjustments.

Looks like the EU is embracing the second feature.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Fri Feb 27th, 2015 at 06:16:39 AM EST
[ Parent ]
That it's Napoleon's code is another Anglo conceit. The tradition goes back to Roman law.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 06:33:39 AM EST
[ Parent ]
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 06:41:02 AM EST
[ Parent ]
the willingness to let any given state fail, economically, and just let migratory fluxes do the adjustments.

Or the military budget.

by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 06:55:40 AM EST
[ Parent ]
Tschyeah.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 08:46:44 AM EST
[ Parent ]
by Upstate NY on Fri Feb 27th, 2015 at 09:11:15 AM EST
[ Parent ]
To drop money from?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 09:28:26 AM EST
[ Parent ]
That actually looks like a neat way to balance the books. Challenge all of the military procurement contracts in progress, on the grounds of irregularities, corruption or lateness (or all three)...

This might compensate loss of revenue from challenging all of the privatization processes in progress, on the grounds of irregularities, corruption or lateness (or all three)...

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Fri Feb 27th, 2015 at 09:50:47 AM EST
[ Parent ]
Remember the story of the submarines or whatever that Greece was supposed to buy in 2010 when it first went broke?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 09:56:45 AM EST
[ Parent ]
http://www.reuters.com/article/2010/03/23/us-eurozone-greece-warships-analysis-idUSTRE62M1Q520100323

Broke? Buy Some Warships.

Every Greek can attest to the bribes of minor officials for basic paperwork. It's a huge problem. But no one wants to shine the light on the massive problem of bribery. Recently there was this article in the New York Times, which I wholeheartedly agree with:

http://www.nytimes.com/2015/02/21/opinion/in-greece-focus-on-justice.html?_r=0

To solve the Greek crisis, Europe needs to focus less on debt and more on justice. Athens did not simply squander a few hundred billion euros: Much of it was stolen. Yet the European Union has done little to compel Greece to crack down on high-level corruption. The possible explanation for this does not bode well for the Union's future.
by Upstate NY on Fri Feb 27th, 2015 at 10:17:19 AM EST
[ Parent ]
I met Randall Wray at a conference in Dublin a couple of years ago together with Dr. Stephanie Kelton who has since been appointed Chief Economist on the Senate Budget Committee by Senator Bernie Sanders (I-VT)- a major coup for Progressives - and one-in-the-eye for mainstream Democratic economists.  Both were very impressive speakers.  The irony is Wray teaches in Kansas - one of the most fucked up US states where the ideological battles are possibly even worse than what Syriza faces in the Eurogroup.  They want to ban teachers teaching evolution ffs...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 05:59:45 AM EST
[ Parent ]
Wray actually teaches in Kansas City, Missouri, one of the more progressive metropolitan areas in either Kansas or Missouri.

I remember discussing that Dublin event here on ET. Will you be coming from your Spanish beach retreat?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 06:15:00 AM EST
[ Parent ]
This doesn't appear to me to be a stated Syriza policy, even if it is their preferred behind the scenes policy option. I suspect they would want to engineer it so that it is seen to have been forced on Greece, rather than an explicit or implicit policy goal.  The short term consequences of Grexit could be quite severe - Syriza would do well to position itself as not wanting to bring it about, even if it would be difficult for it to escape opposition charges of incompetence were it to happen despite Greek opposition.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 05:45:10 AM EST
[ Parent ]
Stated Syriza policy is no Euro exit in principle, but no Euro at any cost either. And a program of ending the humanitarian crisis and reforming the Greek state to their specification and not the Troika's.

'Soft exit' includes what I called a Plan B.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 05:48:47 AM EST
[ Parent ]
What do you think is the timeframe for making Plan B a possibility? How fast can they roll out those credit cards for food stamps?

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Fri Feb 27th, 2015 at 07:04:39 AM EST
[ Parent ]
I would think it could be done in a month and rolled out in another month. People who work or have worked in IT like Frank, Colman or Eurogreen not to name a fewafew might be able to tell us more about the practicalities of such a thing.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 08:34:08 AM EST
[ Parent ]
So two months. The next question is: should the hawks in any of the Institutions realise this as a danger, what can they do against it in that timeframe? What is the next financial instrument up for ECB approval, when will the next liquidity crunch come?

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Fri Feb 27th, 2015 at 08:43:32 AM EST
[ Parent ]
They won't realise it as a danger because all that's being rolled out is the electronic payment and electronic VAT collection infrastructure. They cannot possibly object to that.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 08:48:02 AM EST
[ Parent ]
Do they have no one who can read?
by generic on Fri Feb 27th, 2015 at 08:55:30 AM EST
[ Parent ]
And what are they going to do if they realise? Point at blog posts by Varoufakis when he was working for a videogame maker and claim in public that rolling out e-payments and e-tax infrastructure in 2015 is subversive?

They'd look like clowns.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 09:08:40 AM EST
[ Parent ]
Their position has been completely untenable from the beginning. That hasn't stopped them. Apparently the IMF sabotaged tax collection efforts which is hardly something they can admit in public.

Try to stir up another bank run?

by generic on Fri Feb 27th, 2015 at 09:19:11 AM EST
[ Parent ]
Now they know Varoufakis will go public with any blackmail.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 09:22:02 AM EST
[ Parent ]
Two months seems wildly optimistic to me unless you have a lot of the infrastructure in place already.
by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 08:58:57 AM EST
[ Parent ]
Can it be done in 4 months?

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 09:07:03 AM EST
[ Parent ]
In Greece? (Or Ireland?) Probably not. I'd guess six months is optimistic.
by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 09:21:45 AM EST
[ Parent ]
What if you leverage the (nationalised) private banks? They can roll out mobile payment terminals to businesses, and credit cards. Payment systems is what tehy do.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 09:27:06 AM EST
[ Parent ]
But if you start nationalizing the banks you better already have your alternative plan ready to take over.
by generic on Fri Feb 27th, 2015 at 09:44:09 AM EST
[ Parent ]
But they are already nationalised!
Greece's bank bailout fund HFSF holds majority stakes in three of the country's four biggest banks, National Bank, Piraeus Bank and Alpha Bank, after their recapitalization.
(Greece will not appoint party officials to run banks: government spokesman, Reuters, February 2, 2015)

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 09:55:53 AM EST
[ Parent ]
The average Irish bank takes in excess of two years to update its mobile banking to four year old technological changes. I have reason to believe they're more agile than the average Greek bank.
by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 09:54:17 AM EST
[ Parent ]
And if the Greek banks are anything like Irish banks their IT infrastructure is already on the brink of collapse due to underinvestment.
by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 09:56:29 AM EST
[ Parent ]
Assuming they have any left and it hasn't all been contracted out to Goldman Sachs or someone.
by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 09:57:59 AM EST
[ Parent ]
And if they're like French banks then they are paralyzed by massive overinvestment in the wrong technologies.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Fri Feb 27th, 2015 at 10:03:49 AM EST
[ Parent ]
... and their IT departments will be massively overstaffed. But that comparison's probably a bit of a stretch. I imagine they are more of a bare-bones operation.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Fri Feb 27th, 2015 at 10:05:03 AM EST
[ Parent ]
I agree. I can't imagine that the government IT culture is any less cumbersome in Greece than in France.

Sure, leverage bank infrastructure. The banks can hardly say no.

Hmm I imagine an awful lot of Greek IT talent is expatriate. They should do some aggressive international headhunting to make up a posse.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Fri Feb 27th, 2015 at 09:54:33 AM EST
[ Parent ]
I hope Yanis made lots of friends at Valve.
by generic on Fri Feb 27th, 2015 at 10:22:17 AM EST
[ Parent ]
ET threads are so much fun...

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 10:27:38 AM EST
[ Parent ]
I'm with Colman on this. I don't have personal experience of the banking and financial sectors but have seen quite largely companies almost go to the wall trying to implement major new financial or MRP systems. Such systems never seem to take the complexities of the real world into account, unless you are talking about a "package" which has been implemented and amended many times in similar situations.

A lot will depend on the level of professional expertise available, and on whether all the key players are on board and committed to making the implementation work - because their careers depend on it. The opportunities for blocking and fuck-ups are myriad, but here's the thing: I don't see Greece having much of a choice. It has to be made work, and if you can settle for getting it 90% right first time, 4 months might be as good as 6. The danger is that it will never happen because some key player doesn't want it to happen.  So you have to be ruthless and remover all blockers.

As for the ideological implications, what's not to like?  Who can object to food stamps for the hungry and tax credit notes for people who have been slow to pay their taxes? If the alternative is that the Greek Government runs out of hard Euros and people won't get paid at all, people will be happy to accept part payment in foodstamp/tax credit notes which they can use defray at least some of their outgoings.

Th real question is how to make those tax credits/food stamps trade-able - on black, grey, or white markets, because without that it doesn't really qualify as a currency at all.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 10:57:32 AM EST
[ Parent ]
How did wireless card payment machines get rolled out in Spain, then? It seems unpossible to achieve.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 11:43:11 AM EST
[ Parent ]
How long did it take?
by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 01:30:21 PM EST
[ Parent ]
No idea. From the user's perspective it seemed to happen overnight. May have been 4 years in the making for all I know.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sat Feb 28th, 2015 at 06:31:03 AM EST
[ Parent ]
The problems aren't primarily technical, its all been done before in some form. In theory you could have state owned banks open a new account for each "qualifying" citizen. These accounts will hold credits denominated in Euros but trade-able only in return for food items or taxes due.  Cards would be issued against each account. State wages or payments to suppliers would be paid in part to these new accounts, and in part in whatever is currently the usual way.

New accounting systems would have to be set up to account for the split payments at both Government procurement/HR level and employee/supplier level. Food shops and tax offices would have to receive terminals capable of settling bills from these new accounts.  Some anti-fraud audits would have to be conducted to prevent supemarkets accepting such payment for non-food items, but perhaps they would be less than keen to except non hard cash in the first place - especially if they received more in credits than they need to pay their taxes. Those who refuse to acept tax credits in payment at all might lose business or perhaps even a licence to trade.

Some companies who supply a lot of services to the Government would end up with more tax credits than the taxes they actually owe or are due to pay.  They will want to be able to trade tax credits for real cash.  Banks might be allowed to facilitate this trade provide the seller could prove they were fully tax compliant.

Companies with millions in cash stashed in Switzerland might have to draw on their cash hoard in order to pay their (especially foreign) suppliers as foreign suppliers won't accept tax credits - but receive only tax credits in part payment. Thus hard cash would slowly be leached out of its hides.  But all accounting systems would have to be able to deal with effectively two currencies being used to settle single bills - not a usual IT requirement.  Probably some bills would be settled in hard currency, some in tax credits but many suppliers would be unhappy if they already had enough tax credits to settle their tax liabilities.  Some might only accept payment in tax credits for a discount, and so a grey market might be born.

There are many precedents for businesses operated in two currencies - some N. Ireland shops accept Euros as well as Sterling often at a standard notional trading rate. such systems should be adaptable to running a parallel currency, but for simplicity I suggest an official 1:1 parity should always be maintained, whatever happens on the grey market.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 01:55:42 PM EST
[ Parent ]
Funny, but I wouldn't see the introduction of tax credits as a parallel currency as a Euro exit at all - just an exploitation of existing loopholes in Fortress Frankfurt. No doubt the Eurogroup would rush to try to close those loopholes if Greece were to go down that road, but the ensuing debate would expose many of the fallacies of current monetary ideology and perhaps force some reform of Fortress Frankfurt itself.  At the very least the introduction of a parallel currency would increase fears of impending Grexit, improve Greece's bargaining position vis a vis the Eurogroup, and force greater operational flexibility on the ECB.

To me, your Plan B is the most important thing the Greek Government can do in the 4 months it has bought off the Eurogroup.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 07:06:05 AM EST
[ Parent ]
The beauty of the present approach is that they are creating an electronic payment system to give the government the ability to directly credit private accounts on a regular basis. It apparently will start with those receiving health and/or welfare benefits or starting such new benefits as supplemental assistance to older workers to keep them in the workforce, but could be expanded, I would imagine, quite readily to everyone with a tax account. Once that payment system exists, even in part, the government could run any currency form it wishes through it. This would not have to be acknowledged until it was done the first time, if then.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 27th, 2015 at 07:57:02 AM EST
[ Parent ]
It's soft Grexit if it comes accompanied by capital controls.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 08:29:10 AM EST
[ Parent ]
Yea but capital controls tend to be time-limited and are not irreversible. I see Grexit as a one time event which is almost certainly not reversible within a political lifetime. A soft exit could be a precursor to a hard exit, but t could just as likely be a pre-ecursor to a full re-entry if conditions improve (and some people wise up).

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 11:03:43 AM EST
[ Parent ]
Cyprus' "time-limited and reversible" capital controls are going on two years as we speak...

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 11:04:52 AM EST
[ Parent ]
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 11:19:06 AM EST
[ Parent ]
No, because they didn't introduce a parallel currency.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 11:35:23 AM EST
[ Parent ]
It has left the world of the livingfunctioning economies.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 11:36:49 AM EST
[ Parent ]
There are so many unpredictables in Greece.

When things get bad, what do the police do?

How do the people defend themselves in ordinary life?

Crime is rampant in Athens right now.

by Upstate NY on Fri Feb 27th, 2015 at 09:13:04 AM EST
[ Parent ]
There is some hope, but not too much time: Golden Dawn and the "Dark Forces" (Jacobin Magazine, 2.24.15)
Change is in the air in Athens. We have felt it. This past November we were guests at a workshop attended by Greek and foreign academics and politicians, police union representatives, current and retired Hellenic Police officers (including high-ranking ones), and Syriza's members of parliament and central committee representatives. A meeting of the radical left and the police: it was unprecedented.

The discussions were remarkably candid. Reform -- radical reform -- of the police and the judiciary was on everyone's mind. The energy inside the workshop was matched only by the mood on the street. Hope abounded. Change seemed imminent.

Yet despite this momentum, a dark cloud hung over Athens. The police, of course, remained a conservative enclave. They harbored xenophobic attitudes and, in far too many cases, openly aligned with the far right. Last month, as Syriza was being propelled to power, the police once again voted heavily in favor of the fascist Golden Dawn party.



A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 09:24:08 AM EST
[ Parent ]
There's also the little issue that Noonan is a Fine Gael centre-right politician who's absolutely delighted to have an excuse to impose right-wing austerity policies. A bit embarrassing for him electorally, but reducing labour power and redistributing to the well off is right up his ideological alley.

Meanwhile, fuck Labour.

by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 04:46:24 AM EST
I would have thought it was fuck Fianna fail, Fine Gael, Labour, and Sinn Fein in your case.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 06:37:41 AM EST
[ Parent ]
Yeah, Fuck this for a lark.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 06:50:13 AM EST
[ Parent ]
From before my time here, I'm afraid.  But a very interesting list of recommenders.  Where have they all gone?

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 07:14:45 AM EST
[ Parent ]
Moved on in one form or another, some have been renamed.
by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 08:17:32 AM EST
[ Parent ]
That was pre-crisis. A lot of us had a little more leisure then. And all of us were younger :D

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 08:28:01 AM EST
[ Parent ]
Fianna Fail, Fine Gael and Sinn Fein are just acting to their natures. Labour leadership decided to get their power and their Mercs and ministerial pensions rather than forcing the right to form a government to implement their austerity. Threw away the chance to possibly reconfigure Irish politics.

So now we get Sinn Fein and their little gang of gangsters and murderers. So a special "Fuck You" for Labour.

by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 06:53:56 AM EST
[ Parent ]
As Labour has always done. But as those four parties are the only ones to achieve significant electoral support (following the demise of the PDs and near demise of the Greens) what does this say about the Irish people as a whole?

OK, perhaps let's not go there. It's a different and perhaps not very edifying debate.  I get tired of debates about lamestream media and false consciousness.  At some point you have to start dealing with people from where they are, not where you might want them to be.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 07:19:51 AM EST
[ Parent ]
I'm often tempted to conclude the Irish people are selfish assholes who deserve everything they get. I try to avoid that temptation, but it's bloody hard work sometimes.
by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 08:15:50 AM EST
[ Parent ]
I often feel the same way about my Scots Irish brethren in the USA. A thousand years of identifying with their own ethnic elites against foreigners and then repeatedly being sold out by those same elites. Still today so easily duped and recruited to be the agents of their own despoliation, most seem determined not to learn from their mistakes but proudly cling to the very beliefs that got them where they are. I suspect a lot of it derives from Celtic culture - greatly celebrated here in the Ozarks.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 27th, 2015 at 08:56:51 AM EST
[ Parent ]
Note that denying the existence of the system is what allows the system to continue working invisibly. You know that, of course.
by Colman (colman at eurotrib.com) on Fri Feb 27th, 2015 at 08:23:24 AM EST
[ Parent ]
As you note in the diary: "Business as usual, in other words, had to be shown to be not an option", and "That "the institutions" aka the Troika allowed themselves to be divided and conquered in this way suggest a considerable degree of amateurism on their side."

In light of these two factors add the apparent fact that Varoufakis and Syriza recognized that potential division and pushed hard to make it a reality. They may have benefited from advisors Varoufakis had gotten to know, such as Jamie Gailbraith and Michael Hudson, who had long experience and knowledge of EU politicians and practice, but potential divisions are irrelevant until they are challenged to agree on some action. So I think that Varoufakis and Tsipras played their hand to maximum effect.

I believe that the dynamics of EZ politics have definitely changed - for Greece and for any country with the ability to challenge the bullies. But Greece is the only one to have tried - so far. And TINA is doing poorly in some countries just now, especially Spain, where elections loom. It all depends on local politicians, their where-with-all and the reactions of the local populations. I don't know enough about Spanish politics to hazard a guess, but,were Podemos to become the largest party in Spain, at a minimum, EZ politics as usual would be a bad memory. Germany seems about as hopeless as the Old South in the USA.  

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 27th, 2015 at 08:47:50 AM EST
It is often brought up that Varoufakis got his first job from the last finance minister. If he still has contact he should have gotten a good view already.
by generic on Fri Feb 27th, 2015 at 08:57:21 AM EST
[ Parent ]
I don't know about the "first job". Stournaras brought Varoufakis to the University of Athens around 2000 to set up a PhD program in political economy.

This is representative of the relationship: Open letter to a good friend and colleague (who happened to become Greece's Finance Minister yesterday...) (June 27, 2012) which then soured: Greek Finance Minister Confesses: "I turned down the IMF's offer of an alliance in favour of a debt restructure" (January 10, 2014).

A few months after Varoufakis demanded Stournaras' resignation he stepped down as Finance Minister to become the Central Banker. Talos can tell us more about the extent to which they're still on speaking terms...

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 09:06:22 AM EST
[ Parent ]
Varoufakis was a Pasok activist and adviser to Pasok Prime Minister Andreas Papandreou before that. Michel Rocard wrote a forward to one of his books, so he is a fairly mainstream (and well connected) social democrat even if his father was a communist who later became chairman of Halyvourgiki, Greece's biggest steel producer and his mother was a feminist. It's true he's not a member of Syriza, but saying he's not well connected to the EU political classes is I think somewhat overdone.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Feb 27th, 2015 at 11:17:42 AM EST
[ Parent ]
Varoufakis's actual party membership however is with KKE.

He has never switched his party affiliation.

Shhhhhhhhhhhhhhhhhh.

by Upstate NY on Fri Feb 27th, 2015 at 10:06:40 PM EST
[ Parent ]
Will he be expelled?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sat Feb 28th, 2015 at 06:11:03 AM EST
[ Parent ]
Why expel your biggest Trojan horse unless it is helpful to him politically?

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Feb 28th, 2015 at 07:18:04 AM EST
[ Parent ]
Varoufakis is not a Trojan horse for the KKE, which by now is virulently anti-EU unlike him.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sat Feb 28th, 2015 at 09:31:49 AM EST
[ Parent ]
No. He is sympathetic to kke, but membership in the kke is not something that is even remotely feasible for someone like YV

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Sat Feb 28th, 2015 at 12:58:14 PM EST
[ Parent ]
Well, he has said so in the past. Joined when he was young. Never resigned, never joined another party.
by Upstate NY on Sat Feb 28th, 2015 at 08:27:13 PM EST
[ Parent ]
Right now I give it a 50/50 chance these "far left protesters" are actually right-wing agent provocateurs.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 09:41:19 AM EST
The story is BS. ANTARSYA - the other Marxist coalition - held a small rally, not against SYRIZA but to pressure SYRIZA on an anti-austerity, anti-memorandum line. I think that there was an anarchist march alongside. With this block came a group of idiots which had also caused trouble on the 6th and who proceeded to burn and destroy. Seemingly they're testing the reaction of the police. Serious anarchists want nothing to do with these kids, they are closer to football hooligans than Bakunin. Plus they are notoriously very infiltrated by police.
Interestingly on the 6th they attacked a traffic police car in Exarchia, shouting "Fuck SYRIZA". The riot cops then proceeded to attack squats and anarchist strongholds. Certain of the more violent cops were shouting "fuck your SYRIZA" to the anarchists. This is something that both sides agree on.

Again, most anarchists I know consider these people apolitical hooligans. I think the autonomy with which the police is already operating is more worrying

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Fri Feb 27th, 2015 at 08:04:43 PM EST
[ Parent ]
Reuters: Greece runs out of funding options despite euro zone reprieve (February 27, 2015)
Euro zone officials hope the liquidity squeeze will force Prime Minister Alexis Tsipras's nascent government to agree reform plans more quickly than the end of April deadline set by creditors, paving the way for bailout funding to be released.

"The liquidity squeeze is being used to push the Greeks to very quickly start discussions on the review and finish that as soon as possible - not even waiting for the end of April," one euro zone official said.

...

The reforms agreed under the previous government could be implemented within two to three weeks, a second euro zone official said.

...

"Eventually they will have no other choice but to adopt the measures, and move quickly," the first euro zone official said.

That's clear, then.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Feb 27th, 2015 at 11:07:02 AM EST
In for a penny, in for a pound. This is all at the discretion of EG and ECB officials. If Greece just insists that they release the funds and hangs tough on their interpretation of the deal just agreed, are these 'EU institutions' going to have the nerve to find out what happens with a Grexit? I don't know the reporters involved. What are their leanings? Could be part of the scare campaign.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 27th, 2015 at 02:19:29 PM EST
[ Parent ]
Well people in SYRIZA are becoming nervous. It is obviously yet another attempt at blackmail. And the IMF (considered the more "conciliatory" of the institutions) is in this, as is the ECB. It is concerted.

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Fri Feb 27th, 2015 at 07:52:54 PM EST
[ Parent ]
I don't see that they have any choice but to go forward on the assumption that they will either find the money in all or in part and/or 'the institutions' will back down. Still a game of chicken. About when the tension becomes unbearable I would not be surprised were 'the five eyes' to report that there is 'chatter' about a meeting between the Greek and Russian ministers of defense or between Tsipras and Putin. Meanwhile, Greece can start the process of cancelling some of the defense procurement contracts, preferably those doing the most harm to the hawks, with the savings going to meet the needs for debt service.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 27th, 2015 at 08:27:29 PM EST
[ Parent ]
Boy, Stournaras really screwed up. Worse than not siding with the IMF against Schauble is revealing that he didn't side with the IMF against Schauble.

Greece can NEVER EVER expect help from the IMF in a fight with Schauble.

by Upstate NY on Fri Feb 27th, 2015 at 10:04:19 PM EST
[ Parent ]
In the first opinion poll after the February 20th deal, things seem to be steadily smooth for SYRIZA:

  • Voting preference projection: SYRIZA 47,6%, ND 20,7%, all other parties around their last election numbers except PASOK which is shrinking to oblivion it seems. KKE seems to be losing slightly, ANTARSYA is at double its electoral percentage. So the vote to the "left" of SYRIZA is stable at ~6%

  • 81% of respondents are in favor of remaining in the Euro, as opposed to 18% who would rather leave the common currency. Among those who would leave the Euro are 19% of SYRIZA voters, 17% of ANEL voters, 53% of KKE voters and 39% of Nazi voters

  • 68% are satisfied with the way the government has negotiated (majorities among all parties' voters), versus 23% who aren't.

  • 76% view the government's first month in power as positive (18% negative) including again majorities of all parties' voters - 57% positive ratings from ND voters

If part of the CDU/Institutions strategy was to weaken SYRIZA's approval rates among voters, it seems to be failing

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Fri Feb 27th, 2015 at 08:33:08 PM EST
Syriza might consider holding a referendum or new election a week or so before the most critical decisions by 'the institutions' that could produce a default have to be made. Also, it would seem that it might be wise to stand up special Treasury police agency, like the Secret Service in the USA. Perhaps others as well. It would be unwise to rely on the present police for such work. Beefed up military police capability might also be in order.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 27th, 2015 at 08:42:18 PM EST
[ Parent ]
When was polling done? I can't find a date in the text.

Two further interesting figures I could extract with Google Translate:

  • Those considering Tsipras prime ministerial material jumped from 29% to 55%.

  • The majority approves the government's way of negotiation even among the Nazis (53% to 47%).


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Feb 28th, 2015 at 08:24:35 AM EST
[ Parent ]
Tspiras the Statesman and Varoufakis the activist/protagonist.  A potentially v. useful double act especially if (say) the Schauble/Varoufakis relationship deteriorates further.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Feb 28th, 2015 at 08:32:43 AM EST
[ Parent ]
Could you tell us something about the public reactions of the opposition parties other than KKE and ANTARSYA? Are they lying low, vague, kind-of-supportive, something else? And what's the situation of To Potami: has any internal criticism of pre-election strategy come to light?

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Feb 28th, 2015 at 08:49:09 AM EST
[ Parent ]
This was a pre-publication of a poll that we'll be published in its entirety tomorrow I think, and which finished Thursday.
The other parties are flip-flopping between yelling "disaster" and accusing the government that it too signed a "memorandum" and thus it has "compromised". This is an argument that isn't getting much credit from citizens who are seeing a huge difference both in substance and in style.  Nd cadres seem to still be convinced of the "left parenthesis" scenario and attacking the gov very aggressively on the anti-government tv channels.


The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Sat Feb 28th, 2015 at 12:52:56 PM EST
[ Parent ]
"Will be" - corrector trouble!

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Sat Feb 28th, 2015 at 12:54:08 PM EST
[ Parent ]
I had to Google "left parenthesis":

ekathimerini.com | Tsipras gives SYRIZA MPs pep talk as he tries to cement support

The prime minister indicated that the previous government had been hoping that the challenges facing its successor would be so great that they would lead to it not being able to last for long, the so-called "left parenthesis."


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Feb 28th, 2015 at 03:19:12 PM EST
[ Parent ]
I thought they are lying low because I saw none of this yelling reported, while UpstateNY reported some angry reactions towards the creditors. So this poll result is in spite of opposition noise and a hostile private media (with no public media to counter it).

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Feb 28th, 2015 at 03:26:39 PM EST
[ Parent ]
Greece warned to start reforms to gain cash - FT.com

Greece must immediately start adopting some of the economic reforms demanded by its creditors if it is to receive much-needed access to emergency funds in the face of a mounting March cash crunch, the eurozone's chief negotiator has warned.

Jeroen Dijsselbloem, the Dutch finance minister who leads the Greek talks as chairman of the eurozone finance ministers' group, told the Financial Times that he was prepared to make a "first disbursement" of the €7.2bn remaining in Athens' €172bn bailout as early as this month.

But the funds would only be transferred if the new Greek government, which for weeks has resisted implementing measures contained in the existing bailout after campaigning to kill the programme, adopted reforms the two sides could quickly agree on.

"My message to the Greeks is: try to start the programme even before the whole renegotiation is finished," Mr Dijsselbloem said. "There are elements that you can start doing today. If you do that, then somewhere in March, maybe there can be a first disbursement. But that would require progress and not just intentions."



"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Sun Mar 1st, 2015 at 02:23:14 PM EST


A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Mar 2nd, 2015 at 12:01:56 PM EST


A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Mar 2nd, 2015 at 12:02:56 PM EST
[ Parent ]
And this is why Varoufakis singled out the technocrats.

People made fun of him for a month for differentiating between the troika technocrats and the institutions.

I have no doubt that they take instructions from the same masters, but negotiating with the eurogroup is very different than taking orders from these technocrats.

by Upstate NY on Tue Mar 3rd, 2015 at 11:54:16 AM EST
[ Parent ]


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