Saturday, July 04, 2015

The state of Europe before the Greek referendum

Jamie Galbraith, a friend and former professional colleague of Greek Finance Minister Yanis Varoufakis, has some interesting observations on the state of the negotiations leading up to tomorrow's Greek referendum. At this writing, it's already tomorrow there. (Greece: Only the 'No' Can Save the Euro The American Prospect 07/01/2015; also appears in Social Europe 07/04/2015)

Galbraith isn't impressed with the current leadership of the eurozone:

To understand the bitter fight, it helps first to realize that the leaders of today’s Europe are shallow, cloistered people, preoccupied with their local politics and unequipped, morally or intellectually, to cope with a continental problem. This is true of Angela Merkel in Germany, of François Hollande in France, and it is true also of Christine Lagarde at the IMF. In particular North Europe’s leaders have not felt the crisis and do not know the economics, and in both respects they are the direct opposite of the Greeks.

He also has a view on why the EU elite so despises the DFH Varoufakis:

For the North Europeans, the professionals at the "institutions" set the terms, and there is only one possible outcome: to conform. The allowed negotiation was of one type only: more concessions by the Greek side. Any delay, any objection, could be seen only as posturing. Posturing is normal of course; politicians expect it. But to his fellow finance ministers the idea that the Greek Finance Minister Yanis Varoufakis was not posturing did not occur. When Varoufakis would not stop, their response was loathing and character assassination.
And he stresses the stone intransigence of Angela Merkel and her supporters:

Ultimately, the Greek government found that it had to bow to the creditors' demands for a large and permanent primary surplus target. This was a hard blow; it meant accepting the austerity that the government had been elected to reject. But the Greeks did insist on the right to determine the form of austerity, and that form would be mainly to raise taxes on the wealthiest Greeks and on business profits. At least the proposal protected Greece's poorest pensioners from further devastating cuts, and it did not surrender on fundamental labor rights.

The creditors rejected even this. They insisted on austerity and also on dictating its precise shape. In this they made clear that they would not treat Greece as they have any other European country. The creditors tabled a take-it-or-leave-it offer that they knew Tsipras could not accept. Tsipras was on the line in any case. He decided to take his chances with a vote.
Here are two PBS Newshour reports on the upcoming referendum.

Yes or no on bailout referendum, how should Greece vote? 07/03/2015

That piece relies a little too heavily on the this-side-says, the-other-side-says approach. The discussion features two economists, Jacob Kierkegaard and Mark Weisbrot. Kierkegaard is from the Peterson Institute for International Economics, whose main purpose is to promote dogmatic neoliberal economics. Weisbrot is from the Center for Economic and Policy Research (CEPR), which actually produces serious macroeconomic commentary and analysis.

Kierkegaard's comments in this segment are pretty much hack work we should expect from the Peterson Institute.

Weisbrot was optimistic in Germany is bluffing on Greece Aljazeera America 06/12/2015: "Take partner-in-chief German Chancellor Angela Merkel: If there’s one thing she doesn’t want to be remembered as, it’s the politician who destroyed the eurozone." But he seems to have underestimated Merkel's willingness to bet the farm on trying to push Greece's Syriza's government into submission, or out of office altogether. Merkel and her supporters scarcely hide the fact that they want "regime change" in Athens.

By the end of June in this fast-changing situation, he was writing (Are European authorities trying to force regime change in Greece? Globe and Mail 06/30/2015):

There is considerable evidence that this has been the European authorities’ strategy since the anti-austerity Syriza party was elected in January. Just 10 days after the election, the ECB cut off its main line of credit to Greek banks, even though there was no obvious reason to do so. Shortly thereafter, the ECB put a limit on how much Greek banks could lend to the government – a limit that the previous government did not have.

From the European authorities’ point of view, “regime change” is the only logical strategy. They do have a nuclear weapon, which is to cut credit to Greece entirely – thus precipitating a financial meltdown that would force the country out of the euro. But German Chancellor Angela Merkel doesn’t want this, and neither does her ally, U.S. President Barack Obama. So European authorities continue to take steps to undermine the Greek economy and government, hoping to get rid of the government and get a new one that will do what they want.
In Congress Weighs in on Holding IMF Accountable for Damage Caused by Failed Policies in Greece The World Post 07/02/2015, he describes further the steps the Troika is taking in their current effort at regime change in Greece:

It is not surprising that the very idea of a referendum would provoke the ire of the eurozone authorities. Unlike the European Union, which has a different history, the eurozone project has become a fundamentally anti-democratic project. It has to be; the people currently running it want to reverse, as much as possible, decades of social progress on issues that are vital to Europeans. But you don't have to take my word for it: there is a paper trail of thousands of pages that spell out their political agenda. ...

The European authorities took advantage of the crisis and post-crisis years to impose parts of this agenda on the weaker eurozone economies: Spain, Italy, Portugal, Ireland and most brutally of all, Greece. More than 20 governments fell as a result, until finally, in Greece on January 25, a government was elected that said no. The goal of the European authorities, therefore, is to topple this government. This has been apparent since the ECB cut off its main line of credit to Greece on February 4.
In the PBS segment, he argues, "The European authorities are not offering anything. And it’s becoming more and more clear actually — and I have been writing about this for a while — that the real goal of these authorities is to really get rid of the Greek government. That’s what they’re trying to do. And that’s why they won’t allow the economy to recover so far."

How is Greece likely to vote in austerity referendum? 07/04/2015:

The PBS "special correspondent" in Greece for both segments is Malcolm Brabant, who doesn't seem to have that good of an understanding of the financial situation. The second one is particularly shallow and fatuous, because he makes it sound like Greece in on the verge of a civil war immediately after the vote.

Friday, July 03, 2015

The euro crisis takes the German "quality" press down with it

Georg Diez take a hard look at one of the problems that the euro crisis has highlighted, the subservience of the "quality" media as well as the "boulevard" press to conservative assumptions, and particularly to Angela Merkel's policies and actions in support of her ruinous Herbert Hoover/Heinrich Brüning economic policies for the eurozone and especially for the periphery countries. (Berichterstattung zu Griechenland: Im Dschungelcamp der deutschen Medien Spiegel Online 03.07.2015)

He uses Anja Kohl, financial journalist for ARD, as an example:

Eine Frau, die seit Jahren nichts anderes tut, als dem Dax das Händchen zu halten, wenn es ihm mal nicht gut geht, und den Finanzkapitalismus anzufeuern, der im Kern die Ursache der Griechenlandkrise überhaupt ist ...

[A woman who for years has done nothing else but the hold the DAX's hand if things are going well for it, and to cheer for finance capitalism, which at the core is the main reason for the Greece crisis ...]
On the latter point, he cites Ana Swanson im the Washington Post, The forgotten origins of Greece’s crisis will make you think twice about who’s to blame 07/01/2015:

Once the Greeks joined the euro in 2002, they could borrow at very cheap rates given they were now borrowing under the continent's implicit guarantee, and they dramatically over-borrowed.

"But given that there was high growth, no one was really worried about it,” says Matthias Matthijs, a professor at Johns Hopkins University SAIS and co-editor of the new book, “The Future of the Euro," who relayed the bar metaphor.

Between 1998 and 2007, Greece's annual economic growth per person was 3.8 percent -- the second fastest rate in Europe.

But there were weaknesses within. The booming economy in Greece and other countries such as Ireland and Spain caused prices to rise, and the countries gave generous pay rises to their workers, which made their exports more expensive. That made the countries less competitive, but since they were growing so fast, it didn't matter too much.

Then the financial crisis hit. As economic growth slowed, these countries’ competitive weaknesses and unsustainable debt loads suddenly became glaringly obvious.

“It’s when the tide goes out that you see who’s swimming naked,” Matthijs says.
The is what the "free flow of capital" means. Business and individuals can invest and move funds across borders on the same basis as residents of individual countries. And the free flow of capital is a necessity in a currency zone.

This arrangement is obviously convenient for businesses and speculators. But it isn't necessarily good for individual countries. In the case of the eurozone, it has worked heavily to the benefit of French and German investors and financial institutions and to the detriment of the peripheral countries. As Swanson says, citing Matthias Matthijs, "In short, many in the north pushed for a financial regime that didn't fit the Greek economy, because they personally stood to benefit."

Dietz continues:

Kohl also, die schon 2009 dafür kritisiert wurde, dass sie bei einem dubiosen Börsen-Seminar auftrat und Veranstaltungen von DAX-Firmen moderierte, über die sie eigentlich objektiv berichten sollte, die 2014 bei Frank Plasberg patzig wurde, als es mal wieder um "unser Geld" ging, und die nun bei Günther Jauch auf den neben ihr sitzenden Griechen einschimpfte und dann fauchte, "wir" hätten doch Griechenland dies und das und alles Mögliche angeboten - als sei sie Teil des Verhandlungsteams und nicht des Journalismus.

Oder Rolf-Dieter Krause, der nach langen Jahren in Brüssel an einer Art Stockholm-Syndrom leidet, nur noch in der stahlblauen Rationalität der Macht denkt und wie Kohl sein gebührenfinanziertes Gehalt eigentlich dafür kriegt, dass er möglichst objektiv sein sollte - diesem ARD-Krause platzte bei Plasberg heraus, man solle doch am besten "die Jungs von Syriza zum Teufel jagen".

[Then Kohl, who had already been criticized in 2009 because she appeared at a dubious stock-market seminar and moderated presentations by DAX firms on which she actually was supposed to be reporting objectively. Who in 2014 got insolent on Frank Plasberg's show when it again had to do with "our money." And who now on Günther Jauch's show badmouthed the Greek sitting next to her and then hissed, "we" have offered Greece this and that and other things - as though she were part of the neogitating team and not a journalist.

Or Rolf-Dieter Krause, who for many years in Brussels suffers from a kind of Stockholm Syndrome, thinking only in the steel-blue rationality of power and how Kohl really gets his fee-financed salary for being as objective as possible - this ARD-Krause blurted out to Plasberg, the best things would be "send the boys from Syriza to Hell."]

Plasberg is the host of a TV program called Hart aber fair. Kohl appeared on his show last year out last year dogmatically defending the unending demands by One Percenters and austerians for high interest rates from the ECB to fight the inflation they always says is about to burst upon us, in good times and bad. (Philipp Stempel, Bei "unserem Geld" wird ARD-Expertin Anja Kohl giftig Rheinische Post 28.10.2014)

N-TV reports on Kohl's appearance with Günther Jauch: Thomas Schmoll, Europas Kluft verläuft durchs Gasometer 29.06.2015

Rolf-Dieter Krause heads the ARD office in Brussels, which the EU executive functions reside.

André Tautenhahn also harshes on the performance of the German press in Chaoten am Werk Nachdenkseiten 02.Juli.2015. He links to this video of which he explains was put together by the satirical magazinew Extra3 that shows in what he calls "a terribly humorous way" the tendency of the German media to echo Merkel's line on negotiations with Greece and her hostility to Alexis Tsipras' government, in this case focusing on Sigmund Gottlieb, the chief editor for Bayerisches Fernsehen, Sigmund Gottlieb (BR) und die Griechen | extra 3 | NDR 07/01/2015:

Tautenhahn also has a memorable characterization of SPD Chairman and German Vice Chancellor Sigmar "Sigi Pop" Gabriel, "den man nur noch als aufgeblasene Sprechpuppe der Kanzlerin betrachten kann" "who at this point one can only describe as a gasbag puppet of the Chancellor."

Sigmar Gabriel, den man nur noch als aufgeblasene Sprechpuppe der Kanzlerin betrachten kann

The euro crisis is shaping up to be for German journalism what the Whitewater pseudoscandal and the Iraq War were for the American "quality" media. They may not yet have descended to the low level of their American counterparts. But they are clearly on the way!

Thursday, July 02, 2015

Greece crisis going into the long (for Americans) weekend

Digby nails it on the Greek situation in GOP austerity is a disaster of Greek proportions: Sam Brownback, Bobby Jindal & the economic scam of the century Salon 07/02/2015. (The column is mostly about the results of austerity in Greece, but Salon highlighted the American connection.) She writes:

The nation of Greece may be the cradle of democracy but these days it’s getting a harsh lesson in its limitations. Right now, streets are filled with protesters but there are no lines at ATMs because the banks are all closed. Everyone is waiting to see what’s going to happen when the people vote this week-end on a referendum that will decide, essentially, if the country is going to remain in the Euro and accept the ongoing edicts of “the troika” or if it’s going to “Grexit.” ...

As you undoubtedly know by now, aside from being chosen to suffer for the sins of all the high flyers who caused the financial crisis, the Greeks also had the temerity to elect a leftist government with the express purpose of ending the austerity plan that has ruined their economy and thrown them into even deeper debt than they were in before. That, as Poppy Bush used to say, will not stand. Nobody puts Troika in the corner. The Greeks must pay and pay, not only for their economic folly but also for thinking they could get out of their proper punishment through democratic politics. Sure, those elections are nice and all but lets not forget who’s really in charge.

Another "other than that, Mrs. Lincoln, how did you like the play?" moment. Bleri Lleshi in Europe commits suicide in Greece EU Observer 07/02/2015:

No other country in Europe has carried out more reforms than Greece - but what have they achieved five years later?

Greece is still in a deep crisis. Debts continue to grow. The average Greek became 40 percent poorer since 2010. Unemployment has continued to grow; youth unemployment is at 60 percent. Wages continue to fall and the middle class is disappearing.

What about the €240 billion that Greece borrowed in 2010? An Estimated 90 percent of it went primarily to German and French banks. Not to the Greeks.
Those "reforms" were massive austerity measures of the kind that economists who still remember Macroeconomics 101 were generally saying were a spectacularly bad idea for an economy in depression.

Neil Irwin writes about the strategy of Greek Prime Minister Alexis Tsipras in calling a referendum this Sunday on the Troika's ultimatum of last week (Greece Wanted to Reframe Europe’s Austerity Debate. It Failed. New York Times 07/01/2015): "The Greek government was surely hoping that by walking away and calling a referendum, the creditors would rethink their intransigence, fearful of the economic and geopolitical consequences of letting Greece leave the eurozone. ... Mr. Tsipras was hoping that the threat of a Greek exit would get Europe to blink. The opposite seemed to happen."

That's true as far as it goes. But that's not Tsipras' fault. As Seumas Milne writes (Syriza can’t just cave in. Europe’s elites want regime change in Greece Guardian 07/01/2015):

It’s now clear that Germany and Europe’s powers that be don’t just want the Greek government to bend the knee. They want regime change. Not by military force, of course – this operation is being directed from Berlin and Brussels, rather than Washington.

But that the German chancellor Angela Merkel and the troika of Greece’s European and International Monetary Fund creditors are out to remove the elected government in Athens now seems beyond serious doubt. Everything they have done in recent weeks in relation to the leftist Syriza administraton, elected to turn the tide of austerity, appears designed to divide or discredit Alexis Tsipras’s government.
Things are changing fast in this situation right now. But here's a helpful Your guide to the major (and colorful) people in Greece's financial crisis by Samantha Cooney and Heidi Moore Mashable 06/30/2015.

Greek crisis, with hippie-punching

There is an interesting habit emerging in commentary on Greece, in which some commentators make very sound explanations about the wretched macroeconomics and the arrogant, self-destructive attitude of Angela Merkel and her various supporters in the Troika. But they throw in gratuitous insults against the SYRIZA government of Greek Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis. I guess the fear of being associated with the disreputable hippies is still pretty strong!

Long-time critics of Merkel's Herbert Hoover/Heinrich Brüning austerity policies for Greece and the other "periphery" eurozone countries like Paul Krugman, Joe Stiglitz and Jamie Galbraith have been straightforward about blaming Merkel and the Troika for the disaster they so obviously created.

Merkel's supporters in politics and the press and business follow her line that the dang hippies in the Greek government are to blame for it all. SPD Chairman and German Vice Chancellor Sigmar "Sigi Pop" Gabriel makes himself even more ridiculous practically every time he opens his mouth these days ont he subject of Greece. (Ian Traynor, Alexis Tsipras must be stopped: the underlying message of Europe's leaders Guardian 06/29/2015):

[Sigi Pop] coupled the Greek situation with last week’s foul tempers over immigration and said that Europe faces its worst crisis since the EU’s founding treaty was signed in Rome in 1957.

Gabriel was the first leading European politician to voice what many think and say privately about Tsipras – that the Greek leader represents a threat to the European order, that his radicalism is directed at the politics of mainstream Europe and that he wants to force everyone else to rewrite the rules underpinning the single currency.

The unspoken message was that Tsipras is a dangerous man on a mission who has to be stopped.

Standing alongside his boss, Angela Merkel, as if to send a joint nonpartisan national signal from Germany, Gabriel said that if the Greek people vote no on Sunday, they would be voting “against remaining in the euro”.

Unlike [EU Commission President Jean-Claude] Juncker and [French Socialist President and general looo-ser François] Hollande, who pleaded with the Greek people to reject Tsipras’s urging of a no vote, the German leaders sounded calmly resigned to the rupture.
But those are perpetrators of the austerity attack. You don't expect any better from them.

Sony Kapoor and Martin Wolf both fall into the category of ritual slapping the hippies in the process of making a good analysis of the outrages perpetrated by the Troika.

Wolf's piece is How I would vote if I were Greek Financial Times 06/30/2015

In making my decision [if he were a Greek voting in Sunday's referendum], I would bemoan both the idiotic leftism of my own government and the self-righteousness of the rest of the eurozone. Nobody comes out of this saga with credit.

The Syriza government has failed to put forward a credible programme of reform that might solve the multiple problems of the Greek economy and polity. It has instead made populist gestures. It is, in brief, a dreadful government produced by desperate times.
Punch the hippies! BAM!

Kapoor (Why Greece never got a fair chance Re-Define 07/01/2015):

With no previous experience of government and ill versed in what passes for diplomacy in the EU, Syriza overplayed what was essentially a very weak hand. ...

The good-will towards Greece resulting from the guilt staffers at the IMF and the European Commission felt about their own significant role in Greece’s tragedy was also slowly eroded by the sharp elbows the Greeks brought to the table. ...

But its big mistake was to assume that economic arguments could prevail over ideology and realpolitik. Another was its failure to convince its Eurozone counterparts that it would actually deliver on the promises it made.
Slap the hippies! WHAP!

Maybe they figure the hippie-punching gives their macroeconomic criticisms a bit more weight among the Very Serious People. And in both cases, their actual analyses are on point. Wolf:

Yet the eurozone, too, deserves substantial blame for the outcome. One would never guess from its rhetoric that Germany was a serial defaulter in the 20th century. Moreover, there is no democracy, including the UK, whose politics would survive such a huge depression unscathed. Remember, when Germany last suffered a depression of this magnitude, Hitler came to power. Yes, Syriza is the outcome of infantile and irresponsible Greek politics. But it is also the result of blunders committed by the creditors since 2010 and, above all, insistence on bailing out Greece’s foolish private creditors at the expense of the Greek people. ...

The bailout extension did not offer a plausible exit into recovery: it left too big a debt overhang and, more important, demanded too much short-term austerity. Given the recent backsliding, it seems to demand a move from a primary fiscal balance (before interest) of close to zero this year to a surplus of 3.5 per cent of gross domestic product by 2018. Achieving this outcome might demand fiscal measures that would raise the equivalent of 7 per cent of GDP and shrink the economy by 10 per cent.

One does not put an overweight patient on a starvation diet just after a heart attack. Greece needs growth. Indeed, the economic collapse explains why its public debt has exploded relative to GDP. The programme should have eliminated further austerity until growth was established, focused on growth-promoting reforms, and promised debt relief on completion. ... The European Central Bank has curtailed emergency support for the Greek banks, forcing tight limits on withdrawals. [my emphasis]
Kapoor is even better:

Despite having experienced an angry German government almost push Greece out of the Eurozone in 2012 first hand, I never thought we’d be standing at this crossroads again. It took many of us - advisers, EU technocrats, American politicians and some academics several weeks to convince the key-decision makers in Berlin not to pull the trigger, and it was far from obvious we would be successful. In the end Chancellor Merkel took a fateful decision to overrule the finance minister Wolfgang Schäuble, who remained unconvinced.

Living through this process was hell not least because economic arguments, financial calculations and political scenarios are not ideal for changing the minds of often-ideological lawyers that form the core of the German financial policymaking community. For them it was less about the economics and more about rules and morality.

To be fair to them, when Greece first announced in late 2009 that it had been understating its deficit figures for years, German policymakers were amongst the first to seriously countenance debt restructuring for Greece. However, word from Trichet at the ECB as well as active lobbying by large German and French banks convinced them otherwise. They were told that restructuring Greek debt would trigger a major financial crisis through losses that the banking system could not afford to bear and through potential contagion to other Eurozone sovereign bond markets.[my emphasis]
Brad DeLong commenting on Wolf's column (Must-Read: Martin Wolf: The Difficult Choices Facing the Greeks Equitable Growth 07/01/2015) writes: "Continued cooperation with a Troika that wants Greece to run large surpluses would seem worse for Greece than a resort to cash-on-the-barrelhead balanced trade. And there seems no upside for the Troika: no German is made materially better off by a deeper depression in Greece."

Wolfgang Münchau expresses puzzlement at Tsipras' decision to call a referendum for Sunday. (The road to Grexit and beyond Financial Times 06/28/2015) But he doesn't stoop to hippie-punching:

By far the biggest tactical error committed over the weekend, however, was the rejection by eurozone finance ministers of a five-day extension of the Greek bailout programme to beyond the referendum. With that decision, they foreclosed the only way to keep the show on the road. They have unwittingly strengthened the political argument of the Greek prime minister. He will now be able to say: first the creditors wanted to destroy the Greek economy with their austerity programme. And now they are hoping to destroy Greek democracy.
And he speculates about one of the worse-case outcomes:

The conclusion I draw is that there are two probable outcomes. This first is an indefinite regime of capital controls, perhaps with a bank restructuring later as part of a broader package of debt relief. This would leave Greece inside the eurozone.

The second scenario is Grexit. The first would be preferable. The second would still be preferable to the deal Mr Tsipras rejected, or a return to a pro-austerity consensus.

My biggest concern is a political one. What happens if the Greek electorate voted Yes but Greece is still forced out of the eurozone because the creditors and the ECB left them no other choice?

This scenario would be the most toxic of all. It will imply that a monetary union without political union can only exist in violation of basic principles of democracy. It will come to be perceived as a totalitarian regime.

Tuesday, June 30, 2015

Greek crisis, Tuesday

Those dang hippies running the Greek government are giving poor Angela Merkel fits! The Finance Minister Yanis Varoufakis says Greece will sue in the European Court of Justice (ECJ) if the eurozone members try to kick Greece out of the euro currency. (Griechenland-Krise: Varoufakis droht mit Klage gegen Grexit) As long as Greece remains within the euro, the ECB will have legal obligations to support Greek banks.

Angie is used to Greek governments just knuckling under. But, hey, if the Greeks vote against the government in Sunday's referendum, she may get "regime change" there. Prime Minister Alexis Tsipras says, "If the Greek people want to have a humiliated prime minister, there are a lot of them out there. It won't be me." (Michele Kambas and Lefteris Papdimas, Anti-austerity protests in Greece as bank shutdown bites Reuters 06/29/2015)

This interview actually considers the question of whether Tsipras and Varoufakis are something like hippies: Johanna Bruckner, Rhetorik der Griechenland-Krise: "Tsipras und Varoufakis sind Punker" Süddeutsche Zeitung 30.06.2015

In the interview, rhetoric professor Dietmar Till suggests that they are more like part of the "punk" scene. But he doesn't seem to mean it as a put-down. Rather, he's pointing out that's its a style used in this case to appeal to the public of the EU:

Tsipras mag innerhalb des EU-Establishments ein Sonderling sein, er verzichtet auf eine Krawatte und ist vergleichsweise jung. Bei Varoufakis dagegen ist das gegenkulturelle Moment viel stärker ausgeprägt.

Er trägt Motorradklamotte, läuft mit heraushängendem Hemd herum, verbreitet eigentlich immer gute Laune. Tsipras und Varoufakis richten sich gegen die neoliberale Ordnung, das äußert sich auch in dem Image, das sie sich geben: Sie wollen sich nicht einreihen in die Riege der anderen europäischen Politiker. Sie zelebrieren eine Gegenkultur, fast wie im Punk - Tsipras und Varoufakis sind Punker. Deshalb wirken sie auch so sympathisch, weil sie sich nicht konformistisch verhalten. Ob das wirtschaftspolitisch erfolgreich ist, ist eine andere Frage.

[Tsipras may be an eccentric within the EU Establishment. He forgoes a tie and is relatively young. With Varoufakis, on the other hand, the countercultural moment is much more strongly marked.

He wears motorcyle gear, walks around with his shirt hanging out, really always spreads a good mood. Tsipras and Varoufakis are opposing themselves to the neoliberal order {"neoliberal" here means Herbert Hoover economics}; that shows in the image that they project: They don't want to be ranked among the other European politicians. They celebrate a counterculture, almost like in "punk" - Tsipras and Varoufakis are "punks." It's also because of that that they come off so sympathetic, because they don't act in a conformist way. Whether that is successful in economic policy is another question.]
But Till is obviously impressed with the image that Varoufakis in particular projects in public.

Tsipras and his whole cabinet have made a practice of not wearing ties anywhere until they have a deal that ends the debt crisis.

Tsipras' government has proposed a brand new assistance program from the eurozone's European Stability Mechanism (ESM) (Lefteris Karagiannopoulos and Matt Robinson, Greece makes new aid proposal, seeks debt restructuring Reuters 06/30/2015)

This seems to be an idea similar to some of those proposed in A Modest Proposal for Resolving the Eurozone Crisis – Version 4.0 (July 2013) by Varoufakis, See CONCLUSION: Four realistic policies to replace five false choices.

One good thing about a crisis like the one around Greece is that the American media start covering it. It's a variation on the cynical European saying, "Wars are God's way of teaching Americans geography."

The bad thing is that the American media start covering it. Which means our star pundits and reporters start pronouncing on it, with their usual level of preparation. First George Will did a column about it. Just a few minutes ago, I saw Erin Burnett on CNN talking about it. The sound wasn't on, but the closed caption was saying something like, "Greece is a deadbeat country." Even if that was out of context, just the thought of Erin Burnett talking about the Greek crisis is enough to make my head hurt.

Of course David "Bobo" Brooks, the official Beltway Village authority on Character, will have to declare on the Greek crisis soon. Media geography lessons come at a high price.

Here's an example of such sloppiness from Andrew Flowers, The Extreme Economic Outlier That Is Greece, In 7 Charts FiveThirtyEight 06/30/2015

What’s the driver of all this economic misery? Well, the answers depend on whom you ask. Germany, the IMF and other creditors see Greece’s huge amount of government debt as the main culprit. But many Greek politicians and citizens point to what they consider unnecessary and counterproductive austerity policies — the cutting of government expenditures and the raising of taxes — as the source of their current ills. Either way, the Greek government now has to pay far more to borrow in the open market. Because the European Central Bank lowered eurozone-wide short-term interest rates between 2007 and 2015, most countries now pay a lower interest rate on their government debt — but not Greece.
Some say the Earth revolves around the Sun. Others say it doesn't. Opinions differ.

Joe Stiglitz and Martin Guzman, on the other hand, have something substantial to say in this piece drawing lessons from the Argentine crisis of 2001-2, Argentina Shows Greece There May Be Life After Default The World Post 06/30/2015.

Debt contracts are voluntary exchanges between creditors and debtors. They are done in a context of uncertainty: when the debtor promises to repay a certain amount in the future, everyone understands that the promise is contingent on the debtor's capacity for repayment. There is risk involved -- the reason that creditors demand a larger compensation (higher interest rates) than if they were lending under no risk.

Debt restructurings are a necessary part of the lender-borrower relationship. They have occurred hundreds of times, and they will continue occurring. The way in which they are resolved determines the size of the losses. Bad management of debt crises, such as demanding austerity policies during recessions -- in spite of theory and empirical evidence showing that austerity in recessions only makes recessions deeper -- inevitably leads to larger losses and more suffering. [my emphasis]
The basic fact that there is risk involved for buyers of sovereign bonds seems to be lost on some people. Like the Nixon-appointed zombie judge Thomas Griega, who bizarrely rule last year in favor of vulture funds trying to drive Argentina into default.

Speaking of risk, it's of course not only Greece that is at risk in this high-stakes game. High quality global journalism requires investment. Marcel Fratzscher writes in A failed euro would define Angela Merkel’s legacy Financial Times 06/29/2015:

But what is at stake is not only economic and financial stability. The long-term political damage could be devastating, in particular for the German government. The blame game is heating up about not only who is responsible for the Greek tragedy but why the eurozone failed to get its act together over the past five years and end the crisis. This is a game Berlin and Angela Merkel, Germany’s chancellor, can hardly win. As the strongest economic and political member of the eurozone, Europe and the world have been looking to Berlin to solve the crisis and to reform Europe.
But she will have remained true to the principles of Herbert Hoover and Heinrich Brüning. So there's that.

Monday, June 29, 2015

Greece today: does the Spanish Civil War analogy work?

Economist and political scientist Vicenç Navarro has come up with a sentence of Faulknerian lenght to describe the current situation in the euro crisis (El terrorismo financiero contra Grecia Público 29.06.2015):

Estamos hoy viendo un ataque frontal del capital financiero, hegemonizado por el alemán, y vehiculado primordialmente a través del Banco Central Europeo (BCE), en contra del pueblo griego, ataque que intenta evitar cualquier atisbo de rebelión frente a las políticas de austeridad que están destruyendo el bienestar de las clases populares de todos los países de la Eurozona y muy en particular de Grecia, cuyo gobierno Syriza ha sido el primero en decir “BASTA YA” frente a lo que no hay otra manera de llamarlo como terrorismo financiero (ver el libro del Profesor Juan Torres y yo, titulado Los amos del mundo, las armas del terrorismo financiero).

[Today we are seeing a frontal assault by finance capital, hegemonized {dominated} by the German version, basically facilitated by the European Central Bank (ECB), against the Greek people, an attack aimed at preventing any trace of rebellion against the austerity policies that are destroying the well-being of the popular classes of all the countries of the eurozone and very particularly those of Greece, whose SYRIZA government has been the first to stay "STOP NOW" in the face of what can't be called anything else than financial terrorism (see the book by Professor Juan Torres and me titled, Los amos del mundo, las armas del terrorismo financiero).]
Like the writer I quoted in my previous post, also from Público, Navarro makes an analogy to the Spanish Civil War. Both are evoking it to emphasize the importance of international solidarity with the Greek people.

Spanish Civil War poster

I'm leery of simplistic historical analogies, especially ones involving the Second World War. But I'm with Navarro on the following, even if he's a touch melodramatic about it:

Salvando las diferencias que existen en cada hecho histórico, lo cierto es que en Grecia hemos estado viendo una situación semejante, en que la lucha por la justicia social y por la democracia en aquel país es la lucha por la justicia social y por la democracia en todos los países de la Europa Occidental. La pervivencia de la justicia social y de la democracia en los países de la Unión Europea se está jugando hoy en aquel país.

[Despite the difference that exist in every historical event, what is certain is that in Greece we are seeing a similar situation in which the struggle for social justice and for democracy in that country is the struggle for social justice and democracy in all the countries of Western Europe. The survival of social justice and democracy of the countries of the European Union is in play in that country.]

The true posture of the Troika: "implacable with the weak and obsequious with the powerful"

"Los burócratas de la Troika se caracterizan por ser implacables con los débiles y obsequiosos con los fuertes."

"The bureaucrats of the Troika are characterized by being implacable with the weak and obsequious to the powerful."

So writes Juan Carlos Monedero in Grecia contra los hombres de gris Público 29.06.2015.

Monedero paints what can safety be called a worst-case scenario:

Alemania ahora intenta forzar la salida de Grecia de la Eurozona. Esa salida, inevitablemente, forzaría la salida de Portugal, que forzaría la salida de Italia, que traería consigo la salida de España. Al final, otra vez, cuando Francia estuviera a solas con Alemania, Merkel podría recuperar su moneda, reforzada durante todos estos años por un mercado único a su servicio y una financiación de sus inversiones gratis al haberla pagado el resto de Europa con la altísima prima de riesgo. Y todo el sueño europeo, que nos ha traído decenios de paz interna después de la terrible primera mitad del siglo XX, regresará a la angustia de los años treinta. No se trata de hacer oscuras predicciones. Se trata de no volver a equivocarnos.

[Germany now intends to force the exit of Greece from the eurozone. This exist, inevitably, would force the exit of Portugal, which would force the exist of Italy, which would bring the exist of Spain along with it. In the end, once again, when France would be alone with Germany, Merkel would be able to recuperate her money, reinforced during all these years by a single market at its service and free financing of its investment with which the rest of Europe has been paying with the very high risk premium. And the whole European dream {i.e., the European unity represented by the EU}, which has brought us decades of internal peace after the terrible first half of the 20th century, would regress to the anguish of the thirties. This is not about making obscure predictions. It's about not making the same mistakes.]

Greece in the new stage of the euro crisis

"I can think of no depression, ever, that has been so deliberate and had such catastrophic consequences: Greece’s rate of youth unemployment, for example, now exceeds 60%." - Joseph Stiglitz

Angela Merkel is a talented politician. It's not for nothing that she's referred to in the press as the most powerful woman in the world. The daughter of a Protestant pastor om East Germany, starting in professional politics in her mid-30s with the fall of Communist rule there, she rose quickly in the Christian Democratic Union (CDU) through luck, talent, ambition and sticking the metaphorical shiv in the backs of important patrons of hers like Helmut Kohl and her current Finance Minister Wolfgang Schäuble. She is in her third term as the first female Chancellor of Germany and her converted the once-formidable Social Democratic Party (SPD) into an obedient junior partner fully supporting her radical, Herbert Hoover/Heinrich Brüning austerity policies.

She also has achieved notable success in a surface depoliticization, primarily through neutralizing the SPD as an opposition party. The SPD did much of it themselves; Merkel didn't drag them kicking and screaming into it. As Paul Krugman writes, "As a political matter, the big losers from this process have been the parties of the center-left, whose acquiescence in harsh austerity — and hence abandonment of whatever they supposedly stood for — does them far more damage than similar policies do to the center-right." (Europe’s Moment of Truth 06/27/2015)

The image that Merkel and her media fans like Dirk Kurbjuweit of Der Spiegel have promoted is that of the Second Biedermeier age, one in which German voters are and should be apathetically happy.

But the half-truth of the Second Biedermeier was in fact built on very high-stakes gambling by Merkel in the euro crisis. The euro currency zone was unmistakably showing its structural weaknesses in 2010 when the first so-called "bailout" by the Troika took place. Solving the euro crisis did not, and even at this late date does not, require immediately fixing all the structural problems of the currency zone. (See A Modest Proposal for Resolving the Eurozone Crisis – Version 4.0 by Yanis Varoufakis, Stuart Holland and Jamie Galbraith (July 2013). The first version appear in November 2010.)

But Merkel was fixed on her economic doctrine of ordoliberalism and resistant to further political and economic integration of the eurozone. So she went for solutions that averted the immediate crisis but prolonged the chronic crisis. The consequences for Greece were devastating (Joseph Stiglitz, Europe’s Attack on Greek Democracy Project Syndicate 06/29/2015):

... the economics behind the program that the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund) foisted on Greece five years ago has been abysmal, resulting in a 25% decline in the country’s GDP. I can think of no depression, ever, that has been so deliberate and had such catastrophic consequences: Greece’s rate of youth unemployment, for example, now exceeds 60%.

It is startling that the troika has refused to accept responsibility for any of this or admit how bad its forecasts and models have been. But what is even more surprising is that Europe’s leaders have not even learned. The troika is still demanding that Greece achieve a primary budget surplus (excluding interest payments) of 3.5% of GDP by 2018.

Economists around the world have condemned that target as punitive, because aiming for it will inevitably result in a deeper downturn. Indeed, even if Greece’s debt is restructured beyond anything imaginable, the country will remain in depression if voters there commit to the troika’s target in the snap referendum to be held this weekend. [my emphasis in bold]
In an interview with Time, the Nobel laureate says the Troika has "criminal responsibility" for the current state of Greece. (Joseph Stiglitz to Greece’s Creditors: Abandon Austerity Or Face Global Fallout Time 06/29/2015; link at this writing has a redirect loop; Fortune has a wire version with the same title). From the Fortune version:

Stiglitz, who served as the chief economist of the World Bank from 1997 to 2000, says no such firewall of protection can exist in a globalized economy, where the connections between events and institutions are often impossible to predict. “We don’t know all the linkings,” he says.

Many countries in Eastern Europe, for instance, are still heavily reliant on Greek banks, and if those banks collapse the European Union faces the risk of a chain reaction of financial turmoil that could easily spread to the rest of the global economy. “There is a lack of transparency in financial markets that makes it impossible to know exactly what the consequences are,” says Stiglitz. “Anybody who says they do obviously doesn’t know what they’re talking about.”

Stiglitz sees two possible outcomes to that scenario – neither of them pleasant for the European Union. If the Greek economy recovers after abandoning the euro, it would “certainly increase the impetus for anti-euro politics,” encouraging other struggling economies to drop the common currency and go it alone. If the Greek economy collapses without the euro, “you have on the edge of Europe a failed state,” Stiglitz says. “That’s when the geopolitics become very ugly.” [my emphasis]
This was always a high risk approach on Merkel's part. The Greek government of Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis has finally called her bluff. Her response was to blame the Greeks. (Bundesregierung zur Griechenlandkrise: Merkel schiebt die Schuld auf Tsipras Spiegel Online 29.06.2015)

Tsipras called a referendum for next Sunday, July 5, for the Greek public to vote on the Troika's most recent proposal. His government is recommending a No vote. Tsipras is suggesting that he will resign as Prime Minister if the public votes to accept the Troika's austericide proposals. (Referendum über Sparpolitik: Tsipras droht mit Rücktritt Spiegel Online 29.05.2015)

The Troika, not surprisingly - at least the EU Commission leg of it - is openly encouraging a Yes vote against the Greek government.

Paul Krugman writes, "The troika clearly did a reverse Corleone — they made Tsipras an offer he can’t accept, and presumably did this knowingly. So the ultimatum was, in effect, a move to replace the Greek government. And even if you don’t like Syriza, that has to be disturbing for anyone who believes in European ideals." (Grisis 06/28/2015)

Krugman may be giving Merkel and her collaborators too much credit here. They've been able to bully previous governments into submission, and not only Greece's. They may really have thought that Tsipras and Varoufakis would knuckle under at the last minute. It's always worked before!

A couple of economists writing on the subject recently make what strike me as gratuitous whacks at Greece's SYRIZA government over the current impasse. But both make clear that the Troika is far more to blame. Robert Reich writes on Facebook 06/29/2015:

The Greek tragedy of its debt crisis seems about to end, and if it ends badly it could go badly for your savings and even your job. Greek Prime Minister Alexis Tsipras ... has called for a referendum next Sunday for Greeks to choose between (1) accepting the demands of European creditors that will worsen Greeks’ suffering and do little to improve their long-term prospects, or else (2) immediate defaulting on Greece’s debt, resulting in almost certain ejection from the euro system, and likely contagion to Spain and even Italy as creditors pull out of their banks as well. Wall Street is implicated in all this, and will be affected either way given the integration of our financial systems. But if Greece chooses to default, the value of the dollar will rise further as world money rushes into the safe haven of America, causing our exports to further decline. And Europe’s economy will teeter, possibly pulling us and much of the fragile global economy with it. Who will be to blame? Tsipras and his defiant government haven’t helped. Upper-income Greeks who haven't paid taxes bear some responsibility. But the immediate culprits will be Europe’s leaders, especially German Chancellor Angela Merkel, the International Monetary Fund, and the European Central Bank. All have deepened the crisis by their unwillingness to bend.

Last night Tsipras quoted Franklin D. Roosevelt in telling the Greek people “the only thing we have to fear is fear itself.” Not quite right. We all have reason to fear another Great Recession. [my emphasis]
Barry Eichengreen, the guy who "wrote the book" on the gold standard, Golden Fetters: The Gold Standard and the Great Depression, 1919-1939 (1995), writes in Path to Grexit tragedy paved by political incompetence The Conversation 06/28/2015:

... Syriza had run on a platform of no more spending cuts or tax increases but also of keeping the euro. It should have anticipated that some compromise would be needed to square this circle. In the event, that realization was strangely late in coming. ...

Still, this incompetence pales in comparison with that of the European Commission, the ECB and the IMF.

The three institutions opposed debt restructuring in 2010 when the crisis still could have been resolved at low cost. They continued to resist it in 2015, when a debt write-down was the obvious concession to Mr Tsipras & Company. The cost would have been small. Pretending instead that Greece’s debts could be repaid hardly enhanced their credibility.

Instead, the creditors first calculated the size of the primary budget surpluses that Greece would have to run in order to hypothetically repay its debt. They then required the government to raise taxes and cut spending sufficiently to produce those surpluses.

They ignored the fact that, in so doing, they consigned the country to an even deeper depression. By privileging their own balance sheets, they got the Greek government and the outcome they deserved. [my emphasis]
This is a partially helpful timeline from Kein Geld mehr: Griechische Banken bleiben geschlossen Oberösterreichische Nachrichten 29. Juni 2015. But it's also notable for the framing, which recounts it as a tale of sins of the Greeks.

Die Griechen-Krise

[The Greek Crisis]

2001: Geschafft? Griechenland tritt mit etwas Verspätung der Eurozone bei. Das Land erfüllt angeblich die Kriterien.

[2001: Greece enters the the eurozone with some delay. The country alleged fulfills the criteria.]

2004: Geschummelt: 2004 fliegt auf: Griechenland hat bei den Budgetdaten für den Euro-Beitritt geschummelt. Die Neuverschuldung war stets höher als angegeben.

[2004: Cheated: 2004 it leaks out: Greece had cheated on the budget data for the entry to the euro. The new indebtedness was always higher than alleged.]

2009: Geschockt: 350 Milliarden Euro Schulden, ein Budgetdefizit von 12,5 Prozent: Die neu gewählte Regierung Papandreou legt im Oktober die Budgetzahlen der konservativen Vorgänger offen - und schockt Europa.

[2009: Shocked: 350 billion euros of debt, a budget deficit of 12.5%: The newly elected government of Papandreou in October reveals the budget numbmer of its conservative predecessor - and shocks Europe.]

2010: Gesperrt: Athen bekommt im April an den Finanzmärkten praktisch keine Kredite mehr. Die Eurostaaten und der Internationale Währungsfonds (IWF) gewähren im Mai im Gegenzug für rigorose Sparmaßnahmen Notkredite.

[2010: Shut out: Athens in April can no longer get credit in the financial markets. The euro states and the International Monetary Fund {IMF} in May grant emergency credit in exchange for rigorous savings measures.]

2011: Gescheitert: Im Juli wird klar: Griechenland erreicht die Sparziele nicht - es folgen ein Schuldenschnitt bei privaten Gläubigern (30 Milliarden Euro) sowie weitere Hilfskredite von EU und IWF. Gesamtvolumen: 240 Milliarden Euro.

[2011: Failed: In July it becomes clear: Greece does not achieve the savings goals - a debt reduction follows for private creditors (30 billion euros) as well as further credit assistance by the EU and the IMF. Total volume: 240 billion euros.]

2012: Verzichtet: Griechenlands Geldgeber verzichten vorläufig auf Zinszahlungen. Nach Doppelwahlen (im Mai und im Juni) wird der konservative Antonis Samaras Regierungschef.

[2012: Deferred: Greece's lenders temporarily forgo interest payments. After two elecctions (in May and in June) the conservative Antonis Samaras becomes head of government.]

2015: Gewählt: Das Linksbündnis Syriza von Alexis Tsipras gewinnt im Jänner Neuwahlen mit dem Versprechen, die Sparpolitik Samaras’ zu beenden – zwischen Athen und den Gläubigern - beginnt ein monatelanges Tauziehen um Spar- und Reformmaßnahmen

[2015: Elected: The left alliance SYRIZA of Alexis Tsipras wins in new elections in January with the promise to end Samaras' austerity policy - between Athens and the lenders - months-long gub-of-war begins over austerity and reform policies]
That's it for the readers of this timeline. The crisis is about deceitful, deadbeat Greeks. The savage effects of the Greek depression escape mention. Greece's generous European partners give economic assistance to the Greeks. That they required it to be in the form of additional debt that had to be repaid didn't rise to even an allusion. And this is too often the way the German and Austrian quality press have reported the Greek crisis. Including, in this case, the Oberösterreichische Nachrichten.

Krugman explains that the debt level Greece had prior to the world financial crisis of 2007-8 was a relatively easily manageable problem (The Awesome Gratuitousness of the Greek Crisis 06/29/2015):

In 2007, Greece had public debt of slightly more than 100 percent of GDP — high, but not out of line with levels that many countries including, for example, the UK have carried for decades and even generations at a stretch. It had a budget deficit of about 7 percent of GDP. If we think that normal times involve 2 percent growth and 2 percent inflation, a deficit of 4 percent of GDP would be consistent with a stable debt/GDP ratio; so the fiscal gap was around 3 points, not trivial but hardly something that should have been impossible to close.
That the Troika under Angela Merkel's leadership took that problem and made it an historic (world-historic?) nightmare says to Krugman, "If Europe as currently organized can turn medium-sized fiscal failings into this kind of nightmare, the system is fundamentally unworkable."

Krugman is also back the Tsipras government's position on the referendum next Sunday (Greece Over the Brink New York Times 06/29/2015):

... the situation in Greece has now reached what looks like a point of no return. Banks are temporarily closed and the government has imposed capital controls — limits on the movement of funds out of the country. It seems highly likely that the government will soon have to start paying pensions and wages in scrip, in effect creating a parallel currency. And next week the country will hold a referendum on whether to accept the demands of the “troika” — the institutions representing creditor interests — for yet more austerity.

Greece should vote “no,” and the Greek government should be ready, if necessary, to leave the euro.
Neil Irwin summarizes the way the current situation developed (The Next Few Days Have the Potential to Transform Greece and Europe New York Times 06/28/2015):

The immediate headlines that got us to this point are these: After an intractable series of negotiations over a bailout extension with Greece’s creditors, the nation’s left-wing government left the table Friday and said it would hold a referendum on July 5. Greek leaders think the offer on the table from European governments and the International Monetary Fund is lousy, requiring still more pension cuts and tax increases in a depressed economy, and intend to throw to voters the question of whether to accept it.

Whatever the exact phrasing of the question (and assuming the referendum goes forward as planned), it really boils down to this simple choice:

A “Yes” vote means that Greece will continue the grinding era of austerity that has caused so much pain to its citizens over the last five years, in exchange for keeping the euro currency and the monetary stability it provides.

A “No” vote almost certainly means that the country will walk away from the euro and create its own currency (which will surely devalue sharply), bringing financial chaos in the near term but creating the possibility of a rebound in the medium term as the country becomes more competitive with its devalued currency.
Additional articles, a few among many right now:

Andrew Higgins, European Leaders Insist Greek Deal Is Still Possible New York Times 06/29/2015

Juncker ruft Griechen zu "Ja" für Europa auf Oberösterreichische Nachrichten 29.Juni.2015

Entscheidende Termine für Hellas Oberösterreichische Nachrichten 29. Juni 2015

Cerstin Gammelin, Diesen Deal wollte Tsipras nicht Süddeutsche Zeitung 29.Juni.2015

Puerto Rico's debt crisis

The US Commonwealth of Puerto Rico is also having debt issues, it seems. (Michael Fletcher, Puerto Rico’s governor says island cannot pay back $70 billion in debt, is near ‘death spiral’ Washington Post 06/29/2015)

And, guess what? Austerity economics didn't work very well there, either: "Meanwhile, the government has raised taxes, cut government employment and slashed pensions in a futile effort to get its debt burden under control. Those actions have only slowed the acceleration of debt creation, while harming efforts to reignite the economy."

Wednesday, June 24, 2015

The steel trap version of the eurozone

Aditya Chakrabortty explains why the Greek negoiaitons with the EU/IMF/ECB may drag out for another three weeks or so. If they don't tank and send the situation into a tailsping in the next hour or the next (Greece is a sideshow. The eurozone has failed, and Germans are its victims too Guardian 06/22/2015):

The diplomatic beatings administered to Syriza since it came to power this year can only be seen as Europe trying to set an example to any Spanish voters who might be tempted to support its sister movement Podemos. Go too far left, runs the message, and you’ll get the same treatment.

Whatever the founding ideals of the eurozone, they don’t match up to the grim reality in 2015. This is Thatcher’s revolution, or Reagan’s – but now on a continental scale. And as then, it is accompanied by the idea that There Is No Alternative either to running an economy, or even to which kind of government voters get to choose.

The fact that this entire show is being brought in by agreeable-looking Wise Folk often claiming to be social democratic doesn’t render the project any nicer or gentler. It just lends the entire thing a nasty tang of hypocrisy. [my emphasis]
Those are the last three paragraphs in the article. Sometimes the most interesting part comes at the end.

But the rest of the piece is interesting, too, explaining what has been called "wage dumping" by Germany, though Chakrabortty doesn't use the term here. He writes:

What they find is that German workers have barely seen wages rise for the 14-year stretch. In the short life of the euro, working Germans have fared worse than the French, Austrians, Italians and many across southern Europe.

Yes, we’re talking about the same Germany: the mightiest economy on the continent, the one even David Cameron regards with envy. Yet the people working there and making the country more prosperous have seen barely any reward for their efforts.

Monday, June 22, 2015

Greek negotiations

The negotiations between Greece and the Troika are dragging on, without a resolution. German Chancellor Angela Merkel sounds like she's decided to just stick with her austerity demands until Greece either knuckles under or leaves the eurozone. Doing the highwire act has worked for her repeatedly in the past. But this is a gamble with historical bigger stakes than any she's made before.

Jamie Galbraith recently wrote about The IMF’s “Tough Choices” on Greece Project Syndicate 06/16/2015:

In May 2010, the Greek government agreed to a fiscal adjustment equal to 16% of GDP from 2010 to 2013. As a result, Greece moved from a primary budget deficit (which excludes interest payments on debt) of more than 10% of GDP to a primary balance last year – by far the largest such reversal in post-crisis Europe.

The IMF initially projected that Greece’s real (inflation-adjusted) GDP would contract by around 5% over the 2010-2011 period, stabilize in 2012, and grow thereafter. In fact, real GDP fell 25%, and did not recover. And, because nominal GDP fell in 2014 and continues to fall, the debt/GDP ratio, which was supposed to stabilize three years ago, continues to rise. [my empahsis]
And observes:

... the Greeks have already made tough choices. Now it is the IMF’s turn, beginning with the decision to admit that the policies it has imposed for five long years created a disaster. For the other creditors, the toughest choice is to admit – as the IMF knows – that their Greek debts must be restructured. New loans for failed policies – the current joint creditor proposal – is, for them, no adjustment at all.
The "second generation" Frankfurt School philosopher Jürgen Habermas, a committed supporter of the EU, writes about the latest drama in Warum Merkels Griechenland-Politik ein Fehler ist Süddeutsche Zeitung 22. Juni 2015. He's cautiously critical of the Syriza's government negotiating over the last few months, unfairly so, I would say.

But he's very clear that the main fault lies on the European partners who imposed ruinous austerity policies on Greece.

And he sees the only hope for the European Union is for popular movements and parties to democratize the Union and end the current predominance of "market conformity."

But the EU will never be able to get to democratizing itself or the eurozone to establishing political union if they can't hold themselves together. And the current course doesn't look promising on that score.

This Bloomberg Markets article of 06/17/2015, European Disunion: For Two Rivals in Greek Crisis, It’s Personal by Edward Robinson describes the "wall of debt" that Greece is about to hit:

A wall of debt is rapidly approaching Athens. As of June 1, the nation’s total liabilities stood at €328 billion, or 174 percent of GDP—almost double the 90 percent average in the euro area. Within just a few months, Greece must scrape together €8.2 billion to pay down loans issued by the Frankfurt-based ECB and the IMF and another €514 million for bondholders. To stay afloat, the Tsipras-led government will have to seek a third loan package—this one for €30 billion—according to Eurasia Group, a New York–based research firm. Then the cycle of crisis will begin anew.

“It’s questionable just how much an outsider should come into countries and explain how they should reform themselves,” says Charles Dumas, chairman of Lombard Street Research in London. “It’s at the heart of the whole business of the euro zone. You’ve got different cultures and languages and politics shoved into a blender — and basically they are being told they have to be like Germany.” [my emphasis]

Sunday, June 21, 2015

Hillary addresses racism and the Charleston mass murder

Good on Hillary for this one. Hillary Clinton at the 2015 U.S. Conference of Mayors Hillary Clinton YouTube channel 06/20/2015

She starts talking about the Charleston mass murder around 2:50. She starts off the speech with some vague bipartisan boilerplate for the mayors' conference.

But I'm not inclined to nitpick on this one. Because she jumps on the racism and gun proliferation issues directly. "Once again racist rhetoric has metastasized into racist violence."

She even says the phrase, "institutionalized racism." And it's all put in a way that white people can understand. But without trying to phrase it to comfort the comfortable.

After years of Obama pushing for his Grand Bargain, hearing Democratic politicians say "across the aisle" on anything is like nails on the blackboard to me. But on gun proliferation, she even uses that "across the aisle" phrase to frame how irresponsible the Republicans are on the issue. No "Sistah Soljah moment" crap here.

At the end, she quotes the same Scripture verse that Jerry Brown used back in his second term as Governor to oppose some draconian austerity initiative that Howard Jarvis had gotten onto the ballot. Jerry actually opened up a Bible and read from it, but she does fine with it here.

This New York Times story by Nicholas Fandos headlines her focus on white racism, Hillary Clinton Calls America’s Struggle With Racism Far From Over 06/20/2015.

One conservative twist on display on Meet the Press 06/21/2015 from both Mike Huckabee and David "Bobo" Brooks was to emphasize the courtroom scene in which families of the victims called out their forgiveness to confessed killer.

But it's one thing for traumatized families to do that. It's another for the Huck and Bobo to try to make this a story about forgiveness of perpetrators almost before the blood of the people he murdered has even had time to dry.

White Republicans like the Huck and pretty much every commentator on FOX News aren't willing to forgive black victims shot or choked to death by white killer cops for no good reason. Instead, they cheerfully defend the cops and look for every possible way to smear to murder victim in those cases.

And the same Meet the Press show where the Huck and Bobo wanted to emphasize forgiveness for the white racist mass murderer included a segment on convicted murderers at Sing-Sing prison who used guns in the killings. All of them black.

My first reaction to hearing about the families calling out their forgiveness was that I wouldn't have done that. Because I'm just not as good a Christian as they seem to be. Because the Christian faith does call on believers to forgive those who have done you wrong. No one on the segment wondered what deep defect in White Culture might cause white politicians to howl for the death penalty in terms of unrestrained vengeance instead of emphasizing Christian forgiveness.

Chuck Todd hosted a segment near the start with the Simmons family of one of the Charleston victims, Daniel Simmons, Sr., in which two of the six members on camera spoke in what struck me as stiff, well-rehearsed words. They didn't talk specifically about forgiveness, but did emphasize the need for healing. Todd congratulated them for being examples of "reconciliation, forgiveness, love, faith." Todd And he concluded with the fatuous comment about the community uniting in grief, "Perhaps, if this is what comes out of it, maybe we're a better society for it."

I remember seeing a column by Eric Alterman once noting that "coping" is something that TV news departments feel comfortable doing. But was this really the best approach for the Sunday after what Todd himself in the opening called "the worst racial attack in decades"?

Todd doesn't seem to do as well talking about violent white racism. Look! Scary black murderers in prison!

But what about the families in court calling out their forgiveness? What the Huck and Bobo seem to miss is that they were calling out to a young man who had already confessed to the murder. Calling out their forgiveness is formally and presumably subjectively taking a Christian position. But you forgive someone who has done you wrong. In the context of the court appearance, it was also a call of condemnation for the act of the murderer.

It takes white conservatives like the Huck and Bobo to use that scene to reduce the Charleston mass murder to an anodyne nicey-nice story of forgiveness and reconciliation.

The Charleston murders and white racism denial (Updated)

So, a young white guy murders nine black people in a black church that has a past as a symbol of the antislavery and civil rights struggle. He deliberately leaves one victim alive so she can pass on his own white supremacist message for why it did it. He sported white racist symbols on his clothing and in photos of himself. He admits to the murders and says afterward that his goal was to start a race war. He talks like a white racist, he acts like a white racist, and he kills black people like a murderous white racist.

And the folks at Murdoch properties like FOX News and the Wall Street Journal and people like Jeb! BUSH and Nikki Haley and Donald Trump still are baffled as to whether white racism had anything to do with it?

There's something wrong with this picture.

Cenk Uygur has some things to say about this phenomenon, Charleston Shooting Not Racially Motivated Conservatives Say The Young Turks 06/18/2015:

Old Man Bush when he was President at least nominally opposed David Duke in Louisiana because of Duke's overt white racism. Now Republicans like Jeb! BUSH who put their Christian piety front-and-center of their marketing of themselves as candidates are no longer willing to even say straightforwardly that a racist mass murder is a racist act. Instead they glibly try to tack it on to their deeply dishonest Christians-are-persecuted slogan (by which they mean business owners might not be allowed openly hate on gay people any way they want, or that some woman somewhere might be using birth control). The irony is that there *was* a religious element in this murder. Going to a church and participating in a prayer meeting before murdering your fellow participants was a way for the killer to show that he had no respect for even the most sacred spaces or practices or beliefs that black people might hold.

But people like Jeb! BUSH or Rick Perry (who even referred to the racist mass murder as an "accident') can't say *that* without talking about the role of white racism in the act. So they pretend the murder was directed against "Christians" as such with racial hatred having nothing to do with it. Black lives really don't matter to them.

I haven't checked all the Sunday show segments. Mike Huckabee was on Meet the Press defending the Confederate flag. (Dan Cooney, Huckabee: Confederate Flag Controversy Is Not a Presidential Election Issue Meet the Press 06/21/2015) He did call Roof a "racist," but insisted he should be seen as an isolated individual. He also remarkably said that South Carolina elected the first African-American Senator from the South. [Update/Correction 06/25/2015: Huckabee actually referred to South Carolina having the only African-American Senator from the South; while I understood it in context to mean historically, he didn't literally say that he was the first ever elected from anywhere in the South. Republican Tim Scott is the contemporary South Carolina Senator to whom he's referring.] Actually that would be Blanche Kelso Bruce (1841–1898) who served as Reconstruction-era Senator from Mississippi from 1875–1881, taking the Senate seat once held by Jefferson Davis:

Sen. Blanche Kelso Bruce (R-MS), 1841–1898

Deanna Pan reports in Emanuel AME shooting may be most deadly hate crime in South Carolina history, historian says Charleston Post & Courier 06/18/2015

Wednesday night’s attack also ranks among the deadliest shootings at a house of worship in the United States. The last mass shooting at a religious institution occurred in August 2012, when Army veteran and avowed neo-Nazi Wade Michael Page killed six people at a Sikh temple in Oak Creek, Wis., before turning his gun on himself.

“I think the publicity around mass shootings is quite extreme in the present day and so I think a lot of shooters are going to think of the most sensational type of event and in a way, the places that are attacked that get the most press are the safest. A movie theater in Colorado. A school in Connecticut,” said Dr. Jonathan Metzl, a psychiatrist at Vanderbilt University who studies mental illness and mass shootings.

“Churches fit that model in that they should be places where people can leave their fear or violence at the door. Churches are sanctuaries, and so disrupting that sense of safety is a another level of the violence that’s done in an act like this.”

The killer hates Jews, too, it seems. (Charleston shooter's apparent manifesto blames 'Jewish agitation' for U.S. racial problems Haaretz 06/20/2015; David Wren and Doug Pardue, Charleston Post & Courier 06/20/2015) Although both articles do say it's not confirmed that Dylann Roof wrote the "manifesto."

Who will be the first Presidential candidate to spin that as an "anti-Christian" motivation for the shooting? I'm not kidding. Because in the strange thinking of Christian Zionists who imagine cheering for every war supported by the Israeli Likud Party means they are "pro-Jewish", it's the Christian Zionists who are the True Jews.

More importantly, any excuse not to talk about the role of white racism in this killing will do. Back in the Segregation 1.0 days, good "Christian" Southern white politicians used to speculate that the shooting of a civil rights activist or an attack on a black church was staged by black people or whoever to falsely implicate white racists. In any half-decent report about the notorious Mississippi Burning killings of 1964, you can see quotes from people speculating that the missing civil rights workers were being hidden by Communists or somebody somewhere. But to lots of white people, those still look like the Good Ole Days.

Matthew Boudway on the Commonweal blog writes (This Week's Episode 06/19/2015):

In this case, there is also the issue of racism, about which much of the country seems to be in denial. Jon Stewart called it an open wound on last night’s Daily Show, which became, for one episode, a comedy-free program. This is not an original metaphor, but it's a good one. Open wounds become infected if you ignore them, and that’s what seems to be happening with racism during the second term of our first black president. We can’t expect our politicians to make the racism go away—it’s too deep and complex a problem to be solved by policy alone—but they must do the little they can. At the very least, they must acknowledge that the problem persists.

Aurin Squire addresses Why Conservatives Still Won't Admit That Charleston Was A Racist Crime TPM 06/19/25015

Charlie Pierce addresses Jeb! BUSH's shameful position in Jeb (!) and the Politics of the Dive Esquire Politics Blog 06/19/2015:

Digby wites about The GOP’s staggering Charleston cowardice: Why are so many Republicans so scared of admitting the truth? Salon 06/19/2015

Scott Eric Kaufman wrote on his Facebook page 06/20/2015:

Just so we're absolutely clear -- Republicans and Fox News don't think the Confederate flag is an issue because the massacre in Charleston wasn't about race.

BECAUSE SOME OF YOU NEED THIS SPELLED OUT: The only way you could miss this point is if you're ideologically invested in doing so, and the fact that the GOP presidential contenders all missed it says all you need to know about them.

There's no walking back the fact that all of them initially wanted this shooting to be about ANYTHING other than aggrieved white people exercising their Second Amendment right to murder a group of black people exercising their First Amendment rights to practice their faith and freely assemble.

Naomi Braine writes about the closely related issue of what I call Terrorism Denial, Terror Network or Lone Wolf? Disparate Legal Treatment of Muslims and the Radical Right Public Eye 06/19/2015/Spring 2015 issue.

On the Charleston church's past, see: Jennifer Berry Hawes, Historic Emanuel AME Church has risen from tragedy for two centuries Charleston Post & Courier 06/18/2015.

Doug Pardue and Jennifer Berry Hawes give an account of the mass murder, In an hour, a church changes forever Charleston Post & Courier 06/19/2015.

Saturday, June 20, 2015

Sneering at Greece

Attac: Merkel erpresst Griechenland Neues Deutschland 19.06.2015 features this photo of an Attac activist in a Greek costume eating catfood.

US opponents of Social Security aren't the only let-them-eat-catfood advocates in the world.

Greek Finance Minister Yanis Varoufakis is framing Monday's summit as a decisive moment in the negotiations over Greek austerity (Greece's Varoufakis wants 'clear decision' from Merkel at summit Yahoo! News AFP):

Greece's Finance Minister Yanis Varoufakis said German Chancellor Angela Merkel must make a clear decision at a eurozone summit Monday on whether to negotiate a rescue deal with Athens or heed populist calls to jettison the debt-wracked country.

Merkel can "enter into an honourable agreement with a government, which has rejected the 'rescue package' and is seeking a negotiated solution, or follow the calls from (those in) her government who want her to throw overboard the only Greek government which has been faithful to its principles and which is able to take the Greek people on the road to reform," said Varoufakis.
Meanwhile, even the "quality press" in Germany is widely echoing the hostile tone set by Angela Merkel's ruling coalition of the CDU/CSU and the SPD.

Thomas Eipeldauer in Ein "beispielloses Maß an Solidarität" Hintergrund 18.Juni.2015 writes:

Erstaunlich ist, mit wie wenig kritischer Distanz sich die deutsche Medienlandschaft in die Debatte einbringt. Das Gros der veröffentlichten Meinung bedient Ressentiments, im Falle der "Berichterstattung" Springers kann man von einer permanenten Gratwanderung an der Grenze zur Volksverhetzung sprechen. Die Bild-Redaktion schreibt der Kanzlerin im Vorfeld der Regierungserklärung eine Rede, die sie "von Ihnen gerne hören" würde ("Die klare Botschaft: Es reicht!") und ergeht sich seit Monaten in Beschimpfungen von griechischen Regierungsmitgliedern. In der Süddeutschen kanzelt Stefan Cornelius Tsipras und Varoufakis ab, die FAZ haluziniert nicht nur in grotesker Verdrehung der Tatsachen, dass die griechische Regierung Europa erpresse, sondern atttestiert ihr gleich noch "ideologische Realitätsverweigerung".

[It is astounding with how little critical distance the German media landscape plays a part in the debate. The major part of public opinion appeals to resentments. In the case of the Springer "coverage," one can speak of of a permanent tightrope walk on the border of incitement. The editorial board of [the popular Springer tabloid] Bild writes a speech for the Chancellor {Merkel} prior to the government's explanation {that Merkel gave on June 17} that they "would like to hear from you" ("The clear message: It's enough!) and continued for months with invective against Greek government ministers. In the Süddeutsche {Zeitung}, Stefan Cornelius dissed [Greek Prime Minister Alexis] Tsipras and Varoufakis. The FAZ {Frankfurter Allgemeine Zeitung} not only hallucinates in a grotesque contortion of reality that the Greek government is blackmailing Europe, but also even attests to them "ideological denial of reality."]

The Bild article referred to is Frau Bundeskanzlerin, diese Rede wollen wir von Ihnen hören 16.06.2015.

The Bild-Zeitung is a tabloid that has been notorious for decades for its shrill headlines and bigoted editorial demagoguery. But the Süddeutsche and FAZ are very much considered part of the "quality press."

Apparently the Stefan Kornelius article to which Eipeldauer refers is Die eigentliche Schuld der Regierung Tsipras 18. Juni 2015. Which is a particularly obnoxious piece of work. It calls to mind some star American columnist's appeal to the Democrats for Bipartisan when the Republicans are on some hard right rampage over whatever issue they're pounding at the moment:

Es ist unendlich schwer, die rhetorischen Sticheleien eines Yanis Varoufakis zu ertragen. Der Finanzminister und am Ende auch Ministerpräsident Alexis Tsipras haben für eine Aufladung gesorgt, die inzwischen das fundamentale Prinzip aller europäischen Zusammenarbeit gefährdet: den Kompromiss. Die Europäische Union ist eine Gemeinschaft, die keine Verlierer kennen darf. Gäbe es stets Triumph und Demütigung - Europa würde nicht existieren können. Hier liegt die eigentliche politische Schuld der Regierung Tsipras. Sie hat das Maß verloren, sie kennt nur schwarz und weiß.

[It is infinitely hard to take the rhetorical gibes of a Yanis Varoufakis. The Finance Minister and in the end also Prime Minister Alexis Tsipras have worked up a charge that winds up endangers the fundamental principle of all European cooperation: compromise. The European Union is a community that should know no losers. If there are always triumph and humiliation - Europe would not be able to exist. Here lies the true political guilt of the Tsipras government. They have lost all measure, they know only black and white.]
The examples could be multiplied. The quality press in Germany seems to be failing their domestic public on the euro crisis as badly as the American quality press failed on the buildup to the Iraq War in 2002-3.

The attitude of nationalistic hostility and contempt toward Greece and the Greek people that the CDU, the SPD and far too much of the German press have promoted not only inhibits any realistic understanding of the crisis. Which in any case would be incompatible with the Merkel government's Herbert Hoover/Heinrich Brüning solutions to it.

It also much increases the likelihood of nasty domestic political consequences in the aftermath of a Greek default.

On a historical note, a Facebook friend, Christian Rieck, flagged this brief historical sketch of Europe and the Greek struggle for independence against the Ottoman Empire: Berthold Seewald, Geschichte vor Tsipras: Griechenland zerstörte schon einmal Europas Ordnung Die Welt 11.06.2015.

Charleston and white people

Chauncey DeVega has some sadly very timely observations on what most white people and the major media will not be talking about in connection with Charleston perpetrated by a violent white racist:

... there are several phrases and words that are likely to not be used by the corporate news media in the discussions of the Charleston mass murders at the Emanuel Baptist Church.

They include:
  1. What is radicalizing white men to commit such acts of domestic terrorism and mass shootings? Are Fox News and the right-wing media encouraging violence?
  2. Is something wrong with the white family? Why are their sons and men so violent?
  3. What should law enforcement and white politicians do about white crime?
  4. Is the Charleston mass shooting just one more sign that America needs sensible and reasonable gun control policies?
  5. Where are the white fathers in the white home?
  6. When will white leadership step up and stop white right-wing domestic terrorism?
  7. Is White American culture pathological? Why is White America so violent?
  8. Are there appropriate role models for white men and boys? Could better role models and mentoring help to prevent white men and boys from committing mass shootings and being seduced by right-wing domestic terrorism?
Salon give the piece the title, Charleston church massacre: The violence white America must answer for 06/18/2015.

But actually, the article is focused on how the dominant white narrative, or the White Racial Frame as he calls it, assumes that there is no collective problem over which white Americans see a need for an answer, much less something to answer for.

Richard Kreitner and Back Issues reminds us that this is not at all an isolated act of violent racial terrorism in The Reconstruction-Era Violence Lurking in the Southern Air The Nation 06/18/2015.

Thursday, June 18, 2015

Greek crisis rolls along

Martin Wolf, Divorce in haste, repent at leisure Financial Times 06/16/2015:

As the Irish economist, Karl Whelan, points out in a blistering response to Mr Giavazzi, the Greek economy has suffered a staggering collapse. From peak to trough, aggregate real gross domestic product fell by 27 per cent, while real spending in the economy fell by a third. The cyclically-adjusted fiscal balance improved by 20 per cent of GDP between 2009 and 2014 and the current account balance improved by 16 per cent of GDP between 2008 and 2014. The unemployment rate reached 28 per cent in 2013, while government employment fell by 30 per cent between 2009 and 2014. Such a brutal adjustment would have shredded the politics of any country. ...

Europeans are now dealing with Syriza because of this calamity. But they are also dealing with Syriza because of the refusal to write down more of the debt in 2010. This was a huge error, made far worse by the subsequent collapse of the Greek economy. Indeed, the vast bulk of the official loans to Greece were not made for its benefit at all, but for that of its feckless private creditors. Creditors, too, have a duty to take care. If they are careless, they risk big losses. If governments want to save them, their own taxpayers should be told to pay up.
Still, he talks about the need for Greece to make "bold structural reforms," which in the euro crisis has consistently meant the kind of austerity policies that produced the disastrous result for the Greek economy Whelan describes.

Paul Krugman (Thinking About the All Too Thinkable 06/18/2015) has already decided to break his vow of silence from a couple of days ago about Greece: "The point is that nobody should be casual or confident here. But the creditors should actually be even more worried than the Greeks about a potential exit that has no upside for the rest of Europe."

He refers to one of the most important precedents for the current situations. "As it turned out, the Argentine scenario was headed off by the political determination of elites to stay in the euro and the success of the ECB’s 'whatever it takes' declaration of willingness to act as lender of last resort. But the reprieve wasn’t permanent; in this respect, at least, Athens 2015 is Buenos Aires 2001." With constructive (non-Herbert-Hoover/non-austerity) economic policies, Argentina from 2003 to 2010 had very healthy growth, the largest economic expansion in their history. This is why the current Greek Prime Minister Alexis Tsipras​ said in Parliament a couple of years back, "I wish we were Argentina!"

Yves Smith offers his take in What If There is No Deal on Greece? Naked Capitalism 06/18/2015:

The alarming part of the deadlock is the lack of a plan on the creditor side to develop a Plan B, a sort of mirror image of the Greek government’s claim that its has bet everything on securing a favorable agreement. Even if the ECB has been gaming out scenarios (as was rumored as early as February), it can only do so much unilaterally. The Eurozone crisis is on the verge of entering a phase where a common view among different governments and institutions is necessary before any concerted action can take place. Even allowing for a relatively quick agreement on preliminary steps, there is still a ton of moving parts, as well as the near certainty of continued high friction with Greece.
Smith also reminds us how grimly far from any genuine sense of solidarity the EU is today: "It’s career suicide in too many countries for politicians to vote through a deal with Greece with no pension reductions, and far too little time to soften public opinion by June 30."

And deadlines are still to come down hard (Corina Ruhe, Stephanie Bodoni and Rebecca Christie, EU Calls Emergency Summit as Greece Runs Out of Time Bloomberg Business 06/18/2015:

For Tsipras, there are immediate repercussions. While Greece still has 12 days left before the bailout window shuts, the need for some parliaments to sign off on any agreement the ministers can broker means it’s already too late for them to access aid in time to pay the IMF about 1.5 billion euros ($1.7 billion) at the end of the month, according to Dijsselbloem.

“Let’s say that we do reach an agreement; it’s unthinkable that the implementation and then disbursement will also have to take place before the end of the month,” Dijsselbloem said. “That is simply impossible.”

To get its hands on some money, Greece will now look to extract am extension of its bailout agreement at a June 22 summit that will bring Tsipras and Germany’s Angela Merkel, who has tried to smooth out tensions [SAY WHAT?], in the same room. That EU meeting will start at 7 p.m. in Brussels.

The "at 7 p.m." is a nice dramatic touch, communicating that cliffhanger vibe.

Smith clears up one point that has been awfully vague in a lot of the reports I've seen on the June 30 payment due to the IMF:

Other lenders to Greece apparently do not have cross-default clauses with IMF debt, so the immediate impact of an IMF missed payment (the term of art is “arrearage”) is the blow to confidence, a bar on new IMF lending, and a reduction in the quality of the collateral pledged to the ECB for loans under the ELA, particularly Greek government debt (which is a comparatively small portion of total collateral). Note that the Eurozone member states, many of which are lenders through the European Financial Stability Fund and the Greek loan facility, won’t suffer any immediate impact. ...

While the ECB could in theory cut off the ELA air supply on June 30, the complexity of the situation, plus its “rule driven” message seems to signal that it will wait to act until it has a clear cut cause. But going past the June 30 event horizon means Greece will be under more pressure to introduce capital controls, particularly since experts have estimated that Greek banks will run out of collateral eligible for the ELA sometime in July, and that was before allowing for the possibility of increased haircuts on collateral as a result of the IMF arrearage. That is not a pretty picture
I've followed this story for years. But Smith's description of how nasty Merkel and the ECB could potentially get still strikes me as hair-raising.

Smith's closing paragraph: "I must confess to being fried by following this drama so closely, and the idea that this could go on another month or even longer is draining. Imagine how the officials involved feel. Frayed nerves and exhaustion increase the already high odds of bad decisions and impulsive action."