Sunday, May 03, 2015

Greece, Germany and the eurozone

I'm not really in the mood today to make guesses about the most likely outcome of the Greek-German/EU standoff. The basic options haven't changed: (1) restructuring Greece's debt so the Greek government can pursue stimulatory economic policies; (2) Greek default within the eurozone; (3) Greek default with Greece being expelled from the eurozone; (4) an effectively complete capitulation by the Greek government that accepts indefinite austerity and depression.

Here are a few recent tidbits from the news.

David Böcking und Giorgos Christides, Schutz vor Zwangsräumungen: Ein Grieche kämpft um sein Hausrecht Spiegel Online 03.05.2015: ECB head Mario Draghi is complaining it's social injustice for the Greek government to try to keep Greek homeowners who are underwater on their mortgage payments in their house. Tim Geithner must be proud. (Opinion of the European Central Bank of 10 April 2015 on the prohibition of the auction of primary residences; ECB website)

Griechenlands Krise: Ein bisschen Fortschritt im Schuldenstreit FAZ 03.05.2015; Griechenland-Verhandlungen: Vorsichtiger Optimismus Spiegel Online 03.05.2015; Athen bereit zu Mehrwertsteuerreform FAZ 02.05.2015: There seems to be some agreement from the EU on a reduction of the value-added-tax (VAT) rates in Greece, though how reducing taxes would help keep up the enormous primary surpluses the EU current requires of Greece isn't clear. Also, the EU elite is hoping for a general capitulation from Prime Minister Alexis Tsipras, although that appears to be based on hope and arrogance than anything more concrete.

[Europgroup head Dijsselbloem Jeroen] criticizes Tsipras & Varoufakis for giving … interviews! Keep Talking Greece 04/30/2015: EU bigwigs are still arrogant twits. The article includes this picture with the caption, "Varoufakis’ ghost will always haunt Dijsselbloem till the end of his days. Oh, and Schaeuble!"

For some reason, Angela Merkel's government and Merkel's friend German President Joachim Gauck are making conciliatory noises about Greek reparation claims from the Second World War: Reparationsforderungen: Gauck offen für Wiedergutmachung an Griechen Spiegel Online 03.05.2015; German President Gauck raises prospect of World War Two reparations for Greece Deutsche Welle 01.05.2015.

Reuters/Haaretz report in Germans must be 'sensitive' to what Nazis did to other countries, Merkel says 05/02/2015:

"There's no drawing a line under the history," Merkel said, dismissing a yearning that many post-war generations of Germans harbor.

"We can see that in the Greece debate and in other European countries. We Germans have a special responsibility to be alert, sensitive and aware of what we did during the Nazi era and about lasting damage caused in other countries. I've got tremendous sympathy for that."

Also on Saturday, President Joachim Gauck, who has little real power, reignited a debate over reparations, saying Germany should consider Greece's demands for 279 billion euros ($312 billion) in reparations for the Nazi occupation.

Greece's calls have fallen on deaf ears in Berlin, even though legal experts say it has a case. Merkel's government says has paid its obligations to Greece, including a 115 million deutsche mark payment in 1960.

"It's the right thing to do for a history-conscious country like ours to consider what possibilities there might be for reparations," Gauck told the Sueddeutsche Zeitung.

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