Sunday, July 12, 2015

The Merkel method #ThisIsACoup

This tweet from The Economist's Jeremy Cliffe passing on a statement from some anonymous German official strikes me as only half the profile.

When it comes to her dedication to Herbert Hoover/Heinrich Brüning economics, though, she has shown she is more concerned with imposing her will than in awaiting a consensus to emerge.

Krugman harshes on Angela Merkel and the Troika and their latest ultimatum to Greece to forget democracy (Killing the European Project 07/12/2015):

... this Eurogroup list of demands is madness. The trending hashtag ThisIsACoup is exactly right. This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is, presumably, meant to be an offer Greece can’t accept; but even so, it’s a grotesque betrayal of everything the European project was supposed to stand for.

Can anything pull Europe back from the brink? Word is that Mario Draghi is trying to reintroduce some sanity, that Hollande is finally showing a bit of the pushback against German morality-play economics that he so signally failed to supply in the past. But much of the damage has already been done. Who will ever trust Germany’s good intentions after this? [my emphasis]
Joe Stiglitz is pretty much on the same page (Germany showing 'lack of solidarity' over Greece: Stiglitz Dunya News 07/12/2015):

"What has been demonstrated is a lack of solidarity by Germany. You cannot run a eurozone without a basic modicum of solidarity. It is really undermining the common sense of vision, the sense of common solidarity in Europe," the Colombia University professor and former World Bank chief economist told AFP.

"I think it s been a disaster. Clearly Germany has done a serious blow, undermining Europe," he said.

"Asking even more from Greece would be unconscionable. If the ECB allows Greek banks to open up and they renegotiate whatever agreement, then wounds can heal. But if they succeed in using this as a trick to get Greece out, I think the damage is going to be very very deep."

TeleSur TV reports on the hashtag Krugman mentions (Greeks Face 'Humiliating' Demands As Twitter Says #ThisIsACoup 07/12/2015):

To meet the conditions for fresh aid packages and a third bailout that Greece needs to avoid bankruptcy, European finance ministers want Greece to pass a series of austerity measures--including tax and pension reforms-- through Parliament and put them into law by Wednesday.

Greece will also have to lose fiscal sovereignty as part of the austerity measures, implying that the troika- the International Monetary Fund, the European Commission and the European Central Bank- would be in charge of all legislation relevant to austerity. This also includes changes to legislation already passed by the Syriza government since it took power this year.

Ian Traynor et al report in Greek crisis: surrender fiscal sovereignty in return for bailout, Merkel tells Tsipras The Guardian 07/12/2015:

A weekend of high tension that threatened to break Europe in two climaxed on Sunday night at a summit of eurozone leaders in Brussels where the German chancellor, Angela Merkel, and President François Hollande of France presented Greece’s radical prime minister, Alexis Tsipras, with an ultimatum.

In what a senior EU official described as an “exercise in extensive mental waterboarding” to secure Greek acquiescence to talks on a third bailout in five years worth up to €86bn (£62bn), the two leaders pressed for absolute certainty from Tsipras that he would honour what was on offer. ...

Under the terms set before Tsipras on Sunday night, the Greek parliament has to endorse the entire package on Monday and then pass several pieces of legislation by Wednesday, including on pensions reform and a new VAT regime, before the eurozone will agree to negotiate a new three-year rescue package.

The terms are much stiffer than those imposed by the creditors over the past five years. This, said the senior official, was payback for the emphatic no to the creditors’ terms delivered by the snap referendum that Tsipras staged a week ago.

“He was warned a yes vote would get better terms, that a no vote would be much harder,” said the senior official.

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