Goodbye uncertainty, hello uncertainty

For Greece, the underlying theme of this crisis has been swapping one set of uncertainties for another. In fact, sometimes the uncertainties have been exactly the same, simply repackaged and rebranded. From George Papaconstantinou’s “loaded gun on the table,” to the first bailout in May 2010, from the mid-term fiscal plan in the summer of 2011 to the October 27 haircut agreement last year, from the PSI and second bailout early this year to the European assurances ahead of this summer’s elections: each development has promised stability, continued membership of the euro and better days ahead; each has crumbled into an empire of dust.

Now, hopes are being pinned to the Brussels debt deal agreed in the early hours of Tuesday morning. The immense relief at an agreement being reached is both understandable and justified. The prospect of the eurozone and International Monetary Fund failing to find any common ground on how to make Greek debt sustainable would have led to potentially devastating economic and existential implications for the single currency area and Greece. However, as this relief subsides, it becomes more evident that this deal takes a stab at providing a definitive solution to Greece’s debt problem but falls short, leaving the sword of Damocles dangling over the country. Even if the debt reduction program goes according to plan – and there are doubts whether it will, especially due to questions over the bond buyback scheme – Greece will still have to contend with a debt of 124 percent of GDP in 2020. It is also doubtful whether enough has been done to remove the niggling doubts about Greece’s future in the minds of investors, who are so necessary to helping change the course of the Greek economy. JP Morgan referred to the Brussels pact as a moment of “creative ambiguity.”

Some positive steps – ones which were unthinkable for much of this crisis – were made in Brussels. For instance, the European Central Bank accepting to return the profits it makes from Greek bonds bought via its SMP program was a significant breakthrough. Apart from the fact that this move will help reduce Greece’s debt by an estimated 4.6 percent of GDP, it also represents a realization, albeit belatedly, that the eurozone’s central bank should not act like a private bank. While there are some well-founded concerns about diluting the ECB’s monetary purity, it remains an institution designed to protect the interests of its member states and there can be no situation in which it is in the euro area’s interests for one of the members to be bankrupt and teetering on the edge of political and social collapse but for its partners and central bank to be making a profit from it at the same time.

The decisions to extend the maturities and provide a repayment holiday on EFSF loans from the second bailout and to bring down to just 0.50 percent above the Euribor rate the interest on bilateral loans from the first bailout are in a similar vein. They recognize that extraordinarily bad times require red lines to be shifted and compromises to be made.

However, as things stand, the Brussels agreement looks too much like a compromise struck to overcome short-term turbulence rather than secure long-term stability. Even though the latest steps mean that Greece has the longest average maturity of debt anywhere in the world, at 20 years, it’s doubtful whether Tuesday’s agreement puts the country in a substantially better position to service it. There was an opportunity this week to break the vicious debt-austerity-recession cycle that is threatening to drag Greece and then others into a vortex. It had been well-documented before the quickfire round of Eurogroup meetings this month that a decision to extend maturities on loans to Greece and reduce their interest rate to zero and indexing loans to the country’s growth rate could reduce the country’s debt to around 100 percent of GDP by 2020. This would be achieved without event bringing up the issue of writing the 48 billion euros for the capitalization of Greek banks on the books of the European Stability Mechanism rather than as national debt – an option that disappeared from the agenda over the last few months due to objections by the AAA-rated countries.

An extension of maturities and a zero interest rate would avoid the most obvious, but politically-charged, option of writing off part of the debt that Greece owes to its partners. It would also have the dual benefit of reducing debt to a level that is convincingly manageable, while linking future payments to the performance of the Greek economy: the more it grows, the more debt could be paid off. Instead, we have ended up with a scheme that will punish Greece should its currently collapsing economy fail to meet targets. Apart from the extra conditionality attached to further bailout loans and the fact that Greece is being asked to put all privatization revenues and money from primary surpluses into a “segregated account,” the eurozone has suggested that further debt relief may come in a few years time but only if substantial primary surpluses are being produced.

This defies logic, though. It has been accepted over the last few months by most analysts that a primary surplus has failed to materialize yet not due to a lack of fiscal measures but because of the ever-deepening recession. So, if the economic recovery fails to materialize or is slower than expected and primary surpluses prove elusive or smaller than expected, the eurozone’s reaction – according to Tuesday’s agreement – will be to deny Greece further debt relief, which could help spur investor confidence, economic growth and primary surpluses.

This goes to the heart of the matter, which is that Greece’s partners expect it to begin producing primary surpluses from 2014, with the 2016 figure coming in at 4.5 percent. Greece produced surpluses of about 4 percent between 1994 and 1999, as it prepared to join the euro. But this was accompanied by a growth rate of about 3 percent that rose steadily during this period thanks partly to a conducive global environment. As things stand, it is difficult to see how this can be matched over the next few years. Given the economy has shrunk by about 20 percent over the last five years and is due to contract by at least 4.5 percent next year, it is going to take a remarkable turn of events to see Greece produce growth rates of about 4 percent from 2015 onwards in order to ensure the debt reduction program meets its target in 2020 and primary surpluses are of the magnitude that would nudge the eurozone into providing further debt relief.

This feat appears even more unlikely when one considers that there is nothing in Tuesday’s agreement that addresses lenders demands for Greek to keep up with the breakneck pace of austerity. A minimum of 18 billion euros of cuts and revenue-raising measures are to be implemented over the next four years, with automatic adjusters kicking in if Greece fails to meet its targets. Balancing the demands for further intense fiscal adjustment with the absolute need to grow seems an impossible task.

Then, there is the question of how all this can be matched with the fragile political and social situation in Greece. A Marc opinion poll for Alpha TV this week suggested that almost two thirds of Greeks do not want early elections. This is encouraging for the coalition government but at the same time the window of opportunity for keeping voters on its side and winning doubters around is small. The same survey, and others, show that SYRIZA – with its idea of rejecting outright the troika’s demands – is gaining support steadily and is Greece’s most popular party. Golden Dawn, meanwhile, is a growing menace socially, as it feeds off instability by creating more of it. In this vice-like grip, the coalition will need to show ample political skill and tangible signs of improvement to resist being crushed.

When pooling together these factors and assessing the current climate, the Brussels debt deal appears to be far from the conclusive answer to Greece’s debt-related problems. There have been concessions on all sides and the potential is there for a more decisive intervention in the future. As things stand, though, it does not provide a cast iron guarantee that Greece will remain in the eurozone. It provides a flickering light at the end of the tunnel rather than total illumination and leaves a huge amount of work for Greece, and its partners, to do over the next few months and years. Will they succeed? Of that, we can be uncertain.

Nick Malkoutzis


29 responses to “Goodbye uncertainty, hello uncertainty

  1. “The Brussels agreement looks too much like a compromise struck to overcome short-term turbulence rather than secure long-term stability”, perfectly describes my view as well.

    Goodbye old uncertainty, hello new uncertainty. Unfortunately uncertainty is still persisting.

  2. I am amazed that you expected anything from the Brussels agreement.

    For the last 4 years anything that comes out of Brussels is German orchestrated politics a la Scrooge McDuck. In others words how Germany would avoid to pay for anything while the condemned are asked to purchase the instruments of their execution from their exclusive German supplier at 1000% markup.

  3. @ Dean
    +1 !!!!!!

  4. People don’t understand why we get upset with Germany, but here let me explain it to you in very simple terms.

    Early this year a German engineered haircut (called the pSI) declared with fanfare to have achieved a sovereign debt reduction of 110 Billion euros (approx. 1/3rd of the total Greek sovereign debt, it was declared!).

    Here is how those savings were “achieved”. The Greek bank assets were plundered to the tune of 55 bil., followed by another 25 Billion of Greek social security/pension fund assets. To such another 30 Billion of assets held by foreign banks and financial institutions, for a grand total of 110 Bil. A largely ignorant Greek government, seconded by the plot engineer (aka Germany), announced the monumental “victory”.

    However, nothing of the kind happened that could be demonstrated by figures. Looking at the chart below you could see that the total Greek sovereign debt at the end of 2011 stood at 356 Bil. If you believe that the same debt today stands at 304 Bil. (as the graph indicates; I actually think the figure is higher as of end of November 2012) and then you add the new tranch of 44 Bil. , then the total debt for 2012 is about the same as it was in 2011.

    The Greek sovereign debt pre-PSI and post- PSI is at almost the same level. Which means that the undue wrecking of the Greek economy through austerity created new holes the remedy of which completely erased any prior PSI benefits. This was nothing more than an exercise of buying extra time at no benefit to Greece and all benefit accruing to Germany which(Germany) is continuing to erect defenses at a furious pace towards Grexit. If this whole thing continues for another year or so, then Germany can let Greece die with negligible consequences on the German and European economy.

    It’s all a con game of shifting burdens at zero-sum while the true objective is to gain time. Time which is working against Greece and in favor of Germany.

    Germany unloads any potential costs to the private sector (of Greece) while incurring minimum loses herself. Meanwhile the payoff from the euro crisis to Germany so far has been huge (upwards of 100 Bil. euro). This is the part I call unjust enrichment combined with Scrooge McDuck politics.

    • The Spiegel article above is titled “Greek Debt Deal Delays the Inevitable”.

      I wonder when greeks will agree to see this themselves or when greek politicians will be prepared to admit this. Before? – or after? – privatisations? So that we ‘grexit’ with more debt than before, a citizenry impoverished by wealth transfer and mortgaged unto the 4th generation and owning nothing?

      Given the track record of the EZ throughout the crisis, it should be apparent by now that membership is catastrophic.

      • Eleni:

        IMHO it is the state which the core of the problem. A disproportionately large, inefficient and unproductive public sector putting an enormous pressure on the productive (private) part of the economy.

        Instead of declaring bankruptcy about 3 years ago, the inefficient part (aka state) of the Greek economy – with full German complicity – has begun to plunder the private sector relentlessly and in the process transfer the burdens of its unjustified survival to innocent citizens. A state which instead of clearing the way from its own odious presence, has made priority number One the “saving of Greece” ( which code for the public sector of saving itself using other people’s money).

        Look at what is going on right now. The Greek (private) economy has 3 pillars: Tourism, Shipping and Services. At a time when tourism is out of season (therefore non-productive) and shipping at a seasonal low ( in other words 2 out of the 3 engines out of service), the odious state chooses to attack the only remaining services pillar (which is mainly banking and insurance – we can’t count real estate as being alive at the moment).

        This is incredible really. After allowing the wholesale destruction of its own banking sector with the PSI haircut (which has come to nothing as far as sustainable sovereign debt levels are concerned), the state has the nerve to appeal to the same crippled banking sector for the state’s unjustified survival (they call it the “patriotic” duty).

        If there was ever a patriot duty of all Greeks is to forever abolish and dismember the incompetent state. Kill it without remorse or second thought about it. The state has to go. Not only it produces nothing but it also stands in the way of reaching anything meaningful for Greek citizens. It’s a Soviet era bureaucracy which has produced nothing but embarrassment and misery for all Greeks.

        I complain of Germany a lot (as my patriotic duty dictates) but the elephant in the room is the incompetent governing class and the disgusting state they have created, which both have to go without any hesitation.

      • @ Dean
        Couldn’t agree with you more!

        There are many things up for redesign – among them the insane business- and investment-strangling bureaucracy, and also the voting system : so that constituencies can select their own candidates, local people can put themselves forward, new blood can enter, local accountability etc. It is really time for Greece to move past, or at least modify, its stagnant party politics.

        Given that any further erosion of private or public wealth is hari-kiri in terms of Greece’s interests, and that a competent government would protect EVERY cent of wealth left in this country like pit bulls, Samaras & Stournaras asking institutions and civilians to ‘voluntarily’ participate after PSI proves EITHER the government’s incompetency – and worse, treachery. [I used to think of this as hyperbole but now see it as a factor: having got rid of Papademos, decisions made now by an elected government binding GR to certain death, could have consequences later for these same individuals, under different governments. Think of what happened to the junta.]

        – OR –

        The government & IMF are playing a deeper game – since the IMF have proceeded to up-end last week’s deal with the its ultimatum on Greece’s behalf (+ ultimately all the PIIGS), the only one that might move the EU / ECB to action. In that case ‘voluntary participation’ etc is just theatre, (ie ‘showing willing’) and banks’ visit to Brussels to explain their refusal part of the game.

        There is no way of knowing though I lean to No.2.
        Perhaps out of unquenchable hopefulness.

        p.s. During the recent civil service strikes the Caterers Union, surrounded by Solidarity signs, served free coffee to the strikers. Paid for by us! But where were they with their free coffee in the big general strikes?! Exactly nowhere. We learn that Solidarity is very specific….

      • Eleni:

        Sometimes I wonder what really goes on. 🙂

      • Dean,

        That is Uncertainty! 🙂

  5. Well, it got through the Bundestag today. CDU/CSU levels of rebellion on Greece appear to have plateaued. The Greens (always euroenthusiasts) were always going to be in favour. The SPD Backbenchers mostly wanted to abstain, but the leadership persuaded them (with great difficulty) otherwise (but still with nine rebels).

    Of course, the Netherlands and Finland are still to ratify. It’s not there yet.

    If you want to get a picture of why greek debt:gdp ratio has gone up again so sharply, the data at the greek ministry of finance is a lot better than anything spiegel puts out. Which is hardly surprising. From the “public debt bulletins”.

    June 2011 (before PSI): 353 billion euros

    End March 2012 280 billion
    End September 2012: 303 billion euros

    But the real difference shows in, longer maturities and lower interest payments. For those, you go to the “budget execution plan” and look for “net interest rates”.

    2011: 16,384 billion euros
    2012 (estimate, on figures up to september): 11,275 billion euros.

    So it would appear that the “cunning german plan to wreck the greek economy”, known as PSI, has saved the greek budget 5 billion euros a year.

    You know: germans are pretty good at planning. If they wanted to wreck the greek economy, I think they could do a better job than this.

    And that, of course, is before the just agreed interest rate drops kick in.

    Still, I don’t expect to convince you

    • Richard:

      My point is this: Say, using your figures that the Greek sovereign debt is 303 Bil. euros at end of September. Let’s now assume that by the end of November is 310 Bil. (to use a round figure). Add to it the 44 Bil. just approved and the total Greek sovereign debt stands at 354 Bil. which almost the same as the 356 Bil. a year ago (end of 2011).

      In theory the PSI should have resulted in 110 Bil. reduction in the Greek sovereign debt, but as you can see the net eefect is zero.

      Therefore, simple math indicates that the so called “haircut” did nothing to the level of Greek debt. All it did is to wreck the Greek banking system and thus create an even bigger hole needing even more debt rather than diminish the debt level over time.

      Lest you consider me ungrateful, thank you very much for the efforts of the German Bundestag and your support of Greece. However, I would recommend to Germany to stop collaborating with the Greek political system (which is of dubious skill if not thoroughly incompetent) and begin to seek and support those individuals/structures who/which can really get Greece back on track. Meaning competent and professional managers.

  6. Here is the Greek Implementation Programme status report. Choose a topic to discuss:

    Click to access LGBB.pdf

    • Thank you for that!

      As an architect I went straight to ‘Professions’. Not much information there, except to eliminate a minimum fee!

      In practise there is no minimum fee here, only a demos tax on a minimum fee, paid by the client through the architect, which is fairly low.

      My practise is an international practise rather than a local one and I’ve built and worked mostly outside Greece than in – including teaching (guest professorships etc). This allows me to compare, and if anything I’ve been mystified from the beginning by the call to “open up the profession”.

      In terms of accreditation, contracts, oversight etc – ie professional function – TEE is the same as other professional chambers in Europe, and if anything the minimum fee is lower! The main difference – though not unique – is that it is organised as a syndicate (TSMEDE), providing pensions, professional insurance and medical care. So yearly license fees are very high (c. 2000€ at starting level compared to 75€ without syndicate). It also needs a huge bureaucracy – reflected in its 8 storey building at Syntagma.

      If anything, I expected the Troika to dismantle the syndicate since it eliminates choice and the costs are burdensome in slow years. But NO.
      The medical side has been absorbed into another union but the rest is still there, nor criticised by the Troika as inefficient – go figure!

      Meanwhile (ironically) Germany is one of the most guild and syndicate-ridden countries in the world, presenting a more or less closed shop for outsiders; with arcane practises that prevent competition, while propping up protected sectors. Ruled against many times in the European court but producing no results on the ground. And of course they maintain minimum fees for architects and engineers (much higher than ours) and strict contract fee %s…

      – so what gives?!
      Sauce for the Gander?

  7. This is an excerpt from a NYT editorial:

    “Greece’s prime minister, Antonis Samaras, hailed this week’s debt agreement as the transformation of “endless austerity” into a program that “will lead to growth.” Unfortunately, it promises nothing of the kind, and Mr. Samaras’s fragile coalition shows signs of fracturing under the economic strain. It might not even be able to stagger on until the German election next year. If it falls, Greece could be headed for default and exit from the euro. That catastrophe can still be avoided — but only if Ms. Merkel decides to put the survival of Greece and the future of the European Union ahead of her own electoral calculations.”

  8. I am amazed both by the article and all the commentators including the NYT that still advocate that the Germans or other foreign groups have the responsibility to develop and implement Greece’s economic plan for growth, job creation and debt sustainability This should be Greece’s primary responsibility! With such childish mentality, it is no surprise that Greece will not change and will remain desperately depended on the Germans and forever morally and materially impoverished.

    • @ George Maragos
      None of us, including the NYT, would deny that this is Greece’s primary responsibility. This is not an article or comment thread of irresponsible commentators. The problem is HOW in a depression that has passed the size of the 1930s depression in America and which is daily getting worse.
      With no fiscal stimulus or investment available.
      And no FDR in Europe.

      • I am not quite sure that there is no investment available. I understand that there is a substantial volume of Structural Funds at the EU designated for Greece and waiting to be picked up with projects properly put together (the EU Task Force was going to accelerate that). I understand that the EIB would definitely look at Greek projects (other than a Formula-1 racing track) if they were forthcoming. Cosco, which is already investing about 300 MEUR in ‘its half’ of the Piraeus port, would allegedly love to become involved in the other half (and in Thessaloniki, etc.). I am sure a part of those billions and billions of Greek offshore funds would return to Greece swiftly for investment if they were offered an suitable mix of security and return.

        I have been following Greek media, blogs, tweets, etc. for about 2 years quite intensively now. I have not come across any serious proposal for a long-term economic development plan. Among politicians, I am afraid to say that SYRIZA’s Economic Manifesto, whether it’s a good plan or not is a different matter, is about the only document from politicians that I know which comes close to the basic idea of a plan (but only close…). And then there is, of course, Dean Plasssaras’ plan to fix Greece within 2 years but he won’t share that with anyone publicly.

        A couple of years ago, an 11-year old wrote to Mr. Papandreou (published in the Ekathimerini) how he thought Greece could be fixed. It was cute. Over a year ago, McKinsey published a report which suggested how 500.000 new jobs could come into existence within 10 years as well as 50 BEUR in new GDP. Such initiatives seem to get the same attention span as an icycle in hell.

        When in financial trouble, the first thing one does is to put together a plan how one thinks to get out of trouble and to present it to creditors. Let them then structure the financing. What has been done here for almost 3 years now is to try out all options for structuring financing without having a plan. This is like saying: “I don’t know where I am going but I will drive so fast that I will get there in half the time”.

      • This indeed the case: no party except SYRIZA, (and out of parliament Drasi/Dimiourgia Xana), has put forward any kind of plan, especially not the old centre parties. I wonder why. Again, except for SYRIZA, I have yet to hear the McKinsey report mentioned by any politician. Yet my circle has been seriously discussing it since it came out and I know of 3 projects underway or in formation related to the report – ie in fish farming, foreigners’ retirement homes and medical tourism.

        The fishery plan is full steam ahead, the retirement homes are putting together funding outside Greece.

        However, in terms of stimulus, the EU mysteriously cut 3bn of funds from the National Strategic Reference Framework for 2013 – at present our only instrument for growth. It announced a possible increase of funds for 2014, pending agreement in Jan. 2013.

      • @elenits

        I was not aware that SYRIZA had addressed the Greece Ten Years Ahead report by McKinsey. If so, I would consider that as absolutely sensational. For over a year now have I spent hours blogposting on the McKinsey recommendations and wondering why no one in Greece picks up any of them. Here is my latest summary:

        Could you tell me how SYRIZA has commented on the McKinsey report?

        Yes, I remember reading things about proposals from Dimiourgia Xana which made a lot of sense but since they are so small (and since they don’t publish much in English), it’s difficult to keep abreast of what they have in mind.

      • @Klaus

        I’m sorry, I have no idea if they have published anything on McKinsey.

        However before both the May and June elections I attended rallies and meetings of SYRIZA, Drasi and Dimiourgia Xana. (In the 2nd elections the last two amalgamated). Both parties cited the report, and some aspects of it were discussed at length during various speakers’ discussions.

        Personally I did not find SYRIZA populist – on the contrary, restrained, serious, extremely well informed about economics and all aspects of policy, and open to seemingly antithetical ideas.

        Both parties aim to ‘recreate’ Greece from the bottom up. Both are full of talented people and very impressive.

      • Yes, I did hear quite a bit about Drasi and Dimiourgia Xana in the spring campaigns but hardly anything since then. In fact, SYRIZA has been rather quite since then, too, in my perception. At that time, I thought SYRIZA on one hand and Drasi/DX on the other were about as far apart from one another as extremes on a pole can be.

        Now, I have always felt that if Alexis Tsipras had a twin brother who had as much talent for economic common sense as Tsipras has talent as a populist, and if the two teamed up, then you might have a workable leadership in Greece. So if you are right in observing that SYRIZA and Drasi/DX might want to team up, then this would be an interesting proposition. I just can’t see that. In fact, I once wrote this somewhat sarcastic piece about both of them.

      • @ Klaus
        Whoops! I didn’t say SYRIZA and Drasi / Dimiourgia joined up. They haven’t & won’t. My observation is that there is real value in both parties.

        Before the June election Drasi and Dimiourgia X joined into one party since their combined poll numbers in the May election put them at +5%. I’m sure they would have made the 3% cut in June if daily EU pressure and propaganda had not turned that election into a last minute race-to-the-finish between ND and SYRIZA.

        This led to Stefanos Manos resigning, though he is still involved.
        D/DX (I don’t know what to call them now!) had a conference this weekend which I didn’t attend, but friends who did came out energised and optimistic for the first time in months.

        Ironically D/DX (which also have smaller parties mixed in) are now criticised, like SYRIZA, for being a collage. Yet provided there is enough agreement, surely this is healthier than the old monolithic parties that expel dissenters. No dissent = no discussion = no evolution!

        Definitely SYRIZA and D/DX represent opposite sets of people. Due to the scarcity of enlightened owners (like your Bavarians SMEs), society still needs both. What I liked, and see no sign of elsewhere, was that both are entirely focussed on re-building Greece from the bottom up, creating a new structure. What struck me is that so many of their conclusions are the same, and the common ground is well over 60% and maybe 70% (in my opinion).

        To pick up from your imaginary Tsipras’ economist brother – if for their part, D/D put as a priority the development of humane, respectful policies for labour then the value on both sides could merge and the world take a big step forward!

      • @elenits

        I would really be curious to know the 60% or more where SYRIZA and D/D share common ground. I am no expert on D/D but I do remember that when I first looked up their website, I was floored by the amount of common sense I found there. SYRIZA (that is Alexis Tsipras) always floors me with the talent of hitting the right soundbites but, so far, he has never floored me with economic common sense.

        Mind you, I am not one of those who think that Alexis Tsirpas is the devil in person. I wouldn’t have written over 10 blogposts on the man so far if I didn’t think that there is something to him. He certainly knows the right soundbites; he can project a vision of the future; he can open new and positive perspectives, etc. An American might interrupt me now and say: “Stop right there! That’s all a leader needs to be able to do!”

        Well, not quite. One also needs to apply the right means and deliver results and it is the means where I really would be surprised if common ground between SYRIZA and D/D were so large. For my part, when I listen to Alexis Tsipras, I tend to hear ‘state’ when I would like to hear ‘private sector’; I tend to hear ‘laws & controls’ when I would like to hear ‘incentives’; I sense a desire to control the economic agents instead of letting them play out; etc.

        Just the other day I saw a headline where Stefanos Manos allegedly said that The Left was more dangerious for Greece in the long term than Golden Dawn. That doesn’t speak for a lot of common ground…

      • Klaus:

        IMHO you are mixing apples and oranges.

        You want the Greeks to be focused on long-term structural changes which plays straight into the hands of German minimalism, incrementalism and obstructionism in dealing with the Eurozone problem.

        By doing so you are shifting focus from the German malpractice and offer cover to all cumulative German errors.

        In case you haven’t notice there are two trials going on at the same time:

        1. One on German fitness to lead Europe (which Germany is badly losing)
        2. Second, on the viability of the current Greek plan (which as long as it is dominated by the German mandated austerity is bound to fail).

        What Eleni is saying to you is that all who are interested in Greece want to see a complete restructure. This includes me as well. However the long term Greek restructure is dependent to a great extent on the abolishment of the austerity regime which daily increases the size of the black hole.

        Your attempt to draw me into a conversation by saying mockingly that Dean Plassaras who claims to have a plan but he won’t share it, is a bit childish.

        I think I have demonstrated to you many a times that most and foremost I am (or at least I like to practice the art of) a strategic thinker. Therefore I am telling you without hesitation that this is not the time for the Greeks to come up with a plan (McKinsey based or otherwise) of long term performance. When one’s house is on fire due to the malpractice of a neighbor, one does not plan the next vacation to the Caribbean. One apprehends the reckless neighbor, ensures his imprisonment and inability to practice such disastrous plans in the future and then proceeds with a long term plan of intelligent restoration.

        What you are asking us to do – in giving you a contributive effort for the Greece rescue plan – is to recognize the malfunctioning German part as a given. And such we can not do. No intelligent person would ever accept such diversion of resources and thinking capital in covering up the German failure. Being branded as German collaborator is a kiss of death for both Greek politics and civic life.

      • Regarding the observation that SYRIZA’s and DRASIS’ platforms offering logical alternatives, let’s deal with the obvious first.

        Manos is a Harvard educated MBA and certainly he knows economics. That’s for sure. The charge against him is whether he understands politics.

        Regarding Syriza. When a political party goes from 5% to 30% in a matter of months due to the defection of PASOK supporters (with PASOK now hovering around 5%) the only logical conclusion is that today’s Syriza is nothing more than a reformulated PASOK with a more leftist bend as opposed to a more centrist political party (as the old George Papandreou (The Geros, or the Old Man) would want it to be).

        And since a lot of ink has perished in saying that PASOK(and ND) are part of the old political system that lead Greece to ruin, I find it very odd to hear that today’s SYRIZA is something new that we have not seen before. That Alexis Tsipras is a charismatic leader and a good politician (in terms of how he presents himself) is without a doubt. But to hear old and reformulated PASOK positions articulated by Alexis and somehow in the process construe them as “something quite new” is beyond my comprehension.

        What has happened with Syriza IMHO is a reverse occupation be ex-PASOKers and as such what you will hear from Syriza would be neither new nor representative of its old self. Syriza = the new PASOK today because of the overwhelming numbers of ex-PASOK voters in their ranks. Syriza continues to have a leadership deficit (meaning qualified people to run an actual government) but not for long. Eventually the PASOK leaders and qualified government-style politician will land at Syriza.

        What has happened to PASOK is that having lost and been burned in the Merkel embrace they had to abandon to battlefield and regroup some place else. That some place else is Syriza. This does not mean that Tsipras will be the future leader of Syriza. It means that there is a wholesale change coming to Syriza which will emerge as a more leftist PASOK and ready to take revenge for the Merkel humiliation. But that’s for later.

  9. Greece needs to find its own FDR. Merkel is not its FDR. Greece has had many heroes that contributed to humanity, civilization and built great wealth. It needs to look inward and demand leadership from it’s politicians and hold them accountable. It needs a bold and geniune economic plan that will restore growth and prosperity by taking advantage of every EU program,and by focusing on developing industries that draw on its natural strengths to achieve economic competitiveness. It’s outrageous that such a plan does not exist after more than 3 years of deep recesion.

    The McKinsey report is not a Grrek economic plan. Radical and naive solutions, or repudiation of international commitments as recommended by SYRIZA, not only will deepen the recession but isolate Greece from the international community and deprive it of the financial help it needs to survive and rebuilt.

    I hope that all commentators and opinion leaders will continue to shift their focus and repeatenly call for Greek leadership to draft a bolt economic plan for growth and prosperity. Greece need to find its Pericles.

    • You are totally right in saying that any economic plan for Greece must originate in Greece. Any leadership which allows the perception that the country’s future is determined by foreigners will quickly lose the support of its people (not only in Greece). Experienced ‘sovereign restructurers’ like Bill Rhodes have been hammering that point in for decades.

      Personally, I find it amazing that Greek brainpower (however one wants to define it) is so focused on things which they really can’t influence much (Eurozone crisis) but they show literally no initiative/proposals for the Greek economy. No, the McKinsey report is not a Greek plan and Greece should not just copy it. But Greece should take issue with every point of it and ask whether that could be a good idea or not. And come up with many more own (and good!) ideas. I mean, rocket science that is not! Any project team in an economics university program would come up with something interesting within a few weeks. Collect all the ideas and consolidate them into one coordinated effort. I just happened to pass the anniversary of a blogpost which I had written on this subject a year ago.

  10. @Maragos
    We all agree on the necessity for a greek plan by greeks. So far we do not see any hint of this from the coalition government. There are plenty of politicians from these parties not directly involved in dealing with the crisis on the coalface, and no excuse that this has not been put as a priority.

    As for finding Pericles and FDR, in their absence we the greeks shall have to do our own work and formulate our own vision. From what I have experienced around me, there is enormous consensus on what constitutes a healthy Greece.

    @ Klaus
    The consensus I found between SYRIZA and DD/DX was outside of economics. Their analysis of what brought us to the point is the same; ditto analysis of Greece’s geopolitical position and possibilities; ditto of foreign policy toward neighbours, ie for ex, Fyrom; immigration; parliament – what it should be and isn’t; ditto justice system; corruption; education; resources.

    These are the ones I can think of now. For me this was reassuring.

    Of course they have different approaches economically. But not opposite. They both see the urgent need to clean up the existing barriers to doing business in Greece and for investment. As you remarked a few months ago, SYRIZA also put as a priority the need to repatriate shipping by changing the existing rules that made them flee in the first place.

    Meanwhile someone needs to stand as the party of labour and the vulnerable. That is a simple political fact. Manos cannot simply say the left are Greece’s greatest danger, (though we know what he meant – your point about being not primarily a politician), without proposing a strong solution himself. The fact is that the political “centre” in Greece is soft left, as it is in most EU countries.

    From my point of view if ND/PASOK had drawn a line at taking money from the most vulnerable in society – pensioners and the lowest wage earners – we would not have such huge support for Golden Dawn. (Though admittedly public support for GD originated in the illegal immigrant problem, which is now largely under control). That would have meant biting the bullet and taxing themselves, reducing top salaries especially in parliament, and immediately going after the large corporations and wealthy who in fact, according to government & OECD analysis account for 60% of the tax total. The same for large-scale tax cheats and off-shore accounts. Supposedly going after the powerful is “impossible to do”, but since most of the offenders are known this is nonsense. They could be offered the simple choice of paying up or living outside of Greece forever. This is no time for discretion and very much a public matter, in the same way that small offenders are exposed daily

    Now a small observation that will cheer your heart: 500gm Heinz ketchup is 4.85€, and 500gms Kyknos (greek) ketchup = 1.59€. Kyknos is a new entrant on the ketchup scene, bravo!

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