Notes From Underground: The Continued Saga of Alex Tsipras and the Troika

It is difficult for the global markets to maintain a continued concentration on the fallout from the Greek credit crisis. The markets have spent five years trying to discern what the impact will be from either a default and the Greeks leaving the Euro and thus the EU. The last few days of trading has to make the European authorities nervous as the rising specter of the Greeks actually pushing the exit button becomes a genuine possibility. (Or at least the Greeks want to impress upon their creditors that it is a tactic they are not afraid to utilize.) The fear of a country actually choosing to EXIT has led to yields on Italy, Spain, Portugal and Ireland to rise dramatically. The 2/10 yield curves have steepened as investors are lightening up on the peripheral nation bonds. (The ECB seems to have been sidelined for the last few days as the bank preserves its capital for possible more volatile situation.)

German bund yields have fallen because nervous investors are grabbing good collateral in case the negative response to a GREXIT is more dynamic than European policymakers have thought possible. U.S. Treasury Secretary Jack Lew has warned against European and IMF complacency if Greece was forced to leave the euro. The Greeks are willing to call the bluff of  the Brussels Eurocrats and force the Greeks out as the SYRIZA party knows that more austerity will not improve the Greek economy. The Greeks want debt relief and restructuring so as to have some sense of victory to show the months of negotiation.

Two articles are a must read to shed some  light to where the debt negotiations have evolved. The first article is from the June 5 London Telegraph written by Ambrose Evans-Pritchard, titled, “IMF Has Betrayed Its Mission In Greece,Captive to EMU Credit.” The second article is written by Mark Weisbrot of the Center For Economic and Policy Research (CEPR), titled, “Germany is Bluffing on Greece.” Both are worth a read for a perspective not found in the main stream media. We always search for thinkers to shed light into the dark corners of the global-macro world.

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12 Responses to “Notes From Underground: The Continued Saga of Alex Tsipras and the Troika”

  1. asherz Says:

    Pointing fingers when things go terribly wrong, is the usual epilogue of a tragedy. Ambrose Evans-Pritchard puts the blame on the IMF for being too demanding. He doesn’t consider the possibility of other periphiral states seeing how Greece unloaded much of its debt by playing hardball, taking the same route. Iceland said the banks be damned and it worked.
    Mark Weisbrot puts all the blame on the U.S. and the EU for pushing Greece into a corner. Again no blame is put on the Greeks themselves for playing the role of the prodigal son. Living within one’s means with hard work used to be the centerpiece of the Protestant Ethic and led to the ascendance of capitalism. That ethic has been abandoned in much of the western world as well as Asia (Germany being one of the few exceptions).
    There is enough blame to go around for everyone, but ultimately it is the lead player, in this case Greece, that must bear the responsibility of its own actions. And the fallout will not be contained.

  2. arthur Says:

    Tactics. Negotiations. Bluffing. The Germans don’t want (a Grexit) on Merkel’s sheet. There will be a deal done with Greece by the end of the month.

  3. yra Says:

    Asherz–much to agree with as blame and finger pointing is everywhere but the creditors including and especially the IMF set upon a ridiculous course in an effort to save the creditors and the EU without political unity and tax harmonization.But as usual ,politics now trumps economics and it has become very messy—you forget to mention how Brussels was responsible for removing Papaendreou when he desired going to the people for a referendum to achieve some “General Will” for support for the austerity plan—that makes them the driver of the getaway car

  4. mikegre2014 Says:

    To leave or not to leave, that is the question.

    To let them leave: If Greece gets to shed its debt, then Spain then Italy come into play. Then France. They must let Greece leave.

    To let them stay: Keeping them in keeps Putin out. They must let Greece stay.

    What a dilemma!

  5. asherz Says:

    Yra,
    Long before the proposed referendum, Papandreou had instituted his own austerity program which was not well receivede by the population.Riots and strikes were seen on the news programs nightly. His popularity plummeted and he barely survived a vote of confidence. There were frequent calls for his resignation.Brussels
    did not remove him from office, the Greek voters did.
    Austerity is not something the Athenian will accept. That is why Tsipras was elected and unless the IMF and Merkel now cave, and kick the proverbial can, Greece will be hoisted by its own petard.

  6. yra Says:

    asherz—we agree on many things but not on the removal of Papendreau and even the removal of Berlusconi and the parachuting in of Mario Monti in Italy—we agree to disagree

  7. Squints Says:

    “Riots and strikes were seen on the news programs nightly.”

    Ah. Michele Caruso-Cabrera in the gas mask. Good times. Good times.

  8. Blacklisted Says:

    Greece should exit as soon as they have delayed long enough for people to get their money out of the system and converted into value-preserving assets. As Mish and others point out, there is no downside for Greece to exit (http://globaleconomicanalysis.blogspot.com/2015/06/greece-walks-out-after-45-minutes-talks.html).

    Greece will get concessions, but it won’t be enough, because the German public won’t tolerate what’s truly needed.

    Asherz – yes, Greece manipulated the numbers to get into the euro, but the Eurocrats new the consequences of not consolidating the debt. So, the electronic doubling of Greece’s debt on the rise of the euro is on their backs for refusing to address “phase 2”.

    When you say Greece bears the responsibility of its own actions, are you referring to the civilians or the govt? Are American civilians going to accept the severe austerity coming our way (over and above the normal financial repression) to maintain TBTF banks and bloated govt jobs, perks, and power? Do you think American’s will be in the streets demanding systemic reforms that include: reinstating Glass-Steagall, eliminating political contributions, imposing term-limits, prohibiting federal borrowing, eliminating the monopolistic control over the health care industry (that causes prices to be 10x what they should be), and lay out a plan for haircuts and debt-equity swaps (since there was never any intention of paying off a debt that is IMPOSSIBLE to pay)?

    Unless you are willing to accept the reality of the needed reforms, are you ready to accept the responsibility of your govt’s actions?

  9. asherz Says:

    Blacklisted- In a democracy people generally get what they deserve. The voters as well as those they elect share some responsibility. Papandreou in coming into office discovered that Greece’s financial condition was alarming. He instituted austerity measures by reducing spending, raising taxes, (tax evasion is a national pastime), reduced the bloated public sector, etc. The civilians reacted by strikes and rioting. Electing the Syriza Party showed how the electorate felt about austerity.
    In the US the national debt under George Bush in his 8 years went from $5.6 trillion to $10.5 trillion, almost doubling. VP Cheney said that “deficits don’t matter.” Under Barack Obama it has soared to about $18.5 trillion, the increase almost equaling the total debt accumulation of the prior 230 years. Does the American voter put this issue high up on his priorities? Do his elected representatives do much more than give lip service to this looming dark cloud? Superpowers come and go following similar patterns. The now low information US citizen and his elected representatives have given no indication that they have learned from history. The Great Depression repaired the mindset that took hold during the Roaring 20’s. It may require a similar terrible experience to give a wake-up call to the free-spending officials and those who allowed them a free hand with hardly a note of disapproval. And judging by Hillary Clinton’s recent rally speech, nothing will change.

  10. Blacklisted Says:

    asherz – since we don’t have a democracy or a republic, it’s difficult to say if the people are getting what they deserve. Austerity is not the answer, so I would say the Greek voters got it right.

    Americans and politicians are going to regret not being proactive. The useful idiots, collaborators, and profiteers who were silent, misleading, or fraudulent in the face of systemic corruption will fare worse. Those that justify their actions on the belief they can’t shit where they eat, will find themselves joined together like a human centipede eating the output from the work of their fellow fraudsters.

    There is little chance of anyone avoiding the ripple effects of the coming sovereign debt crisis. Therefore, when the pain that Greece in enduring rolls up on our shores, there is little doubt we will get more than a wake-up call. The challenge of our lifetime will be hanging on to our freedoms. Let’s hope the majority in the military prioritize the constitution above the govt.

  11. A.M. Look 6/16/15 | Says:

    […] Yra is always a must read. If you haven’t signed up for his free Blog you should! https://yragharris.com/2015/06/15/saga/ […]

  12. Chicken Says:

    Pretty clear to me who’s ultimately responsible for this fiasco. I fully realize that doesn’t mean it won’t turn out the way it should.

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