@ernie – Syriza and the Greek people are very pro-EU / euro as they need it badly. They recognise how great the EU has been for them in terms of being able to borrow and get subsidies/grants and they know that the alternative (default & euro exit mostly likely, I doubt the EU would kick them out entirely) is much worse. I think in Greece people voted for the longshot that Syriza could deliver a miracle, the question is once reality sets in and its shown they cannot will the people continue to support them, they may well do, depends how Syriza play their failure to deliver a 50% debt write-off. Perhaps if they can tackle corruption and collect more tax from the middle classes they will.

@tmh, I did indeed read the FT piece, IMO total nonsense what is being proposed. I wouldn’t touch any of it with a barge pole but then I haven’t bought any Greek debt/cash flow (even secured/payment rights) for 25 years so I am not the target audience.

Varoufakis is fast discovering the need to communicate properly. So folk (except the FT) saw through the haircut that wasn’t a haircut and now the locals are getting confused.

Banks shares bounce 20% when nothing has actually happened. So a fin minster creating false markets!!!

Grown ups need to be careful when playing with twitter!!

I think in Greece people voted for the longshot that Syriza could deliver a miracle

You might wish to characterize it as voting for a miracle but most pundits agree that the vote last week was a vote against austerity.

Will Syriza deliver ? Well against the odds it seems that they might, their strategy of linking debt repayment with growth appears to be gaining support, both the US President and the UK chancellor yesterday expressed sympathy calling for growth and jobs to be a priority for Greece. Neither are representative of a Eurozone country of course but both are major players in global finance which adds additional pressure on Germany.

The markets also appear to like Syriza’s plan :

European Shares Rally On Greek Deal Hopes

.

Banks shares bounce 20% when nothing has actually happened.

This is what happens when people don’t read the Financial Times !

The strategy (from Lazard) sounds good as a headline but the devil is int he detail which is coming out today. This would still be a default event and the ratings agencies would have to be clear on this. Plus the Germans have seen through it straight away.

So beware dead bounces…..the FT missed the key point too

A haircut is still a haircut and Greek banks still need to tap the ELA.

A for effort but C- for execution. Still messy times ahead but the politicians will love the implied fudge.

To be honest every time I’ve seen Varoufakis on the telly he hasn’t appeared to need a haircut.

🙂

Have you seen the Steve McQueen mockups from the Great Escape ?

I think the market has bounced as Syriza is stepping back from their hardline rhetoric, they have said they won’t default which during the election campaign was very much on the table. I meant miracle in terms of a 50% debt write off. Greece cannot service it’s debt without the budget cuts its already made and the terms of the bailout where budget cuts and reforms (ie collect more tax). People may have voted against budget cuts / austerity but they need to square that with the agreements they signed and the fact that the country basically cannot borrow any more money.

TMH I think the FT was so keen to print it’s exclusive they switched their brains off. “Growth” bonds and perpetuals 😯

Why don’t the new Greek ministers wear ties … because

Both images from Guardian live feed

Greece cannot service it’s debt without the budget cuts its already made and the terms of the bailout where budget cuts and reforms (ie collect more tax).

Blaa blaa blaa. Greece cannot service its current debt, period. Question is whether it could service some reduced or restructured debt, and whether the extra money that requires is worth it to avoid a failed state on the European mainland. That is a moral(*) and political question more than an economic or financial one.

(*) Given the German experience as a recipient of debt relief, it does not reflect very well on Merkel that she adopts this hardline stance.

Greece is servicing it’s debt as it was granted very generous bailout at a below market rate. The population isn’t happy at the cuts that have had had to be made in order to service that debt and I can appreciate it. The alternative is much worse, however.

A couple of anecdotes from yesterday’s meeting in London. The “growth bonds” where just an idea floated at the meeting, the FT reported it like it was a real proposal. As I understand it Syriza have no firm policy/proposal as of yet, they intend to develop that over the coming weeks. My favourite story is related to state asset sales, finance minister said certain assets had been sold too cheap and that such sales have been halted, they would however be interested in selling loss making assets like the railways where they would be happy to accept €1, haha in their dreams

They said they would do all it takes to stay in the euro, quite conciliatory

My favourite story is related to state asset sales, finance minister said certain assets had been sold too cheap and that such sales have been halted, they would however be interested in selling loss making assets like the railways where they would be happy to accept €1, haha in their dreams

Why do you think that they should sell off profit making assets, surely they should keep stuff which generates a profit and brings them revenue ? The Greek government needs revenue, does it not ? Can you explain ?

I do share you lack of faith in the ability of privateers to turn loss making railways into a profit making venture though, you only have to look at the UK for example of that. The most obvious example is the state-owned East Coast line which last year paid £225million to Treasury – the privateers gave up trying to run it.

Today the British taxpayer subsidises the privitised railways about 5 times more than when they were nationalised. And many of the “private” companies which now run our railways, and receive British taxpayer subsidy are in fact French, German, and Dutch, state owned companies. Such is the lunacy of British right-wing political thinking.

And one of ‘my favourite stories related to state asset sales’, since you brought it up, and since you are apparently interested in Argentina, relates to the railways in Argentina. When the right-wing politician Carlos Menem, who was more thatcherite than Thatcher, and whose right-wing economic policies laid the foundation for the catastrophic economic crises in Argentina was President, he decided to privatise pretty much everything, this of course included the railways.

Unsurprisingly the private sector was not prepared to invest in Argentine railways but as a true disciple of Milton Friedman he wasn’t prepared to accept the almost socialist solution of government subsidies. All free-marketeers know that the market always knows best so if this was not a viable business venture then it should allowed to go to the wall.

IIRC Milton Friedman argued that had the stagecoaches been nationalised they would still be operating today (at a loss of course) because nationalisation stifles development and progress (he very conveniently ignored the fact that arguably the most advanced railway system in the world, French railways, was nationalised over 70 years ago)

So Carlos Menem’s solution was simple……if the private sector couldn’t turn Argentina’s national railway into a viable business then it had to cease operations – the market knows best. In the 1990s most of the rail system was closed leaving just a few urban commuter lines such as in Buenos Aires.

Today despite once having one of the most extensive railway systems in South America (mostly built by the British I believe) and being the eighth largest country in the world, Argentina has no rail link between its major cities. If you want to travel from Argentina’s second largest city, Cordoba, and Buenos Aires, you have to go by road or air. Argentina has to import most of its oil/fuel requirements. It’s a free-market paradise.

However the naughty left-wing government now in power in Argentina plans to rebuild a state-owned national railway.

@ernie, interesting comments, on the topic of public ownership of public transport I think you and I are on the same side. I have experienced public and private systems commuting over 30 years, all are better than the UK which has gotten materially worse since I started in the 80’s and much more expensive especially once you add in the unregulated stuff like carp parks and on vs off peak ticket pricing. The privitisation of public transport in the UK has not been a success but when looking at the economics you need to include the fact the UK government / taxpayer no longer has a liability to fund all the pensions, this is a huge “hidden” expense in the public sector.

When you are in distress financially whether as an individual, company or country you have to sell assets and usually these are the assets you don’t really want to sell. The good assets are worth something, but will of course trade cheap as there is a real risk Greece leaves the euro and they become worth 25-50% overnight. the bad assets like the railway have a massive negative value, ie you have to subsidise them to hand the liability to someone else.

No one can realistically turn the Greek railways round except the government and I doubt they will do so as its too difficult politically. If they are going to rehire 600 cleaners and reestablish some of the highest minimum wages levels in the EU they are not going address the huge structural issues with e railways which go back many many years. Part of me wonders whether it was a joke but I suspect it was another piece of bravado.

Greece has said no more EU money … but .. they want to issue more Greek government debt the only buyers of which are the Greek banks and the only people lending money to Greek banks are the EU. Smoke and mirrors.

reestablish some of the highest minimum wages levels in the EU

Eh? Minimum wage in Greece is EUR 3.41 per hour. Not princely, I’d say.

DrJ – admittedly I am blindly repeating what I read online, perhaps they where referring to minimum wage levels for certain jobs. I will check.

However the naughty left-wing government now in power in Argentina plans to rebuild a state-owned national railway.

Ah, it’s been a while since you’ve regaled us with tales of the economic and social miracle going on under CFK Ernie… Credit default and double digit inflation, with people keing knocked off for threatening to expose the governments dirty dealings:

http://www.theguardian.com/world/2015/jan/28/alberto-nisman-death-cristina-fernandez-de-kirchner-argentina-intelligence-agency

It’s like the old days! Still, at least she’s gonna make the trains run on time 😉

Greek minimum wage (quoted monthly at 680, previously 750 the level they wish to restore it to) is higher than the following

Portugal, Croatia, Turkey, Poland, Hungary, Latvia, Czech Republic, Bulgaria

Greek minimum wage about the same as Spain and really only lower than the richest EU countries.

Well, it’s generally lower than the western European countries and higher than the eastern ones. More or less what you’d expect.

Well to me it shows Greek minimum wage is indeed way too high. Why is it 750 in Greece and 525 in Portugal ? At 680 (current) it’s poverty yet that’s 30% more than in Portugal. (note 750 was the original level, cut to 680 and not they will return it to 750)

Syriza need to come good on their word and break up the cartels, tax avoidance and the black economy.

Oops, what time will the queues begin outside the banks tomorrow?

Very messy…..stay long vol!!!

Why is it 750 in Greece and 525 in Portugal* ?

I have no idea why you think they should be the same

You have to be employed to get minimum wage. Thanks to “austerity” there’s a lot less people eligible, and hence not getting a minimum wage, not getting medical care and not getting a roof over their heads. Still, that’s all their own fault, so f”ck em, right?

Oops, what time will the queues begin outside the banks tomorrow?

Dunno, but surely Draghi and Merkel are making a better argument for staying out of the EU than Nigel Farage ever did.

The comments section in the FT following the news looks like here on a bad day!

Forget the min wage, the serious stuff is imminent after today.

“BLUFF”

Sadly this is no joke…batten down the hatches.

Anyone know who has the contract for printing Drachma notes?

Sadly this is no joke…

and yet various Euro politicians and bureaucrats don’t seem to take it very seriously. They prefer to risk the future of a people as well as their European project just for the sake of pedantry. Sad.

True but every side is living in cloud cuckoo land.

Lazard tried a punt, it’s failed, Eurocrats have upped the anti. Banks are screwed, get your money out now.

When you are in distress financially whether as an individual, company or country you have to sell assets and usually these are the assets you don’t really want to sell.

So you obviously fully support the re-privatization of the East Coast line despite of the fact that publicly owned DOR (Directly Operated Railways) has handed over £1billion to the Treasury since 2009. Whereas the previous privately owned operator, National Express, only managed to run it at a loss, until they finally gave up altogether.

Where’s the logic in that ? Where’s the logic of ideological dogma over commonsense ? And you want the Greek government to follow that sort of loopy narrow-minded right-wing thinking ?

.

Why is it 750 in Greece and 525 in Portugal ?

You said, quote : “…some of the highest minimum wages levels in the EU”, your own graph that you posted at the top of the page shows that claim to be false. And why is the minimum wage lower in Portugal than Greece ? Have you considered that the cost of living is lower in Portugal than Greece ?

In fact your graph probably also reasonably reflects the cost of living in the various European countries, eg, Albania probably has the lowest cost of living on the list and Luxemburg the highest. Had that thought really not occurred to you ?

What has probably also not occurred to you is that raising the minimum wage to stimulate a struggling economy makes sound economic sense. Giving a poor man an extra dollar does significantly more to stimulate economic activity than giving an extra dollar to a rich man. The worse sort of consumers are those with hardly any money to spend. In 2013 for the first time in 45 years Greece experienced deflation, this what happens when demand is so low. Don’t underestimate the negative effects of deflation.

Greece enters deflation for first time in 45 years

And here Nobel Prize-winning economist Paul Krugman explains how a recent study in the US shows that each dollar spent on food stamps in a depressed economy actually raises growth by about $1.70

From the Mouths of Babes

Finally jambalaya, you have repeatedly suggested that Syriza and the Greek people are in denial and yet it is you who appears to be in denial. The first troika brokered austerity package was introduced in Greece in 2010, when that failed another troika brokered austerity package was introduced, when that one failed another one was implemented. Ever since 2010 the answer to the failure of austerity has been to implement more austerity. Greece has now had SEVEN austerity packages, far from having the desired effect the situation is now in fact worse. And yet you want more austerity.

It’s you who is in denial.

I have no idea why you think they should be the same

Greek minimum wage should be lower than Portugal in normal circumstances and substantially lower given the reforms Greece have to make.

@ernie the chart from the EU absolutely confirms my statement, itself taken from the Guradian, that Greece has ludicrously high levels of minimum wage. Greece has mismanaged it’s economy so badly they cannot afford measures like increased spending commitments. The spending of the past has caught up with them and they are facing the hardsh lesson about what happens when you over extend yourself financially

The comparison for Greece should be Turkey with regard to appropriate level of minimum wage

Syriza will soon have to face reality that their future lies in internal reforms and tax collection and not asking the tax payers of Europe for gifts.

Austerity around Europe has not failed, it’s actually been a success in getting debt levels under control. No one suggested austerity was going to lead to short or medium term improvements in growth. It was about the always painful process of deficit reduction.

and yet various Euro politicians and bureaucrats don’t seem to take it very seriously. They prefer to risk the future of a people as well as their European project just for the sake of pedantry. Sad.

The Greek people have made their bed, and whilst they may not like it, it’s time to lie in it.

Some European countries may be worried about a loss of face with a Greek default and expulsion form the euro but the project will be stronger if they have the courage to follow financial and political reality and kick Greec out.

It’s hardly pedantry to decline a €120bn gift to Greece at the European taxpayers expense.

@ernie the chart from the EU absolutely confirms my statement, itself taken from the Guradian, that Greece has ludicrously high levels of minimum wage.

It does no such thing, it places Greece exactly where you would expect to to be relative to other countries. It certainly does not have “some of the highest minimum wages levels in the EU” as you falsely claimed.

And your claim that the Greek minimum wage is “ludicrously high” is a betrayal of your political bias rather than a statement of fact.

Greece has mismanaged it’s economy so badly ……

And yet throughout this thread you have incessantly attacked Syriza, and the left generally, despite the fact that Syriza have only been in power in Greece for just a few days, while completely ignoring the equally important fact that New Democracy, whose conservative economic policies you obviously share, have been in power in Greece for most of the last ten years.

The spending of the past has caught up with them …..

And yet again you ignore the facts. In this case that Greek government spending as a percentage of GDP was not high in the years leading up to crises, in fact it was lower than France, Italy, and Germany. Yes that’s right, Greece spent less of their GDP on government spending than Germany.

It only went up when things went pear-shaped.

“The spending of the past has caught up with them” ❓

Greek minimum wage should be lower than Portugal in normal circumstances and substantially lower given the reforms Greece have to make.

You have just restated your view with no explanation. I still know what your view is and I still dont know why you hold this view.

Because of dogma.

JY my view is pretty easy to understand if you take the time to think about. Portugal, for example, is an developed economy not subject to endemic corruption, a huge black economy and rampant tax avoidance. Whilst it has had its problems it has managed its affairs far more professionally than Greece. As such it is a more attractive country for investment, an much more robust economy. As such it is a much richer country than Greece. High wages in a poor country make no sense. Greece should be at a similar level to Turkey, ie back to where it was before it joined the EU a time when it basically had to stand on its own two feet and not rely on handouts from the rest of the EU.

Financial reality starting to kick in, no surprises the ECB says it will no longer accept Greek bonds as collateral – they are not of sufficient quality and Syriza’s stated policies are in direct breach of the previously agreed commitments. Unless Syriza commits to follow the previously agreed bailout terms and conditions, at least temporarily, they could default as soon as mid/late Feb. Greek government debt now at 20% (note they borrow from the ECB 2%). Some simple maths shows that;

Greek debt to EU 240bn at 2% = 4.8bn pa interest
At current Greek debt levels 4.8bn would support only 24bn and that doesn’t factor in the fact that post a euro exit, interest rates would probably be higher and the new currency further devalued. So if 4.8bn is unsustainable now whilst Greece feels half of that amount is, post a Greek exit the Greek economy could only support the equivalent of 12bn in debt.

@ernie, I am attacking Syriza because their policies are financial suicide for Greece. I am attacking the country as a whole for the way it has managed their affairs over many man years.

Syriza needs to pedal back from it’s current stance. IMO its going to do exactly that as without the EU support its financial armageddon for the country.

The Greek people have made their bed, and whilst they may not like it, it’s time to lie in it.

FFS! How many times? Your lack of compassion for the poor ordinary fold who are pawns in the games of bankers, technocrats and politicians astonishes me. I’m not going to repeat the opposite this time as I think it’s obvious to everyone that you’re engaged in an exercise blinkered denial of the facts so serious that you could probably get a job as a pundit on Fox News.

So a country with “endemic corruption” was not only allowed to join and remain in the EU but also to join the Euro, I wonder how its EU partners failed to notice that ? Can you explain ?

And have you any evidence to offer that Portugal “is a much richer country than Greece” ?

High wages in a poor country make no sense.

I thought we were talking about the minimum wage

my view is pretty easy to understand if you take the time to think about

Pretty sure its your fault for not explaining it at all but thanks for talking to me like I am a small child unable to work out your deep musings

Thanks for actually explaining it this time as I understand why you think this though i disagree.This sums it up for me [ and pretty much every debate woth you] and made me lol

I’m not going to repeat the opposite this time as I think it’s obvious to everyone that you’re engaged in an exercise blinkered denial of the facts so serious that you could probably get a job as a pundit on Fox News.

Why focus on the trees (min wage) instead of the wood?

Overall cost competiveneess is more important than one input. Within the € you have had some countries where unit about costs have converged and others including Greece where they have deteriorated. The impact on Greece has been dramatic as every sector has seen a subsequent deterioration in their levels if competitiveness. This has resulted in a sharp deterioration in the trade balances as result even in sectors such as clothing where Greece used to enjoy trade surpluses.

So you take counties that have relatively high and uncompetitive unit labour costs and lock them into a fixed exchange rate. DOH…..what happens? You have compensatory wage deflation and/or unemployment*. As clear as night follows day. How much pain do people want Greece to take before they address the folly at the heart of this. It’s got bugger all to do with party politics, it’s transcends that spectrum. It’s real stuff……not party political BS.

Dead cat bounce for sure earlier this week. Banks down @25% today. More false markets with politicians speaking before engaging brains.

Sad, sad, sad……

* and lefties who think this is a good idea (or don’t understand basics of labour market economics!!!)

Corruption?

How about how many countries satisfied and satisfy the conditions of entry????? Germany (cough)…….?

Varoufakis on meeting with Schaeuble – “we didn’t even agree to disagree!!!”

What a state of affairs.

Just listened to the press conference. Couple of thoughts.

Debt haircut was not on the agenda, it is “off the table”

Greece was given support at the limit of what was reasonable and possible. it was given support to allow Greece to help itself. Greece must help itself.

Germany recognises the Greek election mandate given to Syriza but Greece should recognise the mandate given to the German government. Any substantial changes to agreements will need national parliamentary approval throughout the EU and chanegs to the EU treaty. that will be a long and slow process.

Schauble said Greece must reform and collect more taxes, especially from the wealthy. Germany recently offered to send 500 tax inspectors to Greece, this was unfortunately declined. German remains willing to help with tax collection.

Voroufakis again said that the largest loan in history in 2009/10 was given to an insolvent country, Greece. “Nothing concrete was agreed or disagreed”.

and lefties who think this is a good idea (or don’t understand basics of labour market economics!!!

Thanks Alex been a while since you popped in I would ask for a quote but what would be the point in that ? We all know the truth , even you, but dont let that stop you making the slur.