Sunday, January 25, 2015

The Syriza hits the fan

Fox News: "Greece's anti-bailout Syriza party wins election."

Well, they promised freedom from austerity and now they're going to get it, good and hard:
Alex Tsipras, the young, charismatic leader of Syriza, is an avowed leftist (his son, Ernesto, is reportedly named for Marxist revolutionary Ernesto “Che” Guevera) and the party’s most likely candidate for prime minister. Tsipras has made it clear that any new government under Syriza—an acronym from the Greek words meaning “coalition of the radical left”—will “renegotiate” the loans extended to Greece by the EU, the IMF and the ECB since 2010 in order to preserve the euro. Those loans—now totaling some 175% of Greece’s GDP—were conditioned on austerity measures that Tsipras has declared intolerable.

While the Greek economy is growing moderately, and Greece is likely able to continue its debt service under existing austerity measures, a Syriza-dominated populist government would likely bring about an economic crisis worse than the one Greece and the Eurozone saw in 2010.
As this Atlantic article notes, the options for the Eurozone "troika" are to write down Greece's debt - and give other PIIGS a blueprint for forgiveness - or kick Greece out of the Eurozone.  It's gonna be interesting.

Extra - Or can Tsipras pull of the "Lula pivot"?

More - Daily Mail: "EU braces for catastrophe."


Anonymous said...

Quitters. Dopes. Don't they know austerity is ALWAYS the way to go? Looking back, it's worked wonders in... uh... and then there was that time in the recessionary economy of... of...

Anonymous said...

Europe must be on the verge of a popcorn shortage as people gather to watch this unfold.

Until now, if you had held to the principle that European leaders would always kick the can down the road, you would have called most of the key events correctly. Of course, you eventually run out of road at some point, but where? Perhaps here, perhaps not. Time will tell.

I think it's also a pretty safe bet that self-proclaimed radical leftists have never, in the entire history of the world, left an economy in better shape than how they found it. Even if the other European leaders offer a generous deal I suspect this will end badly, and soon.

siacd999 said...

Renegotiating a loan is radical? Radical would be sending the EU and the IMF a diplomatic middle finger, leaving the EU, sealing the borders, re-issuing drachmas, and screaming "Molon Labe!" when the blue helmets try to come collect on debts owed.

Syriziously said...

The thing is, austerity was never tried by Greece. Oh, they made austerity pledges to get successive rounds of bailouts, but never came close to meeting the spending reduction targets they had agreed to. The current call to "end austerity" is just another way of saying "we don't want to pay back those loans."

Anonymous said...

Basically, the Greeks ran out of other people's money. "Austerity" means 'living within your means'.

I wonder if the Greeks have any clue that defaulting on their debts means that no one will lend them any money again.

Anonymous said...

"Austerity" means 'living within your means'.

But which means? The means they had? Or the means they had remaining, after Goldman Sachs created a new derivative swap with off-the-books fictional exchange rates, collected their commission for doing so, while simultaneously shorting the Greek government?

You know who never runs out of "other people's money"? Goldman Sachs.

And it was all legal, because financial regulations and oversight make Santa Claus cry.

siacd999 said...

....and this bodes well for the Greek tourism industry, one of the few industries bringing money into the country.

Anonymous said...

“Or the means they had remaining, after Goldman Sachs created a new derivative swap”.

The Greeks wouldn’t have had to deal with any Goldman-esque flim-flam if they hadn’t been paying government workers 14 month’s salary every year. That’s what ‘living within your means’ means. And Goldman-Sachs gets its money from the Federal Reserve, basically an arm of the government, so what's your point?

Besides, Obama certainly cozy'ed up to Goldman-Sachs when he appointed Timothy (Mr. cheats on his taxes) Geithner, former Goldman-Sachs partner, as Secretary of the Treasury.

Don't drink the talking point hemlock said...

Greek workers get the annual salary they get. It’s divided into 14 installments, with two half-paychecks in advance of Easter and summer, and a double paycheck in advance of Christmas. It’s a commonplace budgeting format that is used by numerous other European countries, and it doesn’t increase the total of a worker’s pay. If a Greek employee got his money in 28 installments instead of 14, would he be taking a 50% pay cut?

They’re not getting “free money” unless you honestly believe Nigel Tufnel’s guitar is one louder when it goes to eleven.