https://en.wikipedia.org/wiki/There_is_no_alternative
TINA - what can anyone expect out of any deal with rogue borrowers... apart from kicking the can further down the road and continue changes in govts, it will be damage controls until the real problem explodes...
Greece bullied into accepting deal that’ll be difficult to implement
BUSINESS SPECTATOR JULY 14, 2015 8:52AM
Alan Kohler
Business Editor at Large
Melbourne
The so-called deal over Greece that is being celebrated by markets this morning is not a deal and offers no solution to Athens’ unending crisis.
All that happened over the weekend was that the Prime Minister Alexis Tsipras was held by the ankles over the balcony until he capitulated. He went to Brussels softened up by the European Central Bank closure of Greece’s banks to be greeted by Germany publicly contemplating Greece’s exit (“time-out”) from the eurozone.
It was a brutal one-two: hard cop, hard cop. One commentator wrote that Greece was being treated like a hostile occupied state. Tsipras would have agreed to anything, and in the end, he did.
The document that he eventually signed is laughable, and while it is likely the Greek parliament will accept it on Wednesday — as required for negotiations on a deal even to BEGIN — it will never achieve public support, since it is far worse than what the people had voted against by a large margin a week before.
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The document also removes €50 billion worth of assets into a separate fund for privatisation; while Greece might be trusted to at least try to reform the economy, it isn’t trusted to privatise assets.
Apparently this was the final sticking point, the thing that Tsipras was arguing over at 6am with German Chancellor Angela Merkel after an all-nighter. Merkel wanted the €50bn to be applied to debt repayments; Tsipras refused, saying the humiliation of giving up control of so many national assets was too much.
According to the Financial Times, they were walking towards the door, having given up and accepted that Greece would have to exit the eurozone, when Donald Tusk, the President of the European Council came in and told Merkel and Tsipras they weren’t allowed to leave.
An hour later they came up with a form of words on privatisation proceeds that Tsipras could accept. Half the proceeds would be used to recapitalise the banks, a quarter for “decreasing the debt to GDP ratio” and a quarter for “investments”.
The document lays out what the “Greek offer of reform measures” must contain for negotiations on a new Memorandum of Understanding to start.
There is nothing inherently wrong with the micro-economic reforms, but they would be hard for a single-party dictatorship to implement in a hurry, let alone a divided minority governing party like Syriza.
It even goes into detail such as Sunday trade for retailers and freeing up ownership of pharmacies, milk and bakeries, as well as “rigorous … modernisation” of labour markets.
Also, the fund would be managed in Greece by the Greek authorities, but under the supervision of “the relevant European institutions”. The wording will fool nobody: €50bn in Greek assets have been repossessed by the creditors.
There are to be no debt haircuts. There may be “possible longer grace and payment periods”, as long as all the conditions in the agreement are met and will only be considered after a positive review.
Most importantly, Greece must agree to more fiscal austerity, including “quasi-automatic spending cuts in case of deviations from ambitious primary surplus targets”.
So the government must agree to a pro-cyclical fiscal policy that cuts spending automatically as economic growth slows, making the recession worse.
Austerity was paused in 2014, so that the Greek economy returned to growth and the budget returned to primary surplus. The only reason this crisis occurred is that the IMF, the ECB and Germany refused to bend on the crushing debt repayment schedule that began with last week’s €1.5bn due to the IMF.
The ECB then intervened with the closure of Greece’s banks, an act that clearly displayed its politicisation.
The Greek government has made plenty of mistakes, including the referendum, which Tsipras assumed would come back with a “Yes”.
The unexpected, but overwhelming “No” vote, rejecting a plan that already been withdrawn, meant that Tsipras was negotiating with no popular mandate whatsoever.
In the event the deal he was bullied into accepting will be very difficult to actually implement. Even if, as seems likely, parliament accepts it and the can is kicked down the road for three years, it will simply delay the inevitable reckoning.
The greater immediate problem is the banks, which remain closed and can’t reopen.
Although 25 per cent of their deposits were drained away before they were closed, they still hold more than €100bn in deposits, which would be swiftly removed if they were opened.
They will need to be recapitalised and then capital controls and limits on withdrawals will have to stay in place for a long time. The only good news is that if €50bn in Europe-supervised privatisations can take place quickly enough, then depositors shouldn’t have to take a haircut as they did in Cyprus.
As for Europe more generally, its character has now changed. Instead of being a voluntary association of mutual support, it has turned into a hard currency bloc supported by punitive sanctions.
A member of the club is being treated callously, almost ruthlessly, and as it struggles under the burden of membership, faced with the total collapse of its banking system if it exits, the EU will be standing back and checking to see whether it has lived up to its near-impossible promises.
Simon Schama, the eminent historian, tweeted last night: “If Tsipras was wearing the crown of King Pyrrhus this time last week, Merkel is wearing it now. Her ultimatum beginning of end of EU.”
“Watch for profound psychological divisions to develop within EU: north-south; the surplus states and the beleaguered periphery.
“Punitive accounting will be felt, rightly or wrongly, as a kind of imperial occupation and no good for Europe will come of it.”
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