The contours of a deal on Sunday are starting to emerge.
Syriza has requested a three-year package of loans from the eurozone bail-out fund (ESM) - perhaps worth as much as €60bn – and is reportedly ready give ground on tax rises and pension cuts.
Germany’s subtle shift in position comes as the United States, France, and Italy joined in a united call for debt relief, buttressed by a crescendo of emphatic statements by Christine Lagarde, the head of the International Monetary Fund.The elephant in the room bellows.
"Greece is clearly in a situation of acute crisis, which needs to be addressed seriously and promptly. We remain fully engaged in order to find a solution to restore stability, growth and debt sustainability," said Ms Lagarde.
A report by the IMF said a debt haircut of 30pc of GDP “would be required” to meet the original debt targets agreed in 2012. This could be achieved be stretching out the maturities of bonds to forty years and lowering the interest rate, sparing EMU governments the political pain of having to crystalize direct losses for their taxpayers.
The US has clearly lost patience with the Europeans is now bringing its huge diplomatic power to bear, fearing that mistakes in Greece could lead to a geostrategic fiasco and serious damage to the Nato alliance.
The Telegraph
Greek deal in sight as Germany bows to huge global pressure for debt relief
Ambrose Evans-Pritchard and Mehreen Khan
8 comments:
"that mistakes in Greece could lead to a geostrategic fiasco and serious damage to the Nato alliance. "
What has this got to do with anything? Just implement sane economic policies for Christ's sake! As to "damage to NATO" aren't the EU and IMF calling for cuts in defense spending.
Also debt relief will do absolutely nothing. Why is Tspiras demanding it?
R,
Because he unfortunately studied civil engineering... ie static systems...
If he studies dynamic systems he probably figures it out on his own rather than the place he finds himself now ie relying on incompetent/unqualified advisers from the academy of economics who don't even know there is a Greek Mint among other things...
Tom posted a story here where the Greek military was caucusing with Syriza so those defense cuts were political coming from the side of the institutions... trying to get Syriza to bite on the cuts and thus pissing off their new found friends in the Greek military establishment who are also anti-austerity... high stakes poker going on here... this is a good sign but to your point still comes up short of a more permanent solution...
This is, in my opinion, why Tsipras didn't come to the summit the morning after the election with a new proposal - a proposal that the Europeans would have summarily rejected and started hectoring him about no matter what. He got calls from the US and IMF telling him to keep his powder dry while a deal was worked out.
No fix until Maastricht is rejected and Greece is allowed to run >3% deficit.
This proposal is essentially the same as the EU proposal a few weeks back before the no vote. It isn't the EZ that caved here from pressure, but rather Tsipras.
What does Greece give on the other side of this deal? More pension cuts? Austerity? Layoffs? Demands for larger surpluses? How is this going to work?
I'd sweeten the deal for the pensioners with a parallel currency, good for 100% Greek-sourced goods/services, spread that practice wherever possible. Keep that demand up and keep people employed. Use Euros for imports and value-add like crazy. Use this time to get ready to cut over to Drachma and be a EZ member with it's own currency.
Post a Comment