The IMF: An inexcusable, incorrigible failure

If the IMF’s economists were telling it that the way to engineer a Keynesian recovery in Greece was to loan it enough money to preserve or increase government spending at essentially zero rates for a generation or more, while having the EZB to raise its inflation target to 4%, then what the IMF should have done is to simply walk away without giving Greece a dime. Because it’s patently clear that such a plan is not going to be implemented.

The IMF (and EU) should have walked away in 2010. Greece should have defaulted and then lived without access to debt markets. Fortunately all the players have that chance again in 2015; hopefully they will make the right choice this time.

I wonder to what extent the institutional actors in this situation recognize the existence of the situation as an unanswerable rebuke? I don’t think that any of them would have the temerity to argue that what is occurring as the best of all possible worlds — but it would be interesting to know if they look back and see things that the Institutional EU actors should have done differently? They certainly don’t seem to have an actual answer to the challenge that their proposals are both going to hurt Greece, and have no effect (at best) on Greece’s ability to repay debt. Have they given up the academic fight and are simply exercising power, now?

I don’t have any insight into the factors that cause the IMF to push for austerity in season and out[^1]

As far as I can see, it’s because they have turned their “debt sustainability analyses” into a totem. This has been about as successful as you’d expect something based on thirty year economic forecasts to be. When you start with a forecasting model that always (like every long term forecasting model ever) pulls back to a guesstimated long term trend, and you don’t correct enough for the bubble period so you overestimate Greek potential output, you’re always going to guess the economy can bear more primary surplus than it can. Combine that with an obsession with the top line debt/GDP ratio (which survived the demise of Rogoff & Reinhardt, so it’s a true zombie), which means that you can’t recognise loan extensions as a big NOV reduction, and you’ve got a recipe for disaster.

There’s also the ideological view that “austerity” means spending cuts rather than (as in the successful Swedish recovery from a banking crisis) tax increases. When the last Greek proposal was presented, as far as I can tell the Europeans were ready to say deal. But the IMF suddenly decided “balancing the budget with tax rises? That’s unpossible!” and kicked it out. A really awful, shameful move that might end up causing huge needless suffering. And a genuine attack by a killer zombie – the Washington consensus argument that tax rises can never be a tool of fiscal management.

when it decided that what was needed was a write-down of Greece’s private creditors but left official creditors (i.e. European finance ministers) intact

This wasn’t as nutty or corrupt as it sounds, by the way – European finance ministers were, at that point, prepared to put up tens of billions of euros of new money, so it hardly made sense to cut the legs off them politically. Particularly as they weren’t really left intact – they rolled over their debt into longer-dated loans with low coupons, losing tons of money on an NPV basis.

To echo Peter T (and to perhaps wrongly engage with the (comments switched off) Dsquared post above on Syriza) there seems to be a crucial element of refusal by IMF and Eurogroup to allow Syriza to achieve financial ends by “leftist” taxes (on corporations, or oligarchs, or even the upper end of the middle class) and an insistence on cutting spending, or taxes on the poorer end of society.

I think it would be a mistake (and to parallel Chris B’s disquiet about the EU) and accepting of a very anti-democratic stance not to notice the political flavour of the IMF/Eurogroup intransigence at various points. Analysing the deals on offer only on the top-line effects and not noticing the redistributive implications seems to miss an opportunity to understand part of how we got to where we are now.

I’m sure Syriza could have handled many things much better, but we should not ignore that the “Troika” (shorthand for all the various configurations of creditor actors) offers have been persistently and explicitly modelled on detailed policy prescriptions about the balance between tax rises and spending cuts, seemingly designed to make Syriza’s position politically impossible.

It’s worth also taking a structural lens on the Troika actions.
There is an existing problem between the core and periphery in Europe, part of ongoing trends of centralisation and urbanisation in society and economy in the “post-industrial” age.
The key actions of the Troika were to take a rickety, perhaps failing, periphery state and slam it in such a way as to massively amplify the emigration of the young and educated. It should not be missed that this has pushed the “failing state” of Greece much closer to long term failure. My own feeling is that this is too often missed in analyses of what has occurred – the doctrine of “expansionary austerity” is too easily written off as “a bit of a mistake, but nothing that serious” without proper consideration of the hysteresis effects at work.

To add to metatone – all the IMF/EU “success stories” for austerity (Cyprus, the Baltics, Ireland) have either static (Cyprus, Ireland) or declining populations (the Baltics). Success does not seem to mean the maintenance of the standard of living for the current population. In that respect, they are a bit like Australian country towns – “reform” means removing the existing means of support and encouraging those able to to move to some other place.

@6
“When the last Greek proposal was presented, as far as I can tell the Europeans were ready to say deal. But the IMF suddenly decided “balancing the budget with tax rises? That’s unpossible!””

Any evidence that it was only the IMF? Links? It was the ECB that told France it needed to do deficit reduction via spending cuts and not via tax increases. Seems to be a European thing.

And the fact Dsquared doesn’t allow comments? Like the IMF he’s gone way down in my book. It’s fitting. A referendum in the birthplace of democracy won’t have any impact on the Troika’s decisions. They were never going to negotiate. And Dsquared blames Syriza?

Syriza has the right idea. If the answer to tomorrow’s referendum is Yes, then bow out and refuse to be held responsible for the ongoing, never-ending austerity disaster. No doubt the Troika will give the next government much better terms but then that just shows that it’s all about politics and not economics or budgets. But it looks like the vote will be close either way it goes.

Syriza could have behaved better than Dsquared’s wildest imagination and it wouldn’t have mattered one bit. The Troika still would have refused to budge.

@15, Steve Randy Waldman is great.

As Paul De Grauwe explains in the link in my post, the IMF’s behaviour here is somewhere between a publicity stunt and actively destructive. They kept calling for a face value writedown because they fail to recognise the huge NPV writedown that’s already taken place (ie, the reduction of Greece’s debt servicing cost to a level where it’s lower than Italy or France). This means that their “debt sustainability analyses” underestimate the sustainability of the debt, and means that they keep failing to approve programs like the Greek offer (possibly for the reasons in 13) and putting far too much up front austerity into the programs (because they think that the debt needs to be reduced faster than it actually does).

The “idea of a debt writedown” here was accompanied with a level of primary surplus that was way above what Europe was willing to settle for. It was an offer which was, as far as I can tell, calculated to appear to nobody, from a body which wanted to be taken out of the deal.

This article, by the way has some uncomfortable home truths for an awful lot of people (not just the comments section warriors on this thread) whose knowledge of Greece comes from what they googled this morning, if that, but who have heard that they don’t like “austerity” in a different context and feel like expressing a load of rage over Greece will help them make their domestic political points while looking like concerned humanitarians.

I try and imagine the comments below Daniel’s piece.

Now that that’s done (thanks for the mental exercise Daniel!), can a real, not imagined, discussion be allowed?

“This article, by the way has some uncomfortable home truths for an awful lot of people (not just the comments section warriors on this thread) whose knowledge of Greece comes from what they googled this morning, if that, but who have heard that they don’t like “austerity” in a different context and feel like expressing a load of rage over Greece will help them make their domestic political points while looking like concerned humanitarians.”

It is a remarkably dishonest article. I’m surprised you were impressed by it. Also, given your traditional reaction when you feel someone has insulted you, is it absolutely necessary for you to pen deliberate insults like the above?

Comment section warriors Stiglitz and Krugman:

http://www.theguardian.com/world/2015/jul/03/greek-referendum-what-the-experts-say

Joseph Stiglitz – NO
Nobel laureate in economics and professor at Columbia University
Stiglitz has decried the economics behind the international creditors’ programme for Greece as “abysmal”. “I can think of no depression, ever, that has been so deliberate and had such catastrophic consequences,” he wrote this week.

He says it is hard to advise Greeks how to vote on 5 July, given both options carry “huge risks”. But it is clear the Nobel laureate himself would vote no:

“A no vote would at least open the possibility that Greece, with its strong democratic tradition, might grasp its destiny in its own hands. Greeks might gain the opportunity to shape a future that, though perhaps not as prosperous as the past, is far more hopeful than the unconscionable torture of the present.”

Paul Krugman – NO
Nobel prize-winning US economist
“I would vote no, for two reasons,” Krugman wrote in the New York Times.

Firstly, thinks Krugman, the troika of international lenders – the entity consisting of the European commission, the European Central Bank and the International Monetary Fund – is effectively demanding that the policy regime of the past five years be continued indefinitely: “Where is the hope in that?”

Secondly, the political implications of a yes vote would be “deeply troubling”, he says.

“The troika clearly did a reverse Corleone – they made Tsipras an offer he can’t accept, and presumably did this knowingly. So the ultimatum was, in effect, a move to replace the Greek government. And even if you don’t like Syriza, that has to be disturbing for anyone who believes in European ideals.””

The ultimate point is that there is zero reason for Greece to have experienced 20%+ unemployment for several years. Whether this was by design or by stupidity I do not know, but there always were other options. Making the people suffer for the sins of their (rich) leaders, whether those leaders are Greek or in EU-land (I gather this distinction isn’t so important) achieves what exactly?

It isn’t precisely analogous, but in the US they could’ve given every mortgage holder a bunch of money to pay off their mortgages, or they could have just given the banks a bunch of money and left people unable to pay their mortgages to face inevitable foreclosure. The banks got bailed out, and people faced foreclosure. This achieved what?

“I think the article has a lot of merit to it. ”

It opens by claiming that Greece was recovering last year, pointing to glowing forecasts, while ignoring that every forecast to date has been catastrophically wrong. It puts forward the claim that Greece was poised to exit the relief program smoothly, ignoring the inconvenient truth of the IMF analysis released a few days ago, which makes it clear no one believed Greece could pay back its debts in any foreseeable future. It blames the Syriza government for reversing the positive trend, by creating ‘uncertainty’ – more ‘confidence fairy’ nonsense! – while ignoring the fact that the uncertainty is whether the EU and the creditors will compel Greece to run an unreasonably high primary surplus through cutting more social services while refusing to further discuss any debt foregiveness, despite the fact that the EU and the creditors know debt forgiveness is inevitable. It repeats the lie that the referendum tomorrow addresses the question of whether Greece will remain in the Euro. It faults the Greek government for calling the referendum, even though Greece was presented with an ultimatum featuring terms which were directly contradictory to the platform on which the government was elected in the first place.

I would like this to add to Sebatian H’s first question : “How much of that growth was due to a slowdown of austerity by the Samaras government* and to what extent would any new ‘rescue plan’ kill that growth?”

*if I remember correctly, the last Troika loan was quite a long time ago

I pulled out some key quotes but I encourage everyone to read the whole thing.

“responsibility for, and the consequences of, extending credit badly must fall upon creditors, not debtors.”

“Sovereigns have an option to default full stop. Investors in sovereign securities must price that.”

“The fact of the matter is no country, not Germany, not France, would voluntarily put up with the sort of “adjustment” that has been forced on Greece, for the good reason that gratuitous great depressions are not actually helpful to an economy. Creditors have had five years to mismanage Greece and they’ve done a startlingly effective job. Syriza has had five months to object. However much you may dislike their negotiating style, however little you think of their competence, Greece’s catastrophe was not Syriza’s work. If creditors respond to Syriza’s “intransigence” with maneuvers that cause yet more devastation, that will be on the creditors. Blaming victims for having insufficiently perfect leaders is standard fare for apologists of predation. Unfortunately, understanding this may be of little comfort to the disemboweled prey.

Europe’s creditors are behaving exactly as one might naively predict private creditors would behave, seeking to get as much blood from the stone as quickly as possible, indifferent to the cost in longer-term growth. And that, in fact, is a puzzle! Greece’s creditors are not nervous lenders panicked over their own financial situation, but public sector institutions representing primarily governments that are in no financial distress at all. They really shouldn’t be behaving like this.

I think the explanation is quite simple, though. Having recast a crisis caused by a combustible mix of regulatory failure and elite venality into a morality play about profligate Greeks who must be punished, Eurocrats are now engaged in what might be described as “loan-shark theater”. They are putting on a show for the electorates they inflamed in order to preserve their own prestige. The show must go on.

Throughout the crisis, European elites have faced a simple choice: Acknowledge and explain to electorates their own mistakes, which do not line up along national borders of virtue and vice, or revert to a much older playbook and manufacture scapegoats.

Such tiny, tiny people.”

http://www.interfluidity.com/v2/5965.html

Seconding Mathmos, that’s an excellent piece you’ve found, MPAVictoria.

I especially liked the part which criticised the terrible choice by the EU elites to turn this into an “us vs them” ethnonationalist conflict, the very thing the EU was meant to prevent. The Greek government weren’t the only making mistakes, or the ones making the biggest mistakes, but the people who end up footing most of the bill are the Greek working and middle classes.

It’s not a coincidence that the ones suffering the most are the most politically marginalised groups. After all, in Europe, nowadays, Might does make right.

“33, 34.1: Steve Randy Waldman linked here about 4 times before MPAV got to it. See 15 for instance”

Very true! My apologies for missing the link at 15. But either way it is worth a read. :-)

The recovery in 2014 was not a projection. It happened.

21: If I understand their argument correctly, they’re saying that the gross financing needs are the issue, i.e. in addition to servicing the existing debt, over time their new issuance will be on closer to market terms and therefore the refinancing burden will be too much.

You understand it right but they’re wrong. This assumption is tantamount to assuming that the benefit of the easy terms disappears over time. It is what I’m on about in saying it doesn’t give credit for the NPV reductions

Thanks to Daniel for his reasonably well-argued critique of the Greek government’s position, and to Chris and John for their own contributions. Daniel’s links, including @18, are worth a read. I confess I see very little evidence of good faith from any of the principal actors, especially the Greek non-tax payers.

This is the hinge upon which all future actions turn – “I want my government pension and see no reason why I should pay my share of taxes.” The current Greek government’s decision to create new jobs by hiring young student-spies to video fraud is laughable, serious, and frightening:

“The “onlookers” scheme basically involves the recruitment of “students, housekeepers and even tourists”, with a brief period of basic training, on short term two month contracts to act as undercover tax inspectors, wired for sound and video to gather data on VAT and cash-in-hand fraud. What could possibly go wrong, eh? Apart from the obvious and significant risks to the barely-trained undercover agents, and the political minefield of creating a network of government spies in a society that’s already low on trust, this is actually quite a bad idea as tax policy.”

The Greek government is surely not so daft as to be entirely unaware of the downsides of the snooper policy. So, why take these risks? The snooper policy confirms the current ‘people-friendly’ Greek government clearly believes action needs to be taken against Greek businesses. This is amateur hour.

The real risks, however, are political and social. A Spanish colleague spent some time last week recounting his idyllic youth growing up under Franco. I was not at all happy, listening to him explain to me quite convincingly that a vote worth nothing, isn’t really a vote at all – using Greece as an example.

I’d like to think we’ve come far enough from fascism to be sure of a successful democratic outcome to the Euro crisis. I don’t really want to put the matter to the test. The appeal of autocratic theocracies is based on a similar contempt for democracy. Should we see Greece slide further toward failed-state status, we are certain to see more comparisons with North Africa and in the area formerly known as Iraq and Syria.

I’m guardedly optimistic we can avoid Weimar. But surely we can raise the bar a little higher.

Driving d-squared off with insults isn’t helpful. He provides excellent insight into the mind of the banking apparatus.

True, but some of us remember the days when one used to be able to read DSquared’s posts for something like ‘financially informed left-liberalism’, rather than ‘insight into the mind of the enemy’.

Your description of the East Asian financial crisis as originating in the private sector is at inaccurate at least in part. The private sector was a factor, but the trigger for the crisis was the Thai central bank letting its currency depreciate sharply after depleting its foreign reserves. It had concealed the depletion from the public.

Boundary maintenance has been pretty intense on this topic across all the nominally reality-based blogs for the last 5 days. Message is clear: do not question the neoliberal consensus or you will never work in this town again.

Creditor narrative on Greece is an outrageous passel of distortion

@53 Well. Let’s be generous and say that you’re not whining about having to settle for the truth. Your musing on the d-squared of the present strikes me very much as an accusation of betrayal.

If I’m reading you wrong, please accept my apology.

To someone who has been following the events in Greece and the Eurozone without being an expert, this account rings true: http://www.interfluidity.com/v2/5965.html

It also seems to me a very different account than the one offered by dsquared. I’d be interested to hear Daniel’s view on what, if anything, this author gets wrong.

View the last six months as a game playing exercise. Economically it was obvious that a) the Greeks needed out of the Euro and b) the Greeks needed debt relief and c) that the Greeks were not prepared to abandon the Euro.

Given those three it was perfectly sensible for Syriza to drive the institutions and the Germans to the point where they made the conditions for c) so onerous that Syriza could get past c and achieve a and b. They get to b) by playing Iceland.

Given that Varofakis is an expert in game theory, this is not even a stretch.

An uncomfortable home truth for the Peterson Institute and others who love the “uncertainty kills growth” meme. When oil prices drop, the value of Greek oil refining has always dented Greek growth figures. This has been true for around 20 years.

So the oil prices dropped and the Greek growth figures dropped in some mystical resonance that was clearly all about Syriza.

“Given that Varofakis is an expert in game theory …”

FWIW, when I mentioned this claim to an actual expert in game theory, he guffawed with laughter.

God forbid, Chris, that you should look up his CV.

If anyone has ever been to a rugby match in Wales, or a pub on the same day as a rugby match in Wales, they will understand the following:

ΟΧΙ ΟΧΙ ΟΧΙ – ΟΙ ΟΙ ΟΙ!

(BTW the letter Χ/χ is Chi not Xi (Ξ/ξ) and is pronounced “kh”.)

Democracy Wins, despite financial terrorism and media lies and pressure: it can be done. Send not to know for whom the bell tolls Rupert Murdoch, it tolls for thee: now FOAD ASAP!

Tomorrow I shall go back to being my usual sweet and reasonable self :)

@55 “what does your quote in 49 have to do with the point lfc was making at 47?”

Sorry if you found the prefatory remarks of 49 confusing, paraphrased now as the conclusion of a structured essay cannot and should not be ignored and is certainly more representative of the author’s thinking than cherry-picked remarks. The critical line of that conclusion is that debt-forgiveness is an unavoidable part of the solution. I find nothing arrogant in the concluding remarks.

@47 and @59 We disagree, clearly, about the merits of the cited articles. I found nothing to criticize in any of the sources.

Had I written the initial post and comment @18, I would probably have highlighted two points – first, from DeGrauwe, “…in order for this solution to be applied the insatiable desire of some creditor countries to punish the Greek for their misbehaviour must be overcome… ” (my italics), and the second from the conclusion of the Peterson piece, that debt forgiveness is an unavoidable part of either solution.

To conclude and sound improperly pompous, the events of the last six hours have propelled us all into a future where a Greek exit seems unavoidable. To forestall the depression predicted by Peterson, and very likely to be engineered by the punitive, all concerned are going to have work a great deal harder on finding solutions than has been so far demonstrated.

At some point, we are going to have to set aside ideological battles and find practical solutions that work.

“Why should that be the case when, as you say, Greece should be offered a better deal, one which includes commitments to debt forgiveness? ”

Because there is absolutely no political will for it now (and if there never was then theyve played into the Troika’s hands) If anything, this situation will show that Krugman is, politically, an idiot.

What exactly is yours, or anyones, ‘alternative prescription’ that is plausibly better than continuing the Troika plan ?

@69 and @70

@69. Quite right of you to question the inevitability meme. However, 1. My own belief is that the current Greek government has been divided, to say the least, on the merits of remaining in the EU. 2. The scale of support the government received, if the numbers hold, very much strengthens the government’s hand at a time when Greece’s creditors are divided. Getting a workable recovery package to Greece quickly seems most unrealistic. 3. @ 70 wildly overstates resistance to large-scale debt forgiveness, but de Grauwe identifies the desire to punish Greece as a very real threat. So, @70 is effectively right on this point, and on Krugman IMHO. 4. The track record of responsible behavior by all concerned is very poor and offers little grounds for optimism.

A quick review of the responses is not encouraging either. Avoiding Weimar is now the stated goal of the more responsible leaders. From the Independent:

“…Economy Minister Emmanuel Macron…pointedly referred to one of Europe’s biggest mistakes of the past century, saying, “If the No wins, it will be our responsibility not to create the Treaty of Versailles of the Eurozone.”

I see no hyperbole in Macron’s assessment whatsoever. Merkel and Hollande may yet pull a rabbit out some hat, but whether the bunny will win over hostile lenders, punitive northern Europeans, and suspicious Greeks very much remains to be seen. Let’s hope Europe’s leaders are preparing plans to prevent Weimar with Greece outside the Euro. Not holding my breath. Work beckons.

@ 66
Yes!

@tsipras_eu: The Greek ppl responded to real question at hand: What kind of Europe do we want?
The answer: A Europe of solidarity & #democracy. #Greece

It’s a hard road for Greece either way, but let’s celebrate their courage and wish them the best. I hope and believe this will be the end for the cruel doctrine of Austerity, which has never been about solidarity in facing problems, but about punishing the poor for the sins of the rich.

“If ‘Tsipras should ignore the Greek polity and agree to terms they opposed’ is a politically plausible approach, why isn’t ‘Merkel should acknowledge the debt load is too great, despite what German voters think’ politically plausible? ”

If you wan’t me to acknowledge that the political pressures on Tsipras were huge, then I agree. But so what ? It doesnt mean that there is any good outcome from this ridicuolous vote. (and certainly not from leaving the euro)
But yes, I hope this signals a change of policy in Europe. Unlikely though.

Of course, the Government of Greece is able to debate strategy and take action as a sovereign nation:

= = =
https://www.schneier.com/blog/archives/2006/03/more_on_greek_w.html
Earlier this month I blogged about a wiretapping scandal in Greece.

“Unknowns tapped the mobile phones of about 100 Greek politicians and offices, including the U.S. embassy in Athens and the Greek prime minister.

Details are sketchy, but it seems that a piece of malicious code was discovered by Ericsson technicians in Vodafone’s mobile phone software. The code tapped into the conference call system. It “conference called” phone calls to 14 prepaid mobile phones where the calls were recorded.”

More details are emerging. It turns out that the “malicious code” was actually code designed into the system. It’s eavesdropping code put into the system for the police.

The attackers managed to bypass the authorization mechanisms of the eavesdropping system, and activate the “lawful interception” module in the mobile network. They then redirected about 100 numbers to 14 shadow numbers they controlled. (Here are translations of some of the press conferences with technical details. And here are details of the system used.) = = =

Links to more technical write-ups:

https://www.schneier.com/blog/archives/2007/07/story_of_the_gr_1.html

There is a huge difference between staying in the Eurozone and staying in the EU. No one in his right mind in Greece would want to leave the EU, if only for the huge annual transfer payments Greece receives since decades independent of the current debt situation.

The “no austerity” option for Greece is a fake option. If Greece defaults on all the debt, they still have to balance the current budget, which they dont have to do with (conditional) new credits (which are tactically acknowleged to never be paid back in full by all parties). Now like the priorities imposed by the institutions or dont, i sure dont like them, but at least admit the alternative is to have more, not less austerity overall.

The Greeks have shown real courage and dignity, and it’s admirable that they have chosen by such a large margin to resist in spite of – or perhaps because of? – the arrogant threats and extreme economic pressure from outside and the total propaganda campaign of collaborationists (including, from what I gather, the overwhelming majority of the media, the Church and, judging from the disparity between polls and results, the opinion polling agencies as well) from the inside. I hope – and am inclined to assume – that they also realise what they are risking, and are ready to take the possible further negative consequences of opposing tyranny. Ultimately, the current conflict is about national and popular sovereignty and the right of self-government, and this is the type of stuff that lives – not only financial resources – are sacrificed for.

“The ECB has the loaded pistol, which it has already fired several times already just so no one can pretend it’s not loaded, in the form of an accelerating bank run, now held precariously at the precipice by jerry-rigged capital controls.”

If they learn nothing else, Eurozone members should now understand that the ECB is not reliably their central bank, or their lender of last resort, or their guarantor against bank runs.

If payments system is shutdown entirely this coming week, and a military coup overthrows the elected government, I fully expect that we will hear plenty of apologists for tyranny blaming SYRIZA, for the misbehavior that resulted in abuse necessary discipline.

I’m sure some in the Eurozone will be sure that their own probity would exempt them from any “need” for such measures, and that the Greeks are receiving exactly the kind of aid they need. The willingness of the Institutions to relent, once the government is in “responsible” hands will be the evidence that all is right with the world.

And, who knows? Maybe, the institutions will find a way to fund a bit of a recovery, just to reinforce the lesson for the audience of potential Podemos voters.

Now that the vote is in, Brussels had better tread carefully. What are the odds that China is thinking about sending aid to Greece as a way to gain a European foothold for its new bank?

“Just a note to say I am not interested in participating in any discussions about whether or not I an evil, so basically go and look after yourselves, Crooked Timber comments.”
148 dsquared 07.06.15 at 12:21 am (from another thread).

As a sometime critic of dsquared, I have to say his histrionics over being called bad names confirms the thinnest of skins and demonstrates just how fragile the egos involved are. Bad form, IMHO. The bankers I know are made of much sterner stuff. Reminds of Chuka chucking in his leadership bid after 5 days of bad press. That’s what passes for guts these days on the left.

I’m deeply envious of the accusation of being “evil.” Damned by all the right people, and all that. Although, to be fair, if we can employ the term fair, here, Colin Street confirmed he believed dsquared to be both “evil and stupid.”

Nothing judgmental or unkind about good Colin, is there?

dsquared offers as much of value as anyone on this site. However, he isn’t here to be liked or respected, IMHO. I sincerely hope he goes somewhere to have a good cry, and comes back spitting bullets. Expertise of his kind is very hard to come by on left-leaning sites. His contributions are almost always stimulating and well-informed. The site is much poorer for his absence.

> Although, to be fair, if we can employ the term fair, here, Colin Street confirmed he believed dsquared to be both “evil and stupid.”

My book-of-logic-and-grammar says I said “either”, and then demurred on the exact applicability of the terms in the sense meant. Check.

[specifically I think that DD’s more insightful than he is analytical: insight lets you see angles, analysis lets you see what angles matter. This isn’t the same — isn’t close — to “stupid” — making mistakes is normal — but if we’re going to exclude “he made a mistake because he’s a normal human being and that’s something that normal people do from time to time” and flatten things into a two-point “100% clever — 100% stupid” axis, then… yeah. Perhaps people shouldn’t think, “the only way he can be wrong is if he’s evil or stupid”?]

Or perhaps you could frame it with stupid and evil being something people do rather than something they are, so that people admit and embrace the wrong-doing and stupid-doing that they engage in rather than trying to externalise it.

I mean. Cards on the table! Writing what I did was a stupid thing and a wrong thing. Yes.

“Now that the vote is in, Brussels had better tread carefully. What are the odds that China is thinking about sending aid to Greece as a way to gain a European foothold for its new bank?”

I for one, would love to see the Chinese loan money to the greeks. Much like the Venezuelans, the Greeks would learn very quickly that there is no default on a Chinese loan. If the Chinese government can figure out a way to make the Greek tax collection work, government employees to show up, ghost employees to disappear, etc., etc. more power to them – may they deserve to run Greece more than the EU … or the Greeks.

John Quiggin: . . . there’s no game theory left for the Troika . . .

I don’t think I would call the next move, “just a decision under uncertainty”.

As a tactic, it reminds me a bit of non-violent civil disobedience, where the point is to unmask violence and evil intent.

The SYRIZA government has been struggling to change the political narrative, from the neoliberal line taken by the Institutions and the German establishment to the effect that the Greeks are feckless and entirely in charge of their own fate, deserving all they suffer. In the German telling, it all about the unconscionably generous pensions (which every one, especially in poorer EU countries, is encouraged to resent).

I’m not sure who the intended audience is, from SYRIZA’s perspective. In some ways, SYRIZA and the Greeks generally seem to me to have tended to see the neoliberal technocrats and other EU governments as more benign than, in my judgment, they are. I think you could argue that they are, as much as anything, holding up a mirror to the technocrats themselves: “Here is a central bank destroying a banking and payments systems. [That’s not what central banks do.]”

If the ECB goes ahead, the spectacle of Greece failing as a state, falling under tyranny, will shock many of good will. Would it shock enough? Some will still dismiss even the idea that the ECB might share in the fault, saying “the ECB does not have a mandate for this or that — read the fine print, you philistines!”

If the ECB relents entirely, the bank run will end, Greek overseas deposits will flow back into the country, the government’s primary surplus and its capacity to borrow from its own citizens will buoy the SYRIZA government in defiance.

I think the ECB will try to confuse the situation, by plotting a complex course of half-measures, attempting to navigate a course between the Scylla of blame for catastrophe (no ATMs in a land of sunshine at the height of the vacation season! does it get any worse in a German imagination!) — and the Charybdis of releasing the Greek government from what has been a very short leash.

There’s no forcing Greece off the Euro, per se, without destroying the banking and payments system. And, no practical way for the Greek government to institute a drachma without an economic and humanitarian catastrophe ensuing, even if they wanted to.

confirms the thinnest of skins and demonstrates just how fragile the egos involved are.

Just to be clear, if twitter didn’t exist I would be happy to remaon telling you guys how wrong you are. But in a world where I can swap abuse and get called a bastard by actual Greeks and by significant policy makers, the idea of debating things here is only attractive of people are going to be pleasant about it. I only bother with CT comments at all because of George Scialabba and my fellow front page posters

@104 Welcome back! I wouldn’t bank on people being pleasant, though. Turn in the comments and show us you’ve got a pair.

I meant to say it must not ONLY run a budget surplus. But thinking about it more, I’m not sure it is correct that it has to run a budget surplus – it could borrow from its own citizens to repay foreign creditors. Not necessarily a good long term strategy, but not necessarily bad in the short term.

He wears the loathing from other European countries with pride ?

My assumption was that the Syriza thread was closed as there were two threads already open on the topic?

“My assumption was that the Syriza thread was closed as there were two threads already open on the topic?”

Good grief.

dsquared 07.06.15 at 3:11 am

“Just to be clear, if twitter didn’t exist I would be happy to remaon telling you guys how wrong you are. But in a world where I can swap abuse and get called a bastard by actual Greeks and by significant policy makers, the idea of debating things here is only attractive of people are going to be pleasant about it. I only bother with CT comments at all because of George Scialabba and my fellow front page posters”

Didn’t somebody post something about how the only rule for contrarians was ‘don’t b*tch’?

You do realize that dsquared is ruder than pretty much anyone else here right? Also forgive me I fail to shed any tears for a rich banker currently enjoying a world tour with his family. I am sure he will be fine.