Saturday, June 30, 2012

Ο σκορπιός και ο βάτραχος

του Δημοσθένη Κούρτοβικ

Τα Νέα

30 Ιουνίου 2012

Τον συντομότερο και μεστότερο ορισμό της τραγωδίας τον έχει δώσει ο Χέγκελ: τραγωδία είναι η σύγκρουση του σωστού με το σωστό.

Η σύγχρονη ελληνική τραγωδία είναι η αδυναμία συμφιλίωσης και σύνθεσης δύο εξίσου σωστών θέσεων. Η μία θέση λέει ότι η Ελλάδα πρέπει να αποκτήσει επιτέλους μια δημιουργική, παραγωγική οικονομία και ένα εύρυθμο, δίκαιο κράτος, που δεν θα υπάρχει για να εξυπηρετεί τα κόμματα, τους πολιτικούς και την πελατεία τους αλλά το κοινό συμφέρον• ένα κράτος που δεν θα φράζει τον δρόμο στους άξιους για να περνούν ζωή χαρισάμενη ανάξιοι κομματικοί ευνοούμενοι. Λέει ακόμη η θέση αυτή ότι η Ελλάδα πρέπει πάση θυσία να αποφύγει την απομόνωση, μια απομόνωση που, ιστορικά, έπαιρνε πάντα τη μορφή της αποκοπής από τη Δύση και οι προηγούμενες γενιές την έχουν πληρώσει πανάκριβα, με πισωγυρίσματα και εθνικές καταστροφές.

Η άλλη σωστή θέση λέει ότι υπάρχει ένας λαός, υπάρχουν εκατομμύρια άνθρωποι, και μάλιστα τα ασθενέστερα στρώματα, που καλούνται να πληρώσουν ένα δυσανάλογα βαρύ τίμημα για αλλαγές σχεδιασμένες και επιβεβλημένες από στυγνούς τεχνοκράτες με δικά τους συμφέροντα και μάτια που βλέπουν μόνον αριθμούς και γραφήματα. Δεν είναι δυνατό να περιμένει κανείς από αυτά τα στρώματα να δεχτούν παθητικά την εξαθλίωσή τους στο όνομα της στατιστικής εξυγίανσης. Μια χώρα δεν μπορεί να ορθοποδήσει και να προχωρήσει γονατίζοντας τους πολίτες της. Μια Ελλάδα που την ελαφροχτυπούν επαινετικά στον ώμο οι ξένοι «τεχνικοί της εξουσίας», αλλά την καταριέται ο λαός της δεν μπορεί να είναι το όνειρό μας.

Περισσότερα

Πολιτικοί στο παράλληλο ελληνικό σύμπαν

της Βάσως Κιντή

Τα Νέα

30 Ιουνίου 2012

Μετά την παραζάλη της έντασης και της αβεβαιότητας, τον ποταμό αμφισβήτησης, τα αλλεπάλληλα κύματα ανησυχίας και φόβου που κράτησαν μήνες πολλούς, αφήσαμε αποκαμωμένοι την τύχη μας, έπειτα από διπλές εκλογές, στα χέρια ανέμελων βουλευτών που πάνε στη Βουλή με τα καλά τους, με τη μαμά τους, όπως οι μικροί μαθητές στο σχολείο τους για να βρουν τα θρανία και τους συμμαθητές τους. Η πολιτική ως light επάγγελμα, παρά την ατυχία της σύγκρουσης με την πραγματικότητα τα τελευταία χρόνια.

Απτόητοι, αγέρωχοι, στο δικό τους παράλληλο σύμπαν. Μας φλόμωσαν προεκλογικά με την επαναδιαπραγμάτευση του επάρατου Μνημονίου, παραπλανώντας εν γνώσει τους, και τώρα, το ίδιο επιπόλαια και αμέριμνα, αφήνουν το μπαλόνι των λόγων τους να ξεφουσκώσει σε μια αναιμική επικαιροποίηση που προβλεπόταν έτσι και αλλιώς. Γράφουν κυβερνητικές συμφωνίες - εκθέσεις ιδεών, παπαγαλίες και συμπιλήματα στερεοτύπων, που αξιολογούν και επικροτούν μόνοι τους γιατί κανείς στον υπόλοιπο κόσμο δεν αντιλαμβάνεται αυτό το εκφραστικό ιδίωμα που ανθεί στην ελληνική εκπαίδευση και την ελληνική πολιτική σκηνή. Αυτά που γράφουν δεν τα εννοούν ή δεν τα καταλαβαίνουν. Υπόσχονται σταδιακή απαγκίστρωση από το Μνημόνιο όταν οι προτάσεις τους παρατείνουν την εξάρτηση και όταν το ίδιο το Μνημόνιο δεν είναι παρά μια συμφωνία σταδιακής απαγκίστρωσης από αυτό. Λένε ό,τι θέλει ν' ακούσει κατά περίπτωση το ακροατήριό τους, χωρίς να νοιάζονται για τις συνέπειες, παρά μόνο γι' αυτές που τους αφορούν. Λόγια και κινήσεις εντυπωσιασμού, προπέτασμα καπνού για να μην φαίνεται η ένδεια, η ανικανότητα, η φοβία, η έλλειψη βούλησης να γίνει η δουλειά. Γι' αυτό και πρότειναν να πηγαίνουν όλοι μαζί στην Ευρώπη μην ξεχωρίσει κάποιος, μην αυτονομηθεί. Χεράκι χεράκι, σαν νήπια που διστάζουν να κάνουν το δικό τους αποφασιστικό βήμα.

Περισσότερα

Κοροϊδεύουν εαυτούς και αλλήλους

του Γιώργου Λακόπουλου

Protagon.gr

30 Ιουνίου 2012

Η ιστορία επαναλαμβάνεται. Κάθε φορά που πρόκειται να ληφθεί μια απόφαση στην Ευρωπαϊκή Ένωση, η ελληνική πλευρά ή δεν αντιλαμβάνεται τί ακριβώς πρόκειται να αποφασιστεί, ή πανηγυρίζει εκ των υστέρων για λάθος πράγματα. Το έκανε συστηματικά η κυβέρνηση Παπανδρέου. Η χώρα χανόταν και οι υπουργοί χειροκροτούσαν στο υπουργικό συμβούλιο τον Πρωθυπουργό επειδή θριάμβευσε σε κάποια σύνοδο.

Το έκανε και η κυβέρνηση Παπαδήμου, για την ακρίβεια ο αντιπρόεδρός της. Ο Ευάγγελος Βενιζέλος ακόμη πανηγυρίζει για το περίφημο PSI, ως προσωπική του επιτυχία, ενώ όλοι ξέρουν ότι σε αυτή την υπόθεση η Ελλάδα ήταν περισσότερο θεατής και αποδέχθηκε όσα αποφάσισαν οι άλλοι. Οι οποίοι μάλιστα δεν δίστασαν να αποδοκιμάσουν και τον Παπανδρέου, όταν με την ιδέα του Δημοψηφίσματος έθεσε σε αμφισβήτηση τις αποφάσεις τους επί του θέματος. Παρ' όλα αυτά ο πρόεδρος του ΠΑΣΟΚ προβάλλει ότι η υπογραφή του σε αυτή τη διευθέτηση – που μετέτρεπε τα ελληνικά ομόλογα σε σκληρό χρέος σε χαμηλότερο επίπεδο- τον βάζει στη λίστα των μεγάλων του έθνους που αρχίζει με τον…Καποδίστρια.

Η κυβέρνηση Σαμαρά από την πρώτη στιγμή που σχηματίσθηκε συνεχίζει αυτή την παράδοση του αυτοαποπροσανατολισμού. Κατ αρχήν δεν είχε καμία προετοιμασία για την τελευταία σύνοδο Κορυφής, μέχρι που ανακάλυψε ότι δεν θα συζητηθεί το ελληνικό θέμα και …ανακουφίσθηκε. Εν συνεχεία της πήρε καμπόσο να καταλάβει ότι σε μια τέτοια διαδικασία μια χώρα δεν μπορεί να εκπροσωπηθεί με …υπουργό και αυτό μάλλον την έσωσε. Διότι η παρουσία του Κάρολου Παπούλια στη σύνοδο, έσωσε τα προσχήματα και το κύρος της χώρας, χάρη στην εμπειρία που διαθέτει σε ότι αφορά τον τρόπο που κινούνται οι ευρωπαίοι ηγέτες σε αυτές τις περιπτώσεις.

Περισσότερα

Friday, June 29, 2012

Greece’s political crisis persists

by Anne Applebaum

Washington Post

June 29, 2012

Eleven days ago, the apocalypse did not happen. The Greek elections took place, and the radicals did not win. Syriza — the neo-Marxist, anti-austerity party whose members call one another “comrade” and whose policies include the creation of 100,000 new government jobs — did not get the most votes. New Democracy, the establishment center-right party, emerged victorious, though just barely. They formed a shaky coalition with two center-left parties and promised to push through the budget cuts that the European Union has imposed as a quid pro quo for propping up Greece’s economy. The financial world breathed a sigh of relief: Crisis averted.

That relief may have been premature. Eleven days ago, the apocalypse did not happen — but since then, the apocalypse has continued to unfold in slow motion. The new government has pledged to maintain “austerity” even as crises of various kinds erupt all around it. The newly appointed finance minister resigned after being hospitalized on the day he was supposed to be sworn in. The newly appointed deputy minister for the merchant marines resigned after being accused of conflicts of interest. The newly appointed prime minister is recovering from an emergency eye operation and couldn’t attend a crucial European Union summit this week. Early Wednesday morning, three armed men drove a bus containing gasoline canisters through the entrance to Microsoft’s Athens headquarters and then set it alight. No one was hurt, and the building didn’t blow up, but the ground floor was heavily damaged.

More

Το ΚΚΕ χάνει. Οι ιδέες του;

του Γιώργου Σιακαντάρη

Τα Νέα

29 Ιουνίου 2012

Αν κρίνουμε από το 4,5%, το ποσοστό που έλαβε το ΚΚΕ στις εκλογές της 17ης Ιουνίου, μάλλον θα πρέπει να θεωρείται ο μεγάλος ηττημένος των τελευταίων εκλογών. Το κόμμα που κατόρθωσε να διατηρήσει τις δυνάμεις του, έστω και κρυπτόμενο αρχικά στον τότε ενιαίο Συνασπισμό, το μοναδικό κόμμα που μετά το 1993 επετύγχανε, αν και εσταλινοποιείτο ολοένα και περισσότερο, να διατηρεί και να αυξάνει τις δυνάμεις του, «κατόρθωσε» στις τελευταίες εκλογές να χάσει το 50% της δύναμής του. Τα λεγόμενα ελληνικά παράδοξα είναι πάρα πολλά, ένα απ' αυτά είναι και η γενικευμένη αντίληψη περί δήθεν ηγεμονίας των ιδεών του ΚΚΕ στην ελληνική κοινωνία - ενώ αυτό που φαίνεται ηγεμονία των ιδεών του ΚΚΕ και της Αριστεράς δεν είναι ακριβώς κάτι τέτοιο. Εδώ ο απατών σύζυγος θα είχε δίκιο αν δήλωνε στη γυναίκα του, που τον πιάνει στα πράσα, πως «δεν είναι αυτό που νομίζεις».

Γιατί η ηγεμονία των ιδεών του ΚΚΕ δεν ήταν η ηγεμονία των ιδεών της ευρωπαϊκής Αριστεράς, αλλά η ηγεμονία των βαθύτερων συντηρητικών ιδεών. Αν ηγεμόνευαν πραγματικά οι ιδέες της Αριστεράς, τότε το ΚΚΕ θα πίστευε πρωτίστως στα δικαιώματα του ανθρώπου, στην ιδέα ότι η κοινωνία είναι προϊόν ατομικών βουλήσεων, θα έβλεπε το κράτος ως εργαλείο στα χέρια του ατόμου για να κατακτήσει την ελευθερία του στην ισότητα, θα πίστευε στην ιδέα της νεωτερικότητας ως φορέα καθολικών και οικουμενικών αξιών και στην ιδέα του ατόμου - και όχι του κόμματος ή της τάξης - ως κυρίου της μοίρας του.

Αντιθέτως, το ΚΚΕ και η ελληνική ριζοσπαστική Αριστερά υιοθέτησαν όλο το ρεπερτόριο των ιδεών του βαθύτερου ιστορικά και κοινωνικά συντηρητισμού. Ετσι, εκεί όπου ο κλασικός δεξιός συντηρητισμός υποτάσσει το άτομο στις εθνικές και θρησκευτικές καταβολές του, ο ελληνικός αριστερός συντηρητισμός και αντιδιαφωτισμός υποτάσσουν το άτομο στις ταξικές και, ενίοτε, στις εθνικιστικές του καταβολές. Ο ελληνικός αριστερός αντιδιαφωτισμός σαγηνεύεται και από τον ταξικό αναγωγισμό, αλλά μερικές φορές και από τον ελληνορθόδοξο κοινοτισμό. Η κοινότητα (ταξική ή εθνική) και το ελληνορθόδοξο πρόσωπο διαμορφώνουν έναν νεοελληνικό ηγεμονικό συνασπισμό κατά της ατομικότητας. Εδώ οφείλεται και ο έντονος αντιαμερικανισμός και όχι βεβαίως στη δήθεν ανάμειξη της Αμερικής στις εσωτερικές μας υποθέσεις. Η σύγχρονη Αμερική εκφράζει το όραμα του επιτυχημένου ατόμου που ανοίγει δρόμους, του ανεξάρτητου από κρατικές, κομματικές και θρησκευτικές αυθεντίες ανθρώπου. Εκφράζει δηλαδή ό,τι περιφρονούν περισσότερο και η νεοορθοδοξία και ο ελληνικός σταλινισμός.

Περισσότερα

More questions than answers after the summit

by Gavyn Davies

Financial Times

June 29, 2012

This blog contains Gavyn’s initial response to the eurozone summit. As more news emerges, he may add further comments below if his assessment changes during the weekend.


In the wake of yet another summit, we need to ask our usual question: is this the eurozone’s game changer, or in football parlance the “Balotelli moment”? Clearly, there have been some late night concessions from Germany, which could turn out to be very significant in the long term. Spanish and Irish debt ratios will markedly benefit as the costs of their bank bail-outs are removed from the sovereign balance sheets and absorbed by the eurozone.

The markets have welcomed these developments, and rightly so. In particular, the opening sentence of the statement, which says boldly and simply that “we affirm that it is imperative to break the vicious circle between banks and sovereigns”, could prove to be a major breakthrough. Some think it might be the beginning of a Euro-tarp.

But my fear is that, as so often in the past, the devil will prove to be in the detail. The more carefully one examines the text of the statement, the more questions are raised about how the proposed measures will actually work.

More

A Euro deal from Brussels

by Stephanie Flanders

BBC News

June 29, 2012

In their agreement last night, European leaders in Brussels managed to exceed expectations, which had been set extremely low. But their terse statement leaves a lot of unanswered questions - especially when it comes to how and whether the eurozone's rescue funds will be used to bring down the cost of borrowing for countries like Spain and Italy.

Stocks are up, and Italian and Spanish ten year bond yields are down by around a third of a percentage point. By all accounts, investors are pleasantly surprised, but not all of them euphoric in their response to a statement which is little more than three paragraphs long.

None of those paragraphs, it is worth remembering, mention the issue that causes the most neuralgia for Germany: collective guarantees on eurozone sovereign debt.

In fact, short-term moves toward that - the creation of Euro-bills, for example - were barely discussed at last night's meeting, because Chancellor Merkel had made her position abundantly clear (see my blogs earlier this week on this).

So, what did they achieve?

First, and in the long term possibly most important, they have committed themselves to the idea of a single supervisor of eurozone banks - the European Central Bank - which could have the capacity to inject capital into troubled banks directly, without the debt going on to the books of the sovereign government.

More

What Leaders Have Agreed to at Euro-Zone Summit

Wall Street Journal
June 29, 2012

There is a signal change in the euro zone's thinking and a shift in the position of the key players. Charles Forelle and Matina Stevis pick over the announcements from the Brussels summit of EU leaders.


More

In Greece, Syriza Will Be Back With a Vengeance

by Aristides N. Hatzis

CNBC
June 29, 2012

The Greek people had a difficult decision to make. They had to choose between two diverse groups of parties: a group of moderate parties from center-right to center-left which gave first priority for Greece to stay in the euro zone and renegotiate its bailout terms as far as this is realistically possible; and a group of extremist populist parties of ultra-left and ultra-right, giving their first priority for Greece to free itself from the bailout terms even at the cost of losing its euro zone membership status.

The basic argument for the first group was fear for the uncertainty of an isolated Greece—without allies and lenders, bankrupt and ill-reputed, suffering extreme poverty and civil unrest. The basic argument for the second group was the supposed strategic advantage of a Greece willing to play Sampson ready to commit suicide crying “Let me die with the Philistines!”

Fortunately the Greek people did not fall for the gimmicks of the last group despite the unprecedented momentum of the leading party of this group, the left-wing Syriza. Syriza managed to get 17 percent of the vote in the May 6 elections, an impressive result given its 4.6 performance in 2009. Moreover, in the June 17 elections Syriza reached 27 percent—a 60 percent increase in 40 days. Greece was literally saved by the bell.

Well, not exactly. First of all “saved” is an exaggeration. The alternative to Syriza was a prospective post-election coalition of the conservative party, New Democracy, the social democratic Pasok and the moderate Democratic Left. Pasok and New Democracy are the two parties mostly responsible for the Greek mess.

Follow this link to read the rest of the artcile

See also

Euro Zone Sees Single Bank Supervisor

Wall Street Journal
June 29, 2012

European leaders at a two-day summit in Brussels said they would speed up plans to create a single supervisor to oversee the euro zone's banks, and agreed on measures aimed at reducing soaring borrowing costs for Spain and Italy.

After 14 hours of wrangling on the summit's first day, the leaders agreed that the euro zone's bailout funds should be able to directly boost the capital of struggling banks and said that loans they are planning to help Spain recapitalize its banks wouldn't be ranked above those of private investors in the creditor pecking order—responding to an issue that appeared to cause a negative reaction to Spain's request for up to €100 billion($125 billion) of aid.

They said they would examine ways for the bailout funds to help well-performing countries that didn't need full-blown economic adjustment programs like those they insisted on for past bailout recipients Greece, Portugal and Ireland. But after considering the purchase of bonds directly from governments and in the secondary markets, they couldn't agree on specifics. Thomas Weiser, a senior European official, said such countries should be able to benefit by the summer.

In a statement issued after the meeting, the leaders said: "We affirm that it is imperative to break the vicious circle between banks and sovereigns."

After the announcements, the euro jumped to $1.2586, compared with $1.2444 late Thursday in New York.

More

Thursday, June 28, 2012

Μηνύματα από την ελληνική Ιστορία

του Βασίλη Κρεμμυδά

Τα Νέα

28 Ιουνίου 2012

Μετά τις εκλογές της 6ης Μαΐου είχα γράψει σε αυτές εδώ τις σελίδες για τα μηνύματα που εξήχθησαν από εκείνη την αναμέτρηση, μηνύματα «που δεν έλαβαν οι πολιτικοί»• ήμουν τότε φοβισμένος από κάποια νέα, πρωτόγνωρα για την Ελλάδα, φαινόμενα, τα οποία είχα αποδώσει στη διάλυση του κοινωνικού ιστού από συγκεκριμένες πολιτικές εκμαυλισμού και εξουθένωσης της κοινωνίας, η οποία είχε μείνει χωρίς συνοχή, ανερμάτιστη και απροστάτευτη και, τελικά, έτοιμη να υποδεχθεί και να αγκαλιάσει ανορθολογικές ιδεολογίες και πρακτικές.

Αυτές οι ιδεολογίες και οι πρακτικές, όμως, έρχονται σε πλήρη αντίθεση με την Ιστορία αυτής της κοινωνίας κατά τους τελευταίους - δυόμισι κοντεύει - αιώνες. Κατά τις τελευταίες εκλογές, στις 17 Ιουνίου, όλα αυτά επαναλήφθηκαν και συγκεκριμενοποιήθηκαν. Οι δυνάμεις του ανορθολογισμού επανεμφανίστηκαν πιο ρωμαλέες. Επιπλέον, αυξήθηκε η αποχή από την ψηφοφορία και έφτασε στο 40%, τέσσερις δηλαδή στους 10 δεν ψήφισαν. Πρόκειται για κοινωνική συμπεριφορά απολύτως ανορθολογική. Αν σε αυτούς προστεθούν και οι ψηφοφόροι εκείνοι που προτίμησαν τα κόμματα του αντιευρωπαϊσμού, του αντιδιαφωτισμού, δηλαδή του ανορθολογισμού, φτάνουμε σε ποσοστά που ξεπερνούν κατά πολύ το 50%.

Περισσότερα

Debt and Growth: New Evidence for the Euro Area

by Anja Baum, Cristina D. Checherita-Westphal and Philipp Rother

European Central Bank

ECB Working Paper No. 1450
June 28, 2012


Against the background of the euro area sovereign debt crisis, our paper investigates the relationship between public debt and economic growth and adds to the existing literature in the following ways. First, we extend the threshold panel methodology by Hansen (1999) to a dynamic setting in order to analyse the nonlinear impact of public debt on GDP growth. Second, we focus on 12 euro area countries for the period 1990-2010, therefore adding to the current discussion on debt sustainability in the euro area. Our empirical results suggest that the shortrun impact of debt on GDP growth is positive and highly statistically significant, but decreases to around zero and loses significance beyond public debt-to-GDP ratios of around 67%. This result is robust throughout most of our specifications, in the dynamic and non-dynamic threshold models alike. For high debt-to-GDP ratios (above 95%), additional debt has a negative impact on economic activity. Furthermore, we can show that the long-term interest rate is subject to increased pressure when the public debt-to-GDP ratio is above 70%, broadly supporting the above findings.

Read the Paper

Berlin Blinks on Shared Debt

Wall Street Journal
June 28, 2012

Germany may be willing to move sooner than expected to accept shared liability of euro-zone debt and would support short-term measures to deal with the acute financing problems facing some of the region's governments, German Finance Minister Wolfgang Schäuble said in an interview with The Wall Street Journal ahead of today's European summit.

Mr. Schäuble said Germany could agree to some form of debt mutualization as soon as Berlin is convinced that the path toward establishing centralized European controls over national fiscal policy is irreversible. That could happen before full implementation of treaty changes.

"We have to be sure that a common fiscal policy would be irreversible and well coordinated. There will be no jointly guaranteed bonds without a common fiscal policy."

Such a fundamental change—in effect, a grand European bargain between Germany and other euro members—would require countries to give up a large degree of sovereignty over their budgets. Many European policy makers are asking how far Berlin is willing to go in return to putting its financial strength at the disposal of the euro zone.

"We are willing to go as far as we need to in order to get a sustainable agreement in Europe," Mr. Schäuble, speaking in his spartan Berlin office, said.

More

Wednesday, June 27, 2012

OECD Chief Says Europe's Firewall Is Insufficient

Wall Street Journal
June 27, 2012

The euro area should rush to the defense of Spain and Italy in the bond markets using all the institutions it has at its disposal, Angel Gurria, the secretary general of the Organization for Economic Cooperation and Development, told Dow Jones's Matina Stevis.


More

Tuesday, June 26, 2012

Look beyond summits for euro salvation

by Martin Wolf

Financial Times

June 26, 2012

Yet again, the EU is about to hold a summit to deal with the crisis in the eurozone. Yet again, it is likely to fall far short of a convincing solution. A heavy weight rests on the shoulders of weary and disillusioned leaders. The question is whether there is hope for success.

What is needed, as I have argued before, is a solution that is both politically feasible and economically workable. The former means an ability not only to achieve agreement among governments responsible to national electorates, but also to obtain at least toleration of that agreement among those voters, something that greatly worries Angela Merkel, the eurozone’s most significant politician. Economic workability means offering electorates enough hope for the future to persuade them to elect leaders prepared to stick with membership of the eurozone.

Against those criteria, let us consider three possible solutions: federal Europe; the status quo; and limited reforms.

The broad thrust of proposals for a banking and fiscal union, via eurozone bonds, along with greater fiscal discipline, is to solve the difficulties of today’s fragile eurozone. It is obvious that such measures attract supporters of the European ideal and those who want others to pay for the consequences of past mistakes. It is obvious, equally, that such proposals anger and frighten those who think they will then have to subsidise the improvidence of others.

More

The Eurozone Needs Exit Rules

by Christian Fahrholz and Cezary Wojcik

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

CESifo Working Paper Series No. 3845
June 26, 2012


This paper argues that the key issue for defining and solving the Eurozone’s (EZ) difficulties lies in readjusting the relationship between the centre and the periphery of the EZ. Our argument proceeds in two steps. Firstly, the basic finance problem of a centre-periphery system is captured by a threat game with perfect but incomplete information. To get close to the essence of today’s crisis we analyze to what extent a ‘troubled’ periphery EZ member can negotiate a bailout from the center due to the existence of a negative externality arising from its potential default. Secondly, we analyze how establishing ‘exit rules’, which have recently also been advocated by Jacques Delors, would shift the centre-periphery relationship in a way that safeguard the stability of the EZ. We demonstrate that such rules may help limiting the scope for brinkmanship whereby fiscal problems in one member create a negative externality for the rest of the EZ. We show that such rules will strengthen the EZ through at least four channels.

Read the Paper

Monday, June 25, 2012

EU plan to rewrite eurozone budgets

Financial Times
June 25, 2012

The EU would gain far-reaching powers to rewrite national budgets for eurozone countries that breach debt and deficit rules under proposals likely to be discussed at a summit this week, according to a draft report seen by the Financial Times.

The proposals are part of an ambitious plan to turn the eurozone into a closer fiscal union, giving Brussels more powers to serve like a finance ministry for all 17 members of the currency union. They are contained in a report to be presented at the summit, which will also outline plans for a banking union and political union.

Thursday’s summit comes amid investor fears that the eurozone is re-entering a danger zone. Bond and equity markets were hit on Monday as Cyprus became the fifth country to apply for an international bailout, citing its banking sector’s large exposure to the Greek economy. In Greece, the five-day-old coalition government suffered a setback as its finance minister resigned.

Berlin has demanded tough controls over national budgets as a prerequisite for mutualising sovereign debt within the eurozone and the proposals appear to be an effort to get the German government to support a move towards commonly issued eurozone bonds.

More

See also

Europeans Agree on Sovereignty: Everyone Wants to Keep It

by David Henry

Bloomberg

June 25, 2012

Europeans have finally found something they agree on: sovereignty. Almost no one wants to give it up.

Majorities in eight European Union countries surveyed by Pew Research Center recently opposed the loss of budgetary control to EU officials. Of the five euro-zone countries included in the study, only Italy favored increased supranational authority. In Greece, which is still flirting with bankruptcy even after forming a new government, a whopping 75 percent are against ceding control to a finance ministry in Brussels.

The English-speaking world and much of southern Europe are waiting for German Chancellor Angela Merkel to blink on common bonds (translation: "I spend, you pay"), the use of bailout funds to finance banks directly and a lender-of-last-resort role for the European Central Bank. If only Germany would just roll over, the thinking goes, the world could go back to prosperity and the problem would be solved.

More

Οι αβεβαιότητες της μεταρρύθμισης

του Πάνου Καζάκου

Τα Νέα

25 Ιουνίου 2012

Οι τελευταίες εκλογές οδήγησαν σε μια πολυκομματική κυβέρνηση ευρύτερου ιδεολογικού-πολιτικού φάσματος. Η νέα κυβέρνηση φαίνεται ότι δεσμεύεται να εφαρμόσει το πρόγραμμα μεταρρυθμίσεων και δημοσιονομικής εξυγίανσης («Μνημόνιο») παρά τη ρητορική της αναδιαπραγμάτευσης και την ιδέα μιας «εθνικής διαπραγματευτικής ομάδας» για την αναθεώρησή του. Πρόκειται απλά για ένα επικοινωνιακό τέχνασμα υπό την πίεση της κριτικής στο «Μνημόνιο» από τα άκρα και τα οχυρωμένα συμφέροντα εντός του κράτους και γύρω από αυτό. Ο,τι μπορεί να αλλάξει είναι περίπου γνωστό (επιμήκυνση της περιόδου εντός της οποίας πρέπει να νοικοκυρέψουμε τη δημόσια οικονομία κ.ά.). Πάντως η τρόικα θα είναι πιο εύκαμπτη στις διαπραγματεύσεις με την κυβέρνηση για την επιλογή «ισοδύναμων» εναλλακτικών προτάσεων, αν η τελευταία δείξει με συγκεκριμένες αποφάσεις ότι προχωρεί στον δρόμο των μεταρρυθμίσεων και της δημοσιονομικής εξυγίανσης.

Η δέσμευση για την εφαρμογή της πολιτικής οικονομικής προσαρμογής είναι κρίσιμη γιατί βρισκόμαστε σε μια περίοδο μεγάλων αβεβαιοτήτων στον ευρωπαϊκό περίγυρο. Η Ελλάδα χρειάζεται την εξωτερική βοήθεια για να μη χειροτερεύσει δραματικά η κατάσταση και για να μη διολισθήσουμε σε μια παρακμή διαρκείας.

Περισσότερα

How to design a banking union that will save the eurozone

by Jean Pisani-Ferry

Financial Times

June 25, 2012

To stop the doom spiral that threatens the eurozone, European leaders must now repair the serious flaws in the design of monetary union that have been revealed by the crisis. At the very least, at this week’s summit of European leaders, they should recognise them, name them, agree on directions for reform, and set a timetable for decisions.

Banking union — the move to a common regime for supervision, deposit insurance and resolution — has emerged as a key component of such a repair strategy. The idea makes sense because it addresses the feedback loop between sovereign weakness and banking weakness. The concept has been endorsed by several eurozone governments (including France who used to be lukewarm about it), by the European Central Bank and the European Commission, by the UK (provided it is not asked to take part) and by the International Monetary Fund. Germany has reservations, but they do not seem to be absolute.

There is however distance from concept to realisation. A banking union entails many choices.

More

Read the Paper

Sunday, June 24, 2012

Greece Needs to Chart a Different Course

by Mohamed A. El-Erian

Huffington Post

June 24, 2012

Greece's political leaders still don't seem to get it, and neither do its official creditors. The longer this problem persists, the greater the challenge of turning around a country already beset by recession, insolvency, distressingly high unemployment and rising poverty.

Over the weekend, the country's new governing coalition led by Prime Minister Antonis Samaras signaled that it would request an extension of at least two years in the implementation of the austerity program agreed with the Troika (European Central Bank, European Union, and International Monetary Fund).

This is to be tabled in the coming days. The hope is to get European heads of government to sign off in the context of their upcoming Summit at the end of the week which will be focused yet again on steps to overcome the region's ever-deepening debt crisis.

The Greek government believes that it can diminish the detrimental impact on the population of austerity -- by stretching out the implementation of budgetary spending cuts, layoffs, wage and salary reductions, and tax increases; and, concurrently, by mobilizing additional external support from the Troika in the form of larger new loans and better terms on prior loans (principally lower contractual interest rates).

More

Tuesday, June 19, 2012

The Decline of Democracy

by Bret Stephens

Wall Street Journal

June 18, 2012

Democracy is the worst form of government, except for all those other forms that have been tried from time to time. Everyone knows who said this, and everyone thinks it's true. But is it, really?

After last weekend I've begun to have my doubts. In Egypt, the ruling military junta reacted to the apparent victory of Muslim Brotherhood presidential candidate Mohammed Morsi by stripping the presidential office of its powers. That came just days after Egypt's top court dissolved the Islamist-dominated parliament, which had been freely elected only a few months ago.

How arbitrary. What an affront to the Egyptian people. Now let's hope it works.

Then there's Greece, which also had an election over the weekend. The Greeks are supposed to have made the "responsible" choice in the person of Antonis Samaras, the Amherst- and Harvard-educated leader of the center-right New Democracy party. Responsible in this case means trying to stay in the euro zone by again renegotiating the terms of a bailout that Greeks cannot possibly repay and will not likely honor.

Yet the more depressing fact about the election is that Mr. Samaras didn't even get 30% of the vote. The rest was divided among the radical-left Syriza (27%), the socialist Pasok (12.3%), the anti-German Independent Greeks (7.5%), the neo-Nazi Golden Dawn (7%), the center-left Democratic Left (6.2%) and, finally, the good old Communist Party (4.5%).

In other words, the Greeks gave a solid 46% of their vote to parties that are evil, crazy or both, even while erring on the side of "sanity" with parties that are merely foolish and discredited. Imagine that in 1980 Jimmy Carter had eked out a slim victory over a Gus Hall-Lyndon LaRouche ticket, and you have the American equivalent to what just happened in Greece.

More

Monday, June 18, 2012

Reinventing the European Dream

by Anne-Marie Slaughter

Project Syndicate

June 18, 2012

The euro crisis and Queen Elizabeth’s recent Jubilee seem to have nothing in common. In fact, together they impart an important lesson: the power of a positive narrative – and the impossibility of winning without one.

Commenting on the Jubilee’s river pageant and horse parade, historian Simon Schama talked to the BBC about “little boats and big ideas.” The biggest idea was that Britain’s monarchy serves to connect the country’s past to its future in ways that transcend the pettiness and ugliness of quotidian politics. The heritage of kings and queens stretching back across more than a millennium – the enduring symbolism of crowns and coaches, and the literal embodiment of the English and now the British state – binds Britons together in a common journey.

Cynics might call this the old bread-and-circuses routine. But the point is to fix eyes and hearts on a narrative of hope and purpose – to uplift, rather than distract, the public. Are Greeks, Spaniards, Portuguese, and other Europeans really supposed to embrace an austerity program imposed on them because prevailing wisdom in Germany and other northern countries considers them profligate and lazy? Those are fighting words, creating resentment and division just when unity and burden-sharing are most needed.

Greece, in particular, now needs a way to connect its past with its future, but no monarch is forthcoming. And, as the cradle of the world’s first democracy, Greece needs other symbols of national renewal than scepters and robes. It is through Homer that virtually all Western readers first encounter the Mediterranean world: its islands and shores and peoples knit together by diplomacy, trade, marriage, oil, wine, and long ships. Greece could once again be a pillar of such a world, using its current crisis to craft a new future.

More

Back to the 1930s: The Hammer, Sickle and Swastika

by Aristides N. Hatzis

Financial Times

June 19, 2012

Ten days before Greece’s elections, a member of the neo-nazi party, Golden Dawn, repeatedly hit a female candidate of the communist party while appearing live on a television talk show and threw water over a female candidate of the radical left Syriza. The communist had just called him a “bloody fascist” and he addressed her as a “commie”. Greek elites (journalists, intellectuals, politicians) condemned his violence almost unequivocally. Yet the ugliest part of this incident was the readiness of many lay people to defend him, even cheer him, while the neo-nazis rose in the polls.

Unfortunately this episode was not isolated. Despite the narrow victory of a centrist party in Sunday’s vote, almost every day extremist violence breaks out in Athens and beyond. Neo-nazis against immigrants, anarchists and leftists. Anarchists, ultra-leftists and other fringe groups of the nationalist-populist camp against riot police, mainstream politicians, journalists, liberal intellectuals, even artists. Add to this a surge in crime and rising tolerance of violence and you have a clearer picture of today’s Athens. Does it remind you of anything?

That’s right. Greece’s situation recalls the Weimar Republic. Violence (and its banalisation), hate, rage, polarisation, fear, despair and resignation. As for the police, it has already taken sides: neo-nazis won by a landslide in polling stations where officers were assigned to vote.

The electoral results demonstrate the dangers to the Greek democracy. The centre-right New Democracy party may have edged ahead, but the parliament, for the first time in Greek history, will be full of extremists. Besides the neo-nazis and a Stalinist communist party there is Syriza, whose leader is a fan of Mao Zedong, Fidel Castro and Hugo Chávez. It is difficult to find a notable dictator, even among the great butchers of the 20th century, without a steady following in the Greek parliament. The three protagonists of the dreadful TV incident were also elected. Imagine them together in routine parliamentary proceedings. Golden Dawn members have already made it clear they would come down hard on any member of parliament saying something they strongly disapprove of.

How did Greece, the birthplace of democracy, come to have a parliament full of hammers, sickles and swastikas? This is not how it was ever meant to be. After winning independence in the late 1820s, Greece was attached to the west and particularly to the UK, which protected and patronised Greece until it was replaced by the US in the late 1940s. This patronage had some beneficial side effects. Greece was always on the winning side: in the first world war, the second world war, the cold war. From 1929 to 1980 Greece had an average growth rate of 5.2 per cent and was admitted to the European Community as early as 1981 partly as a reward.

The rest is history: welfare populism, cronyism, statism and corruption can describe the Greek political system for most of the period from 1981. This is why Greek people have finally punished the two former main parties (New Democracy and the social-democratic Pasok party) for leading Greece into a horrible economic crisis with huge debts and deficits and a corrupt, inefficient state, unfit for reform and captured by special interests.

This failure of the mainstream political system and of the short-sighted, growth-stifling austerity policies enforced by the European leadership led Greece to the precipice. Greek people are disillusioned, miserable, exasperated and very frightened. They seem to be falling into the same trap again, by rewarding demagoguery, political opportunism and arrogant ignorance. Their knee-jerk reaction was to vote for parties such as Syriza, the rightwing nationalist and populist Independent Greeks and the Golden Dawn. These parties became vehicles for a popular backlash, gathering more than 41 per cent of the vote.

However, more than 50 per cent of Greeks voted for parties strongly committed to European unification. These parties will probably form a government that must achieve the impossible: renegotiate better bailout terms and enforce reforms in the face of fierce opposition from Syriza.

Mario Vargas Llosa wrote recently in El Pais that “Greece is the symbol of Europe and symbols cannot be abolished without that which they embody collapsing and degenerating into the barbaric confusion of irrationality and violence that Greek civilization liberated us from”.

Yet Greece is only a small step away from civil unrest and total collapse. It does not deserve this. Europe has the power to push us off the cliff but also the ability to hold us back and save us. This is not just an economic decision; it is largely a political decision. A fatal mistake will haunt Europe for ever.

* The writer is an Associate Professor of Law and Economics at the University of Athens and runs the blog GreekCrisis.net

Link

PDF version of the op-ed (from FT.com)

Germany Must Make Greece’s Vote Count

Bloomberg
Editorial
June 18, 2012


Now that Greek voters have done the right thing, it’s Angela Merkel’s turn to tell the German electorate a few home truths about the euro.

Sunday’s narrow victory for pro-bailout parties in Greece offers heartening proof that voters can reject comforting delusions -- such as the defeated Syriza party’s idea that Greece could renege on its bailout terms and stay in the euro -- provided that politicians take a clear stand to explain reality, warts and all.

The election won no more than breathing space for Greece. The victory for the conservative party, New Democracy, won’t fix the euro’s flaws or make it any more realistic for Greece to bounce back from recession if the letter and timetable of its austerity package stay unchanged. Markets think Greece might still crash out of the euro, with contagion to follow: The blink-and-you-missed-it duration of the rallies in Spanish and Italian bond markets Monday morning made that much clear.

Still, something potentially important has changed. It will be clear that any decision for Greece to default and leave the euro will be made not just by recalcitrant Greeks, but also by creditors, in particular Germany, who refuse to make the program feasible. So if -- and that’s a significant “if” -- Merkel and her Christian Democratic Union want to keep the euro area intact, they’ll have to make decisions they’ve resisted, and for which they’ll pay a price at the ballot box.

More

Time to act: euro collapse would define our era

by Lawrence Summers

Financial Times

June 18, 2012

Once again good news has had a half-life in the markets of less than 24 hours. Just as news of Spain’s bank bailout rallied markets and sentiment for only a few hours, a Greek election outcome as good as could have been hoped did not buoy markets for even a day. There could be no clearer evidence that the strategy of vowing that the European system will hold together, doing the minimum to address each crisis as it comes and promising to build a system that is sound in the long run has run its course.

Nor is the Group of 20 leading economies, whose leaders conclude their meeting today, likely to change anything soon. Europe’s troubled economies will demand more emphasis on growth, lower interest rates on their official debts and more transfers. The Germans will show sympathy with the aim of reform but will insist that financial integration coincide with political integration. The rest of the world will express exasperation with Europe’s failures and demand more be done. Officials blessed with more diplomatic than economic insight or courage will produce a communiqué expressing a measure of satisfaction with the steps under way, recognising the need to do more and looking forward to continued dialogue. The only good thing is that expectations are so low this will barely disappoint markets.

The truth is that Europe’s debtors and creditors are both right. The borrowers are right that austerity and internal devaluation have never been a successful growth strategy, certainly not when major trading partners are stagnating. In the few cases where fiscal consolidations have preceded growth, they have either involved stagnation relative to previous levels of income (as in Ireland and the Baltics) or buoyant demand associated with surging exports, increasing competitiveness and low borrowing costs (many euro members in the early years). The borrowers are also right to claim that even a previously healthy economy will quickly become very sick if forced to operate for several years with interest rates far above growth rates, as is the case across southern Europe. And experience clearly shows that structural reform is always harder when an economy is contracting and there is no sector to absorb those displaced by reform.

More

Greece has won Europe a respite – now it must use it

by Gideon Rachman

Financial Times

June 18, 2012

The night before the Greek elections, Athens exploded in joy. The Greek national team had won an unexpected victory at the European football championships. In the next round, with delicious symbolism, Greece will play Germany.

The main significance of the Greek elections, however, is that it actually avoids the need for a showdown between Greece and Germany. A clear victory for the far-left Syriza party might have provoked a crisis, by nullifying the Greek bailout deal. Under a centrist coalition, Greece will probably cut a deal that allows the country to stay in the euro and to limp on with a modified austerity programme. The financial version of the Greece-Germany match will therefore go into extra time – with the hope that both sides will ultimately settle for a face-saving draw.

A respite in the Greek part of the euro crisis does not mean that Europe is off the hook, however. On the contrary, it is increasingly clear that Greece is no longer at the centre of the problem. The fate of the euro will be decided in Spain and, above all, Italy.

Europe should be using the brief respite brought by the Greek elections to rethink its whole approach to the euro crisis. At present, the debate is stuck. Politicians, particularly in Germany, are being urged to take dramatic steps towards banking, fiscal and political union to save the single currency.

More

Greece gains some breathing space

Financial Times
Editorial
June 18, 2012


It is a measure of the shaky foundations of eurozone policy towards Greece that Antonis Samaras, who was until recently seen as the biggest saboteur of the country’s financial rescue, is being greeted as its saviour after winning Sunday’s parliamentary election.

After an inconclusive May poll, the new result offers some hope. The campaign clarified that a vast majority of Greeks wish to stay in the euro, but disagree whether this is compatible with unilaterally rejecting policies imposed by the International Monetary Fund and the eurozone. Still, half those who voted backed parties largely supportive of the memorandum that commits Greece to the conditions. Mr Samaras seems in a position to form a government that can finally drag Athens out of paralysis.

But the election by itself solves nothing, and the current course of unending economic depression in Greece and deep distrust between Athens and its euro partners cannot be sustained much longer. Mr Samaras’ political support is precarious. Many held their noses voting for him, linked as he is with the dysfunctional system that created Greece’s mess. Without a sense of improvement soon, even more Greeks may heed the siren calls of extremist movements.

It is vital that Europe and Mr Samaras reach an understanding swiftly. His New Democracy party wants to amend the memorandum. Some eurozone politicians (including the German foreign minister, Guido Westerwelle) have hinted at flexibility. They must together put Greece’s adjustment programme back on track – but on a track that is more likely to lead to success.

More

The Greeks Bet on Europe, and You Should Too

by Simon Serfaty and Alexis Serfaty

Bloomberg

June 18, 2012

Amid the daily forecasts of Europe’s impending death and warnings of chaos and calamity to come, there are good reasons to be bullish about the future of the European Union.

Admittedly, these can be hard to make out, as citizens rebel against the EU as a producer of austerity and a consumer of their national identities, while pundits dismiss the very idea that national governments would cede more sovereignty to underpin the euro.

Paradoxically, Greece’s near-suicide may renew the solidarity needed for the EU to work. A large majority of European citizens still believes that however bad the EU and its single currency may be, there’s nothing better to replace either. Greek voters reached the same conclusion on Sunday, when they backed the conservative New Democracy party to form a new government in the hope it will enable them to stay in the euro area.

The vote was close, but the mandate is nonetheless clear: 71 percent of Greeks favor keeping the euro, according to a recent public opinion poll. Most, if not all, of Greece’s EU partners, including the German government, agree. The Greek vote confirms a trend: Despite the many incumbents removed from power in Europe since the financial crisis struck, no populist majority has emerged as a credible alternative to the mainstream parties. For the 27 EU members, life without or outside the union has long ceased to be an option with wide appeal.

More

Greeks Avoid Triggering Immediate Disaster; Now for the Tricky Part

by Douglas J. Elliott

Brookings Institution

June 18, 2012

Europe dodged a bullet yesterday, as Greek voters narrowly resisted the temptation to elect a government committed to ripping up the agreement with Europe which provides funding for much of their budget. Instead, New Democracy, the center-right party, should be able to form a coalition government with a narrow majority, with the participation of the other traditionally dominant Greek party, the socialist party PASOK. (It is a sign of how far they have fallen that the two parties gained only a bit over 40% of the vote when, for years, they garnered about three-quarters.)

Greeks are torn between several profound but conflicting feelings. On the one hand, they hate the austerity measures contained in the agreement with the “troika” of institutions that provide the bailout funding. They also are very disappointed in the two traditionally dominant parties that got them into this mess and remain quite flawed. These factors pushed many voters to go with Syriza, a coalition of left-wing parties led by the charismatic Alexis Tsipras. Syriza promised to force sharp changes in the agreement with the troika.

On the other hand, Greeks strongly support staying in the Euro. The problem comes because the only way to stay in the Euro is likely to be accepting the existing agreement with substantially more modest changes than Syriza is demanding.

More

Antonis Samaras Starts Greek Coalition Talks

Wall Street Journal
June 18, 2012

Greece's conservative New Democracy party will begin talks on forming a pro-bailout coalition government after eking out a victory in Sunday's elections. WSJ's Matina Stevis assesses his chances of a successful outcome.


More

Samaras’ victory offers relief but no answers

by Stephen King

Financial Times

June 18, 2012

So, huge sighs of relief all round. Greece’s New Democracy party, led by Antonis Samaras, managed in Sunday’s elections to head off growing support for the radical left wing Syriza alliance. Mr Samaras looks set to become Greece’s next Prime Minister.

The Athens ATMs won’t run dry, there will be no sudden reintroduction of drachmas and Greece will happily be able to persuade itself that it remains firmly held in the bosom of Europe. The euro lives to fight another day.

Mr Samaras will now attempt to form a ragtag government including more or less everyone except Syriza. At the very least, that means a coalition involving both teh centre-right New Democracy and the socialist Pasok party, hardly the cosiest of bedfellows. They have, after all, been at each other’s throats for the past few decades.

Still, both New Democracy and Pasok claim to be both pro-euro and pro-austerity, so Greece’s European partners and the wider world should be able to breathe a sigh of relief.

More

Biting the Bullet at the Ballot Box

Wall Street Journal
June 17, 2012

It hasn't been a good year for Yannis Delatolas.

The 45-year-old electrical engineer's salary was cut by nearly a third and his tax bill skyrocketed, as the economy spiraled downward and new levies were imposed to meet European Union-set budget targets.

Mr. Delatolas said he considered voting for the leftist Syriza party, which pledged to rip up the strict terms of Greece's EU rescue package, but decided the risk of Greece's being shoved out of the common currency was worse than the prospect of more austerity.

On Sunday, he cast his ballot for Syriza's conservative pro-bailout rival, New Democracy.

"We have to stay in the euro, regardless of the pain," Mr. Delatolas said. "I can't play around with the future of my two children."

That electoral calculus helped propel New Democracy to victory over Syriza in one of the most closely watched elections in Greek history.

With 99% of ballots counted Sunday night, New Democracy had 30% of the vote, compared with 27% for Syriza.

More

Greece as Victim

by Paul Krugman

New York Times

June 18, 2012

Ever since Greece hit the skids, we’ve heard a lot about what’s wrong with everything Greek. Some of the accusations are true, some are false — but all of them are beside the point. Yes, there are big failings in Greece’s economy, its politics and no doubt its society. But those failings aren’t what caused the crisis that is tearing Greece apart, and threatens to spread across Europe.

No, the origins of this disaster lie farther north, in Brussels, Frankfurt and Berlin, where officials created a deeply — perhaps fatally — flawed monetary system, then compounded the problems of that system by substituting moralizing for analysis. And the solution to the crisis, if there is one, will have to come from the same places.

So, about those Greek failings: Greece does indeed have a lot of corruption and a lot of tax evasion, and the Greek government has had a habit of living beyond its means. Beyond that, Greek labor productivity is low by European standards — about 25 percent below the European Union average. It’s worth noting, however, that labor productivity in, say, Mississippi is similarly low by American standards — and by about the same margin.

On the other hand, many things you hear about Greece just aren’t true. The Greeks aren’t lazy — on the contrary, they work longer hours than almost anyone else in Europe, and much longer hours than the Germans in particular. Nor does Greece have a runaway welfare state, as conservatives like to claim; social expenditure as a percentage of G.D.P., the standard measure of the size of the welfare state, is substantially lower in Greece than in, say, Sweden or Germany, countries that have so far weathered the European crisis pretty well.

So how did Greece get into so much trouble? Blame the euro.

More

Greek pro-bailout parties secure ruling majority

Reuters
June 17, 2012

Parties backing a bailout saving Greece from bankruptcy won a slim parliamentary majority on Sunday, beating radical leftists who rejected austerity and bringing relief to the euro zone which was braced for fresh financial turmoil.

The election result looked likely to yield a coalition government led by conservative New Democracy but leaves an emboldened SYRIZA bloc to rally angry opposition in the streets to the punishing terms of the bailout.

Official results released by the interior ministry, with 97 percent of ballots counted, showed New Democracy taking 29.7 percent of the vote, with SYRIZA on 26.9. The PASOK Socialists were set to take 12.3 percent of the vote.

Because of a 50-seat bonus given to the party which comes first, that would give New Democracy and PASOK 162 seats in the 300-seat parliament, in an alliance broadly committed to the 130 billion euros ($164 billion) bailout.

Germany signaled there may be some leeway on the timeframe for cuts demanded in return for the aid.

More

Greek elections: the replay deepens the divide

Guardian
Editorial
June 17, 2012


Imagine the pass we would have reached if the future of Britain turned on elections for Coventry city council. The eurozone has reached a comparable position, as the eyes of a continent trained on a ballot in one small corner of a vast economy, representing a mere 3% of the total. The choice of a government is of natural importance to the 11 million Greeks. But one weird consequence of the zone's lethal rigidity is that world statesmen, financial colossuses and fearful millions beyond all got obsessed with Sunday's knife-edge vote.

Greeks waited on Sunday night to learn if two, three or four points separated the conservative New Democracy from the leftist Syriza, but the important numbers for daily life are no longer measured in percentages. They come in great ugly fractions – the full one-fifth of output that has gone up in smoke, the quarter that has been hacked off many pensions and the half of young adults who are unemployed. As the world found out the hard way in the 1930s and is now discovering afresh, there is quite simply a limit to how much austerity people will swallow. The Greeks reject the strangulation of livelihood that they can see all around them, but are also determined to cling to the euro and avoid lurching back to a Balkan past. To survive, the big parties had to fit themselves around these basic contours.

After all, Sunday confirmed the collapse of social democracy in the form of Pasok and also saw a substantial vote sustained for the neo-Nazis of Golden Dawn. Despite being led by the divisive Antonis Samaras, ND thus felt obliged to demand a sweetening of the harsh bailout which it has championed. Even then, it ended down several points on its bad loss of 2009. If it is victory, it's not victory as we know it – hence the immediate spin about a grand coalition. Syriza, meanwhile, which in 2009 was a fringe coalition of malcontents ranging from Greens to Trotskyites, has toned down its Brussels bashing. Its charismatic leader, Alexis Tsipras, penned FT op-eds swearing to stick in the euro, as he trod a path from obscurity to the brink of victory in a couple of months.

More

Syriza hails its advance despite defeat

by Joshua Chaffin

Financial Times

June 17, 2012

Although beaten into second place in Greece’s most important election since the restoration of democracy in 1974, supporters of the leftwing Syriza coalition greeted their group’s strong election showing as a glorious victory.

As they waited for Alexis Tsipras, their young charismatic leader, the crowd of Syriza supporters in central Athens broke into celebration, waving red-and-white banners, chanting and singing along to anthems of Mikis Theodorakis, the 1960s songwriter and musician who gave voice to the resistance against the country’s military dictatorship.

A collection of leftists from as far afield as Australia and Venezuela – with Zapatista T-shirts, plentiful facial hair and a bent for black – mingled in the warm evening air, their mood helped along by a makeshift bar selling beer at recession-friendly prices.

In a nearby doorway, a man sat in plain view with a needle plunged into his bleeding arm – a reminder of the increasingly common scenes of misery in the Greek capital that have helped to fuel Syriza’s rise.

More

Greece’s Next Finance Minister?

by Matina Stevis

Wall Street Journal

June 17, 2012

It’s a tough job, but someone’s got to do it. Here’s three prominent New Democracy figures who are likely to play a role in the Greek finance ministry or hold a separate economics-related portfolio. Not to be premature, of course. New Democracy may have come first in Sunday’s elections, but it hasn’t yet started trying to form a government. We include a fourth profile wildcard: the current finance minister.

NEW DEMOCRACY

Stavros Dimas
Former European Commissioner for the environment (and, prior to that briefly for Social Affairs), party vice president and former foreign minister in the short-lived Papademos government, Mr Dimas is a New Democracy heavyweight. The 71-year-old politician read law and economics at the University of Athens before moving to New York University for his masters. He worked on Wall Street as well as the World Bank. He was deputy economic coordination minister and as trade minister in the late 1970s, but his expertise in the field is not why he’d get the job. His Brussels experience, respect at home and clout abroad could mean he is his party’s best shot at negotiating milder bailout terms with the country’s international creditors, the euro zone and the International Monetary Fund.

Kostis Hadjidakis
A relatively low-key and liberal member of New Democracy, Mr Hadjidakis oversaw the privatization of Olympic Airlines, the highly-indebted national air carrier, as Development minister in 2009. He also served as Transport and Telecommunications minister. Originally from the island of Crete, he spent seven years in Brussels as a member of the European parliament. The 47-year-old is a strong candidate for the Development ministry and his privatization and European experience will play in his favor.

More

Struggle looms to form Greek coalition

Financial Times
June 17, 2012

Greece’s centre-right New Democracy (ND) party was poised on Sunday night to win the country’s second general election in six weeks after pushing the leftwing Syriza coalition into second place.

Antonis Samaras, its leader, now faces an uphill task to put together a viable coalition government to try to rebuild credibility with European partners and revive the country’s flagging bailout programme.

His proposal for an inclusive government of “national salvation” was rejected out of hand by Alexis Tsipras, the Syriza leader, saying his party would play the role of “an honourable opposition.”

Mr Tsipras’s own call for a “continuing struggle against the bailout”, reinforced by an impromptu late-night outdoor speech on Sunday in central Athens, suggested he was also preparing to take opposition to the streets.

Mr Samaras was due to receive a mandate to form a government from President Karolos Papouilias on Monday and start a first round of meetings with two potential coalition partners.

“There will be no new adventures . . . or political games,” Mr Samaras promised. “We will work with our European partners and add to our obligations the needed policies for growth and combating unemployment.”

More

Greece's Next Likely Leader Faces Tall Odds

Wall Street Journal
June 17, 2012

Antonis Samaras, the leader of Greece's victorious New Democracy party, has made a fast turnaround from Europe-bashing populist to the continental power brokers' preferred choice to lead Greece.

Voters in Greece Sunday handed New Democracy the edge in a close race with no likely outright majority winner, according to early projections. But as the leader of the top-finishing party in the fractured poll, Mr. Samaras will get the first shot at attempting to form a government and is likely to be prime minister.

Few jobs in politics are as unforgiving as being Greece's prime minister right now. But seizing the office would realize a long-held ambition for a man who was a conservative darling two decades ago before being exiled from the party, and then staging a remarkable comeback.

Now, the question for the American-educated politician from a prominent Greek family is whether he will fare better than the last American-educated politician from a prominent Greek family to sit in the chair: His old Amherst College roommate George Papandreou.

More

A Greek Reprieve

Wall Street Journal
Editorial
June 18, 2012

Europeans—at least the non-Germans—breathed a sigh of relief Sunday as a plurality of Greek voters took a step back from jumping out of the euro zone. Now we'll see what Europe's leaders can do with their latest reprieve.

Tallies as we went to press Sunday indicated the center-right New Democracy party won some 29.5% of the vote, up from its 18.8% showing last month. New Democracy told voters it wants to remain in the euro zone while claiming it would be better able to renegotiate the terms of the Greek bailout provided by the rest of the Europe.

Trailing New Democracy was the hard-left Syriza coalition with 27.1%—up substantially from its count from last time. The center-left Pasok, which dominated Greek politics for a generation and won the 2009 elections, was slated to take a mere 12.3%. Pasok polled only slightly more votes than the combined tally for the Communists and the neo-Nazi Golden Dawn.

New Democracy leader Antonis Samaras has a better chance at forming a government than he did two months ago—if only because failure would mean repeating the protests and violence that seem to increase with each Greek election. Pasok leaders have been coy about joining a New Democracy government, but that may change if the alternative is another election or more chaos.

As for Syriza, it may be just as happy losing this round, figuring it can pick up the pieces if the center-right fails again. Its tub-thumping leader, 37-year-old Alexis Tsipras, has been the great beneficiary of Greek rage at an economic program, misleadingly dubbed "austerity," that has managed to avoid neither recession nor default.

More

Official projections show New Democracy in lead in Greece

Reuters
June 17, 2012

Official projections show the conservative New Democracy Party with the lead in Greek election. Deborah Lutterbeck reports.


More

Sunday, June 17, 2012

Pro-Bailout Party Wins Greek Vote

Wall Street Journal
June 17, 2012

Greece's conservative New Democracy party eked out a slim victory in Sunday's elections and will seek to form a pro-austerity coalition government with other parties to take the immediate steps needed to comply with strict financial targets set by its international lenders.

The outcome is likely to ease fears—at least temporarily—of a Greek exit from the 17-nation euro zone, but political uncertainty is likely to continue as parties embark on contentious coalition talks, which, even if successful, may not result in a lasting government.

New Democracy leader Antonis Samaras vowed to respect the country's commitments under a €173 billion ($218.6 billion) bailout agreement with the European Union and the International Monetary Fund, and invited all parties supporting euro membership to participate in a national "salvation" coalition government—a call promptly rejected by radical leftist leader Alexis Tsipras.

"Today the Greek people have expressed their will to stay anchored with the euro," Mr. Samaras told a packed news conference at Greece's Zappeio Hall, where Greek party leaders traditionally head to claim victory after national elections. "We will respect our signature and the country's obligations."

More

Greek election: scramble to form coalition to steer country through crisis

Guardian
June 17, 2012

Emerging as the frontrunner of a nailbiting election seen as decisive for Greece's future in the eurozone, the conservative New Democracy leader, Antonis Samaras, began the arduous quest to build a coalition on Sunday night with an appeal to form a government of "national salvation".

New Democracy narrowly beat Syriza, an alliance of radical leftists, winning 29.53% of the vote against 27.12% for the coalition led by Alexis Tsipras. Samaras called the result a victory for Europe.

"The Greek people today voted for the European course of Greece and that we remain in the euro," Samaras declared in a victory speech. "This is an important moment for Greece and the rest of Europe," he insisted, saying that Athens would honour the commitments it made in exchange for rescue loans from the EU and IMF.

It had been hoped that the election – following an indecisive ballot on 6 May – would help clear a political landscape marred by escalating polarization and growing extremism. Sunday's poll failed to do either.

More

Markets crave some certainty in Greece

by Nils Pratley

Guardian

June 17, 2012

It's not the Greek election result investors feared most – but it's not far off. Greek society is deeply divided and there is no certainty that a new coalition government led by the conservative New Democracy party would be able to survive for long. The likely victory of a pro-bailout party, rather than the radical left grouping Syriza, may be enough to settle nerves in markets briefly. But much will depend on the strength of the government that is now formed.

Will Greece have a government by the end of this week? That's the first hurdle to be cleared. The largest party, armed with an extra 50 seats in parliament, gets first shot and the potential kingmaker is the socialist Pasok party. But Pasok appears to have seen its share of the vote fall from 13.2% in May to about 12% today. Even added to New Democracy's expected 30%, that would give a two-party coalition a total share of the popular vote of little more than 40%. That's a weak base from which to attempt to push through radical cuts in government spending.

A further member of the coalition might be required to strengthen the moral authority to govern. Enter the Democratic Left – but its 6% or so support was only roughly in line with that of the extreme-right Golden Dawn party. Whatever happens, Syriza and Alexis Tsipras, its leader, will retain a strong voice in Greek politics.

More

New Democracy Looks Set to Win Greek Election

Spiegel
June 17, 2012

Official projections on Sunday evening showed the conservative New Democracy as having won the Greek election, whose outcome is seen as crucial to the euro zone's future. The party may be able to form a pro-bailout coalition government with the Socialists, but Greece could still face months of uncertainty.


The world has been watching Sunday's elections in Greece with bated breath, worried that the outcome could precipitate a Greek exit from the euro zone. Now it looks as if the two mainstream parties that support the bailout deal with the European Union and International Monetary Fund (IMF) may be able to form a government -- but Athens isn't out of the woods yet.

According to official projections on Sunday evening, conservative New Democracy looked set to finish first with 30.6 percent of the vote, followed by the left-wing Syriza party with just over 26 percent. The center-left Socialists (PASOK) were expected to come third with 12.8 percent.

The far-right Golden Dawn party was projected to receive around 7 percent of the vote, giving them 18 seats in parliament.

The party that finishes first gets a 50-seat bonus, meaning that -- if the projections are correct -- New Democracy and the Socialists would win at least 160 seats in the 300-seat Greek parliament between them. They could form a coalition government which would broadly support the EU-IMF bailout.

More

Pro-Bailout New Democracy Ahead in Greek Polls

Wall Street Journal
June 17, 2012

The latest projections from the Greek election give the conservatives, New Democracy, a slim lead over Syriza, the radical left coalition. The figures suggest a coalition government could be formed by mainstream parties.


More

What happens if Angela Merkel does get her way

by Wolfgang Münchau

Financial Times

June 17, 2012

The Bundesbank said there should be no banking union until there is a fiscal union. Angela Merkel said that there should be no fiscal union until there is political union. And François Hollande said that there should be no political union until there is a banking union. They have 10 days to disentangle that knot.

The interesting thing is that all statements are correct in a certain way, but only the French president offered a practical solution; without crisis resolution, there can be no political union. Mr Hollande made a concrete proposal to allow the European Stability Mechanism to inject unlimited equity into banks; allow it to refinance itself through the European Central Bank; and to let the ECB supervise the 25 largest financial institutions. The German chancellor responded, respectively, with Nein, Nein and Ja.

Unfortunately, the 25 largest banks have no bearing on this problem. It is the other banks that matter. Ms Merkel has accepted the weakest and least relevant bit of Mr Hollande’s proposal.

With so many ideas on the table, it is critically important to understand what is required right now. Spain needs an equity injection into its banking system from the eurozone, not through a loan to the Spanish recapitalisation fund. Only when that happens, can Mariano Rajoy, the Spanish prime minister, claim to have nailed the problem and set off to watch the football – an activity at which he excels. And to address Italy’s problem, the EU needs to find a way to lower its interest rates. This can only occur through one of the following three measures: a eurobond; direct bond purchases through the ECB, or the ESM. But Italy is too big to fit under the umbrella, the ECB does not want to monetise debt and Germany is opposed to a eurobond.

More

Greek election: weary voters explain their choices

Guardian
June 17, 2012

While Anna Benaki trod carefully down the white steps from the northern Athens polling station, Mania Barsevski sat at the bottom, cigarette in hand and contemplative. The two women had both voted for the parties that had defined them all their political lives, and both were adamant that they were doing the right thing for Greece's future. But there the parallels ended.

Benaki, a former justice minister for the centre-right and pro-bailout New Democracy party, insisted that her party alone could "take the country forward" and make sure it stayed in the euro. Barsevski, a former public servant forced to take early retirement at the age of 53 and now living off a reduced pension, voted – not for the first time – for Syriza. "Of course, we know it will be difficult," she said. "[If we win] we'll take over an economy that is destroyed. But if we don't win the situation will be even worse and by the next election there will be nothing left standing."

As Greeks went to the polls on Sunday in a subdued and anxious mood, two parties with sharply different policies and messages were battling it out for their votes in the country's most important election for decades. On the one hand was Antonis Samaras, the pro-bailout New Democracy leader who cast his vote in the Peloponnesian town of Pylos promising a "new beginning". On the other was anti-austerity champion Alexis Tsipras, who was mobbed by supporters and television cameras when he arrived at an Athens polling station. But, for many people in this weary, divided nation, neither man was the solution to their acute and growing problems.

More