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The Roller Coaster Continues

roller coaster

Composite image by Alex Brogan. CC License 3.0

Our friends Marilyn Carter and Mark Emamian are watching the news of the Iran nuclear talks as closely as we’re watching news of the Greek economy.  There has been a weird kind of parallelism in the two sets of negotiations.  Marilyn’s latest Facebook post quotes a Washington Post article: “According to some reports from Tehran, virtually all business has halted as people wait anxiously to learn whether they will get sanctions relief in exchange for accepting restrictions and monitoring of the country’s nuclear program…”  Greece is in a similar state; everyone is holding their breath as they wait and watch the news.  Relatives sound subdued when we talk on the phone.

Late Friday, the Greek Parliament overwhelmingly approved the Syriza austerity plan (vote was 251-32).  That’s really surprising, given that the plan so closely resembles the one rejected in the referendum 5 days before.  This gave me the sense that Greece really didn’t want to exit the euro, and that the representatives could pull together and make a difficult, unpopular decision.   So, a strong turn by Greece back towards the euro; ball in EU court. And today the EU ministers met.  I had wondered if they’d be willing to give enough debt relief to make it possible for Greece to begin an emergence from the crisis.  But they didn’t even get to that question.  The leadership (German, Dutch, and Finnish) found Greece’s proposal inadequate and called for more details.  They focused on “problems of trust,” meaning they don’t believe the government will actually implement its own plan.  They will supposedly meet again tomorrow (Sunday), and in the evening the heads of government will meet. This feels like the end of the story to me.  Syriza more or less capitulated, and the finance ministers refused to take yes for an answer.  It’s not totally unreasonable to wonder if Greece will really implement its promises, but anyone who wanted an agreement, who wanted to defuse the crisis, would see that as an issue for another day.

It’s hard to see how the proposal could be amended and approved by the Greek parliament before the Sunday evening/Monday morning deadline.  And it’s hard to imagine Syriza being able to cede any more territory.  The EU may demand the transfer of properties for privatization to a fund based in Luxemburg; it may demand “monitors” inside the Greek treasury.  Pakis points out that they’ve had the latter for several years; has it helped?  One gets the feeling the Germans will demand the dismantling of the country as the price of inclusion.  None of this is definite for now, but here’s an account of Saturday’s unfolding events. Interestingly, today’s news includes a new possibility that Greece could sue Goldman Sachs for the estimated $500 million it made on shady transactions that enabled Greece to enter the euro in 2001:

“Under Ms Loudiadis’s guidance, Goldman swapped debt issued by Greece in dollars and yen for euros which were priced at a historical exchange rate that made the debt look smaller than it actually was. The swaps reportedly made about 2 per cent of Greece’s debt disappear from its national accounts.

“The size and structure of the deal enabled the bank to charge a far bigger fee than is usual in swap transactions…”

It has been widely reported that, for a good part of the last decade, Goldman was lending money to Greece and then betting that the loans would fail.  It kept selling drinks to the alcoholic, in other words, and laughed all the way to the bank.  I don’t know that Greece could net enough money from a lawsuit to make a difference.  Perhaps it would regain a few shreds of dignity; perhaps it would just call attention to its own failings.  There are ample reminders, though, that Greece didn’t get into this crisis on its own.

Categories: Greece
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