Mar 272015
 March 27, 2015  Posted by at 10:52 pm Finance Tagged with: , , , ,

Wyland Stanley Pedestrians ascending steep grade, San Francisco 1935

Speculation and expert comments are thrown around once more – or still – like candy on Halloween. Let me therefore retrace what I’ve said before. Because I think it’s really awfully simple, once you got the underlying factors in place.

But first, if one thing has become obvious after Syriza was elected to form a Greek government on January 25, it’s that the party is not ‘radical’ or ‘extremist’. Those monikers can now be swept off all editorial desks across the world, and whoever keeps using them risks looking like an awful fool.

All Syriza has done to date, when you look from an objective point of view, is to throw out feelers, trying to figure out what the rest of the eurozone would do. And to make sure that whatever responses it got are well documented.

Because of course Greece (through Syriza) is preparing to leave the eurozone. Of course the effects and consequences of such a step are being discussed, non-stop. They would be fools if they didn’t have these discussions. And of course there will be a referendum at some point.

There’s just that one big caveat: Syriza insists on needing a mandate from its voters for everything it does, whether that may be kowtowing to Greece’s EU overlords or walking away from them. At present, however, it doesn’t have a mandate for either of these actions.

The best it can do is to drag out negotiations as much as it can, and let Europe openly assert its perceived superior power over the Greek population as much as it wants to, complete with more iron-fisted demands for austerity, more budget cuts, more asset sales. Tsipras and his people will let this go on until the Greeks are even more fed up with Brussels than they already were when they elected Syriza in the first place.

It’s a subtle game, but it’s the only one open to Tsipras and his crew. Even if they’ve long concluded that trying to negotiate a deal with Germany et al was a lost cause way before talks started, Syriza has to go through the motions until it is confident the people of Greece are ready to vote in a referendum on eurozone membership.

A risky game, since it could bring back ‘the old guard’ of the handful of families that have governed the country for decades and that were willing co-operators with the Troika, but at the same time it’s the only game in town at the moment.

Tsipras needs to explain to the Greek people that the double mandate of staying inside the eurozone and at the same time ending austerity is in fact an empty mandate, because the eurozone refuses to allow it.

He needs to explain that this means the eurozone refuses to recognize the democratic values of one of its member states, voting to change policy. Brussels is in effect telling the Greek people on a daily basis that they don’t matter. That’s what Tsipras has to make clear, and then he can call the referendum.

It should be obvious that this whole mandate question changes potential actions by Athens to a huge degree. But from what I read every day, it doesn’t seem to be. Even within Tsipras’ own support base, perhaps some don’t understand what is going on. Either that or they’re part of the strategy. Judge for yourself:

Greek Crisis Nears A Turning Point

Stathis Kouvelakis, who teaches political theory at King’s College in London and is a member of Syriza’s central committee, says the party has to face up to the reality of its recent retreat on its election pledges and the nature of the forces arrayed against it. In particular, Kouvelakis notes the successive steps taken by the ECB to restrict the flow of liquidity to the Greek economy, shutting down or limiting Greek access to various types of ECB financing.

“It should be clear, however, that these moves would bring about a dynamic that would breach fundamental constraints of the monetary union and would inevitably lead to the exit from it,” Kouvelakis wrote in his latest post at Jacobin. “In any case, the ECB’s relentless blackmail with its provision of liquidity places onto the agenda every day the issue of regaining sovereignty over monetary policy.” It was the stranglehold that prompted Tsipras in a recent interview with Der Spiegel to refer to the ECB “still holding onto the rope that is around our necks.”

But Kouvelakis argues that covering over the issues by renaming the troika “the institutions” or by using weasel words like “creative ambiguity” is not going to solve the problem. The initial euphoria over Syriza’s victory has quickly faded, but it can be revived, he says, if the party faces reality. “In order for this to happen, however, the horns of battle have to blow again, and the ensuing struggle has to be waged with all due seriousness and determination, not with PR stunts and rhetorical contortions.”

He cited the widely quoted words from Interior Minister Nikos Voutsis earlier this month before the Greek Parliament, when he said “the country is at war, a social and a class war with the lenders” and that in this war “we will not go like cheerful scouts willing to continue the policies of the memorandum.” This is the kind of talk the world needs to hear from Greek officials, Kouvelakis says, “not the language of facile optimism that creates illusions and causes confusion that tomorrow may prove costly.”

Kouvelakis reasons from a standpoint that is not covered by Syriza’s present mandate. He at least should know this. Tsipras cannot afford to be seen by the Greek population as the man who hasn’t done all he could to keep the country in the eurozone while negotiating an end to austerity. It makes no difference at this point what his personal ideas are on the issue.

Kouvelakis does choose to let his personal opinions prevail. If Tsipras would do the same, a referendum would be much riskier for Syriza. The party was elected to represent its austerity-weary voters, not the subjective opinions of its leaders.

If Tsipras and Varoufakis should elect to give in to Brussels and Berlin, that decision would still need to be put before the people to vote on, because it would mean a prolongation of austerity. And that is not the mandate.

By the same token, if the leadership decides an exit is the only option, and that further negotiations are hopeless because Europe won’t accept anything else than strapping the proud Greek people in a straitjacket, that too will have to be put before a vote.

Of course Syriza, like any other government, keeps track of opinion polls, but they know there will come a moment when a referendum can no longer be postponed no matter what the polls say. In that, Greece is living up to its glorious past as the cradle of democracy.

And that makes it all the more cruel that the country has been ruled for such a long time by anything but a democratic system. Maybe we can say the circle is round. But the connection that closes the circle is still very fragile, and nobody knows that better than Alexis Tsipras.

Still, make no mistake: of course they’re preparing to leave.

As someone long prepared for the occasion;
In full command of every plan you wrecked –
Do not choose a coward’s explanation
that hides behind the cause and the effect.

And you who were bewildered by a meaning;
Whose code was broken, crucifix uncrossed –
Say goodbye to Alexandra leaving.
Then say goodbye to Alexandra lost.

Say goodbye to Alexandra leaving.
Then say goodbye to Alexandra lost.

Leonard Cohen – Alexandra Leaving

Home Forums Greece Prepares To Leave

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  • #20156

    Wyland Stanley Pedestrians ascending steep grade, San Francisco 1935 Speculation and expert comments are thrown around once more – or still – like can
    [See the full post at: Greece Prepares To Leave]


    I have been in a similar situation, albeit on a very tiny scale. All you can do is wait until the screws are tightened, until it becomes obvious to others what is really going on, that they don’t matter. Tsipras knows this but, as you say, has to keep quiet.

    “Tsipras cannot afford to be seen by the Greek population as the man who hasn’t done all he could to keep the country in the eurozone while negotiating an end to austerity.”

    Yep. First, they bring it to the population’s attention. Second, they wait until the play becomes obvious.

    Formerly T-Bear

    Syriza only promised the Greek voters to negotiate with the troika from the position that the policies of austerity were unacceptable. Once it is uncontrovertibly shown by that troika or any comprising that troika that no negotiations will take place in an acceptable manner, and further that assistance is not forthcoming in any form until compliance to the will of the troika is guaranteed, to the point of collapse of the basic social currency (that one will really hurt and open eyes to the economic fraud being perpetrated upon the Greeks). Only then, once the Greek population has been ‘economically educated’ can a way be found for exit a defunct banking system and reestablishment of the country’s sovereign monetary authority. Not much politically will be effective until that river is crossed – just the way of the world that education always has its costs.

    V. Arnold

    @ Formerly T-Bear

    Yes, agree completely.
    Varoufakis and Tsipras are not stupid or naive; they know what is what.
    What I see going on, is a very masterful uncloaking of the troika and their methods and motives, for all the world to see. Point, counterpoint, and information is revealed.
    Podamos (sp) is in the wings and the great unravelling may be about to begin.
    One can only hope, no?


    I do hope, Ilargi, that Varoufakis and Tsipras are subscribed to TAE!


    If they are going to default, why did they first borrow from the pension system in order to pay back the IMF? Won’t that money be missing for paying out pensions in the future?

    John Day

    Tsipras, Varoufakis, the Troika, and Greek bankers are all in the position of having to each do something they really don’t want, almost daily, to keep the Euro system from collapsing.
    They must all be retching each morning when they get out of bed.
    Greeks have pulled 15% of their assets out of Greek banks, and the bankers across Europe know those funds are not going back until things are settled. The outflow continues, and the ECB has to provide the funds, and is averse to that, but bound to do it, but just moment by moment, drop by drop.
    German, Dutch and Italian governments are massively committed to backing their banks, as Austria is, but that’s awkward at this moment. They can’t really back their banks to the degree they say, so they are sweating bullets through all this, smiling with clenched teeth and blaming Greeks. Everybody knows all of this at the ruling levels, but part of ruling is standing up there day after day and saying your lines.
    Not only was money borrowed for short term pension payments this month, hopefully to be paid out almost on time, but pensions in general, and across the world, have been gutted. They just have not widely defaulted quite yet.
    There will be a huge global choosing of who gets resources like food, water and fuel.
    Africans are getting dealt out of survival by neo-colonialism from Europe, China, global multinationals, Bill Gates, Monsanto, and not just for oil and uranium, it’s for their farms and the biodiversity of their seeds. The African farmers are being genocided, and so are their crops, nurtured for thousands of years, like corn was in Mexico.


    > Syriza insists on needing a mandate from its voters for everything it does, whether that may be kowtowing to Greece’s EU overlords or walking away from them.

    Is that something they have actually pledged, or just good politics? A mandate from the people only applies until the circumstances change. Once they have exhausted the possibilities of how to please the Troika and also not implement more Austerity, I should have thought the old mandate falls by the wayside, leaving the Government to do whatever it feels is necessary.

    To exit the Euro would need preparations lasting at least a month, (printing new, or more likely overprinting old, banknotes). If they have to win a referendum first, that extends to 2 months. Capital controls would have to be used to stop bank runs, and having those on for 2 months would be impracticial.

    On the other hand, if the decision is made by Government secretly, capital controls are only needed on redenomination day. In the paper “Leaving the Euro: A Practical Guide”,
    by Roger Bootle and his team from Capital Economics, which won the Wolfson Economics Prize, they look at the constitutional legalities and come to the conclusion that the secretive way is the way to go.

    It may already be happening, and the grovelling to the Troika for just a few more days of lenience, is just a necessary charade for the time being.

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