May 062015
 
 May 6, 2015  Posted by at 11:22 am Finance Tagged with: , , , , , ,


NPC Graf Zeppelin over Capitol 1928

In its German language edition, Der Spiegel ran a piece last night (translation is mine) about a proposal from the German Green Party (Die Grünen) to deal with the Greek debt crisis that is radically different from how its own government has so far approached the situation. The Greens are not in the Berlin government, but they are a force in German politics regardless, if only because the country loves so much to portray itself as green.

The Green Party’s euro working group, made up of foreign policy, finance and economic specialists, first of all says that, realistically speaking, it will take 10-20 years to deal with Greece’s debt issues.

Furthermore, while many of the Greek problems are ‘home-made’, the “one-sided focus”, on the part of its creditors, on a high primary surplus has led to further economic collapse and thus growing debts. “Austerity is broken and has failed.” (‘die Kaputtsparpolitik ist gescheitert’). Moreover, today’s short-term crisis management, which merely moves from one payment to the next, needs to stop.

Future reforms should no longer target ordinary citizens, but above all the wealthy and the profiteers of ‘nepotism’. If Athens is consistent in applying these reforms, it would be rewarded with further reductions in interest rates and repayment terms.

From this vantage point, the Green Party proposes the following scenario:

• Primary surpluses achieved until 2020 should remain in the country for Athens to finance its domestic programs with, and not be used for debt servicing.

• Greek debts to the ECB and IMF should be taken over – and serviced – by the European Stability Mechanism (ESM) as part of a third loan program, in return for an ‘ambitious reform program’. This loan program would need to stay in place until the Greeks can, as a result of the reforms, service their own obligations again. The reform program should serve to achieve an effective and sustainable government reform, to stabilize the economy and to create a stable framework for investment in Greece.

• Athens wouldn’t have to start servicing its European Financial Stability Facility (EFSF) loans until 2022.

• New and additional loans could be awarded for which Greece will only have to pay interest in times of economic growth. This idea, earlier also raised by the Syriza government, is modeled on the 1953 plan according to which Germany was allowed to pay war debts only in times when it had trade surpluses.

We’ll have to wait and see how much weight the German Greens carry in Europe. They have 10% of the seats in the German parliament, and the European Green alliance has just 7% in the European parliament.

It is, however, obvious that alternative views exist to those prevalent among the troika members, whose unity also threatens to be shattered as substantial differences between EU and IMF standpoints have started floating to the surface.

However it may be, it’s not a plan that Merkel and Schäuble can just sweep under the carpet. They will have to come with a well-argumented response.

And Greece will need to be offered a way to make its next set of debt payments, starting with a big one on May 12.

Home Forums German Greens Propose Radical Greek Debt Solution

This topic contains 5 replies, has 5 voices, and was last updated by  Raúl Ilargi Meijer 3 years, 10 months ago.

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  • #20904

    NPC Graf Zeppelin over Capitol 1928 In its German language edition, Der Spiegel ran a piece last night (translation is mine) about a proposal from the
    [See the full post at: German Greens Propose Radical Greek Debt Solution]

    #20912

    John Day
    Participant

    This buys more time for transition than each little kick of the debt can does, but requires major changes in EU finance to even begin, maybe impossible changes.
    It is an alternative, which must now be addressed.
    Good.

    #20914

    Ken Barrows
    Participant

    Even with the Greens, it’s about “growth.” Sigh.

    #20935

    mattilathehun
    Participant

    TAE – what are the chances of you guys forming a political party? What are the chances you guys have read up on past successful political revolutions and are willing to try apply those methods? IT seems to me that it is the duty of the well-informed to inform the not-so-well informed of the thieves and crooks in the UN, or the World Bank, or IMF or whatever. It is our duty to stop those animals who believe the only thing to life is money. It is our duty to harness the power of the masses, of the millions of people who do not have homes, or reliable healthcare, or a good stable job, and give them the government that they deserve.

    #20938

    steve from virginia
    Participant

    The Green program cannot solve anything as all funds including debt repayments must be borrowed. In Europe, the source for euro-denominated loans is German and French banks.

    No matter which direction the streams of funds wish to flow the source is the same German and French banks, everyone else is an intermediary (rentier): ECB, IMF, ISM, etc. The only way to reduce debt in one area is to increase it elsewhere.

    At bottom the debts will be repudiated and everyone in Europe will suffer. The cost will be measured in the depth of Europe’s ruin. Keep in mind, there is no more growth, the means to recover after calamities does not exist. Europeans must be careful, to look past the numbers offered by bankers and politicians and decide for themselves what matters: fake Las Vegas-style ‘prosperity’, money-wealth and wasteful lifestyles or some alternative way of existence that does not require energy imports … financed with tens (or hundreds) of trillions of borrowed euros. The problem in Europe and elsewhere is not the pensioners or even governments but hulks at the end of the continent’s driveways.

    The Europeans have a choice, they can either live in Tuscany or they can live Syria. Drive a car = borrow money = Syria.

    #20941

    mattila

    No political party for us. That’s one system nobody should get caught in. It selects for sociopaths and psychopaths. Watching the UK elections goes a long way to confirm this once again. That and the still increasing blatant role of the press as propaganda machine. I don’t think we are psychopathic enough to survive that kind of thing.

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