[Marxism] 02-02-15 France Supports Greece in EU Debt Battle
POSTING RULES & NOTES #1 YOU MUST clip all extraneous text when replying to a message. #2 This mail-list, like most, is publicly & permanently archived. #3 Subscribe and post under an alias if #2 is a concern. * Note that Schaeuble has not rejected the reported Greek proposal for a swap of the debt it owes to the EU, ECB, and IMF, only that Germany does not want Greece to act "unilaterally", indicating that this could be a basis for negotiation. More support for the view Syriza will be forced into a compromise which does not resemble its campaign promises. http://www.reuters.com/article/2015/02/02/us-greece-politics-idUSKBN0L60WO20150202?feedType=RSS&feedName=worldNews (Reuters) - Greece's new government dropped calls for a write-off of its foreign debt and proposed ending a standoff with its official creditors by swapping the debt for growth-linked bonds on Monday, a week after its election on an anti-austerity platform. Finance Minister Yanis Varoufakis, in London to reassure private investors that he was not seeking a showdown with Brussels over a new debt agreement, said the new left-wing government would spare privately held bonds from losses, a source told Reuters. The reported proposals, which included a pledge to reform the Greek economy, contrast sharply with the government's strident vows in Athens last week to ditch the tough austerity conditions imposed under its existing bailout. Late on Monday, Varoufakis issued a statement saying that comments of his to financial investors had been misinterpreted. He gave no details but he was widely reported in Greek media to be backing down from the government's aim of reducing the debt. "The government and the finance minister will not back down, irrespective of how grieved some people are by our determination," he said in the statement. It was not clear whether the proposals would be accepted by European heavyweight Germany, which opposes softening the terms. Varoufakis had not discussed the swap with officials from its European Union or European Central Bank creditors, said the source, who had direct knowledge of the plans but would not be named due to the sensitivity of the issue. The finance minister also said he had not put a value on the swap, the source said, calling it a "work in progress". "These bonds held by the ECB right now can be restructured. It's possible to turn it into perpetual bonds to be serviced, or growth-linked debt," said the source. "It's the same with a proportion of the other bilateral bonds held by the official sector." Germany's Finance Minister Wolfgang Schaeuble told Reuters in an interview earlier on Monday that Berlin would not accept any unilateral changes to Greece's debt program. "We want Greece to continue going down this successful path in the interests of Greece and the Greeks but we will not accept one-sided changes to the program," he said at the Reuters Euro Zone Summit. Varoufakis called his plan a "menu of debt swaps" that meant Athens would no longer call for a write-off of Greece’s 315 billion euros ($360 billion) of foreign debt, the Financial Times reported. "What I’ll say to our partners is that we are putting together a combination of a primary budget surplus and a reform agenda," Varoufakis told the newspaper. "I’ll say, 'Help us to reform our country and give us some fiscal space to do this, otherwise we shall continue to suffocate and become a deformed rather than a reformed Greece'." Athens planned to target wealthy tax-evaders and post primary budget surpluses of 1 to 1.5 percent of gross domestic product, he told the paper, even if it meant his party, Syriza, could not fulfill all the spending promises on which it was elected. The finance minister and Greece's new Prime Minister Alexis Tsipras are touring European capitals in a diplomatic offensive to replace Greece's bailout accord with the European Union, ECB and International Monetary Fund, known as the "troika". On Tuesday, Tsipras will meet Italy's Prime Minister Matteo Renzi, a young center-left leader thought to be among those most sympathetic to calls for leniency. Varoufakis said he was confident he could reach a negotiated settlement soon, telling Britain's Channel 4 news it was time to stop Greece being a "festering wound" on Europe and dismissing a suggestion the ECB could block a new deal. He met international investors on Monday evening. Michael Hintze, founder and CEO of hedge fund CQS, asked afterwards if the minister had proposed a debt swap, said "It's more balanced and broader than that," without elaborating. The source told Reuters losses would not be forced on private investors, saying: "They have had enough hair cuts." In a statement released by the Greek Finance Ministry early on Tuesday in Athens, Varoufakis said the government's aim was to pull the co
Re: [Marxism] 02-02-15 France Supports Greece in EU Debt Battle
POSTING RULES & NOTES #1 YOU MUST clip all extraneous text when replying to a message. #2 This mail-list, like most, is publicly & permanently archived. #3 Subscribe and post under an alias if #2 is a concern. * On Feb 2, 2015, at 11:55 AM, Ralph Johansen via Marxism wrote: > I’m wondering, if Germany begins to get pressure from other governments that > it doesn't feel it can accommodate for whatever reasons having to do mainly > with its net export position, with the position of the Bundesbank and the > moral hazard effect on other indebted governments, what do we think is the > likelihood (I've read that it is a probability) - and the effect - of a > complete pull-out of Germany from the Eurozone, re-instituting the > Deutschmark or a similar separate German medium of exchange? If Germany left the euro, it’s expected that it’s currency would rise sharply and its exports would face stiffer competition from other European nations and overseas. That was a major reason it entered a currency union with countries whose economic performance have exerted a restraining influence on the exchange rate. I can’t see why German capitalism would want to revert to the status quo ante. Unlike the highly indebted peripheral countries, it has benefited mightily from its position within the eurozone. > As you say, an eventual compromise at a low level of debt relief appears as > the likely prospect, but 80-90% of the bail-outs the Greeks have been getting > go to pay interest and principle on outstanding indebtedness at the expense > of Greek (and European) taxpayers, which is why Syriza concludes that more > loans at anything like existing terms are less than useless, and that they > absolutely cannot pay them with a shrinking economy anyhow. It’s very unlikely that the existing terms will remain in place, although it’s equally doubtful they’ll be any substantial write off of existing debt. But maturities can be spread out to relieve the burden of debt and both sides can then claim victory - Syriza, that it has obtained debt relief and can redirect the savings towards social programs, and the Merkel government, that it has held the line on a deep debt writeoff. Since the other indebted nations, notably Italy and Spain, will want similiar treatment, it should form part of an overall package outside of a formal debt conference. At least, that’s my reading of where both sides think they’ll end up although, as in any negotiation, there’s no assurance they’ll be able to reach a mutually acceptable compromise. > There seems to be no question that Syriza's approach owes more to Keynes than > to Marx, that the effort is being characterized as first allevating the most > acute points of domestic distress and then advancing proposals to save > European capital from itself, especially since other European taxpayers are > paying for this debacle as well - - but look, Syriza only obtained 36% of the > participating electoral vote, their parliamentary plurality of 49% exists as > an anomaly of the rules of apportionment of seats, they cannot propose that a > socialist government will expect the Greek people to agree to cut their > economy loose from its European moorings and share a dwindling nothing, they > cannot survive without external aid at this point, no one, other than other > European states (collectively) that fear penumbral effects on their own > financial prospects of Greek collapse, will willingly invest in a faileing > state -- and the Greek people in the light of all this are not regarded by > Syriza as ready for a socialist revolution - nor given the options do they > see a viable plan for such a situation. And when anyone suggests that you let > Greece crash completely, and then there will be conditions ripe for > revolution, and autarky, we have to remember that they do not have anything > like the resources available to Argentina which, with its vast land and > relatively large productive infrastructure for providing inputs and for > growing soybeans for China was able to recover from default. Even Ireland, > which has had some recovery from imposed austerity under terms similar to > those imposed on Greece has a historical relationship as a platform for plant > and investment by international capital that Greece lacks. This is the position of Varoufakis and the Syriza leadership and it’s understandable why they would be so hesitant about a voluntary exit. But other respected voices on the left like Costas Lapavitsas have argued that if Greece left the eurozone and adopted its own devalued currency, it could begin to recover - admittedly after a very difficult transition period - with forceful state intervention in the economy. Europeans and others would buy cheaper Greek goods, and take advantage of cheaper vacations, education, health and other
[Marxism] 02-02-15 France Supports Greece in EU Debt Battle
POSTING RULES & NOTES #1 YOU MUST clip all extraneous text when replying to a message. #2 This mail-list, like most, is publicly & permanently archived. #3 Subscribe and post under an alias if #2 is a concern. * Marv Gandall wrote Despite the predictable hardline posturing by Germany, the ECB, and the EU, this weekend’s sympathetic comments by French finance minister Sapin and US President Obama can’t help but reinforce the Syriza leadership’s conviction that it can exploit strategic divisions at the top concerning austerity and the debt crisis. I noted several weeks ago that “the likeliest outcome is an eventual compromise which limits, but does not entirely impair, Syriza’s ability to provide jobs, income support, and debt relief to Greece’s beleaguered population. Such an outcome would be in keeping with the growing conviction of the European elites that its brutal austerity regime is undermining economic growth and political stability throughout Europe and that some accommodation to mass distress and discontent is necessary.” France Supports Greece in EU Debt Battle By MARCUS WALKER, INTI LANDAURO and ANDREW ACKERMAN Wall Street Journal Feb. 1, 2015 (Behind a paywall) (...) Lemme see if I have this right: First of all, Europe as the second or third largest economic player has a heavy bearing on the global economy and appears to be in a very tenuous state which is partially concealed by its opaque structure. I'm wondering, if Germany begins to get pressure from other governments that it doesn't feel it can accommodate for whatever reasons having to do mainly with its net export position, with the position of the Bundesbank and the moral hazard effect on other indebted governments, what do we think is the likelihood (I've read that it is a probability) - and the effect - of a complete pull-out of Germany from the Eurozone, re-instituting the Deutschmark or a similar separate German medium of exchange? As you say, an eventual compromise at a low level of debt relief appears as the likely prospect, but 80-90% of the bail-outs the Greeks have been getting go to pay interest and principle on outstanding indebtedness at the expense of Greek (and European) taxpayers, which is why Syriza concludes that more loans at anything like existing terms are less than useless, and that they absolutely cannot pay them with a shrinking economy anyhow. There seems to be no question that Syriza's approach owes more to Keynes than to Marx, that the effort is being characterized as first allevating the most acute points of domestic distress and then advancing proposals to save European capital from itself, especially since other European taxpayers are paying for this debacle as well - - but look, Syriza only obtained 36% of the participating electoral vote, their parliamentary plurality of 49% exists as an anomaly of the rules of apportionment of seats, they cannot propose that a socialist government will expect the Greek people to agree to cut their economy loose from its European moorings and share a dwindling nothing, they cannot survive without external aid at this point, no one, other than other European states (collectively) that fear penumbral effects on their own financial prospects of Greek collapse, will willingly invest in a faileing state -- and the Greek people in the light of all this are not regarded by Syriza as ready for a socialist revolution - nor given the options do they see a viable plan for such a situation. And when anyone suggests that you let Greece crash completely, and then there will be conditions ripe for revolution, and autarky, we have to remember that they do not have anything like the resources available to Argentina which, with its vast land and relatively large productive infrastructure for providing inputs and for growing soybeans for China was able to recover from default. Even Ireland, which has had some recovery from imposed austerity under terms similar to those imposed on Greece has a historical relationship as a platform for plant and investment by international capital that Greece lacks. From what I'm also learning, one of the main impediments to a restructuring of the Eurozone, in order to construct a recycling or redistributive mechanism which does not leave each individual state responsible for its own indebtedness - where one state (Germany) is a net exporter and most others are net importers (think the US, with the federal government being able to distribute say Boeing plants to strapped states when Boeing asks Congress for a subsidy for expansion, or when Congress distributes venues for military bases) - is that many other European nation's finance ministers seem to know full well that the present structure is untenable and p
