Category Archives: Naked Capitalism

Why Syriza Failed, by Yves Smith

This is a wonderfully written piece that accurately captures the Greek situation. Thank you to Pepe’s Corner for bringing it to our attention.

We would also encourage for readers to explore the other brief material that we have selected to publish on the unfolding Greek ‘situation’ (read: Banker led destruction of a whole country).

You can read that here.

While reading on the ongoing obituary of Syriza, one cannot help but notice how much of an amazing airbag function the party has performed. As Dagmar Henn has previously said, the party was successful in stopping the mobilization of the Greek people.

AE

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Yves here. While the path for the ruling Greek government to make a deal with its creditors is fraught, it is pressing forward to try to come to an agreement by the next Eurogroup meeting, May 11. Greece has an IMF payment due May 12 that it will find difficult to meet. With the new urgency and the, um, realignment of the negotiating team, the odds now look to favor Greece capitulating even in the event of a default even if the ruling coalition tries holding ground on some of its red lines like pensions. If a default were to occur, it’s not hard to imagine that the IMF and the ECB would make Greece an offer it can’t refuse: the IMF would reverse itself on giving Greece a grace period for its payment if it relented on the disputed issues, otherwise the ECB would have no choice in light of the default to remove or limit its support under the ELA That would force Greece to impose capital controls, nationalize its banks, and issue drachma to recapitlaize them. Both the Greek public and most Syriza members are opposed to a Grexit.

Tsipras continues to send mixed signals on its intentions. He has veered time and time again from making cooperative noises when he encounters resistance from the creditors to making defiant statements to appeal to voters. Consider this section from the Financial Times yesterday that we flagged in Links:

The moves come as senior Greek ministers have publicly acknowledged in recent days that they may be forced to accept economic measures they have been attempting to avoid, a sign they are preparing Greek voters for concessions.

Today, the Financial Times has Tsipras again taking up a defiant posture and saying he might be forced to call a referendum. We’ve said that the likely lead time makes that impossible (as in Greece will almost certainly default before a referendum can take place) and the Eurogroup chief Jeroen Djisselbloem cleared his throat and said pretty much the same thing (which may amount to calling the Tsipras idea a bluff). From today’s Financial Times:

Greece’s leftwing prime minister has warned that he would hold a referendum if international creditors insisted on a “vicious circle of austerity” as the key to unlocking urgently needed bailout money.
Hours after making a conciliatory gesture to Greece’s eurozone partners with a reshuffle of his negotiating team on Monday, Alexis Tsipras struck a more defiant note….

A referendum could lead to weeks of continued uncertainty about Greece’s solvency. A plan by Athens to hold a plebiscite in 2011 was effectively scuppered by eurozone leaders. But some officials also believe it could be a way for Mr Tsipras to win public support for an eventual reform programme.

Jeroen Dijsselbloem, the Dutch finance minister who leads the Greek negotiations as head of the eurogroup, said he did not think a referendum was a feasible option for Mr Tsipras given the urgent need for a deal so that bailout cash can be disbursed soon.

“It would cost money, it would create great political uncertainty, and I don’t think we have the time,” Mr Dijsselbloem told Dutch radio. “And I don’t think the Greeks have the time for it.”

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