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Thursday, July 30, 2015

Reform momentum and its impact on Greek growth | Alessio Terzi at Bruegel.org

Reform momentum and its impact on Greek growth | Alessio Terzi at Bruegel.org

  • Greece has an imperfect track-record of structural reform implementation. However, the poor growth outcome of the Greek programmes is also a consequence of the timing and composition of reforms, which were not optimally geared towards a speedy transition to a new growth model based on the private sector. While the main responsibility for this lies with the Greek authorities, international institutions share the responsibility for the poor growth-enhancing effect of reforms.

  • In the current context, further structural reform efforts should be mainly targeted at supporting Greece's speedy return to solid growth rates. This is not only because poverty and unemployment have reached very high levels, but also for political economy reasons: reforms must quickly be seen to be working in order to buttress the consensus in favour of reform.

  • Further efforts should be made to improve Greece’s business environment and to liberalise product markets, in addition to shifting taxation away from labour and towards consumption. Reforms to improve the quality of institutions should continue and are very much needed in the Greek setting, while taking into account that their demanding implementation might use up administrative capacity and their impact on growth will only be seen over long time horizons.

IMF: NO BAILOUT FOR GREECE - Business Insider

IMF: NO BAILOUT FOR GREECE - Business Insider



Peter Spiegel IMF cannot join Greek rescue, board told

Tuesday, July 28, 2015

German Council of Economic Experts: Special Report of the Council

Advisory Council on the Economy: Special Report of the Council

Special Report of the Council

The recent conflict between the government of Greece and its partners in the euro area has shaken the very foundations of European Monetary Union. According to the German Council of Economic Experts, an independent body that advises the government in Berlin, these tensions have underlined the high urgency for further reforms.

While ZEW (Centre for European Economic Research) proposes (a)  a common unemployment insurance scheme at the supranational level, and (b) setting up insolvency procedures for countries that are facing the threat of national bankruptcy. 

Saturday, July 25, 2015

Hans-Werner Sinn : "Why Greece Should Leave the Eurozone"

Why Greece Should Leave the Eurozone - The New York Times

Jeremy Bulow & Kenneth Rogoff : The modern Greek tragedy | VOX, CEPR’s Policy Portal

 The modern Greek tragedy | VOX, CEPR’s Policy Portal

see also Why sovereigns repay debts to external creditors and why it matters 

Saturday, July 18, 2015

Charles Wyplosz : The new European Union | VOX, CEPR’s Policy Portal

The new European Union | VOX, CEPR’s Policy Portal

The new bailout deal for Greece was not easy. This column argues that it was also a failure. It will not be enough to recapitalise banks, it asks for structural reform that exceeds Greek capacities, and it raises the Greek debt-to-GDP ratio to unsustainable levels. In a few months or quarters, the programme will fail and the Grexit question will flare up again.

Wednesday, July 15, 2015

#ThisIsNotACoup - Dispelling some myths about the Greek agreement

#ThisIsNotACoup - Dispelling some myths about the Greek agreement

An Empire Strikes Back: Germany and the Greek Crisis | Stratfor

An Empire Strikes Back: Germany and the Greek Crisis | Stratfor
 the Germans did something they never wanted to do: resurrect fairly unambiguously the idea that Germany is the sovereign and dominant nation-state in Europe, and that it has the power and the will to unilaterally impose its will on another nation. Certainly the niceties of votes by finance ministers and prime ministers were adhered to, but it was the Germans who conducted the real negotiations and who imposed their will on Greece.

Hugo Dixon : #ThisWasNotACoup – POLITICO

#ThisWasNotACoup – POLITICO

 this was not a coup. It was Alexis Tsipras, not the other European leaders, who rejected the wishes of his people. The others leaders  who, in any case, are responsible to their own people rather than to the Greeks  were resigned to Athens leaving the euro. If Tsipras was humiliated, that was largely his own fault.
...

 Tsipras is in a terrible bind largely because he made wild promises he couldn’t keep, was not on top of important detail, wasted time with inflammatory rhetoric and made a series of bad miscalculations. He is not the victim of a coup. 

Monday, July 13, 2015

The birth of European macroeconomics | VOX, CEPR’s Policy Portal

The birth of European macroeconomics | VOX, CEPR’s Policy Portal

Mean Squared Errors: IMF: Most misleading sentence ever?

Mean Squared Errors: IMF: Most misleading sentence ever?: On June 26th -- the day before Greek Prime Minister Alexis Tsipras announced his intention to call a referendum on the Troika's proposed...

Greece is being punished for refusing to play by the Eurogroup’s rules | Euro Crisis in the Press

Greece is being punished for refusing to play by the Eurogroup’s rules | Euro Crisis in the Press

The etiquette of the Eurogroup is that one leaves one’s national interests at the door. Relations are more personal than political. Ideologies and grand statements of political doctrine have no place in the body’s deliberations. If a minister is constrained because of a difficult situation at home, this is treated as an understandable – if unfortunate – problem that needs to be solved. Ministers find in the Eurogroup a source of energy and support for taking on their own domestic populations. It is also a private club of sorts, where what goes on inside remains secret. Ministers attending the Eurogroup are transformed from politicians representing interests into experts seeking solutions to common problems.

Greece and Europe reach a deal after all | Brookings Institution

Greece and Europe reach a deal after all | Brookings Institution

Syriza gambled and lost, causing the Greek economy to plunge back into recession as uncertainty and eventual capital controls strangled the economy. This would potentially be justified if a better ultimate deal resulted, but it is very hard to believe that the Greeks would have failed to do at least this well, with far less pain, if they had played nice instead. The only remaining argument in favor of their strategy is that it is possible that Tsipras had to be this confrontational in order to hold Syriza together while moving towards the concessions to Europe necessary for a deal. Again, it is hard to imagine that there was no better way, if only a toned down version of the tough approach to negotiations, but it is impossible to prove this.
In any event, there now appears to be a deal, which is definitely good news. Let us hope that it holds together through the remaining steps, leads to positive effects on the economy, and can be implemented over three years without any new and risky confrontations. None of these are certainties, but the alternative of Grexit would be so damaging that I, for one, will be celebrating the fact of a deal.

Saturday, July 11, 2015

A Problematic Proposal from Greece | Foreign Policy

A Problematic Proposal from Greece | Foreign Policy

Does Greece’s latest bailout proposal, now accepted by the Greek parliament, and currently being scrutinized at length by eurozone finance ministers, make sense? It’s pretty much the same deal that was soundly rejected by Greek voters less than a week ago. The voters clearly knew something that the government didn’t — this is a lousy plan for the Greek economy, and a government stacked with economists surely could have come up with something better.

Greek Bank bread and Buiter | longandvariable

Greek Bank bread and Buiter | longandvariable



Me thinks that In view of the developing Banking Union, why not? As long as Greece does not revoke EZ treaties. “Greek” banks will , in effect, be owned by the ESM and supervised by the Eurosystem, which extends deposit guarantees.


Five misconceptions about the Greek debt crisis

Five misconceptions about the Greek debt crisis

It is widely accepted that the Greek bailout and austerity package has led to wealth flowing from Greece to its European creditors, benefiting foreign banks at the expense of Greeks, that its debt is unprecedented and unsustainable, that its recession is the unprecedented result of reforms that cannot succeed, and that Greece’s exit from the Eurozone would be calamitous.

Thursday, July 9, 2015

Olivier Blanchard : "Greece: Past Critiques and the Path Forward"

Greece: Past Critiques and the Path Forward | iMFdirect - The IMF Blog



Brad DeLong 's take: "Needed: Large Greek Devaluation or Large-Scale Transfers to Greece"

James Surowiecki : " Why Europe Needs to Offer Greece Debt Relief " - The New Yorker

Why Europe Needs to Offer Greece Debt Relief - The New Yorker

In fact, because of past restructurings that extended the maturity and lowered the interest rate on most of the country’s debt, Greece’s debt-servicing costs are actually relatively low—lower than those of many other European countries. If the Greek economy could manage to grow at even a modest clip, it would have little trouble servicing its debt. The debt itself is fundamental to Greece’s future prospects, as we’ll see, but for all the attention it’s gotten, it’s actually a secondary problem right now.

Europe’s Greek Failure by Daniel Gros - Project Syndicate

Europe’s Greek Failure by Daniel Gros - Project Syndicate

Sunday, July 5, 2015

The Guardian view on Greece’s no vote: eight days that shook a continent | Editorial | Comment is free | The Guardian

The Guardian view on Greece’s no vote: eight days that shook a continent | Editorial | Comment is free | The Guardian

it emerged that the Greek people had said no to continuing to engage with their creditors on the same suffocating terms.

Greece votes No – now Syriza must clarify what that really means

Greece votes No – now Syriza must clarify what that really means

Paul De Grauwe : "Greece is solvent but illiquid: Policy implications"

Greece is solvent but illiquid: Policy implications | VOX, CEPR’s Policy Portal

Greece’s debt is 180% of GDP, which seems to make it insolvent without large primary surpluses. This column argues that since restructuring lowered the interest burden to just 2% of GDP, Greece is solvent – or would be with nominal GDP growth of just 2%. The ECB’s misdiagnosis has caused an unnecessary banking crisis. The solution is to accept that Greek debt is sustainable, so the austerity programme can be relaxed and liquidity support provided to the Greek banking sector. 

Greece Is Doing Democracy Wrong - Bloomberg View

Greece Is Doing Democracy Wrong - Bloomberg View

In a crisis, effective democracy requires an elected leader to do what he or she thinks is right -- and take the consequences later, when elections are called. Prime Minister Alexis Tsipras’s failure to do this isn’t democratic -- it’s irresponsible hedging in the hopes of maintaining popularity even after a change in the policies that elected him. The popular will is in any case a useful fiction, as the Greek public is soon to learn, in case they’ve forgotten.

Friday, July 3, 2015

IMF report damning for Greek policies - The Economist

IMF report damning for Greek policies - The Economist
Seldom has the cost of political incompetence and brinkmanship been spelt out so vividly. Even if the Greeks vote for sanity in the referendum and endorse the creditors’ proposals in what will be seen as a vote for staying in the euro area, they have paid a heavy price for the impatience that brought Syriza to power.

Reuters commentary 3/7/15

Hugo Dixon : "If the Greeks vote “No” in Sunday’s referendum, the euro zone authorities may just shrug their shoulders and think that Athens had it coming. But if the people vote “Yes”, the euro zone authorities will surely want to avoid such a catastrophe."

Paul Glader : "Greek Prime Minister Alexis Tsipras, of the left-wing Syriza party, is playing games of poker, chicken and Russian roulette simultaneously. He is playing poker with EU finance ministers, hoping they are bluffing and won’t actually turn off the spigot of loans, bonds and possible debt relief flowing into Greece. Tsipras seems to believe Merkel and other leaders would encourage the troika — the International Monetary Fund, the European Central Bank and the European Commission — to release the final scheduled $8.1 billion bailout payment to Greece, the cradle of democracy."


Paul Taggart & Kai Oppermann : "The real question being asked of Greek voters in the referendum"

The real question being asked of Greek voters in the referendum

if the Greek public rejects austerity measures in the vote, Syriza will have post-hoc legitimation of its decision to walk away from the deal on the table.

What is at stake in the referendum? | Guntram B. Wolff at Bruegel.org

What is at stake in the referendum? | Guntram B. Wolff at Bruegel.org

A “yes” would give the prospect of staying in the euro area but conditions will not be easy. A “no” will result in Grexit with an uncertain future and high costs to Greek society, at least initially. If I was Greek, I would vote “yes” in the understanding that better conditions by creditors are the other part of the deal. 

What is at stake in the referendum? | Guntram B. Wolff at Bruegel.org

What is at stake in the referendum? | Guntram B. Wolff at Bruegel.org

The decision by the prime minister to call a referendum leaves the Greek citizens with a stark choice. The core of the question is whether Greek citizens will be ready or not to accept that in a monetary union financial assistance and solidarity are only extended if – in turn –the recipient accepts jointly agreed conditions. This is the core of the debate of the last months. It is this principle that the creditors will not be ready to give up – also because of their conviction, that a monetary union requires binding commitments and constraining institutions. 

Greek debt crisis—by the numbers – 7 charts ***** | Real-World Economics Review Blog

Greek debt crisis—by the numbers – 7 charts ***** | Real-World Economics Review Blog



Hm!..."Greek Debt Crisis". Very concise definition, but wrong. It doesn't describe the problem. Wrong frame (Kahneman) , useless conclusions. The Greek crisis as it appeared in 2009/10 was one of Fiscal Sustainability coupled with an unsustainable Current Account Deficit. 

There was no way the Greek government could maintain their spending even if the total debt was wiped out.

Thursday, July 2, 2015

John Aziz at Pieria : "Let Them Eat Baklava"

Let Them Eat Baklava

In my view (and that, it seems, of Paul Krugman) the fault lies squarely with the diagnosticians and pharmacists of the IMF, the ECB and the EU who have imposed such extreme austerity on a Greek economy as to leave it severely and stupendously depressed. 

Debt Sustainability Analysis

www.imf.org/external/pubs/ft/scr/2015/cr15165.pdf

"This preliminary draft DSA was prepared by Fund staff in the course of the policy
discussions with the Greek authorities in recent weeks. It has not been agreed with the
other parties in the policy discussions, and it has been circulated to, but neither discussed
with nor approved by the IMF’s Executive Board. Since it was prepared, the Greek
authorities have closed the banking sector, imposed capital controls, and incurred arrears
to the Fund. These developments are likely to have a significant adverse economic and
financial impact that has not yet been reflected in this draft DSA."

Why Greece’s socialists just might be political masterminds - The Washington Post

Why Greece’s socialists just might be political masterminds - The Washington Post

He has played it so perfectly, in fact, that the rest of the world is busily calling Tsipras and his advisers naïve and incompetent, not realizing that he's already won......... Maybe this analysis gives Tsipras too much credit. As Nixon notes, it's impossible to know what the premier was really thinking, and if his goal was to keep the country in the euro, he has done a terrible job.

The 'Demerging' Greek Economy - Bloomberg View

The 'Demerging' Greek Economy - Bloomberg View