For one thing it's not clear that it will be voted through and implemented in time. Tsipras says Parliament should vote for what he admits is a very bad deal.
http://diaryofarepublicanhater.blogspot.com/2015/07/tsipras-i-dont-believe-in-this.html
The conventional wisdom seems to be that he has the votes though he'll have to get it from his opposition. However, this may also destroy hum politically. If so this would be the kind of chaos that will bring further doubt that this deal will be done in a timely way.
Yet the markets seem to feel that everything has been solved. I wonder how the US market now seems to not have a care in the world when it was struggling before this deal.
I can buy the idea that what happens in Greece won't have much effect on the US at least not in the short term-though if Grexit undermined the entire euro system this could be a concern for the US as well as Europe is obviously a very important trading partner for Uncle Sam.
And if what's been happening is of no consequence why did the market take off after the announcement of a deal?
This would seem to imply that if we find out soon that the deal isn't a done deal after all this could be trouble?
The IMF is now saying that it may not be able to accept the latest 'aGreekment'-and their reasoning is pretty sound.
"The move again raises the pressure on Germany, which has opposed any debt relief, just as it prepares to seek the approval of its parliament to negotiate the details of a new bailout hashed out in a summit at the weekend."
The International Monetary Fund has sent a strong signal that it may walk away from Greece’s new bailout programme, arguing that it will not be able to participate if European creditors do not offer Athens substantial debt relief."
“Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far,” the memo reads.
"That view was reinforced by the IMF on Tuesday when it said it would not be able to disburse €16.4bn in its own funds that European officials are counting on unless an agreement on debt relief was concluded."
http://www.ft.com/cms/s/0/444a0bc8-2a46-11e5-8613-e7aedbb7bdb7.html#ixzz3fvrDgzTk
http://diaryofarepublicanhater.blogspot.com/2015/07/tsipras-i-dont-believe-in-this.html
The conventional wisdom seems to be that he has the votes though he'll have to get it from his opposition. However, this may also destroy hum politically. If so this would be the kind of chaos that will bring further doubt that this deal will be done in a timely way.
Yet the markets seem to feel that everything has been solved. I wonder how the US market now seems to not have a care in the world when it was struggling before this deal.
I can buy the idea that what happens in Greece won't have much effect on the US at least not in the short term-though if Grexit undermined the entire euro system this could be a concern for the US as well as Europe is obviously a very important trading partner for Uncle Sam.
And if what's been happening is of no consequence why did the market take off after the announcement of a deal?
This would seem to imply that if we find out soon that the deal isn't a done deal after all this could be trouble?
The IMF is now saying that it may not be able to accept the latest 'aGreekment'-and their reasoning is pretty sound.
"The move again raises the pressure on Germany, which has opposed any debt relief, just as it prepares to seek the approval of its parliament to negotiate the details of a new bailout hashed out in a summit at the weekend."
The International Monetary Fund has sent a strong signal that it may walk away from Greece’s new bailout programme, arguing that it will not be able to participate if European creditors do not offer Athens substantial debt relief."
“Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far,” the memo reads.
"That view was reinforced by the IMF on Tuesday when it said it would not be able to disburse €16.4bn in its own funds that European officials are counting on unless an agreement on debt relief was concluded."
http://www.ft.com/cms/s/0/444a0bc8-2a46-11e5-8613-e7aedbb7bdb7.html#ixzz3fvrDgzTk
For once the IMF makes perfectly good sense. There is no point whatsoever to doing this if there's no debt relief.
It's in a way amazing that we still have to argue for debt relief in 2015, 7 years after the financial crisis. Yesterday Hillary was saying that she thinks some of the bankers should have gone to jail in 2009. That may be though I'm not certain.
However, even if we failed by not having prosecutions of banks in 2009, we still handeld the crisis 100 times better than in the EU. Simon Wren-Lewis rightly pointed out that in America lenders were allowed to walk away but in the EU even now the very idea of a haircut is very controversial.
"If borrowers get into difficulty in a way that threatens the solvency of lending banks, there are at least two ways a government or monetary union can react. One is to allow the borrowers to default, and to provide financial support to the banks. Another is to buy the problematic loans from the banks (at a price that keeps the banks solvent), so that the borrowers now borrow from the government. Perhaps the government thinks it is able to make the loans viable by forcing conditions on the borrowers that were not available to the bank."
"The global financial crisis was largely dealt with the first way, while at the Eurozone level that crisis was dealt with the second way. Recall that between 2010 and 2012 the Troika lent money to Greece so it could pay off its private sector creditors (including many European banks). In 2012 there was partialprivate sector default, again financed by loans from the Troika to the Greek government. In this way the Troika in effect bought the problematic asset (Greek government debt) from private sector creditors that included its own banks in such a way as to protect the viability of these banks. The Troika then tried to make these assets viable in various ways, including austerity. Two crises with the same cause but very different outcomes."
http://mainlymacro.blogspot.com/2015/07/the-great-recession-and-eurozone-crisis.html#comment-form
"The global financial crisis was largely dealt with the first way, while at the Eurozone level that crisis was dealt with the second way. Recall that between 2010 and 2012 the Troika lent money to Greece so it could pay off its private sector creditors (including many European banks). In 2012 there was partialprivate sector default, again financed by loans from the Troika to the Greek government. In this way the Troika in effect bought the problematic asset (Greek government debt) from private sector creditors that included its own banks in such a way as to protect the viability of these banks. The Troika then tried to make these assets viable in various ways, including austerity. Two crises with the same cause but very different outcomes."
http://mainlymacro.blogspot.com/2015/07/the-great-recession-and-eurozone-crisis.html#comment-form
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