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The Pantomime of the Greek Deal

July 10, 2015

A bad deal is what Greece wanted. A bad deal is what Greece got. Tsipras neither saved nor doomed the country.


This is my initial reaction to the deal proposal by Greece: it is more austerity -harsh austerity at that – and many of the measures are recessionary. Distribution of the burden seems to me fairer than before. If the upside is access to a significant stimulus package (front-loaded), a smoothing of the measures (back-loaded) and substantial restructuring of debt, to make it definitively viable, it will probably be seen as worth it. It is certainly capable of being sold as worth it.
Essentially, everyone managing to keep their position/perks/income in the context of an economy which is in the middle of a death spiral, is meaningless. If the economy begins to recover, then things which were unbearable, become bearable. Austerity becomes a background noise, rather than a preoccupation and a progressive government will be able to offset the damage. It is a delicate balance.
Market confidence is a strange creature. There is a lot of money sloshing around at the moment, taken out of China which is in free-fall. Money which is bulging to be invested. All it takes is an intangible notion that Greece has hit the low point, for investment to return. Whether this package achieves that balance or not, will have to be assessed over time, as the detail of each measure becomes known and away from the adrenaline and hysteria of negotiation fever.
Instant, dramatic, pantomime reactions of the type “Tsipras just destroyed Greece” and “Tsipras just saved Europe” are numerous and deeply unhelpful. He has done neither. This isn’t a booing or cheering moment…

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4 Comments leave one →
  1. July 10, 2015 2:45 pm

    Reblogged this on sdbast.

  2. July 10, 2015 5:43 pm

    Paul Mason from channel 4 news seems to have fairly summed up the situation today. My own ill informed assessment is that it has proven to be far too costly for Greece to leave the euro and the EU.

  3. July 10, 2015 6:27 pm

    “The confused camp which condemned Tsipras for not making a deal two weeks ago, then voted OXI at the referendum and, now, condemns Tsipras for trying to make a deal is large – probably the majority”.

    I don’t think so. The people who voted “no” on Sunday did not want Tsipras to sign a deal the previous weekend. This should be self-evident.

    This deal is bad and may well break Syriza up in two (all the Left Wing, plus the group of 53 and even Varoufakis apparently, oppose it) but it’s not worse than the one two weeks ago (it’s the same with minor cosmetic changes). What is bad is that Tsipras has not yet used his sovereign power to nationalize the banks, including the Bank of Greece, what is bad is that the vast majority of those who voted “no” on Sunday feel betrayed by this copy of the previous unacceptable deal.

    Read please:

  4. July 11, 2015 12:31 pm

    Great article, Alex – for me there are two issues, and a further question; one, can the benefits of debt relief outweigh the potential harm of the recessionary aspects of the proposals (this of course assumes debt relief will be forthcoming), two, there is a risk that in introducing these proposals, Tsipras has undermined the trust placed in him by a huge number of people. My further question is – in your view, do these proposals undermine the wider anti-austerity movement? Maybe Tsipras feels he is doing what has to be done, but my fear is that the wider anti-austerity movement has suffered something of a setback – that said, perhaps this was the only way to break the logjam, and he deserves huge plaudits for managing to split the creditors, even within Merkel’s own domestic coalition? What is your view?

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