Greece is at it again (or still might be a better word)! Let’s turn back the clock a mere month! On April 28th we get the following news (via several sources): “Greece has decided to pull Finance Minister Yanis Varoufakis back from bailout negotiations, a move it describes as ‘clipping Varoufakis’ wings’ and ‘reining him in’ after three months of debt talks failed to produce an agreement”.
That move made perfect sense, several people (including me) saw him in some rock star presentation which was good for his ego and not too good for the Greek people. Of course, reining in does not mean ‘keeping him quiet‘, which I would not do (for the shear entertainment value alone), but also because he is the selected spokesperson of the Greek economy. So when we see the news in the Guardian a few hours ago stating: “Greek bond weaken after Varoufakis blames creditors“, my first thought was ‘can’t the man shut up?’
The quote given is “The problem is simple: Greece’s creditors insist on even greater austerity for this year and beyond – an approach that would impede recovery, obstruct growth, worsen the debt-deflationary cycle, and, in the end, erode Greeks’ willingness and ability to see through the reform agenda that the country so desperately needs. Our government cannot – and will not – accept a cure that has proven itself over five long years to be worse than the disease”
In my own view I state that he squandered 95% of the time he had with posturing, he forfeited the game buy thinking that Greece is too big to be ‘Grexitted’. Guess what Yanis! The Dutch SNS bank thought that very same notion! It did not pan out too well for them either!
Now we get the second quote, this one from Dimitris Stratoulis. He states “If we decide that there is no money left for the IMF, we have repeatedly said that our priority is to pay salaries, pensions, health, and education”. To be honest, I cannot completely oppose that! Although my priority should state Pension, Salary and Health, with a question mark to what salaries are to be paid, but I understand that the people should normally go first. I do not oppose this! Yet Syriza has been playing what I regard to be a pissing contest with people who did not need to play that game and had no interesting in playing that game. There is additional evidence. Perhaps you remember the case of Leonidas Bobolas, who got arrested in April 2015 for 1.2 million in tax evasion? That short term theatrical play just as the ‘negotiations’ were going on. I reported it in my blog on April 27th in the article ‘Finding inspiration‘ (at https://lawlordtobe.com/2015/04/27/finding-inspiration/).
How many arrests since then?
The news is awfully quiet around it. There has also been zero visibility on praising Kostas Vaxevanis on his findings and his reports. It seems to me that the members of Syriza have absolutely no intent of doing anything constructive at all towards their creditors. So when we see the statements “Greek finance minister Yanis Varoufakis has apparently pledged that Greece will meet its €305m repayment to the International Monetary Fund” by Yanis Varoufakis as well as “Tsipras instructed officials to act speedily as his government sought to defuse tensions saying it would do its best to honour its debts – even if it failed to reveal how, exactly, it would find the money to pay €1.6bn in loans to the International Monetary Fund next month” (Helena Smith, the Guardian).
Yet these two parts are already ignoring the 750 million pushed forward because the invoice of May 12th was not ‘paid’! It was settled using the IMF emergency funds, which means that this money is also due. In addition on May 12th, 16th and 19th are the amounts of 348, 581 and 348 million due. That is just the IMF, the maturing bonds as well as the ECB have not been taking into account in this matter. In addition, more bailouts are already known to be needed, so as Varoufakis is boasting, threatening and claiming, I notice that many are ignoring the observation some made “the creditors’ insistence on even more austerity, even at the expense of the reform agenda that our government is eager to pursue“. This is at the heart of the matter, because Greece is facing a 22 billion annual interest invoice, which it has no way of paying. A fact many are simply ignoring. So as non-actual payment of three quarters of a billion were made, we must wonder where that comes from. Let’s not forget that on June 12th 3.6 billion in T-bills mature!
Another non-reality comes from that same Guardian when we see: “Traders are also blaming Klaus Regling, the head of the European Stability Mechanism, for today’s euro selloff“, which is specified in “There is little time left… That’s why we’re working day and night for an agreement. Without an agreement with the creditors, Greece will not get any new loans. Then there’s a threat of insolvency. There are a lot of risks contained in that”, which is a reality I have pleaded for, for some time now. The funny part is that the New Democracy HAD it for the most sorted and the Greek people were suffering, no one denies that! Yet the courts have not made any attempt to hold previous administrations accountable, the tax evasion schemes had one trial so far and 1.2 million does not go far.
There is one final part that is an additional danger. It is not reported on, because in all honesty, the actual danger is not known yet. But did you consider how tourism will do this year? How many thousands of tourists will consider avoiding Greece (the Germans being a first nation that comes to mind)? You see, no matter how we regard the Germans, they for the most had jobs, had incomes and will desire a warm vacation. The Greek approach will work out nicely for Spain, Portugal and Italy I reckon, but with the acts of alienation Greece is cutting itself in the fingers. In addition, the dangers of drying ‘wells’, like the fear of empty ATM’s and other means not operational give added fear to the tourist population. Even though Crete should remain reasonably safe, the reality is that no part of Greece might be safe if clear progress is not booked within 2 weeks. I do hope that it will not pan out to be too bad for Crete, Stavros Arnaoutakis has been an active fighter for the prosperity of Crete for a long time and it was his birthday yesterday, so: “Happy belated birthday Stavros!” He was born in Archanes, due South of Iraklion. You might wonder why I bring this up. I will repeat the issue I voiced well over a year ago. It is becoming more and more visible that the power of Crete might reside in its independence. Crete has a founded tourist base, it has a functioning harbour for commerce and functioning airports for commercial ends too. This independence would not break their Union with Greece, but unlike the independence of Scotland, Greece has a much better chance to setup its independence at present, without too many nasty negative sides. Whatever options Syriza is currently destroying, Crete could set up a working base of minimal credit and continue for now. It will be hard, no one will deny that, but if Crete can sway a few services towards the Cretan island, it would for the better part be decently self-reliant.
This is a much better position than the position Greece had in the past, which team Tsipras/Varoufakis efficiently destroyed as I personally see it.
I also believe that the dedication Stavros Arnaoutakis has shown for a strong Crete could go a long way with whatever creditor conversation might be needed. As Crete moves straight into the Drachma, which would then be called the Cretan Drachma, would start to build on a future for both social enhancements (within Crete) as well as built on the decent foundations that Cretan housing has as well as a shift towards a services oriented future. Consider the mild climate Crete offers with water views all around that island, how long until 2-3 retirement villages would rake in jobs, commerce and income from retirees who would like their last few years in decent sunshine?
It is not enough to warrant full independence, but it is a start, if only to make the reliance on tourism 10%-20% smaller. Consider call centres that could work in that time zone and the better weather conditions. Before too long, students from all over Europe will seek a call centre all day and party all night vacation. I admit it is not the business call that matters here, but good commerce is where you built it!
Now, this might not be a great idea (perhaps not even a good idea), but I am trying to find a solution! I hope that there will be options for the Greek people, because Syriza is quickly and as I see it possibly intentional discarding whatever solution is left for the Greek people. If you doubt this, then consider the following facts:
* Less than an hour ago, I see in the Guardian, the following release: “Mujtaba Rahman, analyst at Eurasia Group, reckons that Greece will probably reach a deal with the Eurozone in time” (I am not convinced), in addition we see “We continue to believe Tsipras will lose around 5-10 lawmakers from his coalition when the package is presented to parliament (potentially attached to a vote of confidence). But we suspect he will lose less than 12 MP’s allowing him to keep his parliamentary majority“. As I see it, this should be about protecting the Greek people, now we see the cold reality (not an invalid one) that this seems to be more about playing with votes and keeping a ‘parliamentary majority‘!
This is why I felt that Antonis Samaras was the better option. He was trying to find solutions, not be ‘the popular guy’! You think Antonis Samaras was making friends when he was in office? No! He inherited a 400 billion invoice (very rough estimate) with no way to pay for it. With floating the credit ceiling and pushing non actions, Tsipras in his short time (with of course support by Varoufakis) has added close to 20% to that total debt. Now, in all honesty, he did not cause that 20% directly, but by sitting on his hands and playing theatrics he has not helped resolve any of it.
But we must also adhere to reality. The following we get from Bloomberg if Greece misses a payment: “A missed payment date starts the clock ticking. Two weeks after the initial due date and a cable from Washington urging immediate payment, the fund sends another cable stressing the “seriousness of the failure to meet obligations” and again urges prompt settlement. Two weeks after that, the managing director informs the Executive Board that an obligation is overdue. For Greece, that’s when the serious consequences kick in. These are known as cross-default and cross-acceleration“. This is a true reality, yet is that per payment?
Consider that this happen on June 5th and we get to June 19th? At that point two T-bills will have matured for the total amount of 5.2 billion, the second one of 1.6 billion on the 19th itself. When the 5th is missed, what will the markets do then? In addition, on June 19th a total of 910 million will be due too (16th and 19th of June IMF payments). In addition, what will happen to the interest levels when the two week term passes?
No one denies that the payment pressure is too unreal, but the Greek government themselves was cause to all of this (not Syriza)! That is at the heart of the ignored facts (read: unmentioned). These facts are exactly why Crete should consider protecting the Cretan population if at all possible. In addition, the separation could give additional credit to the Greeks on Crete and it might (not a guarantee) instil a lesser negative impact on tourism, which would be a massive plus. A few extra options could be set up there, but that would be up to Stavros Arnaoutakis and his peers to decide.
So how will we see this steeplechase unfold?
The ‘die hard’ positive proclaimers are singing the same song again and again, the doomsayers are hammering on what cannot be and both are interestingly avoiding key issues. Whether they feel repetitive on them is beside the point. I try to remain on the fence (which is hard with Syriza), yet I do try to find solutions. Will they be useful? Not for me to decide, but at least as a non-Greek, I might be one of the few trying to find a non-exploitative solution, which puts me ethically, morally and spiritually ahead of the pack.