Early Bird Headlines 30 July 2015
Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.
The Early Bird today was overwhelmed with the explosion of news from Greece. This story is one of the strangest we have ever seen. Hollywood script writers couldn't create a more complex plot than what is unfolding in Greece. Yesterday we had an article about how the Greek stock market was scheduled to open on Friday. We doubt very much that will happen as a dramatic conflagration has erupted.
- IMF's Lagarde: Greek debt restructuring 'inevitable' (Deutsche Welle) The head of the International Monetary Fund (IMF), Christine Lagarde, repeated her insistence Wednesday (29 July) that any new bailout program for Greece requires significant restructuring of the cash-strapped eurozone nation's massive debt load. Other creditors have repeatedly rejected any such consideration.
- No Barrier to Exit – Business Migration from Greece (Navigator Consulting Group) Hat tip to Roger Erickson. This article gives a series of anecdotal accounts of businesses and high net worth individuals moving money and business activities out of Greece. The accounts may well be true but cannot be proven by this post as no links to sources are given. See next article for some reference links.
- Total Collapse: Greece Reverts To Barter Economy For First Time Since Nazi Occupation (Zero Hedge) The headline is more than slightly overstated but the article does contain links to data on such things as job losses, business closures, steep retail sales decline, etc.
- Greek PM says will not implement measures beyond those set at summit (Reuters) Greek Prime Minister Alexis Tsipras said on Wednesday that his government would not implement reform measures beyond what was agreed with lenders at the euro zone summit earlier this month. Tsipras told Sto Kokkino radio:
"I know well the framework of the deal we signed at the euro zone summit on July 12. We will implement these commitments, irrespective of whether we agree with it or not. Nothing beyond that."
- Greece's Tsipras on shaky ground, warns of elections (CNBC) Greece's problems are far from over as the country's leftwing prime minister warned that he might be forced into calling an early election if he does not have the support of his party to push through key reforms. This article says "Greece is miles away from a bailout."
- Yanis Varoufakis faces criminal prosecution over clandestine 'Plan B' currency plot (The Telegraph) The Greek Supreme Court sends a legal case to Greek parliament as "treason" charges escalate against former finance minister. See following articles. From The Telegraph:
Greece's state prosecutors have set their sights on former finance minister Yanis Varoufakis who faces possible criminal charges over plans to set up a parallel payments system inside the monetary union.
The Greek parliament received two sets of legal complaints about the economist's "surreptitious" blueprint to introduce a euro-denominated alternative currency as a precursor to an exit from the eurozone.
The cases were bought to the parliament by the Supreme Court following complaints from a Greek lawyer and mayor, and separately by a group of opposition conservative parliamentarians.
As an MP, Mr Varoufakis has immunity over criminal prosecution. But this could now be overturned by the Greek parliament which is set to review the allegations.
The self-styled "erratic Marxist" convened a five-man team to oversee clandestine plans to introduce "parallel liquidity" in Greece in order ease the credit strangulation imposed by the European Central Bank.
Mr Varoufakis' team included respected US economist James K. Galbraith, and touted the use of smartphone apps to allow the state to continue making its domestic obligations to suppliers and collecting tax revenues. Mr Galbraith could also be facing a criminal trial over his involvement.
- Greece's Cuban Path to a Parallel Currency (Bloomberg View) This Op Ed of 28 May discussed why the idea of a parallel currency for Greece is worthy of consideration, with even German Finance Minister Wolfgang Schaeuble broaching the possibility as Greece fails to reach an agreement with its creditors. It could work -- albeit not in the way suggested by the pretty models circulated by economists in recent months. See also Schaeuble Said to Cite Option of Greek Parallel Currency (Bloomberg Business).
- Greek Economic Crisis: Is A 'Parallel' Currency The Answer? (Forbes) After a lot of operational details are discussed the conclusion is that a parallel currency would be the best way for Greece to maintain liquidity on the way to being forced out of the euro.
- Varoufakis' Plan B was worse than a crime - it was half-baked nonsense (Fortune) This was written by Geoffrey Smith, a senior editor at Fortune. From the article:
Tsipras' gamble with his country's future was backed up only by a stunted, half-formed plan for a new currency. It's a measure of how far into the realm of the absurd the Greek crisis has gone that Yanis Varoufakis' surreptitious plan for taking Greece out of the Eurozone should have made so many headlines over the weekend.
It seems only hours ago that the many critics of the former finance minister and his boss Prime Minister Alexis Tsipras, were complaining precisely that they hadn't prepared for a "Grexit" scenario. But now a new political row has erupted because they had.
But the real scandal is not that the government laid secret plans to leave the Eurozone, it's that it realized they were unworkable, but continued to play chicken with its creditors as if they were convinced of their infallibility for another two months, while the country's economy spiralled into another disaster.
- Greece's Plan B: Varoufakis confirms secret parallel currency plan (SBS News) Former Greek Finance Minister Yanis Varoufakis has confirmed he had made secret preparations to hack into citizens' tax codes to create a parallel payment system after the disclosure provoked shock and disbelief in Greece.
- Treason charges: What lurks behind the bizarre allegations (Yanis Varoufakas)
The bizarre attempt to have me indicted me on... treason charges, allegedly for conspiring to push Greece out of the Eurozone, reflects something much broader.
It reflects a determined effort to de-legitimise our five-month long (25th January to 5th July 2015) negotiation with a troika incensed that we had the audacity to dispute the wisdom and efficacy of its failed program for Greece.
The aim of my self-styled persecutors is to characterise our defiant negotiating stance as an aberration, an error or, even better from the perspective of Greece's troika-friendly oligarchic establishment, as a 'crime' against Greece's national interest.
My dastardly 'crime' was that, expressing the collective will of our government, I personified the sins of:
- Facing down the Eurogroup's leaders as an equal that has the right to say 'NO' and to present powerful analytical reasons for rebuffing the catastrophic illogicality of huge loans to an insolvent state in condition of self-defeating austerity
- Demonstrating that one can be a committed Europeanist, strive to keep one's nation in the Eurozone, and, at the very same time, reject Eurogroup policies which damage Europe, deconstruct the euro and, crucially, trap one's country in austerity-driven debt-bondage
- Planning for contingencies that leading Eurogroup colleagues, and high ranking troika officials, were threatening me with in face-to-face discussions
- Unveiling how previous Greek governments turned crucial government departments, such as the General Secretariat of Public Revenues and the Hellenic Statistical Office, into departments effectively controlled by the troika and reliably pressed into the service of undermining the elected government.
It is amply clear that the Greek government has a duty to recover national and democratic sovereignty over all departments of state, and in particular those of the Finance Ministry. If it does not, it will continue to forfeit the instruments of policy making that voters expect it to utilise in pursuit of the mandate they bestowed upon it.
In my ministerial endeavours, my team and I devised innovative methods for developing the Finance Ministry's tools to deal efficiently with the troika-induced liquidity crunch while recouping executive powers previously usurped by the troika with the consent of previous governments.
Instead of indicting, and persecuting, those who, to this day, function within the public sector as the troika's minions and lieutenants (while receiving their substantial salaries from the long-suffering Greek taxpayers), politicians and parties whom the electorate condemned for their efforts to turn Greece into a protectorate are now persecuting me, aided and abetted by the oligarchs' media. I wear their accusations as badges of honour.
- Yanis Varoufakis is being pilloried for doing what had to be done (The Guardian) The former finance minister devised an ingenious - if unorthodox - fallback plan to ensure liquidity for Greece's economy.
- Indicting Varoufakis: The World Upside Down (The Automatic Earth)
There's always a great irony in anyone at all coming under pressure for doing exactly what they should be doing. Still, it happens a lot. The irony gets that much greater when the party in question is a government, and a much maligned one at that.
Of course Syriza had to look into options, possibilities, eventualities if ever the moment might come that Greece had to (were forced to) move beyond the euro. They would have been entirely in fault, and entirely remiss, if not outright criminally negligent, if they had never looked into this.
And of course this had to be done in secret. There is no other way. The proof is in the pudding: just look at the reactions to Varoufakis' explanation to a group of investors of how he went about Tsipras' pre-election-victory green light for exploring 'beyond euro' scenarios.
Just imagine what political opponents and international media would have made of it all had they known back in December. There are simply far too many ill-informed and/or sensationalist and/or political-gains-hungry voices out there to not do these things in secret.
- ECB warned to pump more money to save eurozone as Varoufakis denies hacking into Greek tax system (The Telegraph) An "explosive audio recording of former finance minister Yanis Varoufakis discussing Greece's "Plan B" for an alternative currency" has surfaced. From this article:
In a conversation hosted by the Official Monetary and Financial Institutions Forum (OMFIF) made public for the first time, Mr Varoufakis discussed how he had been charged by prime minister Alexis Tsipras with establishing an alternative currency system to prop up the banking system and continue making government payments should the ECB continue their financial strangulation of the economy.
Mr Varoufakis discussed the use of smart phone apps to develop a euro-denominated alternative payments system and authorised an old childhood friend and Columbia University professor to "hack" computer systems of Greece's state's revenue body which were "fully" in the control of the Troika.
"We were planning to create, surreptitiously, reserve accounts attached to every tax file number, without telling anyone, just to have this system in a function under wraps", said Mr Varoufakis in the recording.
However he denied attempting to hack the details of millions of Greek taxpayers.
- Greece news live: Troika deny 'unfounded' claims they control Greek tax system as investigation calls against Varoufakis grow (The Telegraph)
- Why Greece’s Debt is Illegal (Michael Hudson) Michael Hudson has contributed to GEI. Transcript here for The Real News Network interview below.
- Capitalism and Government Debt at Odds in Greece (The Real News Network, YouTube) Interview is in two parts.
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