The Greek Tragedy: The Coup is Almost Complete
David Noble
Founding & Managing Director, The Peter J. Werth Institute for Entrepreneurship & Innovation
Do not stand up to Capital. You will get hit with a brick...in the face. Just about two weeks ago, Tsipiras walked out of negotiations calling for a public referendum on the bailout. He said a vote for no would get Greece better terms. I predicted that Capital would punish Greece for such a public rebuke. It seems I was right.
Today out of Brussels news has been released that a harsh austerity package has been agreed upon. Germany, Greece's largest creditor (who bought up most of the former debt owned by German banks in the first bailout), has forced austerity upon the Greeks that certainly can not be agreed to by the ruling Syriza party. So where does that leave Greece and the financial markets?
Today and tomorrow, stocks will rise on the "Yay!" news of Greece remaining in the Euro, but then tomorrow evening you will start to see the Greek government reshuffling maybe? A lot of the far left politicians will not want to be associated with this austerity package. The Greek government has all the backing it needs to walk out on Europe. They correctly realize that without their banking system or currency, that support will not last. Therefore, the best place to be if you are a far left politician is outside the government that institutes this policy. Will Tsipiras even go so far as to resign, so the Greeks come running back to him in a few months when the bite of austerity hits. Wednesday and Thursday should prove to be pretty bad for the financial markets as the reality that we do not really have a deal in place sets in...
This package is not sustainable for Greece or Europe. This agreement will not make anyone happy. The Portuguese, Irish and Italians have to be more than a little worried with how this is playing out. Will they push to move out of the Euro or to bring their national economies in line with German rules regardless of the cost. A lot is left to be decided as this plays out.
What I can tell you is that without a massive debt restructuring/forgiveness plan, the Greek economy can not sustain itself in the short, medium, or long term. Sustainability requires interdependent pieces to work together. This package does not get us there. The Greek people understand that, and they are willing to reject the offer.
Founding & Managing Director, The Peter J. Werth Institute for Entrepreneurship & Innovation
9 年Without a doubt, this is no way to do a bankruptcy...@robert
Originations & Buy/Sell Syndications | Columbia MBA
9 年It's paradox for all parties involved, because if Greece commits to austerity it will not allow their already struggling economy to grow, but if they default they will be forced to go revert to the Drachma and possibly be forced to leave the Euro Zone altogether. The latter option will establish a poor precedent for the other debt strapped countries that comprise PIGS, that will find themselves in an all too familiar situation in the near future. Here is an interesting read discussing historical examples of how debt crises were handled in Germany's history. The first example discusses the tribulations of the Weimar Republic's adherence to austerity in the face of crushing debt following WWI. The lesser known and more positive example highlights the economic growth experienced by Post-WWII Germany in the early 1950's due to the fact that their creditors forgave outstanding debt obligations. It is hard to say what the best solution is. https://www.businessinsider.com/germany-failed-to-learn-from-its-own-history--and-now-greece-is-paying-the-price-2015-7
Founding & Managing Director, The Peter J. Werth Institute for Entrepreneurship & Innovation
9 年There simply has to be a better way than the status quo. UK politicians must be ecstatic right now that they never jumped into the Euro. The single currency requires less/no sovereignty.