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The Lesson of Greece Is that Europe Is Run by Functional Sociopaths or Psychopaths

2015 June 24
by Ian Welsh

Syriza has made an offer which includes pension cuts and VAT tax increases, and “institutions” have refused to accept it, saying that (among other things) parametric measures aren’t acceptable (though they accepted them from Spain and Ireland). They will now counter-offer.

By “among other things” they mean:

Labour laws, collective bargaining, pension reform, public sector wages, opening up closed professions, investment as well as value-added tax and corporation tax.

You do not believe, in any case, that any of these things will be good for ordinary Greeks, do you?

Total Greek Debt is about 330 billion Euros. 246 billion of that is “bailout funds,” of which over 90 percent went to private banks. As I (and many others) noted back in 2010, Greece should have defaulted then. This “problem,” such as it is, is now almost entirely the creation of attempts to bail out private lenders who should have done their due diligence, and who deserved to lose their money.

I note that the ECB is doing 1.1 trillion of “unconventional monetary policy,” about a third of which is Greek debt–mostly debt they piled up after 2010. A hundred billion of that, piled into 100 year bonds at 1 percent interest would about deal with the problem; Greece could handle the remaining debt.

A hundred billion, in today’s world, is really not that much money.

But the issue has never been Greek debt, per se, the issue has always been making it clear that no one can default and get away with it, let alone leave the Euro. Greece has been used to make an example, and when they elected a government with a mandate to negotiate an end to austerity they had to be taught an extra lesson for thinking that democracy trumped the right of debtors to run the government of those who owe them money and can’t pay it back.

(This is not remotely an exaggeration, as the terms of the deals made include the Government having to run new policies past “institutions”).

Greeks do not want to leave the Euro. They cannot devalue their currency, which is what they need to do, without leaving the Euro. They do not, apparently, even want to default and stay in the Euro.

In other words, Syriza has no bargaining position based on a popular mandate. Its mandate was “end austerity, but do it without being able to make any credible threats.”

Based on its public mandate, Syriza has no BATNA–Best Alternative to a Negotiated Agreement. In essence, they must take anything that Europe offers.

Or Syriza can turn to the public and say, “there is no deal to be had.”  But “institutions” never give them the time necessary to, say, run a referendum to get a mandate.

Greeks want to stay in the Euro, as commenter Mandos has often pointed out, because the Greek government is terribly run. They’d like to be run by the German government. The problem is, the Germans aren’t offering the government Germans get, they’re offering austerity run by the Greek government.

If Greeks want a good government, they’re going to have to create it themselves. The first stage requires giving a government a mandate allowing them to do what reason and reality both dictate must be done: seriously threaten to default and/or leave the Euro, and follow through with the threats if a good deal isn’t forthcoming.

Absent this, Syriza’s only choices are to buckle, or to do something for which they don’t have a mandate. Of course, sometimes doing the right thing goes against the wishes of the majority of the population–and these are big steps, so it is hard to blame the Greeks for being squeamish. And in hard electoral terms, if Syriza did the right thing, the economy would need to improve before the next election or they’d be out.

But, also in hard electoral terms, they may as well, because if they don’t, they’re going to lose the next election anyway. The Greeks voted them in to end austerity; they will have failed, and the Greeks will most likely try someone else.

Good luck to Greece, the Greeks, and Syriza. They’re going to need it. But luck tends to come to those who are thinking straight about the reality of their lives, and the Greeks aren’t.

As for the “institutions,” let this be your daily reminder that our leaders are functional sociopaths, at best, but act more like psychopaths. Austerity has meant immense suffering, but it is more important to them to bail out their rich donors and friends and help make them richer and more powerful, than it is to make tens to hundreds of millions of lives (far beyond Greece) less miserable.

Psychopaths.

When you’re trying to predict how European elites will operate, assume that they are sociopaths on a good day, psychopaths on any other day. The pain and suffering of those whom they do not personally know is not real to them, and they do not care how bad life is for anyone who doesn’t make their lives, personally, better.


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33 Responses
  1. subgenius permalink
    June 24, 2015

    I thought we already had established that ALL of us are ruled by sociopaths…

  2. June 24, 2015

    Yep. Greeks have to decide, as a people, that joining the single currency was a terrible mistake and forced them to be a particularly outlying outlier in an experiment gone awry. The problem is that the form that Greek nationalism has taken and the shape of the conflicts inside Greek society leave them ill-equipped to make the decision based on the calculus you outline.

    When you’re trying to predict how European elites will operate, assume that they are sociopaths on a good day, psychopaths on any other day. The pain and suffering of others whom they do not personally know is not real to them, and they do not care how bad anyone’s life is who doesn’t make their lives, personally, better.

    Unfortunately, it’s not just about the elite. A lot of Northern Europeans have short memories and think that their bailout tax money is going to go down the drain of bad Greek governance, so they as voters demand commitments in advance that are in line with what they think good governance looks like, ie, they too think that this is about the salutary invasion of Greece by German bureaucrats. That is why German politicians make a big deal of how they offered to send a brigade of German tax collectors to help Syriza set up better tax collection and were refused — therefore, it must be that Greece doesn’t really want better tax collection, and just wants to suck German money.

    There’s also a large contingent of Eurocrats who genuinely believe in pacta sunt servanda as the thin line between Europe and chaos and believe that allowing elections and democratic mandates to overturn treaties is folly. For this reason, what they expect in an untenable situation is for the treaties and memoranda to be followed in appearance only and for the actual implementation to be fudged. In this narrative, Syriza is the author of its own misery because it could have gotten tacit acceptance that the situation is untenable if only if it were willing to show that it would publicly follow the procedure while being cut slack by other means. This is the narrative that is used to show that Syriza forced the creditors into a political corner for ideological reasons and therefore came away with less than it could have in material terms. ie, political fudging (lawlessness) as the way to maintain the primacy of law…

  3. Ian Welsh permalink
    June 24, 2015

    Oh sure. The ordinary people have, in large numbers, been corrupted as well.

    ” pacta sunt servanda” is interesting. Well, you can have rule by democracy, or not. There are certainly arguments against it, but I’d like to see them made clearly and openly. Plato at least had the guts to despise democracy to its face.

  4. June 24, 2015

    That last, by the way, is often hypothesized as the reason why Merkel decided to let Samaras fall, ie, she thought that the fudge as it had developed wasn’t working, and believed that she could get a better fudge via Tsipras. The entire European establishment essentially believed that Tsipras was the head of a “neo-PASOK” inside Syriza and that he was just *waiting* to come to power to ditch his backers and found a coalition with To Potami instead (the “reasonable” Greeks). The fact that this hasn’t happened yet is considered cause for great surprise and consternation — German media regularly theorizes precisely what way Tsipras will emerge a “winner” by reshuffling his coalition.

    This may eventually happen. Who knows? Like I said, the European establishment can’t even imagine how it hasn’t happened by now.

  5. June 24, 2015

    ” pacta sunt servanda” is interesting. Well, you can have rule by democracy, or not. There are certainly arguments against it, but I’d like to see them made clearly and openly. Plato at least had the guts to despise democracy to its face.

    Very many “in the trenches” Eurocratic types are quite happy to take the Platonic line there and do so openly. It’s how much of “rank-and-file” Brussels and its extensions views itself. You really have to visit Brussels and the European Quarter in particular to understand how deeply ingrained this attitude is into the very architecture. Suspicion of democracy and popular sovereignty is not terribly surprising considering Europe’s history and what it took to forge the EU in the first place.

    The inability to forge a compromise on the refugee issue — Brussels quite rationally wants an EU-wide quota system, it’s absolutely fair there — confirms in the mind of the Eurocrats that policy is better made by wise mandarins rather than European populations and that the system of treaties and post-hoc treaty fudges is the optimal solution to European problems. That is one of the complaints about Syriza — that there are ways and channels for Syriza to lodge legitimate complaints, but Syriza insists on taking it to the open, political level in a challenge to a process that was hard to build in the first place. At that level, fudge is much harder to bake. Therefore, in this narrative, to prevent further breakdown, Greece and Greeks must now be sacrificed, and it’s the fault of the bull-in-the-China-shop approach of left-wing populists who think they’re merely challenging neoliberalism rather than European order itself.

  6. June 24, 2015

    In other words, the Eurocracy, the sincere part — and there is a sincere part — has always wanted to forge a path between soi-disant benevolent dictatorship and democracy. That is the role of things like “Staff Level Agreements” and all that. The “primacy of bureaucracy over democracy”, I’ve heard it put. But that means that it is extremely ill-equipped to handle a situation in which democracy decided to make its views known in a manner contrary to the appearance of “bureacratic sovereignty.” It cannot react positively towards it and compromise with it, because it would create incentives for others to break down the processes that it built. And it cannot ever acknowledge error, it can only fudge its way around it.

  7. June 24, 2015

    Tsipras has taken it right down to the wire, and at the last instant signaled his government’s willingness to accept even unacceptable punishment and humiliation from the loan sharks. Now is the time to turn to the Greek people and tell them plainly that their backs are to the wall. “The Germans’ demands are so insane, they will not even take yes for an answer, but instead they insist upon continuing and intensifying the pain and debasement of the Greek people. We must leave them and make our own future. We will find friends when we need them, and soon enough at the rate they are going the Germans will have no friends at all.” Perhaps he can work in a reference to the 2 year long Nazi seige of Leningrad, in which Hitler repeatedly and explicitly told his generals not to accept offers of capitulation from the Russian defenders but to raze the city to the ground with all its inhabitants still inside. “For five years, we have endured siege by the forces bent on brutal domination of the European continent. Like the people of St. Petersburg -then called Leningrad- we have stood alone, cut off, surrounded, reduced to starvation, driven even to suicide and madness. Only a stranger to reason, only an enemy to civilized decency would press us harder. Still for two years the foe pressed the besieged Russian city. The people of Leningrad would not be allowed to become a financial liability to their would be conqueror. We will not feed them after their defeat, he said. And still the foe does not relent. Even our surrender now after five years would not blunt his thirst for our suffering. Fifty years ago they were shown much mercy, and fifty years later they still do not know what it is. Who would believe another fifty years would teach them anything? Who could believe Greece can survive long enough to finally receive it from them when they did?”

  8. markfromireland permalink
    June 24, 2015

    Sociopaths at any rate. Not sure I’d go along with psychopaths. However I digress from the point I wanted to make. Ian do you keep an eye on this chap and his postings? Olivier Blanchard Blanchard is the IMF’s chief (macro)economist.

    This is an economist we’re talking about so it’s worth while examining his assumptions if you cast your mind back to July of last year you’ll remember that Blanchard’s assumptions included inter alia:

    A primary assumption that Greek debt would fall from 175% of GDP to 120% of GDP by 2020.

    This primary assumption was based in turn upon the following assumptions:

    1. The Greek economy would grow by 3% both this year and every other year until 2020.
    2. Inflation would average between 1% and 2% a year both this year and every other year until 2020.
    3. The Greek government would run a primary budget surplus of 4% a year.

    The kindest word I can think of to describe these assumptions is “ludicrous”. When I’m not being kind I incline to the opinion that Blanchard was deliberately whoring out a pack of lies. The Greek economy is in a deflationary spiral not an inflationary one. The Greek government could, perhaps, run an annual primary surplus of 4% a year but only by dint of keeping the place in permanent recession if one is optimistic and permanent depression if one is not. If instead you are a bit more reasonable than Blanchard and assume that:

    1. The Greek economy would grow by 1% both this year and every other year until 2020.
    2. Inflation would average 0.5% a year both this year and every other year until 2020.
    3. The Greek government would run a primary budget surplus of 1.5-2% a year.

    Then Greece’s debt to GDP ratio will continue to rise. The only way to stop Greece’s debt to GDP ratio rising is massive debt relief. And I mean real debt relief not subsidising irresponsible lenders. The problem with that is that the German, Dutch, French, and Spanish government’s in particular are opposed to it.

    The other problem as you correctly point out is that the current Greek government or at least the currently dominant faction within it are unwilling to force the issue. I think this is a pity because I think that they could so long as they are actually running a surplus. There seems to be some doubt as to that point which you’ll find covered in detail here Globalized: Greece’s Primary Surplus Was Smaller Than Reported.

    I find myself wondering if leaving aside questions of mandate one reason why the Greek government is failing to stand up to their creditors is that they know that their surplus is either smaller than they previously believed or is again shifting from surplus to deficit.

    My suspicion is that Greece is heading for a default. My hunch (and it is no more than a hunch) is that even if a deal is made that it’s difficult to see how such a deal will not fall apart within a year and that the cause of that falling apart will be that Greeks will once again be in the position of deciding whether they’re more afraid of leaving the euro than of any conditions they’ll be forced to endure as the price of staying in it.

    mfi

    PS: For those interested the feed for the IMF Direct blog is is here iMFdirect – Feed. Know your enemy is always good advice.

  9. Pluto permalink
    June 24, 2015

    Several years ago, after the 2008 crash, I was working on an article about global military spending; that is, I was looking at the top customers of the five big weapons producers. The period being covered was from 2007 to 2011, I believe.

    I was shocked to see that Greece was the largest customer of Germany and France, and the second largest of the United States, during those years. How could that be?

    The other night, I took a look at 2013 weapons spending, just among NATO members. The US, of course, has tall bar — but right next to it is Greece. Of all Nato Nations, Greece is the only one spending above the recommended 2 percent of GDP on weapons.

    It looks to me that nearly all Greek’s Goldman-Sachs packaged bonds were used to goose the profit sheets of the Defense Industry Cartels. Clearly these deals were made long before Syzra came along.

    We know a couple of things, for sure: The Greeks are the hardest working population of all the members of the EU. The work the longest weeks and the most hours of all of them.

    Another thing we know is that everytime these loans are restructured, they came back with little to no money earmarked for Greek banks.
    ::

    What isn’t well known, is that assuming the revolving door of bailout funds rolls again, what will be the use of funds of this latest and greatest bailout of Greece.

    Sadly, the answer is also well known. We showed it first back in 2011 when we asked, rhetorically, “where does the Greek bailout money go?”

    So for those who don’t recall, here is a refresher from Macropolis, which a few months ago showed that of the €226.7 billion euros disbursed to Greece since the first Greek bailout, an equivalent to almost 125% of Greece 2014 GDP, “the combined allocation to the Greek state’s operating needs was just 11 percent of the total funding, at circa 27 billion euros.”

    Here’s an image (that may or may not show here:

    That’s right: hundreds of billions “spent” to rescue Greece… with the vast amount of proceeds used to promptly repay the very sources of these funds: the IMF and the ECB.

    So will this time be any different, and will the Greeks receive anything extra? Alas no,

    Poor Greece. They are married to the mob. The loan will never end. Their people will be systematically crushed.

  10. Pluto permalink
    June 24, 2015

    Ah, I see image (pie chart) does not embed. Always a challenge when discussing economics.

    Here’s the link:

    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/06/Greek%20bailout%20uses%202_0.jpg

  11. Ghostwheel permalink
    June 24, 2015

    Stand up to invading, million man Persian army? Check.

    Stand up to fat-assed millionaire bankers? Ah, no … we’ll just live in alleys and eat out of garbage cans, thank you.

  12. June 24, 2015

    @Pluto
    “I was shocked to see that Greece was the largest customer of Germany and France, and the second largest of the United States, during those years.”

    And no doubt epic scale kickbacks accompanied these sales. I remember hearing about the inexplicable need for lots of German Leopard tanks the Greek government felt right around the time of the 2010 Memorandum. If I were running Syriza, I’d really want to follow up on that money trail. Let’s hope they started digging as soon as they got into power. Then when the EU apparatchiks deliver their do or die ultimatum to Greece (which I guess has just happened in Brussels) all the names of all parties involved would be named.

    Sticking with the Euro-elites are sociopaths theory, naming names won’t shame any of the parties guilty of passing and accepting kickback bribes. They’re immune to shame. But it should have an effect on the perceived legitimacy of these figures among their respective peoples.

    The obvious problem with this scenario is that the guilty in this case are resourceful, internationally connected and protected. They are well versed in hiding transactions, and places like the UK – a tiny island which seems to have been placed on this Earth to function as a money laundering haven for the world’s worst criminals – will go to any lengths to obscure their misdeeds. It’s a standard service for qualified customers. The United States with its panopticon surveillance network could certainly ferret out all the details of the dirty arms sales, just as it has done with FIFA. But it is one of the dirty, having been put on this Earth seemingly to sell arms to the world’s worst criminals, and in any case the US is always lining up on the wrong side of the Greece v. the Euroccupation Army.

    The Syriza government will have to get lucky to catch some of their predecessors in their crimes. Then they will have to summon up the required balls to go public with the information and prosecute.

  13. subgenius permalink
    June 24, 2015

    Hours worked =/= efficiency

    It has been repeatedly shown that long hours lead to a less productive work week….

  14. Monster from the Id permalink
    June 24, 2015

    I begin to think Plato should have been given the same fate as his mentor.

  15. June 24, 2015

    For a laugh, there’s this column by Hugo Dixon in NYT, who is the go-to guy for “Opinions on Shape of Earth Differ” journalism in matters Greek crisis:

    http://www.nytimes.com/2015/06/22/business/international/everybody-shares-blame-in-greek-crisis.html?_r=1

    I stopped counting the wrongitudes halfway through.

  16. Dan Lynch permalink
    June 24, 2015

    Ian said “also in hard electoral terms, they may as well, because if they don’t, they’re going to lose the next election anyway. The Greeks voted them in to end austerity.”

    Nailed it. Syriza’s real mandate is to end austerity.

    In 1932 FDR campaigned on a promise to balance the budget. He had no mandate to leave the gold standard or to stimulate the economy with deficit spending. But FDR was pragmatic, he gave a hoot about common people, and he knew that his re-election was in doubt unless he took action.

    Tsipras is no FDR, though it’s never to late to grow a spine.

  17. Lisa permalink
    June 24, 2015

    “Functional Sociopaths ” isn’t that an oxymoron?

  18. Ian Welsh permalink
    June 24, 2015

    short for “functionally operate as sociopaths”. Aka. They might not actually be sociopaths if tested.

  19. Jay M permalink
    June 24, 2015

    Greece has been high profile since the Cold War from a defense perspective. It has been on the boundary of the id and the super-ego. Greece is the super mediterreaniam port, mare nostrum. Russia seeks to support Med allie Syria but the internal attack is significant against Assad.
    Iraq, how many boots on the ground now?

  20. ProNewerDeal permalink
    June 24, 2015

    I suppose we can ditto the functional sociopaths for the right-wing fascist corporate whore Murican poltrickian cabal, including 0bama, McConnell, Boner, Pelosi, Ron Wyden, etc; given their traitorous anti-Constitutional TPA/TPP legislation.

    How is that TPP rigged trade/Monopolist Welfare bill being handled in Canada (I had read Canada is 1 of the 12 nations)? I would hope that at least the NDP is not part of the fascist cabal like the Reaganesque right-wing 0bambot/DLC faction of Democrats.

  21. Peter permalink
    June 24, 2015

    Whatever mental disorder these stooges have they are still just minions of transnational capital and if they were summarily eliminated a new crop would crawl from beneath their rocks to take their place. We prefer to put a face on these conflicts but that helps cover the degenerate system that drives this end-stage Vulture Capitalism.

    Most people in the West didn’t seem to learn anything when these neoliberal plans were used against countries in South America during the ’90s and that was just a practice run for the bigger prize of the final theft of the remainder of the commons in the more advanced economies.

    With the end of growth, difficulties in creating new financial bubbles and general stagnation there is not much new profit to be gained except by cracking the bones of the weak and sucking the last marrow from the defenseless victims.

    Greece is probably doomed no matter what they do, even if they default and leave the Euro they will be prostrate and open to asset stripping, sanctions and financial hounding for years. Much of the rest of Europe will be targeted for restructuring, reform and pillage when the conditions are ripe as they already are or will soon be in the weaker economies.

    I had hoped that Syriza or at least what it stands for could have spread to the targeted countries of Europe but with the apparent neutralizing of Podemos in Spain there doesn’t appear to be a united front developing to resist the hegemonic power of Capital and its agenda.

  22. markfromireland permalink
    June 24, 2015

    From the Financial Times:

    As expected, the standoff between Athens and its creditors that exploded into the open on Wednesday has focused on pension reforms – a point made clear in a document obtained by the FT’s correspondent in Athens, Kerin Hope.

    According to the five-page list of “prior actions” – which are always the real nitty-gritty in any bailout agreement, since it lists the specifics that the sitting government must implement and the calendar for implementation – creditors have asked for wholesale changes to the pension proposals made earlier this week by Alexis Tsipras, the Greek prime minister.

    We’ve posted the document here*.

    In order to achieve savings of 1 per cent of gross domestic product – or about €1.8bn – starting next year, creditors are demanding a significant rewriting of Tsipras’ pension reform plan.

    First, rather than gradually raising the effective retirement age to 67 by 2025 as Athens has proposed, creditors want that moved up to 2022 (Athens had originally shot for 2036 in one of its earlier proposals). The creditor plan would allow for retirement at 62, but only for those who have paid into the system for 40 years. Those measures would become law immediately, under the counterproposal.

    It would also phase out a so-called “solidarity grant” – a special top-up payment given to poorer pensioners – by the end of 2017. The original Greek proposal had wanted to start phasing it out by 2018, with the grant only abolished in 2020.

    This new proposal from creditors closely mirrors the original creditor offer given to Alexis Tsipras, the Greek prime minister, three weeks ago and would eliminate most of the new contributions and fees that were in the Tsipras’ new plan – including a 3.9 per cent increase in employer contributions to the main pension plan, which accounted for the bulk of the savings in the 11-page document Athens gave creditors on Monday.

    On the other point of dispute, overhauling the value-added tax system, creditors have interestingly backed down on a demand that electricity be included in the higher VAT rate of 23 per cent; the new plan allows electricity to be levied at a new middle rate of 13 per cent. A “super-reduced” rate of 6 per cent would be created for pharmaceuticals and books.

    Importantly, it looks like Tsipras has also backed down on maintaining exemptions from VAT for Greece’s islands, a major “red line” for Syriza’s coalition partner, the Independent Greeks party. That could cost Tsipras their support in next week’s vote. Under the “VAT reform” heading, the unedited proposal includes “eliminate discounts, including on islands”.

    The creditors also slashed most of Tsipras’ biggest revenue-generating taxes, including a one-off 12 per cent tax on all corporate profits over €500,000 that was to come into effect this year. In their Monday proposal, the government had projected getting €1.3bn from that measure alone, by far the largest revenue generator outside the pension system. A big red line is drawn through that one.

    In addition, instead of the increase in the corporate tax rate from 26 per cent to 29 per cent, as the government suggested, creditors are pushing for a rise to only 28 per cent, a sign of their concern that the raft of new taxes will just make the economy dip back into an even deeper recession.

    In the place of these new taxes, creditors are seeking new spending cuts, including abolishing subsidies for diesel oil purchased by farmers and doubling cuts to defence spending – from a proposed €200m to €400m – by reducing personnel and weapons procurement.

    Source: Leaked: Creditors’ counterproposal to Athens | Brussels blog

    * The document containing the creditors’ proposals [PDF] can be found here: Greek-crediors.pdf

  23. Ian Welsh permalink
    June 24, 2015

    So, you MAY not tax rich people, is what that says.

    I may write on this tomorrow.

  24. June 24, 2015

    >“Functional Sociopaths ” isn’t that an oxymoron?

    It depends on whether you giving or taking.

  25. markfromireland permalink
    June 24, 2015

    Also from the FT:

    Hopes that Greece was on the verge of an agreement to release €7.2bn in desperately-needed bailout funding were dashed Wednesday night after Alexis Tsipras, Greece’s prime minister, failed to reach a deal after seven hours of talks with creditors in Brussels.

    The marathon session between Mr Tsipras and the heads of his country’s three bailout monitors — the European Commission, the International Monetary Fund and the European Central Bank — produced “not much progress,” according to a senior eurozone official.

    And a subsequent evening meeting of eurozone finance ministers, who were summoned to Brussels specifically to finalise a new bailout deal, was cut short after just over an hour because there was no agreement to finalise.

    “Unfortunately we have not reached an agreement yet,” said Jeroen Dijsselbloem, the Dutch finance minister who chairs the ministerial committee after the meeting ended.

    Mr Tsipras was due to resume talks with Jean-Claude Juncker, the commission president; IMF chief Christine Lagarde; and ECB president Mario Draghi at 11pm in Brussels in a last-ditch attempt to close differences, which officials said remained wide. Eurozone finance ministers were also told to remain in the Belgian capital and were due to reconvene at 1pm on Thursday.

    “We are not much further along than we were on Monday,” said Wolfgang Schäuble, the German finance minister, as he arrived for the third eurogroup meeting in a week called to resolve the Greek crisis.

    Mr Tsipras had flown to Brussels unexpectedly earlier on Wednesday to salvage a compromise agreement after creditors, led by the IMF, demanded wholesale changes to an economic reform proposal he had submitted on Monday.

    According to documents seen by the Financial Times, creditors are focused on overhauls to Greek pensions, judging Mr Tsipras’ plan of hiking contributions to the system as being unworkable and pushing instead for cutting benefits.

    “The repeated rejection of equivalent measures by certain institutions never occurred before — neither in Ireland nor Portugal,” Mr Tsipras lashed out before leaving Athens.

    “This curious stance may conceal one of two possibilities: either they don’t want an agreement or they are serving specific interest groups in Greece,” he added. The Greek premier made no public remarks after the Brussels talks.

    According to annotations by creditors in a detailed version of the Greek offer submitted on Monday and obtained by the FT, Mr Tsipras would have to revamp nearly his entire pension reform plan to win bailout funding.

    The creditors, who are pushing for the pension system to be made more sustainable, want a more rapid rise in the effective retirement age to 67 and the closure of exemptions that allow people to retire early. They are also demanding that Greece phase out a “solidarity grant” for poorer pensioners by the end of 2017.

    A senior Greek official said: “The IMF stayed with their original harsh line. We didn’t expect that and we can’t accept it.”

    One eurozone official said trust between Athens and creditors had evaporated and “nervousness” had set in. “No one wants to budge,” said the official.

    Without a deal this week, there will not be enough time for Athens to legislate for all the economic reforms needed to extend the EU bailout beyond its Tuesday expiration date. A German-led group of governments has demanded the Greek parliament pass all the reforms before they will approve an extension. Any extension must be passed by the German Bundestag along with several other eurozone parliaments.

    Mr Tsipras’s decision to leave Athens a day before he was due in Brussels for a regularly-scheduled EU summit came despite a mounting political revolt within his own Syriza party at home over many of the large-scale tax increases included in the compromise offer the Greek premier delivered on Monday.

    That submission had raised hopes a deal could be reached at Wednesday’s eurogroup meeting, and a Greek central bank official said about €100m in deposits returned to the country’s banking system on Tuesday. No request was made to the ECB on Wednesday to raise the amount of emergency loans Greek banks have required to meet the massive deposit withdrawals in recent weeks.

    The ECB’s governing council earlier this week sanctioned an increase of just under €3bn. That lifted the total amount of emergency liquidity assistance the Bank of Greece can grant to just under €89bn.

    Although officials said differences between Athens and its creditors remained the main difficulty, two officials involved in the talks said the IMF and the commission were at loggerheads over how many revisions are required.

    Officials said Mr Schäuble has been angered by commission efforts to cut the IMF out of negotiations with Athens. At Monday’s meeting of eurozone finance ministers, he admonished the commission and said it “should stop blaming” the IMF for the stand-off. He would not accept a deal without IMF approval, he added.

    In addition, talks have continued to founder over the issue of debt relief, which Greek authorities have insisted is necessary to sell a deal at home. Although the IMF has backed a restructuring of Greece’s eurozone bailout loans, a Berlin-led group of countries has insisted debt relief cannot be addressed until after the current talks are completed.

    “It’s a no-go for us,” said one senior eurozone official.

    A French official said Athens was pushing for a deadline for debt relief talks to take place. In November 2012 finance ministers made a commitment to debt restructuring but such negotiations never occurred.

    Officials had hoped a deal on Wednesday night among finance ministers would have allowed it to be endorsed at a summit of EU leaders on Thursday. Without an extension, the remaining €3.6bn in the EU’s portion of the bailout would disappear and Athens would probably default on a €1.5bn loan repayment due to the IMF on Tuesday.

    Senior EU diplomats said without a deal on Wednesday, it is possible Donald Tusk, president of the European Council, may hand the job of tackling the stand-off to the eurozone leaders on the second day of their summit on Friday. “Much speculation, no decision,” said one EU official. “Tusk will take stock of the situation in light of the outcome of the eurogroup.”

    Additional reporting by Claire Jones in London and Stefan Wagstyl in Berlin

    Source: Hopes dashed for quick Greek bailout deal – FT.com

  26. guest permalink
    June 25, 2015

    Meanwhile in a redefinition of bipartisanship, DC passes Fast Track against the wishes of the vast majority of the voters of either party (although only a few Dems voted that way, few opposed it in any meaningful way, and plenty more Dems were standing by willing to vote that way if their vote was needed to get the legislation over the finish line).
    Pretty soon we can dispense with state or national sovereignty in DC, or even Brussels, and just let those business tribunals rule everything.

  27. Tsigantes permalink
    June 25, 2015

    MeanwhiIe Stavros Theodorakis, head of pseudopod party To Potami [17 seats in the three hundred seat Greek parIiament] was in BrusseIs yesterday conferring with Pierre Moscovici, and former PM Samaras arrived Wednesday evening. Specuation is gathering of regime change…

    http://www.theguardian.com/world/2015/jun/24/greek-bailout-deal-hangs-by-thread-tsipras-rails-at-creditors

    A former Greek prime minister, Antonis Samaras, who is also on his way to Brussels, said Greece was being forced to choose “between catastrophe and a very bad solution”. The opposition centre-right New Democracy party said five months of drawn-out negotiations and putting up a robust defence had been a fiasco.

    http://www.telegraph.co.uk/finance/economics/11697463/Last-ditch-Greek-rescue-hopes-dashed-as-Alexis-Tsipras-faced-with-austerity-ultimatum.html
    Last-Ditch Greek Rescue Hopes; Tsipras Faces Austerity Ultimatum (Telegraph)

  28. June 25, 2015

    It is interesting when people in Europe start sending ultimatums, it gives things a kind of Nazish flare to the proceedings. Secret car rides etc. FDR only promised to balance the budget as a token at the end of the election to various inside people, I think that that is the case here.

  29. June 25, 2015

    Greece cannot leave the euro nor do the Greeks want to leave off the euro.

    Euro = gasoline.

    Greeks will sacrifice their children for their precious cars (they already have). The inevitable next step for Greece is collapse.

    Don’t worry, it won’t be the last … the damned cars will kill us all.

  30. June 25, 2015

    Having said the foregoing, Greece could solve its immediate debt problem in a few minutes if their government had any imagination or courage. Sadly …

  31. Ian Welsh permalink
    June 25, 2015

    I am reasonably sure that deals can be cut with Russia and/or Iran/Venezuela for oil. Leaving the Euro is not leaving the EU, and Greece can protect Russia from further sanctions. Other deals (bases, food, etc…) are also possible.

  32. Joanna permalink
    July 8, 2015

    Oh, poor poor Greeks..
    how can you not feel sorry for their feeling of entitlement?
    how can you criticize their early retirement, bloated pensions, extended vacations, corruption, and general laziness?
    how can you complain about heir low output per worker, whining, and blaming everybody but themselves for their financial woes?

    Greece was never compatible with the rest of Europe – too corrupted, too lazy, too averse to WORK.
    EU took on a spoiled bum, fed it and supported it, and now the bum complains because the gravy train stopped.
    EU should have never invite Greece to its fold – I hope it is a lesson to remember when countries like Turkey etc clamor on EU’s door in the future.
    When a country has a completely different set of values (regarding work ethic, corruption or
    religion) it is not going to work.’

    So another bailout for Greece?
    And who is paying for all that?
    Hard working EU citizens, not the idiots in Brussels.

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