The horizon is not so far as we can see, but as far as we can imagine

What Does Syriza Have a Mandate to Do?

Syriza’s mandate, given twice, is as follows:

End austerity without leaving the Euro.

This mandate cannot be executed. Without leaving the Euro they can cannot reduce their debt sufficiently, nor avoid imposed austerity from their creditors.

Does that mean they must accept any deal?

If they do, they have violated their mandate as well. They have not left the Euro, sure, but they also haven’t ended austerity.

So, they are forced to choose between two parts of a mandate. They may end austerity. Or they may leave the Euro.

I will suggest that since the austerity is what is killing and impoverishing Greeks that, given a choice between these two opposed goals, they should leave the Euro.

The counter-argument is that leaving the Euro will make things even worse.

This is true. But there is a very strong argument that it will do so only for two to three years and that after that Greece would be better off than it would be still in the Euro, and therefore, still in austerity.

It is insane to say, “This mandate has two parts, we cannot do both, and therefore we must choose the one which will lead to suffering for which we can see no end-date, rather than taking a chance will likely end the suffering sooner, and in the forseeable future.”

Greece did have its own currency, you know. And the economy was better then. It is not like no one still alive remembers a Greek economy outside of the Euro. Acting as if the world will end if it goes back to the Drachma is deranged.

That is all.

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Meanwhile, Some Music!


Greek Bailout Offer Passes


  1. Sadly, Yves has closed comments, at least for now, on her latest Greek post. I don’t get what she’s saying with it. Tsipras is trying to stay in the Euro. So he basically gave up and gave in to the Troika’s demands. As you say, what else was he supposed to do? Have they really done no planning at all about going back to the Drachma?

  2. zot23

    The real problem here are the Greeks. Syriza is a political animal and does wants to stay popular. The problem is the Greek people are sick of the austerity but not of the false dream of EU membership. That is to say they have doubled down on wishing really, very hard that the pain will end and good times will return just like before. They are not willing to make the choice they actually need to make (austerity or Grexit), and as the saying goes if you don’t make choices someone will make them for you. That someone is Germany and the EU central bankers.

    Can’t give someone medicine when they won’t accept it, no matter how much they need it.

  3. Ian Welsh

    I suspect Yves is trying to say “if they’d just accepted the first deal offered they’d have had a better deal than this.” We’ll know if that’s true soon. Syriza has been incompetent, in my opinion: they did not have the necessary contingency planning and all indications are that they honestly though the Europeans would cut them a better deal (delusional). The second one would be tolerable if they’d at least had the sense to still do the contingency planning.

    You simply do not go into negotiations without a BATNA (you “walk” position) unless you’re an idiot or have absolutely no choice. They had other choices.

    In other words, I believe there was something else he could have done. If you go back through my posts, you’ll see I think they should have prepared for Grexit and been willing to do it if they didn’t get a good deal.

    Zot: if that’s what they’re doing they’re morons. Austerity will destroy their popularity far more surely than leaving the Euro. People forgive all if you actually make the economy improve.

    Instead they will now be fully associated with all the pain that is about to go down.

    I explained this in posts further down.

    No, Tsipras is either stupid, weak, both or genuinely thinks the Euro is more important than austerity. I’m not sure which of those would be a greater indictment.

  4. David

    Both Golden Dawn and the communist party refused
    to be part of this government of “national unity” so it looks
    like as you say Ian, that they will be the only ones with their credibility intact.

  5. The Tragically Flip

    In limited defence of Syriza they seem to have put up the most fight of any government having EU imposed austerity since the crisis. Iceland obvious wins, though they had the advantages of not even being an EU member, never mind in the Euro (among other important differences).

    But Ian’s critiques are right. The possibility of a forced Grexit was so manifest since they took office, it is criminal negligence not to have done preparation for it. I’m sure they feared such preparations would leak, but that should have been viewed as a positive – it would add credibility to their bargaining position (even as they would have to had sternly denied any such leaks or blamed it on bureaucrats acting independently or something).

    I guess I still hold out a smidgen of hope the apparent “cave” is somehow still part of a buying time strategy and that very secret Grexit preparations have been made and successfully kept secret until the moment a Grexit is announced. The PM did seem to be on the verge of accepting the first bad deal before changing course and going referendum. I don’t think any of this is true, but it would be splendid if it is.

  6. anonymouscoward

    I’ve always seen it as a choice between 10 or 20 years of pain versus perpetual servitude and abuse. Put more simply. Short, intense agony versus endless anguish.

    What will you have, Greece? Would you rather be known as a poor people who nevertheless have their own national laws and national honor, and who can’t be pushed around in their own land – or would you accept permanent untermenschen status in a new thousand year Reich? The “Eurozone” is simply the German Empire reborn. You are not equals in it. There is no United States of Europe, nor does any “European People” exist to serve as its future foundation and reason for being. When the Masters got you to surrender your nationalism(s), they slipped on a collar and a yoke. German hands pull it tight, and that is the only “ever closer union” you can look forward to with them. The ugly reality of all this really can’t be denied anymore, so your choice isn’t even between competing economic theories, but between sovereign freedom and foreign domination. Without sovereignty there is no question of choosing economic theory. The possibility simply doesn ‘t exist for you. As your Masters -Schaeuble, Merkel, Juncker- have repeatedly shown you, you don’t get to choose (and in any case, their theory doesn’t admit of the possible existence of other competing theories: it is frankly totalitarian.) And yes, you must also decide whether to risk open confrontation with your captors now (certain pain and lots of it), or else risk it later (pain delayed into the future and temporarily put out of mind). But in deciding that you should ask yourselves this: will you be stronger or weaker later? And when is “later”? Is this present moment not crisis enough for you? If you put off confrontation now -and put it off, and put it off, as you probably will- will there even be Greeks still around later to object to their foreign enslavement?

    But asking that raises the question: are there Greeks right now? Or are you already the character-free, denatured, stateless Eurotrash drones the Empire seeks and intends to make of you and all the other distinct peoples of “the Periphery”?

    Opting for slavery is an inherently contemptible choice, not because one surrenders one’s own dignity in the face of superior force and remorseless evil, but because it is the nature of enslavement that future generations have their dignity stolen from them in advance by their ancestors’ cowardice. No generation has the right to do that to another.

  7. Kurt

    I apologize if this is a stupid question, but would it be possible for Greece to continue using the Euro as its de facto currency even without agreeing to the creditors’ terms?

  8. mike

    Two points. First, we have absolutely no experience with a country leaving the euro AND having the other countries they left deciding to squash that country completely as evidence for others that might get similar ideas were that country as successful as you believe Greece would be. None. Argentina and Iceland did not face this, and Russia and China can’t be expected to step in unless they have some guarantee of a stable governing partner, which they will only get by Syriza doing a deal and getting this phase over with. We don’t have any idea how/whether the Greeks themselves will respond yet, and there is no “The End” to be attached to this when papers get signed. There will be days, weeks, and years to come, and the famous unintended consequences to play out for all sides. So condemning the people who will actually have to experience it and those they elected explicitly not to put them into that situation can make those of us who would have exited from the start feel superior but we do not and cannot know if we are right.

    Second, had Syriza been openly planning and prepping for exit, that could have been used by their internal enemies to turn the political tables on them very quickly as violating what they were elected for and by the external side to expel them as many wanted at the start and get the squashing started. The resulting austerity from that can just as easily be rationalized out to be even worse than you’re foreseeing and thus even more worth avoiding. Why we all take it for granted that a Golden Dawn that hasn’t demonstrated its own actual competence at this point would automatically be a version of successful right wing takeovers rather than those put down in the past by determined hegemons like the banksters are proving to be, I’m still not understanding. The financial weapons of mass destruction only work against the Left? We think banksters don’t have their own BATNA planned and that they couldn’t make things even worse than the provoked bank runs that already caused the immediate hardship they did?

    Again, it saddens me greatly that the result isn’t what I would ideally want, but the question for all of us sounding impressively like John Wilkes Booth right now is how certain are we that our own “competence” would have been more effective in these circumstances. As someone who got elected twice to a small town school board and had all kinds of trouble trying to be true to constituents who were all over the place in a small town, I know my competence levels wouldn’t have been as high as the Greek leaderships’. I don’t think any of us here can make a clear claim to that and that we instead need to see where this all is in a few months rather than continuing our sports radio trash talk telling everyone we already know the World Series winner now in July and anyone saying different is incompetent, stupid, or weak.

  9. Thomas Lord

    I see no contradiction in the mandate.

    “End austerity” means to drastically reduce the extraction of surplus value whether by the state or by Capital. The end of austerity is not the end of poverty-crisis but the beginning of its possible eradication.

    “Stay in the Euro” means to retain the Euro as the national currency so that Greece commodities, particularly labor power, are not forcibly devalued compared to the rest of the Eurozone.

    The only practical contradiction is of course the externalities imposed on the banking system. SYRIZA’s power being limited, it’s only best choice is to not make itself an instrument of those externalities.

    If that line of reasoning is sound it leads to some strange conclusions. For example, the government should not have sought a new memorandum. It should not issue scrip. If it is left with no third option it should simply shut down.

  10. Chris

    The basic principle has been demonstrated: the EU means German dominance. That lesson will be tested again until there is another war. Only a matter of time.

  11. gendjinn

    What if Syriza has been told that Grexit == military coup?

  12. yellowsnapdragon

    If it is true that Schauble offered to pay Greece to #Grexit, Tsipras may be planning some kind of legal groundwork to prevent Greek expulsion from EU. For better or for worse.

  13. Greg T

    If Ambrose Evans-Pritchard’s reporting is accurate, Tsipras is trying to fall on his sword. The U.S. has taken over negotiations of a new bailout deal, equipped with harsh austerity, in exchange for debt relief. The Germans are resisting principal writedowns because this puts immense domestic political pressure on Angela Merkel. They want an extension of maturities and lower interest payments. There’s still a chance Germany can scuttle this, so nothing is over until the ink is dry.

    Tsipras appears to have given up. Unless he’s smarter than all of us, and he was planning a Grexit all along, he’s prepared to swallow whatever terms are granted to him and just hope a U.S.- brokered deal throws him a bone. Even if he gets debt relief, the harsh austerity will end his government. Austerity has more impact on the public than debt relief. It’s still possible Greece will be forced out of the Euro by the German-led northern bloc, but It doesn’t appear Tsipras has the chops to leave on his own. Syriza’s lack of preparations for a Euro exit underscore this.

  14. Greg T

    A deal like this will throw Greece into political turmoil. Syriza will crack up and Greece will be led by a very unstable coalition of pro-bailout forces like Pasok, To Potami an what remains of New Democracy. It remains to be seen if Syriza’s Left Platform can reach an accommodation with the Communists to form a hard left challenge to Greeks membership in the common currency. If not, the hard right, probably an ultr nationalist mix including Golden Dawn will fill the breach.

  15. Pluto

    I find myself returning again and again to Alexis Tsipras’ original vision. Within days of his election, he published this “original vision” as an open letter to the people of Germany, which he titled: “Open Letter to Germany: That Which You Were Never Told About Greece”.. (I republished it here.)

    As one would rightly imagine, this “vision” and its meaning is now buried in the past six months of pounding neoliberal brainwashing and media bullying. Tsipras was clearly aware this would happen; had been happening; would continue to happen — and addressed it in his first sentence:

    Most of you, dear [German] readers, will have formed a preconception of what this article is about before you actually read it. I am imploring you not to succumb to such preconceptions. Prejudice was never a good guide, especially during periods when an economic crisis reinforces stereotypes and breeds biggotry, nationalism, even violence.

    What I am not finding is any confusion in the meaning of the mandate. Not then and not now — after the referendum.

    As a legal aside, I also see no conundrum in Greece’s continued participation in the EU or EZ, if they so choose. Even after a default. Greece might, after all, continue both for a period of time to assure a stable transition. There is no legal mechanism for expelling Greece from the EU. As for use of the Euro, Greece may choose to use it as a primary currency or a parallel currency for as long and wishes to do so. (Naturally, the currency protections from the ECB drop away, but the immediate nationalization of the banks can ameliorate this, and it is a safe and convenient way to introduce a parallel currency.) After all, many nations use the US Dollar as a national currency without permission or implied obligation of the US.

    I notice punitive thinking toward Greece is rife these days. Without it, the picture becomes much clearer.

    In 2010, the Greek state ceased to be able to service its debt. Unfortunately, European officials decided to pretend that this problem could be overcome by means of the largest loan in history on condition of fiscal austerity that would, with mathematical precision, shrink the national income from which both new and old loans must be paid. An insolvency problem was thus dealt with as if it were a case of illiquidity.

    In other words, Europe adopted the tactics of the least reputable bankers who refuse to acknowledge bad loans, preferring to grant new ones to the insolvent entity so as to pretend that the original loan is performing while extending the bankruptcy into the future. Nothing more than common sense was required to see that the application of the ‘extend and pretend’ tactic would lead my country to a tragic state.

    And, this:

    My party, and I personally, disagreed fiercely with the May 2010 loan agreement not because you, the citizens of Germany, did not give us enough money but because you gave us much, much more than you should have and our government accepted far, far more than it had a right to.

    At the time Alexis Tsipras wrote these words on January 26th, 2015, I would say he was in a state of enlightened clarity about the nature, purpose, and strategy of Neoliberal banking. It is not as if there was no record of this happening to one South American country after another, ultimately leading to the privatization of their natural resources and/or valuable geographical features, such a deep water ports. Tsipras is well aware that Greece is on the path of being turned into “40 acres and a mule” for Europe’s profit and pleasure.

    Let me be frank: Greece’s debt is currently unsustainable and will never be serviced, especially while Greece is being subjected to continuous fiscal waterboarding.

    Can this possibly be made any clearer? Is any sentient being on this planet not aware that a new “bailout” for Greece will be used for only one purpose: to service the debt, without a principle pay down? Who does this benefit? Greece assumes a significantly greater non-payable debt and even more nation-destroying austerity, while the shareholders pocket the profits and the banking system does not enter toxicity in their books.

    Here is the mandate:

    Our target is the country’s stabilization, balanced budgets and, of course, the end of the grand squeeze of the weaker Greek taxpayers in the context of a loan agreement that is simply unenforceable. We are committed to end ‘extend and pretend’ logic….

    Dear readers, I understand that, behind your ‘demand’ that our government fulfills all of its ‘contractual obligations’ hides the fear that, if you let us Greeks some breathing space, we shall return to our bad, old ways. I acknowledge this anxiety. However, let me say that it was not SYRIZA that incubated the cleptocracy which today pretends to strive for ‘reforms’, as long as these ‘reforms’ do not affect their ill-gotten privileges. We are ready and willing to introduce major reforms for which we are now seeking a mandate to implement from the Greek electorate, naturally in collaboration with our European partners.

    Our task is to bring about a European New Deal within which our people can breathe, create and live in dignity.

    Everything that has happened since this letter was written is kabuki, staged for your entertainment. You know this to be true, because every time you leave the theater, nothing in the real world has changed. Greece is merely lobbing the ball back into Brussels’ court, and will continue to do so, for eternity.

    Or, in so many words:

    Write the damned debt off because there is no money to pay it.

    The laws of physics are merciless.

  16. markfromireland

    @ pluto:

    Their mandate is the electoral platform upon which they stood and is the basis upon which they were elected by the Greek electorate. Not some letter written to foreigners.


  17. S Brennan

    I agree with Ian main point here, Syriza did not fulfill their duty to the citizens of Greece, indeed any nation unable/unprepared to manage, or resume to manage it’s monetary system is derelict in it’s duties. Greeks who have been forced to shed so much blood to honorably protect their borders should be ashamed that when, monetarily attacked by Germany, they laid down their swords and shields begging for mercy. The last time Nazis attacked Greece they paid dearly with their best assault forces who were damaged enough that they could not be used in the invasion of Russia. Greece’s national infantilism, which happens to all cultures when they come into contact with preaching of Milton Friedman’s Satanic verses, is a great stain upon Greece’s honor.

    Also, Grexit is an unfortunate term. Exiting the Euro is a sensible, nay moral action, Greece exiting the EU is foolish, at this time. Grexit is unclear as to it’s meaning, perhaps, EuroDrop would be a much more descriptive term.

    The EU [an effort to end European conflict] and the Euro [an effort by right wing extremists* to destroy democratic institutions while providing long term welfare to Germany] are inherently incompatible. One is faulty institution with many flaws, but a noble justification, the other, a Trojan horse that will be used to slaughter those who bring it inside their national borders.

    *Not to be confused with “conservatives” who thought the Euro moronic.

  18. Greg T


    This is a well-written tract by Tsipras. He clearly understands what’s being done to Greece by the Troika. Greece has the moral high ground here. The wrongs committed against it give it the right to reject its membership in the Eurozone.

    They should do it. The question is, are they prepared to do it? Do they have the fortitude? Have contingency plans been made? Has the public been mobilized to confront it? Maybe Tsipras has been angling for an exit all along. Given the facts we have, it does not appear so.
    A disorderly Grexit would threaten Tsipras’ power. He may have already decided he can’t win no matter what he does. Given the results of Sunday’s referendum, he can’t sell an austerity-laden bailout package to the population. We know he can’t sell it to his Left Platform.

  19. Pluto


    I am sorry, the link in my post failed, and is repeated below correctly.

    You wrote:

    “Their mandate is the electoral platform upon which they stood and is the basis upon which they were elected by the Greek electorate. Not some letter written to foreigners.”

    But, Mark, SYRIZA did perform in all aspects of the electoral mandate they received from the Greek people:

    The day after Alexis Tsipras was elected Prime Minister of Greece on January 26, 2015, he made good on his promises to voters. The young leftwing leader of the Syriza party swept away the age of austerity. The barricades came down outside the Greek parliament, followed by an announcement that the IMF privatization schemes of Greek public property and services would be halted and all pensions would be reinstated. Then came the news of the reintroduction of the €751 monthly minimum wage. And this all happened before Greece’s young new prime minister had got his first cabinet meeting under way.

    After that, fees for prescriptions and hospital visits were scrapped, collective work agreements were restored, workers who had been laid off in the public sector were rehired, and citizenship was immediately granted to migrant children born and raised in Greece.

    Barely 48 hours after storming to power, Alexis Tsipras and the Syriza party ended the biting austerity that had so thoroughly destroyed the Greek economy and caused so much suffering. January 26th was a new day and a new chapter in the history of Greece.

    — from, “The Last Temptation of Greece”

    The electoral mandate is a done deal. Syriza was NOT elected to take on more crippling debt and austerity. Quite the opposite.

    That is why Tsipras called for a referendum. Europe was making demands that were not part of Syriza’s electoral mandate — and Tsipras could not sentence the Greek people to even more extreme endless suffering, without their permission.

    I do not think the events of the past six months are that complicated.

    I found the following official document about the Greek economy to be illuminating:

    It begins….

    Prime Minister Alexis Tsipras’ article in Der Tagesspiegel: German taxpayers are not paying for Greek pensions

    June 18, 2015 | categories : Articles and Statements, Prime Minister

    During a negotiation, an exchange of arguments is legitimate so long as there is sincerity and good faith between the parties.

    Otherwise, when the dialogue is ongoing with no end in sight then the methods used are akin to those described by the great German philosopher Schopenhauer in “The Art of Always Being Right”!

    For example, it is unfair to selectively use statistical indexes — even if they are endowed with the prestige of distinguished economists, such as Olivier Blanchard– to produce unsupported generalizations that obscure reality.

    As such, I’d like address a popular myth that the average German taxpayer has been led to believe….

    It goes on to present perspective-altering facts not apparently in possession of newspaper readers.

  20. Dan Lynch

    The “mandate” excuse is BS.

    In 1932 FDR campaigned on a promise to balance the budget, criticizing Hoover for running up the deficit on wasteful spending. There was no mandate to leave the gold standard and run up the deficit.

    Next time someone brings up the “Syriza didn’t have a mandate to leave the Euro” excuse, ask them “Did Syriza have a mandate to cut pensions? To raise taxes on the working class? To sell public property? To privatize public infrastructure? To bail out German bankers? To kowtow to the Troika?”

  21. It was nice being popular for a little bit around here, but now I’m going to return to my usual meta-Cassandra mode, because I disagree with most of the posts here on this. I’ll write more detailed comments on this later, but instead I’d like to share my latest earworm with you, from Linkin Park, which is normally not my cup of tea but so very apropos that it’s now stuck in my head. Some of the lines match the feeling I get from this thread:

    …We can’t wait
    To burn it to the ground

    You told me, “Yes”
    You held me high
    And I believed when you told that lie
    I played soldier, you played king
    And struck me down, when I kissed that ring
    You lost that right, to hold that crown
    I built you up, but you let me down
    So when you fall, I’ll take my turn
    And fan the flames
    As your blazes burn

    And you were there at the turn
    Waiting to let me know…

  22. CMike

    Kurt asks:

    I apologize if this is a stupid question, but would it be possible for Greece to continue using the Euro as its de facto currency even without agreeing to the creditors’ terms?

    Yes, Greece could do that but without the issuing authority of a Central Bank it would present similar problems to going on a gold standard, a convertible gold based currency. There are only so many Euros in Greece right now and any of them that are used to buy imports that would only deplete the total amount. Meanwhile the Euros on deposit in Greek banks greatly exceeds the amount of physical Euros that are in Greek bank vaults.

    That’s a characteristic of fractional reserve banking, the habit of banks to lend out a multiple of whatever amount of currency they have on hand. Should all depositors, including those who have a deposit credit for the money they’ve borrowed, start a run Greek banks the banks would not be able to provide the currency to pay off the depositors. (In the past week, for instance, depositors were limited by the government in the amount of Euros they could withdraw from their accounts.) That’s why a commercial bank needs to be tied into a Central Bank, a Central Bank can print and lend any amount of its own fiat currency (in the case of our own Federal Reserve, that Central Bank can order any amount of dollars from the Bureau of Printing and Engraving) and provide a bank facing a depositor panic all the liquidity it needs to stay open.

    In the U.S. -in simplified terms- the Fed would provide a cash short bank all the cash it needs in a crisis provided the Fed’s auditors thought the paper -the IOUs from borrowers in the form of mortgages, car loan, or other obligations- the bank was holding was worth what the commercial bank owed its depositors. If the bank did not own enough value in the way of IOUs the Fed, our Central Bank, would declare the bank insolvent, take it over, and pay off all depositors and then liquidate all IOUs, taking a loss. (Actually, the Federal Deposit Insurance Corporation would take the loss and, hopefully, pay for it out of the accumulated premiums it had been collecting right along from all the banks and the deposit accounts in the failed bank would be assigned to a solvent bank in the time between a Friday closing and the following Monday opening.)

    So, in answer to your question, yes Greece could stay on the Euro but all the commercial banks there would fail because everyone literally would want to hold paper Euros rather than have a credit at the bank and there would be no where enough paper Euros to provide them.

  23. How do “de facto” Euro countries work, by the way? Well, here’s some clues.

    Actually if all Greek citizens got ING or DKB accounts somehow, and all Greek merchants used electronic payments, then in theory you could implement a Grexit simply by everyone agreeing to forego in-person bank branch services and doing all their business in other countries’ online banks.

  24. Sorry, a Grexitless default.

  25. Synoia

    SYZRIA can end austerity by being kicked out (or off) the Euro.

    Then SYZRIA can point to the Eurobastatds, and say “They Did It.”

    Sometimes it is a mistake to be assertive, and better to be the victim.

  26. Bill

    I read that the debt will be paid by cutting pensions and raising sales tax. Way to stick it to Greece’s low and middle class and kill demand. My understanding is that part of the reason outgo exceeded income in Greece is because of upperclass tax evasion. Stuff like this happens in the U.S. all the time. Municipal pensions are raided to pay for corporate tax cuts and then the very-serious-people scold the public about the need to cut pension spending to balance the books – you know, to do the responsible thing. The wealthy put the burden of funding the public sector on the poor, facilitated by the people in government who are in their pocket. They privatize gains and socialize loses. Greece could go after the wealthy tax evaders, but they won’t. This is not a Greece/EU problem; this is the 1% versus the 99%.

  27. guest

    SYZRIA can end austerity by being kicked out (or off) the Euro.
    Then SYZRIA can point to the Eurobastatds, and say “They Did It.”
    Sometimes it is a mistake to be assertive, and better to be the victim.
    Hopefully Schauble will get his way, or the Baltics will balk at debt restructuring and run them out of the Euro for their own good.
    But if Syzria is making an offer that is as bad or worse than the “humiliating” one they rejected last week, that says to me Syzira wants it to be accepted so they can stay on the Euro. They had a mandate to not accept austerity. There was nothing in the referendum about rejecting austerity unless it might prevent them staying on the Euro, was there?. They could have insisted on something reasonable but less austere and let themselves be run out of the Eurozone if they wanted to do it passively. As it is, it looks like they are now begging to be “humiliated”.

  28. Ian Welsh

    Some amazing comments here

  29. anonymouscoward

    Re: the question can Greece continue to use Euro transitionally after leaving the Euro Monetary Union, with the problem of scarcity of paper money.

    One point not mentioned so far is that Greece can print Euro notes up to €20. They lack the ability to print larger Euro notes, or the ability to rapidly print up their own national currency. I believe from what I’ve read elsewhere that Greek originated Euro notes all have serial numbers beginning with the letter Y. (i-Grec) However, there’s no telling how much paper and other supplies the Bank of Greece has stockpiled to print Euro – and they would need to print a lot. Could it possibly be enough to handle the desire to hold cash in the emergency of Grexit? And in the first place, demanding that the bank of Greece run the presses non-stop requires a Greek government takeover of the bank, which is actually considered a branch of the ECB, and that would be viewed as highly inflammatory, if not an outright “hostility”. Printing not authorized by the ECB headquarters in the city of Dis would be labeled counterfeiting – something often cited as an act of war. The “Y” prefixed serial number could be put to use as a defense against the counterfeiting charge. Any cashier or teller outside Greece could tell a Greek bill from a non-Greek at a glance and reject it. But you can rely on the Germans -inveterate counterfeiters of other people’s money in times of war- to take maximum umbrage at Greeks printing up Euro outside the control of the ECB. So, large risks before anyone thinking of taking this path.

  30. markfromireland

    @ anonymouscoward July 11, 2015

    You are correct. When they joined the Euro they destroyed their printing presses. To showing commitment or willingness or something.

    You’re also right about the Y series and about the formiddable nature of the logistics involved.

    The Bank of Greece is a member of the ESCB it’s ALSO only partially state owned (by law not more than 35% of its shares can be Greek owned) and traded on the Greek Stock exchange.

    If upon reading that your first thought is along the lines of “that’s lunacy” or even just WTF I suggest you think back to how Britain and France treated the Khedive’s government to get hold of the Suez Canal for a template. Greek sovereign debt has never been good for the Greek people as a whole.


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