The European Central Bank (ECB) is threatening to withdraw emergency funding from Greek banks if the Greek government doesn't do what it wants. The central bank's actions toward Greece occur less than two months after secret letters revealed that the ECB threatened to pull emergency funding from Irish banks if the state did not apply for a bailout, in what many saw as an overreach into the sovereign affairs of the country. The ECB later pretended that Ireland had applied for its bailout voluntarily. The letters revealed that in fact the ECB had required the Irish government to apply.
ECB threats Greece over emergency funding - Business Insider
What's more, Varoufakis's academic specialty is game theory, the study of strategic decision-making in situations where people with differing interests try to maximize their gains and minimize their losses. Varoufakis knows as much about this subject "as anyone on the planet," Galbraith says. "He will be thinking more than a few steps ahead" in any interactions with the troika. Market analyst Nicholas Spiro, of Spiro Sovereign Strategy in London, says Varoufakis might be stirring things up on purpose. Syriza's leaders are "trying to establish their anti-austerity credentials, to show the Greek electorate that their vote was not in vain," Spiro says. "They will play this game as long as they possibly can. This will give them political cover to climb down" and compromise later.
OK, so as I understand the latest from the new Greek government, Yanis Varoufakis is saying that he and his colleagues don’t care what happens to the headline value of the debt — if you want to claim that there has been no write-off, OK. What they want instead is substantive but not outrageous relief from the burden of running primary surpluses (surpluses ex interest payments), reducing the amount of resources transferred to creditors from 4.5 to 1-1.5 percent of GDP; they also want flexibility to achieve these surpluses with a mix that includes more revenue and less spending austerity.
Who's unreasonable now? Paul Krugman NYTimes.com
But, though the Syriza party’s victory sent Greek equities and bonds plummeting, there is little sign of contagion to other distressed countries on the eurozone periphery. Spanish 10-year bonds TMBMKES-10Y, +0.00% for example, are still trading at interest rates below those of U.S. Treasuries. The question is how long this relative calm will prevail.