06-21-2015, 11:51 PM
Prime Minister Alexis Tsipras’s government said there was an effort under way to spur capital flight, with Finance Minister Yanis Varoufakis later accusing the central bank of stoking fears. The scaremongering seeks to undermine the financial system and strengthen the position of the country’s creditors, a Greek government official said in an e-mail to reporters.
Greece Sees Plot to Undermine Economy, Spur Capital Flight - Bloomberg Business
The Greek Left thinks that if the Europeans hold out, the Greek payoff is higher if they too hold out and provoke Grexit. In other words: troika reforms are so bad that Grexit is better. They also think that the Europeans have far more to lose from Grexit than they do. In the event that the Eurogroup ‘sees sense’ and concedes, the Greek Left thinks they still do better by having held out, and not carrying out painful reforms.
Guest post: The Greek standoff is no Prisoner’s dilemma | FT Alphaville
How much has the Greece saga cost European equity investors? Try $897 billion, more than the value of benchmark indexes in Spain, Portugal and Ireland, combined. What had been a record year is in danger of turning sour, with the Stoxx Europe 600 Index going from its biggest quarterly gain since 2009 to the worst month, June, in two years. A third of this year’s rally has been lost as the gauge dropped 7.2 percent from its all-time high on April 15.
Greece Has Already Cost Investors $897 Billion This Year - Bloomberg Business
What that means is that the involvement of European governments has not helped Greece at all. With only IMF support, Greece would have suffered the same degree of austerity that has actually occurred. The additional money provided by the European authorities has been used to pay off Greece’s creditors, first through delaying default in 2010 and 2011, and then by only allowing partial default in 2012. (I’m not sure the two groups see the division that way, but if some of the IMF money was intended to pay off Greece’s creditors, you have to ask why the IMF should be doing that.)
mainly macro: The Eurozone’s cover-up over Greece
The key point is that the European authorities and the IMF were wrong. Contagion happened anyway, and was only brought to an end when the ECB agreed to implement OMT (i.e. to become a sovereign lender of last resort).This was a major error by policymakers - they ‘wasted’ huge amounts of money trying to stop something that happened anyway. If Eurozone governments had needlessly spent money on that scale elsewhere, their electorates would have questioned their competence.
mainly macro: The Eurozone’s cover-up over Greece