07-18-2015, 10:23 PM
And Mr Varoufakis also assumed that the outside option for Greece was not all that bad. That means his hand, in a negotiation, would be very strong. That is because, quite recently, Greece was running a so-called "primary surplus" earlier this year. That means if it got cut off from financial markets because it failed to pay its debtors, it could still keep its public services running. I would presume he also thought the banks would be kept afloat by the European Central Bank: in previous chapters of the crisis, it actually rewrote its own rules to keep the banks open and liquid in Greece. In that situation, Mr Varoufakis thought the damage would be much worse to Europe than it would be to Greece of a failure to agree.
Was the Greek finance minister pretending to be mad? - BBC News
one person who has read it is the former finance minister Yanis Varoufakis. And not only that: just hours before what may be the most critical vote in Greek history, he has released an annotated version of what the Euro Summit statement really means for Greece.
Presenting The "Greek Terms Of Surrender" As Annotated By Yanis Varoufakis | Zero Hedge
It's about time Greece left the euro — it's the only way to keep the country from falling further into the black hole of debt that is ravaging its economy. Greece has too much debt. In fact, it's "highly unsustainable" according to the International Monetary Fund, and the only way the country will remotely have a chance of getting this reduced is by a Greek exit from the euro, or Grexit.
Grexit update: Greece should leave euro - Business Insider
The IMF isn’t a creditor in the usual sense of the word. It’s a collateralised bilateral swap agent that exists to help countries balance international payment obligations so that they don’t have to start wars, grab resources or asset-strip trade partners when they abuse their trust. The clue comes in the ‘F’ of the IMF acronym, which of course stands for fund not force. But even that is a misdirection, since the fund is actually made up of capital commitment quotas, not pre-paid lump sums of capital. Pre-paying would be dumb, you see — a waste of perfectly good capital. What if there’s no crisis to allocate the funds to? That capital just goes to waste, unused. What the quotas really are then are capital pledges. This loosely translates to signed up IMF members agreeing to freeze their own potential counter claims on trade partners who can’t afford to balance their IMF account, until the country in question can afford to honour them. In the event the “creditor” nations don’t have counter claims, they simply agree to assign claims on their own capital resources, and so forth, in exchange for eventual claims on the country in question. That’s why you can’t actually technically default. It’s not a loan. It’s a swap.
Why you can’t technically default on the IMF | FT Alphaville