http://econospeak.blogspot.com/2012/05/problem-with-eurozones-throw-greece.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+espeak+%28EconoSpeak%29&utm_content=Google+Reader
There is no democratic deficit in Greece: its people have clearly indicated they want to do two things, clean the slate by defaulting on their debts and staying within the Eurozone. This is seen as unacceptable in Brussels and Frankfurt, and Greeks are supposed to understand that if they choose the first they will lose the second.
Alas, there is no legal procedure by which Greece can be expelled from the EZ; therefore the strategy has to be one of making retention of the euro so ruinous for Greeks that they will exit on their own volition. The mechanism is the Target system through which euros are transferred from one national central bank to another.
The idea is this: when funding from the troika is cut off after a default, the Greek government will lack the resources to backstop its banking system. Moreover, euro transfers via Target will be cut off. Greek depositors who try to withdraw their funds will be told, sorry, but the cupboard is quite bare. This will ignite a banking meltdown, and the only way out for Athens will be to redenominate financial liabilities in a new currency they can supply. Whether they call it a drachma is up to them.
Clever, huh? The only hitch is that, now that the game plan is becoming clear, rational Greeks are not choosing to wait for an EZ attack before withdrawing their funds from Greek banks and transferring them somewhere, anywhere, else. There is a gradually accelerating bank run taking place which is likely to reach criticality before a Greek-EZ policy showdown can take place.There is a broader lesson here. By threatening to choke the Greek banking system, the EZ implicitly threatens to do the same for Spain or even Italy. They can say otherwise, but why should depositors in shaky peripheral banks believe them? Withholding euros from peripheral banking systems is a gun that goes off before it is fired. Simply brandishing this weapon is causing havoc and speeding the demise of the entire zone.
Better to put the gun away and do what should have been done all along: have the ECB assume the lender of last resort function for all EZ banks, with centralized financing of deposit insurance in particular. Don’t use the threat of a financial panic as a policy tool.
and.....
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_16/05/2012_442484
The Problem with the Eurozone’s Throw-Greece-from-the-Train Plan Is that its Timing Can’t Be Controlled
There is no democratic deficit in Greece: its people have clearly indicated they want to do two things, clean the slate by defaulting on their debts and staying within the Eurozone. This is seen as unacceptable in Brussels and Frankfurt, and Greeks are supposed to understand that if they choose the first they will lose the second.
Alas, there is no legal procedure by which Greece can be expelled from the EZ; therefore the strategy has to be one of making retention of the euro so ruinous for Greeks that they will exit on their own volition. The mechanism is the Target system through which euros are transferred from one national central bank to another.
The idea is this: when funding from the troika is cut off after a default, the Greek government will lack the resources to backstop its banking system. Moreover, euro transfers via Target will be cut off. Greek depositors who try to withdraw their funds will be told, sorry, but the cupboard is quite bare. This will ignite a banking meltdown, and the only way out for Athens will be to redenominate financial liabilities in a new currency they can supply. Whether they call it a drachma is up to them.
Clever, huh? The only hitch is that, now that the game plan is becoming clear, rational Greeks are not choosing to wait for an EZ attack before withdrawing their funds from Greek banks and transferring them somewhere, anywhere, else. There is a gradually accelerating bank run taking place which is likely to reach criticality before a Greek-EZ policy showdown can take place.There is a broader lesson here. By threatening to choke the Greek banking system, the EZ implicitly threatens to do the same for Spain or even Italy. They can say otherwise, but why should depositors in shaky peripheral banks believe them? Withholding euros from peripheral banking systems is a gun that goes off before it is fired. Simply brandishing this weapon is causing havoc and speeding the demise of the entire zone.
Better to put the gun away and do what should have been done all along: have the ECB assume the lender of last resort function for all EZ banks, with centralized financing of deposit insurance in particular. Don’t use the threat of a financial panic as a policy tool.
and.....
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_16/05/2012_442484
Troika worried about sell-off halt
By Vangelis Mandravelis
The decision by the state privatization fund (TAIPED) to freeze the sell-off program due to the political uncertainty ahead of another round of elections next month has provoked the displeasure of the representatives of the country’s international creditors in Athens.
TAIPED’s board decided on Tuesday to suspend the program until a new government is elected, but the mission from the European Commission, the European Central Bank and the International Monetary Fund -- known collectively as the troika -- suggested that this is compromising yet one more structural reform effort in this country.
TAIPED said in a statement that “the observers appointed by the European Central Bank and the eurozone expressed their concern about the board’s decision.” Fund officials added that at least three months have been lost in the timetable for the application of the privatization program, which is crucial in the effort to boost state revenues, as they also include March and April in the election period. They add that the 3 billion euros target for sell-off revenues is no longer feasible.
and....
http://www.athensnews.gr/portal/1/55563
2pm The prime minister has told his cabinet that they will not be paid for the month that they will be in office, Mega TV reports.
1.10pm Parliament's 300 MPs were sworn in shortly before noon. This, the shortest-lived parliament in the country's, is due to be dissolved on Friday by President Papoulias to pave the way for new elections on June 17.
Just back from parliament, our Costas Papachlimintzos reports that there were a few incidents this morning:
The speaker, Vyron Polydoras, skipped the swearing-in ceremony for the body's Orthodox MPs. Pasok's Apostolos Kaklamanis had to remind him. The rate of participation during the religious oath-taking varied, with almost all Communist Party (KKE) MPs not taking part. Liana Kaneli seemed to be the only deputy from that party to display the sign of the Trinity with her hand as the archbishop of Athens read out the oath. About half of the deputies from the Radical Left Coalition (Syriza) and the Democratic Left participated.
During the swearing in of the body's three Muslim MPs, the Golden Dawn MPs (below) remained seated while the rest of the chamber stood.
Earlier, the Golden Dawn MPs marched into the parliamentary chamber in military formation, led by the party leader. It's the first time that the neo-Nazi party has entered the parliament.
10.15am The new cabinet has been sworn in by Archbishop Ieronymos of Athens and All Greece and the new ministers are signing the official decrees. The new government will lead the country to new parliamentary elections in precisely one month, on June 17.
The cabinet comprises 16 ministers, mainly chiefly university professors, former ministers and diplomats. There are no deputy ministers
Here's the full line-up:
Prime Minister Panagiotis Pikrammenos
Administrative Reform and E-Governance Minister Pavlos Apostolidis
Citizen Protection Minister Lefteris Economou
Culture and Tourism Minister Tatiana Karapanayioti
Defence Minister Frangos Frangoulis
Development, Competitiveness & Shipping Minister Yannis Stournaras
Economy Minister George Zanias
Education, Lifelong Learning and Religious Affairs Minister Angeliki-Evfrosyni Kiaou
Environment, Energy & Climate Change Minister Grigoris Tsaltas
Foreign Minister Petros Molyviatis
Health and Social Solidarity Minister Christos Kittas
Infrastructure, Transport and Networks Minister Simos Simopoulos
Interior Minister Antonis Manitakis
Justice, Transparency and Human Rights Minister Christos Yeraris
Labour and Social Security Minister Antonis Roupakiotis
Rural Development and Food Minister Napoleon Maravegias
State Minister Antonis Argyros
10.05am The caretaker cabinet is been sworn in. More details once we get them.
10am As leader of a party that may come first in the new elections, Syriza's Alexis Tsipras is getting a lot of international media attention. On Wednesday, he gave an interview to Christiane Amanpour, host of the CNN programme Amanpour.
Much of the reaction to what Tsipras' said focuses on his ability in the English language. He said, for example, that "with this [memorandum] policy we are going directly to the hell".
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