“Should the proposal that was submitted by the European Commission, the European Central Bank and the International Monetary Fund at the Eurogroup of June 25, 2015, which consists of two parts that together constitute their comprehensive proposal, be accepted?”
The OXI, or NO, vote won by 61 to 39 percent.
I have been a student of the European Union for over 20 years. I played the role of former European Commission President Jacques Delors at a Model European European Union (EU) Simulation held in Luxembourg in January 1994 while a student at the State University of New York (SUNY) at Buffalo. At the end of the simulation, I had the pleasure of meeting Luxembourg Prime Minister Jacques Santer. I returned to Luxembourg a year later to recruit European students to participate in the same simulation held at SUNY Brockport. Mr. Santer left for Brussels within days of my arrival to become take Mr. Delors' job as the President of the Commission.
After returning home from Luxembourg, I continued to be a student of the EU. I advocated closer economic integration between the member countries. However, I felt some countries such as Greece should not adopt the Euro as they had not met the Euro Convergence Criteria. Greece has a tourism based economy that would be hurt by an expensive Euro. If German, Belgium, the Netherlands, and other countries wanted to adopt the Euro, fine. After a number of years, Greece and other countries could possibly join in the future. Sweden, Denmark and the UK were wise NOT to adopt the Euro. Greece, Spain, Portugal, Italy, and Ireland should have done the same.
(On a related note, I do not think Serbia should join the EU though Germany and other members have demanded recognition of the 2008 Uniform Declaration of Independence (UDI) by Albanians in Pristina. The price of giving up Kosovo is too much from a religious, cultural and economic prospective. More on that later.)
On a related note, this is a comment I wrote on a petition to President Obama in February 2015.
Greece should stay in the EU if it wants. However, joining the Euro was a huge mistake. Derivatives and accounting tricks were used in order for Greece to comply with the Maastricht criteria (or Euro convergence criteria). A strong Euro has hurt tourist and service based economies such as Greece, Italy, Spain, Portugal, and Ireland. Greece should exit the Euro. Continued American support of Greece in this time of austerity and depression would be greatly appreciated. Thank you!
I have read various perspectives on the issue and wanted to share them with you.
The Painful Arithmetic of Greek Debt Default by Columbia University Professor Charles W. Calorimis on March 18, 2010. I had the pleasure of meeting Professor Calorimis in early 2010 at Holy Trinity Cathedral on the Upper East Side (UES) in NYC.
A Way Out for Greece after the "No" Vote on July 5, 2015 by Professor Calorimis.
Greek Debt Crisis: How Goldman Sachs Helped Greece to Mask its True Debt by Beat Balzli
Children abandoned by Greek parents as cuts also sees country running out of medicine
Things have gotten much worse since this 2012 Daily Mail article.
The facts behind the Greek melodrama by Srdja Trifkovic
Germans Forget Postwar History Lesson on Debt Relief in Greece Crisis by Eduardo Porter.
A curious sidelight to the Greek debt crisis by Sparta
This article details reparations that Germany owed after WWI and WWII. There are precedents for debt forgiveness.
Here are the reasons David Rosenberg is still not worried about Grexit
Before resigning on July 6, Finance Minister Yanis Varoufakis wrote about 6 bullet points summarizing the NO position on July 1.
Why we recommend a NO in the referendum – in 6 short bullet points
- Negotiations have stalled because Greece’s creditors (a) refused to reduce our un-payable public debt and (b) insisted that it should be repaid ‘parametrically’ by the weakest members of our society, their children and their grandchildren
- The IMF, the United States’ government, many other governments around the globe, and most independent economists believe — along with us — that the debt must be restructured.
- The Eurogroup had previously (November 2012) conceded that the debt ought to be restructured but is refusing to commit to a debt restructure
- Since the announcement of the referendum, official Europe has sent signals that they are ready to discuss debt restructuring. These signals show that official Europe too would vote NO on its own ‘final’ offer.
- Greece will stay in the euro. Deposits in Greece’s banks are safe. Creditors have chosen the strategy of blackmail based on bank closures. The current impasse is due to this choice by the creditors and not by the Greek government discontinuing the negotiations or any Greek thoughts of Grexit and devaluation. Greece’s place in the Eurozone and in the European Union is non-negotiable.
- The future demands a proud Greece within the Eurozone and at the heart of Europe. This future demands that Greeks say a big NO on Sunday, that we stay in the Euro Area, and that, with the power vested upon us by that NO, we renegotiate Greece’s public debt as well as the distribution of burdens between the haves and the have nots.
"It is hard to advise Greeks how to vote on 5 July. Neither alternative –
approval or rejection of the troika’s terms – will be easy, and both
carry huge risks. A yes vote would mean depression almost without end.
Perhaps a depleted country – one that has sold off all of its assets,
and whose bright young people have emigrated – might finally get debt forgiveness; perhaps, having shrivelled into a middle-income economy, Greece might finally be
able to get assistance from the World Bank. All of this might happen in
the next decade, or perhaps in the decade after that."
Where Do We Go From Here :
Greece isn't the only country in major debt trouble. Brasil, China, Ukraine, and other countries have debt issues. America is not immune from this as Puerto Rico as its debts are "not payable".
The US National Debt is $18 Trillion and counting; you should be sitting down when reading the the US Unfunded Liabilities (GAAP) of $97 Trillion at the bottom of the US Debt Clock. Add in another $27 Trillion for Medicare and $14 Trillion for Social Security are also at the bottom of that same US Debt Clock page.
The aforementioned problems are credit markets have derivatives totaling $1 Quadrillion, or 1,000 $1 Trillion. "Derivatives are a $1 quadrillion ticking time bomb, soaked in gasoline and sprinkled with gunpowder."
Former US Assistant Treasury Secretary Paul Craig Roberts hopes that China and Russia come to Greece's aid. Time will tell. In the meantime, my thoughts and prayers continue to be with the Greek people.
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Nobel Prize Economist and Columbia University Professor Joseph Stiglitz made many great points in his June 29 Guardian Op-Ed listed in its entirety below.
Joseph Stiglitz: how I would vote in the Greek referendum
Neither alternative – approval or rejection of the troika’s terms – will be easy, and both carry huge risks
The rising crescendo of bickering and acrimony within Europe might seem to outsiders to be the inevitable result of the bitter endgame playing out between Greece and its creditors. In fact, European leaders are finally beginning to reveal the true nature of the ongoing debt dispute, and the answer is not pleasant: it is about power and democracy much more than money and economics.
Of course, the economics behind the programme that the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund) foisted on Greece five years ago has been abysmal, resulting in a 25% decline in the country’s GDP. I can think of no depression, ever, that has been so deliberate and had such catastrophic consequences: Greece’s rate of youth unemployment, for example, now exceeds 60%.
It is startling that the troika has refused to accept responsibility for any of this or admit how bad its forecasts and models have been. But what is even more surprising is that Europe’s leaders have not even learned. The troika is still demanding that Greece achieve a primary budget surplus (excluding interest payments) of 3.5% of GDP by 2018.
Economists around the world have condemned that target as punitive, because aiming for it will inevitably result in a deeper downturn. Indeed, even if Greece’s debt is restructured beyond anything imaginable, the country will remain in depression if voters there commit to the troika’s target in the snap referendum to be held this weekend.
In terms of transforming a large primary deficit into a surplus, few countries have accomplished anything like what the Greeks have achieved in the last five years. And, though the cost in terms of human suffering has been extremely high, the Greek government’s recent proposals went a long way toward meeting its creditors’ demands.
We should be clear: almost none of the huge amount of money loaned to Greece has actually gone there. It has gone to pay out private-sector creditors – including German and French banks. Greece has gotten but a pittance, but it has paid a high price to preserve these countries’ banking systems. The IMF and the other “official” creditors do not need the money that is being demanded. Under a business-as-usual scenario, the money received would most likely just be lent out again to Greece.
But, again, it’s not about the money. It’s about using “deadlines” to force Greece to knuckle under, and to accept the unacceptable – not only austerity measures, but other regressive and punitive policies.
But why would Europe do this? Why are European Union leaders resisting the referendum and refusing even to extend by a few days the June 30 deadline for Greece’s next payment to the IMF? Isn’t Europe all about democracy?
In January, Greece’s citizens voted for a government committed to ending austerity. If the government were simply fulfilling its campaign promises, it would already have rejected the proposal. But it wanted to give Greeks a chance to weigh in on this issue, so critical for their country’s future wellbeing.
That concern for popular legitimacy is incompatible with the politics of the eurozone, which was never a very democratic project. Most of its members’ governments did not seek their people’s approval to turn over their monetary sovereignty to the ECB. When Sweden’s did, Swedes said no. They understood that unemployment would rise if the country’s monetary policy were set by a central bank that focused single-mindedly on inflation (and also that there would be insufficient attention to financial stability). The economy would suffer, because the economic model underlying the eurozone was predicated on power relationships that disadvantaged workers.
It is hard to advise Greeks how to vote on 5 July. Neither alternative – approval or rejection of the troika’s terms – will be easy, and both carry huge risks. A yes vote would mean depression almost without end. Perhaps a depleted country – one that has sold off all of its assets, and whose bright young people have emigrated – might finally get debt forgiveness; perhaps, having shrivelled into a middle-income economy, Greece might finally be able to get assistance from the World Bank. All of this might happen in the next decade, or perhaps in the decade after that.
By contrast, a no vote would at least open the possibility that Greece, with its strong democratic tradition, might grasp its destiny in its own hands. Greeks might gain the opportunity to shape a future that, though perhaps not as prosperous as the past, is far more hopeful than the unconscionable torture of the present.
I know how I would vote.
Joseph E. Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University. His most recent book, co-authored with Bruce Greenwald, is Creating a Learning Society: A New Approach to Growth, Development, and Social Progress.
Copyright: Project Syndicate, 2015.
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