Some recent items of interest

September 9, 2015

Troika ‘vetoed’ a 2010 proposal from the Irish government to impose bondholder haircuts.

From the irish Times 9/9/15

The EU-IMF Troika veteod a proposal to impose haircuts on about €4 billion worth of senior unguaranteed bondholders in late 2010, a special adviser to the former minister for finance Brian Lenihan told the Oireachtas Banking Inquiry today.

Alan Ahearne said these bonds were in the minister’s “line of sight” when the government’s original guarantee expired in September 2010 but the European Central Bank opposed such a move.

Mr Ahearne said the European Commission “sided” with the ECB and that while individuals within the IMF supported discounts being imposed, the Washington DC-based organisation did not.

“The ECB approach was quite strident that there would not be a programme,” he said.
Mr Ahearne said imposing haircuts on bondholders could have saved the State €1.5-€2 billion but the Government backed away following the opposition of the Troika.

Click here for full article


“Grexit remains the likely outcome of this sorry process”

Wolfgang Münchau writing in the Finacial Times says:

Alexis Tsipras should never have hired Yanis Varoufakis as his finance minister. Or he should have listened to him, and kept him on. But instead the Greek prime minister chose the worst of all options. He followed Mr Varoufakis’ advice of rejecting the offer of the creditors — until last week. But having done this, Mr Tsipras committed a critical error by rejecting Mr Varoufakis’ plan B for the moment when the country’s banks closed down: the immediate introduction of a parallel currency — IOUs issues by the Greek state but denominated in euros. A parallel currency would have allowed the Greeks to pay for their daily transactions when cash withdrawals were limited to €60 a day. A total economic collapse would have been avoided.

But Mr Tsipras did not go for this, or indeed any other plan B. Instead he capitulated. At that point, he was no longer even in a position to choose a Grexit — a Greek exit from the eurozone. The economic precondition for a smooth departure would have been a primary surplus — before debt service — and an equivalent surplus in the private sector. Greece has no foreign exchange reserves. If the Greeks were to reintroduce the drachma, they would have had to pay for all of their imports with the foreign exchange earnings of their exports. These minimum preconditions were in place in March but not in July.

Click here for full article


Its That Man Again – Yanis Varoufakis is interviewed by Tim Sebastian

Click here for full video

Varoufakis also has an article in the New York Times entitled “How Europe Crushed Greece”

Previous post:

Next post: