Greek prime minister doesn't think they should have to repay debt

Once again, Greece is on the brink of default, and this time, it appears that the government is going to let it happen.

In essence, members of the far-left Syriza party that was elected earlier this year think that because they ran on an anti-austerity platform and won, their creditors should bow to the "democratic choice" of the Greek people and negotiate terms that leave Greece virtually off the hook for $320 billion in debt..  The government of Prime Minister Alex Tsipras is complaining that the modest labor and fiscal reforms demanded by EU creditors are "absurd."

Negotiations have reached an impasse, and Tsipras took to the pages of the far-left French newspaper Le Monde to lash out at Greece's creditors.

Financial Times:

 Greece’s chances of striking a deal to access a much-needed €7.2bn in rescue aid looked even bleaker on Sunday after Alexis Tsipras, prime minister, accused bailout monitors of making “absurd” demands and seeking to impose “harsh punishment” on Athens.

Mr Tsipras’s accusations, made in Le Monde newspaper, came only days after his government claimed an agreement was imminent. They have increased the sense of chaos around negotiations in the week many believe a deal is needed to avoid a Greek default.

On Friday, Athens is scheduled to make a €300m loan repayment to the International Monetary Fund that is being closely watched by creditors after some Greek ministers hinted that it might not be met without bailout aid. A further €1.2bn of IMF payments fall due over the subsequent two weeks.

Several eurozone officials fear that, without a deal this week, there will not be time for Greece to legislate and implement an agreed list of new economic reforms before the end of the month, when its bailout expires. The uncertainty has sparked large-scale withdrawals from Greek banks, with about €800m taken out in just two days last week — renewing fears of a full-scale bank run.

Greece’s three bailout monitors — the IMF, European Commission and European Central Bank — must sign off on the new reforms before the funds will be released, but in his Le Monde article, Mr Tsipras accused them of being unyielding in the face of significant Greek concessions.

“The lack of an agreement so far is not due to the supposed intransigent, uncompromising and incomprehensible Greek stance,” Mr Tsipras wrote. “It is due to the insistence of certain institutional actors on submitting absurd proposals and displaying a total indifference to the recent democratic choice of the Greek people.”

The criticism appears directed at the IMF, which has taken the hardest line of the three institutions, particularly regarding cuts in public sector pensions, which Mr Tsipras described as already having been excessively slashed. EU leaders, including Chancellor Angela Merkel of Germany, have specifically warned Mr Tsipras that no deal is possible without IMF approval.

Tsipras has proposed debt forgiveness.  He has proposed allowing Greece to issue bonds that they don't have to pay back for 50 years.  He has proposed any number of solutions that allow Greece to continue spending more than it gets in taxes, with the rest of Europe bankrolling the excessive welfare state.  This time, it appears that the EU has run out of patience.  And because the EU has somewhat inoculated some of the weaker economies in Europe against a Greek default, the blowback from a Grexit can probably be limited.

The Greek prime minister continues to live in Never-Neverland.  He is likely to discover the harsh reality of his situation before too long.

Once again, Greece is on the brink of default, and this time, it appears that the government is going to let it happen.

In essence, members of the far-left Syriza party that was elected earlier this year think that because they ran on an anti-austerity platform and won, their creditors should bow to the "democratic choice" of the Greek people and negotiate terms that leave Greece virtually off the hook for $320 billion in debt..  The government of Prime Minister Alex Tsipras is complaining that the modest labor and fiscal reforms demanded by EU creditors are "absurd."

Negotiations have reached an impasse, and Tsipras took to the pages of the far-left French newspaper Le Monde to lash out at Greece's creditors.

Financial Times:

 Greece’s chances of striking a deal to access a much-needed €7.2bn in rescue aid looked even bleaker on Sunday after Alexis Tsipras, prime minister, accused bailout monitors of making “absurd” demands and seeking to impose “harsh punishment” on Athens.

Mr Tsipras’s accusations, made in Le Monde newspaper, came only days after his government claimed an agreement was imminent. They have increased the sense of chaos around negotiations in the week many believe a deal is needed to avoid a Greek default.

On Friday, Athens is scheduled to make a €300m loan repayment to the International Monetary Fund that is being closely watched by creditors after some Greek ministers hinted that it might not be met without bailout aid. A further €1.2bn of IMF payments fall due over the subsequent two weeks.

Several eurozone officials fear that, without a deal this week, there will not be time for Greece to legislate and implement an agreed list of new economic reforms before the end of the month, when its bailout expires. The uncertainty has sparked large-scale withdrawals from Greek banks, with about €800m taken out in just two days last week — renewing fears of a full-scale bank run.

Greece’s three bailout monitors — the IMF, European Commission and European Central Bank — must sign off on the new reforms before the funds will be released, but in his Le Monde article, Mr Tsipras accused them of being unyielding in the face of significant Greek concessions.

“The lack of an agreement so far is not due to the supposed intransigent, uncompromising and incomprehensible Greek stance,” Mr Tsipras wrote. “It is due to the insistence of certain institutional actors on submitting absurd proposals and displaying a total indifference to the recent democratic choice of the Greek people.”

The criticism appears directed at the IMF, which has taken the hardest line of the three institutions, particularly regarding cuts in public sector pensions, which Mr Tsipras described as already having been excessively slashed. EU leaders, including Chancellor Angela Merkel of Germany, have specifically warned Mr Tsipras that no deal is possible without IMF approval.

Tsipras has proposed debt forgiveness.  He has proposed allowing Greece to issue bonds that they don't have to pay back for 50 years.  He has proposed any number of solutions that allow Greece to continue spending more than it gets in taxes, with the rest of Europe bankrolling the excessive welfare state.  This time, it appears that the EU has run out of patience.  And because the EU has somewhat inoculated some of the weaker economies in Europe against a Greek default, the blowback from a Grexit can probably be limited.

The Greek prime minister continues to live in Never-Neverland.  He is likely to discover the harsh reality of his situation before too long.