Bye Bye Greece

The IMF didn't impose the November 2012 framework. That was mainly the work of the Eurozone and the ECB. The IMF agreed to the settlement that was reached.

The IMF also is actively involved as a participant, and isn't arguing about the merits or demerits of austerity as a whole.

The IMF report - and indeed if you look at the Greek statistics - seems to indicate that Harald Hau would have been proven wrong and that without policy changes that Greece would not have undergone another bankruptcy.

Similarly your latter interview on Germany's 20's - 30's defaults conveniently avoids the point that Germany's Deutsche Mark was spiraling out of completely control. The inflation rate was far above anything Greece has ever had to experience. You cannot compare the German situation in the 1920s with the present day Greek situation. This is, perhaps, thanks to the Euro - if Greece still had the Drachma it could be possible they would have imploded.

Cynosure, it is your right to believe that the austerity program would have worked if Greece would have done whatever. I disagree. I say they would have needed a generous debt haircut. See my links in #18 and the following links:

The first one contains some data regarding the expertise of the IMF. See the picture at the start of the article.
http://krugman.blogs.nytimes.com/2015/06/25/breaking-greece/

In the second you can see a nobel laureate saying about the troika "They have criminal responsibility".
http://time.com/3939621/stiglitz-greece/

The third one gives some interesting insights about myths spreaded by our politicans and you can also learn what happened to the money which was given to greece.
http://www.spiegel.de/international/germany/former-central-bank-head-karl-otto-poehl-bailout-plan-is-all-about-rescuing-banks-and-rich-greeks-a-695245.html

Each author says that a debt haircut was and is the best thing to do.

I agree with you, Cynosure, that it is not completely the fault of the Troika, it is also the fault of the richest 20% of Greece who didnt pay their taxes and of corruption in Greece. But that is now irrelevant, now is relevant how Greece does survive. And that is done by a debt haircut. Thanks.

#23, I'm actually Greek and I can safely say that a lot of those arguments are bleeding-heart nonsense. Tax evasion is a phenomenon across _all_ sections of society, as is ignoring construction laws and many other things. But we don't call them corrupt because everyone is breaching the laws.

The problem with Krugman and Stiglitz is that they are old-school Keynesians. I happen to be good friends with one such person who is currently working towards his PhD.

Basically, it is impossible to rationalise any solution at the current state according to the policies they advocate. The only way they can do big government investments is if there is a very, very generous debt haircut, massive restructuring of the public-sector workforce and an end to near-universal tax evasion. Greece was the only country where the public sector paid better than the private sector. Where the public sector formed a comparatively massive percentage of employment for your typical developed European country. But it was also hilariously inefficient. It was near-impossible to fire anyone, and after 5+ years of austerity, the government is still too afraid to touch with the public sector. No, an independent third party was needed to handle these things.

Of course that is all irrelevant now. I'm glad that the no vote won. It was a vicious cycle of loans and half-arsed restructuring. It would go on until at least 2019 (conservative estimate) according to some earlier projections. If anything, this referendum brought a bit of certainty, that the markets much required. How do we step forward? It's unclear. But at least there are no doubts on if Greece has survived. The country is turning over a new leaf now. An ugly,shit-stained leaf to be sure, but it's still a blank page, dirty and insufficient as it may be, and anything can happen.

Hellball, don't take the debt personally. The only reason any country can pay off such a massive debt is if the collectively get behind the idea. That hasn't happened. It pours scorn on everybodyelse that has in the eurozone and EU. Brilliant! Greece saves itself (in the short term) but ruins their partners in the process......Truly Savant thinking....

Feck - I'll take my Lp's back, unscratched and our dog too but you can keep the house.

I'm not taking it personally. I haven't lived there for 9 years. In fact you may notice I was very explicitly blaming Greek people for a lot of the problems. :P

It's easy to blame the higher-ups for crises like these but a bit of self-reflection will go a long way. In the case of Greece, there are deep-seated cultural problems (e.g. tax evasion) that render a lot of potential reforms fruitless.

'Blaming' the higher ups is exactly right. If you work hard and don't spend more than you earn, why should you suddenly be made out of a job because there is no money to spend? Who is it that pays? The problem is - the people who mess up are still millionaires. There is no justice - perceived or otherwise.
Why can I not ask for the money I paid into a National Pension Scheme back when the government admits the fund have been redistributed? I am probably beginning to sound like a 'my woe is worse than yours' - but ffs -if you want a chance against the unfairness - then at least get on a level playing field!

#24 ' The only way they can do big government investments is if there is a very, very generous debt haircut, massive restructuring of the public-sector workforce and an end to near-universal tax evasion. '

I fully agree to that.

Here is another link i just found, very good info, unfortunately it is german only, may be helpful for some:

http://cansel-kiziltepe.de/10-fragen-und-10-antworten-zum-scheitern-der-verhandlungen-zwischen-troika-und-griechenland/

Awesomer, I think you're arguing with me over something I don't actually disagree with you on.

I don't think the debt that Greece has is sustainable, but at the same time, what I'm arguing, is why should Greece be given a debt haircut when they act childishly on the world stage?

I'm sure we can all agree that reforms are vital to the Greek economy. There's no need - unless you want me to - to get into the nitty gritty of it, but I can think of two prime examples of outdated Greek practices which really need to be ended. Firstly, the Greek system has no formal method of land registration, something most other developed countries have. Therefore, it is easy in Greece to invest in property, but as there is no record of who owns the land it is easy to avoid the tax. If one is located and taxed, it is possible to bribe the tax man. Even without this, a case determining ownership of land in Greece can take 8 years. This is really backwards, land registration should be mandatory across the entire EU.

Secondly, the ratio of government employees to citizens is far too high. The state employs roughly 22% of the workforce directly, whereas in most other developed nations this number is more around 12 - 19%. The USA, for example, sits at 16% despite having a population of 350 million - magnitudes greater than the Greek 11 million. Japan sits at 10%. Coupled with generous pension allowances and early retirement ages for "dangerous work" (hairdressing famously was considered "dangerous work"), it creates a state of affairs which are luridly inefficient. The Greek government, for example, has refused to privatise the national taxi operators, which operates at a loss.

A third example is of the imbalances between the islands, military and orthodox church. The church supposedly owns about 30% of all Greek land, but is completely exempted from any form of tax (most charities or religions still usually have to pay some form of land duty/tax). VAT will not be increased in the islands, whilst corporation tax is raised to 29% (for comparison, the UK has a corporation tax rate of 19%).

I agree with you fundamentally: Greek debt is unsustainable. But what I'm arguing is why - realistically - should the EU, including nations which are poorer or have suffered more than Greece (such as Romania, or Lithuania) continue propping up a Greek system which actively repels reform?

When Greece makes an effort to reform, widely and across the board, a debt haircut could be worked out.

I am disappointed that the Greek populace voted "Oxi". It is their choice, but it creates unprecedented weakness within the Eurozone, and may ultimately have caused enough resentment to force Greece to leave the Euro (but not the EU).

Greece's reform proposals leaked: http://www.naftemporiki.gr/finance/story/976680/the-greek-reform-proposals

ON VAT:
The new VAT system will: (i) unify the rates at a standard 23 percent rate, which will include restaurants and catering, and a reduced 13 percent rate for basic food, energy, hotels, and water

(iii) Eliminate discounts on islands, starting with the islands with higher incomes and which are the most popular tourist destinations, except the most remote ones. This will be completed by end-2016

ON FARMERS:
phase out the preferential tax treatment of farmers in the income tax code by 2017...close possibilities for income tax avoidance (e.g., tighten the definition of farmers)...abolish subsidies for excise on diesel oil for farmers

ON TAX EVASION:
adopt outstanding reforms on the codes on income tax, and tax procedures: introduce a new Criminal Law on Tax Evasion and Fraud...with a view, inter alia, to modernize and broaden the definition of tax fraud and evasion to all taxes

ON THE SHIPPING INDUSTRY:
increase the rate of the tonnage tax and phase out special tax treatments of the shipping industry.

ON THE MILITARY:
reduce the expenditure ceiling for military spending by €100 million in 2015 and by €200 million in 2016 with a targeted set of actions, including a reduction in headcount and procurement;

ON COMPETITION LAW:
announce international public tender for the acquisition of television licenses and usage related fees of relevant frequencies; and

ON INCOME TAX:
(i) Increase the tax rate to income for rents, for annual incomes below €12,000 to 15% (from 11%) with an additional revenue of €160 million and for annual incomes above €12,000 to 35% (from 33%) with an additional revenue of €40 million

ON PENSION REFORM:
The Authorities recognise that the pension system is unsustainable and needs fundamental reforms...Effective from July 1, 2015 the authorities will phase-in reforms that would:

create strong disincentives to early retirement, including the adjustment of early retirement penalties, and through a gradual elimination of grandfathering to statutory retirement age and early retirement pathways progressively adapting to the limit of statutory retirement age of 67 years...with immediate application.

adopt legislation so that withdrawals from the Social Insurance Fund will incur an annual penalty

Gradually phase out the solidarity grant (EKAS) for all pensioners by end-December 2019.

(ii) broaden and modernize the contribution and pension base for all self-employed, including by switching from notional to actual income, subject to minimum required contribution rules

ON JUSTICE:
reform the Civil Procedure Code, in line with previous agreements; introduce measures to reduce the backlog of cases in administrative courts; work closely with European institutions and technical assistance on e-justice, mediation and judicial statistics.

ON ENERGY:
adopt the reform of the gas market and its specific roadmap, and implementation should follow suit.

take irreversible steps (including announcement of date for submission of binding offers) to privatize the electricity transmission company, ADMIE.

ON AIRPORTS:
Take irreversible steps for the sale of the regional airports at the current terms with the winning bidder already selected.

No mention of haircuts, or other favourable terms. I don't think Tsipras' gamble paid off at all. In fact, he has to make an extra 5 billion euros of cuts than he had to just over a week ago (an increase to 13 billion from 8 billion).