Confusion (2)

The Mail doesn't know its (stage) left from right (circled - click to enlarge):

Confusion

I meant to write a blog about today's G20 summit and the continuing Eurozone crisis, but events are moving so fast that I can't keep up at the moment. For a number of hours now we have had reports that Greece's PM George Papandreou has resigned, then oh no he hasn't, then oh yes he has ...and so on. And it's not even pantomime season yet.

Also Italian bonds continue to rise to record levels, as Italian politics is in a bit of turmoil. France and Spanish bonds have also risen. Van Rompuy and Barroso can't decide whether to hold a press conference or not. The sleepwalking into chaos continues.

Meanwhile a rather revealing twitter exchange between myself and pro-EU Telegraph journalist Daniel Knowles. I was simply arguing for an orderly break-up of the euro - the only realistic option left to prevent a chaotic collapse. This response below from Daniel was rapidly deleted, but I have a screenprint:

"You people"? Hmm interesting. And then the follow up:

What is really dangerous is that the Euro is heading rather rapidly for a disorderly collapse because no-one will make any of the very difficult decisions required to stabilise the crisis. When the collapse happens Mr Knowles will then find out what the words idealistic and extreme really means.

Germans Say Nein To Greek Football

From Greek paper Ekathimerini:

The German soccer federation suddenly informed its Greek counterpart on November 2 that it cannot host Greece's friendly game with Romania at Reutlingen on November 15 «for security reasons."

Greece had arranged the friendly in Germany in order to satisfy the huge demand by Greek expatriates to see their national team play, but less than two weeks before the match, the DFB told EPO it could not stage it after all, according to an EPO statement on Wednesday.

How strange...or maybe not:

The German federation's decision came just 24 hours after the Champions League game between local Borussia and Olympiakos at Dortmund with some 4,000 Greek fans in the stands whose behavior could not be faulted.

Speculation in Athens suggested that the decision may be down to the political uncertainty in Greece that could turn the match into a demonstration, although that appears to be quite far-fetched.

It is also likely that the German federation was upset by the behavior of Olympiakos fans in Piraeus during the home game against Borussia on October 19, as they produced a banner (pictured above) that appeared to be offensive to Germany.

EU harmony continuing as normal...

Greece Will Vote Yes

The referendum question according to the FT has been decided, and as expected it will be couched in terms of EU membership not the bailout itself (my emphasis):

Greek voters would be asked not to approve or reject the terms for Greece’s next financial rescue, which European leaders set at a Brussels summit last week, but a broader question centred on support for Greece’s membership of the European Union and 17-nation eurozone.

Greek enthusiasm for EU membership runs at more than 72% - George Papandreou will win the vote. Like most referendums it's going to be rigged.

A Question

As the Greek referendum fallout continues, (Richard North has excellent analysis of Papandreou's strategy), a thought has occurred to me. Will the Greeks even know what bailout package they'll be voting on given that it doesn't actually exist yet?

The deal announced to great fanfare last Thursday was vague, and short on details. The details have yet to be hammered out on the banks agreeing to voluntary haircuts, on leveraging the European Financial Stability Facility (EFSF) effectively to a trillion euros, who pays, and whether the bank recapitalization program is even sufficient.

And EU finance ministers are not expected to agree on these nitty-gritty elements of how the EFSF will work until sometime in November, with the exact date not fixed. It is probable that agreement on it and other elements of the deal will drag on longer maybe into next year (if at all).

As the referendum might take place as early as December, the Greeks may end up effectively voting on a deal that no-one knows what it is.

Another Greek Surprise

The Guardian, links to a report from Athens Times that the top officials in the Greek military have been replaced today in a 'surprise' move:

In a surprise move, the defence minister proposed on Tuesday evening the complete replacement of the country’s top brass.

At an extraordinary meeting of the Government Council of Foreign Affairs and Defence (Kysea), which comprises the prime minister and other key cabinet members, Defence Minister Panos Beglitis proposed the following changes to the army, navy and air force and the general staff:

• General Ioannis Giagkos, chief of the Greek National Defence General Staff, to be replaced by Lieutenant General Michalis Kostarakos
• Lieutenant General Fragkos Fragkoulis, chief of the Greek Army General Staff, to be replaced by lieutenant general Konstantinos Zazias
• Lieutenant General Vasilios Klokozas, chief of the Greek Air Force, to be replaced by air marshal Antonis Tsantirakis
• Vice-Admiral Dimitrios Elefsiniotis, chief of the Greek Navy General Staff, to be replaced by Rear-Admiral Kosmas Christidis

It is understood that the personnel changes took many members of the government and of the armed forces by surprise.

As a consequence there's much speculation that it is being done to prevent a military coup. However there's no indication yet that a military coup is on the cards, though given the financial turmoil in Greece and that its Government is close to collapse this evening, nothing can be ruled out. Also EUobserver reported this morning:

There are other signs the government is losing control.

In recent weeks, members of the Greek police forces have also protested against the troika outside EU offices and French and German embassies, while retired army officers stormed the Greek defence ministry.

Defence minister Panagiotis Beglitis in October warned that the Greek military establishment is a "state within the state."

On Tuesday, he convened an unscheduled meeting of the Government Council for Foreign Affairs and Defence, the supreme decision-making body on national defense.

According to sources within the ministry quoted by Greek daily Eleftherotypia, Beglitis is planning to replace the leadership of the military with "his own people." Unnamed officials described his actions as "politically mad" and "militarily dangerous."

One interesting question, posed before on this blog, if Greece does become a military dictatorship (again) will the EU throw it out because it fails its democratic criteria? And what of its membership of the Euro?

Interesting times.

Have Your Say...

...on whether Greece should have their say. The Guardian wins the 'ironic piece of the day' award:


You can vote here on whether the Greeks should be allowed to...er vote.

That Bombshell

I wrote yesterday's post about the referendum proposal in Greece in a bit of a hurry. Partly because I was at work when the news came through on my phone and partly because it was such a bolt from the blue. It completely surprised everyone even George Papandreou's own parliamentarians. But whatever the reasons behind his decision, much amusement can be had from the obvious sheer terror he invoked across the EU. Daniel Hannan writes:

I wish I could convey the sheer writhing horror that George Papanderou's referendum proposal has provoked in Brussels. Eurocrats instinctively dislike referendums. They feel that their work is too important and complicated to be vulnerable to the prejudices of hoi polloi.

A referendum at any time would be regarded by European leaders as irresponsible. But a referendum when the euro is teetering on the brink is seen as the height of ingratitude, selfishness and recklessness.

Wondrous joy. As expected the markets this morning have taken on a plummet trajectory - over two months of uncertainty now lie ahead until the vote. That Greece will default is a given, the markets have priced that in; how and when are the key questions. Now with the referendum there's another possibility that's been thrown into the mix, that in the event of a no vote that Greece could not only exit the Euro but possibly the EU altogether.

And it's the last point that means a Greek no vote is not a certainty.

Firstly it will significantly depend on the referendum question asked. If the question is along the lines of the bailout package itself and more austerity then a no vote is a likely outcome. However if the question is couched in terms of a no vote meaning exit from the Euro and the EU, and I suspect strongly that this will be the case, then the outcome is far from certain. Not only do referendums tend to favour the status quo but much scaremongering will be deployed - Greece leaving 'will be a disaster' they will cry.

Secondly the EU will use every tactic in the book; blackmail, threats, coercion and bribes. They have form on this - Lisbon, Ireland anyone? Then there's the infamous EU's last resort of; 'wrong answer vote again'.

A no answer is not guaranteed by any means.

What Papandreou has done though is start a risk of contagion of similar demands in other countries. Already, after last week's deal, Spain, Portugal and Ireland started making noises about getting more concessions from the EU as Zerohedge highlights:

...just as expected, the weakest PIIGS - Portugal and Ireland - wasted no time to start rumblings about a "suddenly slowing economy" in the aftermath of the Greek bail out which achieved nothing but to delay contagion by 48 hours and to unleash demands by everyone else to get the same concessions, in essence pushing Europe into an even deeper hole...

Confirming that the tsunami of demands has been unleashed is today's announcement from the Bank of Spain that not only was Q3 GDP flat (read: negative), but that the deficit target for the year would not be achieved.

How long before they start to make threats of referendums as well?

Another pressing problem is Italy, here the Eurozone has real immediate problems. I suspect that Greek Finance Minister Evangelos Venizelos's hospitalisation due to stress related health problems won't be the last amongst Eurozone politicians.

Greece Calls A Referendum

On top of soaring unsustainable Italian bond yields today, we also have the Prime Minister of Greece, George Papandreou, announcing a referendum on the new EU aid package:

"We trust citizens, we believe in their judgement, we believe in their decision," he told ruling socialist party lawmakers.

Nearly 60 percent of Greeks view Thursday's EU summit agreement on a new 130 billion euro bailout package as negative or probably negative, a survey showed on Saturday.

Ha ha cats and pigeons spring to mind. The markets will likely go mad tomorrow. Also adds extra pressure onto Cameron regarding a referendum - this EU issue is not going away is it 'call me Dave'?

Tory MP Changes Vote For A Tenner

Politicalbetting picks up on this story from yesterday's Mail:

One Eurosceptic Tory had an unusual reason for abstaining in the vote on an EU referendum: he didn’t want to lose a bet.

Convinced that the rebellion would fizzle out, he had made a wager with a fellow sceptic that fewer than 60 Tories would vote against the Government.

The deal was that, for every rebel over the magic number, he would have to pay his colleague £10 and vice versa. When he walked down to the division lobbies last Monday night, he was taken aback by how many Tory MPs were defying the whips. He calculated that he must be a couple of hundred quid down and decided to abstain.

‘I was buggered if I was going to give him another tenner,’ he joked.

But the two sides in the debate had no idea what his motivations were for not voting. They both desperately tried to cajole him into supporting them as he sat on the Commons’ green leather benches during the division. Even the Chancellor, George Osborne, got in on the act, pushing him to back the Government.

This MP’s behaviour adds a whole new meaning to the phrase 'taking a gamble on Britain's future'.

I'm not sure what to make of this. There's a couple of lines that suggest he was mischievously joking to the journalist, or perhaps he was got at by the whips and so used a flippant story as cover for his lack of bottle. Or maybe it is indeed true, that he changed his vote, on a subject of national importance, to minimise his betting loses - to save 10 pounds.

If true it means a Tory MP was prepared to sell this country's future for a tenner.