Ah, George Papandreou: FT Alphaville is starting to see method to your madness.
Greece’s prime minister continued his formidable run of attention-grabbing statements on Friday with a belter delivered to Greece’s main private trade union.
Greek Prime Minister George Papandreou warned on Friday his country was one step from being unable to borrow and appealed to labor unionists to support his efforts to escape a debt crisis shaking the euro zone…
…”We are in a state of war, in a battle against special interests, both at home and outside Greece,” he said. “It is a battle against speculators and for transparency, so that markets are at the service of the people, not the other way around.”
Gosh. As for this allegedly imminent inability to borrow — well, that rather contradicts Papandreou’s statement just the day before that Greece does not want financial aid, from either the EU or IMF.
So what’s going on then? Looks like a little bit of coercive bargaining.
It seems to be the case that the Greek prime minister would really rather like help refinancing his country’s debt, whatever he argues in public.
As the Greek daily Kathimerini makes plain, the government already has a de facto IMF austerity plan in place for the long term. A shame to commit to all that pain, only to fall victim to short-term financing problems with this year’s maturing debt.
Sadly, Papandreou can’t argue any of this in public.
After all, a much-hyped EU-level ‘bailout’ failed to materialise on Monday, only to be followed by a German U-turn over the possibility of IMF help for Greece. Germany’s change of view strengthened on Friday, according to Reuters. But France quickly fought back, according to BusinessWeek.
Papandreou can’t commit to one side’s view without upsetting the other. But he can raise the stakes of not acting overall. Hence that cavalier disavowal of any help — which fanned markets’ fears over Greece on Thursday — as well as Friday’s message to a domestic audience that his government was doing everything it could at home.
The onus has firmly been placed on Europe.
The stakes are high – according to the WSJ’s Heard on the Street, too high. But surely Papandreou is doing a good job of keeping refinancing on the table at a time when most eurozone governments appear to be making it up as they go along. That counts for something.
And at least no one is so far seriously proposing sovereign default for Greece. Well, almost no one.
We should note Friday’s Salzburger Nachrichten interview with Thilo Sarrazin, a Bundesbank board member. Translation and emphasis are ours:
SN: What if Greece can no longer refinance its debt?
Sarrazin: Then Greece should do what any borrower does – it just files for bankruptcy…
…General Motors has gone into bankruptcy, the dollar has not been affected. Why should it affect the euro, when Greece, with 300 billion euros, goes bankrupt? Then Greece would have to negotiate with its creditors on debt or interest waiver suspensions. This is not the responsibility of the states. This would be the right deterrent example for all other potentially unsound states.
A rather to-the-point comment from the Bundesbanker, albeit (in our humble opinion) entirely insane.
Keep on pushing, Papandreou
Related links:
Athens seeks European solution – FT
Quote du jour, Greek huff edition – FT Alphaville
FT Alphaville’s Greekbailout-o-meter says… – FT Alphaville
CDS Report: Greece is back (did it ever go away?) - FT Alphaville