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July 13, 2015 | Breathtaking Political Capitulation; Tsipras Should Resign; Tsipras Trades Royal Flush for Draw at Inside Straight

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Shockingly Stupid Sequence of Events

I am seldom stunned by political stupidity. In fact, I am surprised when I don’t see it.

Yet, I have never witnessed a political reversal so shockingly stupid as we saw tonight from Greek Prime minister Alexis Tsipras.

For months on end Tsipras claimed he would not accept blackmail by Germany. He rejected Germany’s “final offer” in favor of a referendum.

He encouraged Greek citizens to vote “no” to the bailout referendum. Then they did, by an overwhelming majority.

Breathtaking Political Capitulation

Tonight, Tsipras reversed himself 180 degrees, and accepted the newest “final offer” that was far worse than the one he turned down a short while ago.

The deal so harsh that I agreed with Paul Krugman’s description of “grotesque“.

Specifically, Krugman said of the latest deal “This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is, presumably, meant to be an offer Greece can’t accept; but even so, it’s a grotesque betrayal of everything the European project was supposed to stand for.

Whether or not one believes in the eurozone, and no matter what side one takes in the debate, there is no question regarding Krugman’s description.

Creditor Demands

For the complete list of creditor demands, please see Tsipras’ Choice: Total Capitulation or Grexit; Text of 4-Page Eurozone Demands.

Germany demanded, amongst many other things, that Greece put up €50 Billion in collateral (no doubt islands and state businesses at bargain basement prices).

The creditor demands remind me of the war reparations at the end of WWI that ultimately collapsed Germany and led to WWII. That may be a bit of an exaggeration, but that is what comes to mind.

ThisIsACoup

Following months of rants against Germany and the Troika, culminating in a referendum in which the Greek people overwhelmingly agreed the deal was a bad one, Tsipras bowed down and accepted a far, far worse deal.

In Critics Flock to Site “ThisIsACoup”; Killing the European Project; Illusions; Who’s Going to Pay?, I offered my take on why the eurozone would fail.

I still stand by that analysis. The eurozone remains fatally flawed.

Who’s Going to Pay

In spite of this stunningly idiotic reversal, I still maintain that one way or another, Germany will pay a price (by bailout, by default, or by destructive breakup).

Only the timeline and who gets the blame has changed.

Tsipras Trades Royal Flush for Draw at Inside Straight

Tsipras won the game. He had the backing of Greek citizens no matter what he did. The opposition party leader and former prime minister resigned following the “no” vote in the referendum.

Blame for Grexit was squarely in the Germany’s hands. And it was even in the best interests of Greece to default.

Tsipras traded all that away for nothing!

Questions

  • Did the US bribe Tsprias with a secret account worth millions?
  • Is someone holding his kids hostage?

If one of those (or something similar) does not explain the reversal, then what does?

I have often stated that when one of the answers to a question is stupidity, then stupidity is frequently the likely answer.

But stupidity alone cannot possibly explain this course of events.

Tsipras Should Resign

If Tsipras had an ounce of decency left, he would resign, put forth a new referendum, and let the people decide. Apparently, this hypocrite would now tell them to vote yes.

He sure owes Greek citizens an explanation. Instead he will fire all the ministers who do not go along.

Wow.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

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July 13th, 2015

Posted In: Mish Talk

2 Comments

  • Avatar Robert Laden says:

    Apparently the real problem in Europe is that many of the European voters (and the political leaders whom they elect) still regard money as something valuable that they have to work to earn. They still don’t understand the concept of simply printing more money when you need it. So granting a large loan to a country that would have a very low FICO score (if countries had FICO scores), requires a lot of strings to be attached to that loan.

  • Avatar bh2 says:

    Krugman: “[I]t’s a grotesque betrayal of everything the European project was supposed to stand for.”

    As usual, he is wrong. This has been a grotesque demonstration of everything the European project has actually stood for. Only academic economists and other idle dreamers ever believed this was anything but yet another attempted conquest of Europe by the usual suspects.

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