Archive for the 'EU matters' Category


The final Greek vote: YES 38.7%: NO 61.3%

Monday, July 6th, 2015


So what’s the next move? We really are moving into the unknown


Tsipras’ own goal is Cameron’s gain

Friday, July 3rd, 2015


David Herdson on a crucial weekend

If there were any doubt that David Cameron is a lucky politician, events in Europe this last week have again made the point. No sooner had he suffered a setback at the European Council, failing to win a chance of treaty reform, than the Greek government gives him (inadvertently, no doubt), a huge helping hand.

The decision of Alexis Tsipras to commit his government to destruction by a method to be determined by the Greek voters tomorrow might be somewhat unorthodox by normal standards but then this is no orthodox government. The act of a snap referendum was, however, perhaps predictable as the equivalent of a student sit-in or protest march, which is the kind of politics Syriza is familiar with: the belief that a demonstration of solidarity and causing enough of a fuss will force opponents to grant concessions.

Those tactics work rarely enough in the workplace or the university, never mind the conference chambers of government, which is why Syriza has signed its own government’s death warrant. If the vote’s a Yes then its resignation follows, leading inevitably to new elections which one presumes the centre-right New Democracy would win. Alternatively, if it’s a No then it’s a more drawn out and bloody affair with an inevitable stand-off effectively between Yanis Varoufakis on the one hand, Wolfgang Schäuble on the other and the Greek banks and population in between.

By that point, irrespective of the economics, political factors would be paramount and the overriding consideration of the creditors would be to avoid setting an easy precedent – and the creditors, who in the context of an uncontrolled bank run have the trump card of effectively controlling Greece’s money supply and hence its ability to import food, petrol and other essentials – will therefore win providing they keep their nerve. Quite how the government would fall remains an open question but that it would fall is not.

Which way the vote will go is hard to call. The betting markets have Yes at a consistent 4/9 with SkyBet offering No at 7/4 (all other bookies quoting 13/8). That seems to me to considerably overestimate Yes’s chances; sufficiently so to recommend No at those odds.

No is clearly the loud campaign – who rallies for austerity? – and the government clearly believes its own delusions as to what the outcome will mean. And voters believe in the truth of that which is plainly strongly believed. Furthermore, at the last election, the main parties actively, if independently, advocating No polled 52.8% between them (you can’t call as disparate a group as the communist KKE, the radical leftist Syriza, the populist-nationalist ANEL and the neo-Nazi Golden Dawn a ‘coalition’ or ‘alliance’). By contrast, those advocating Yes, the conservative New Democracy, centrist Potami and social democrats Pasok only polled 38.5%. (The rest of the 2015 vote went to parties who failed to make it to parliament). The polls, with one exception have all shown the two sides within 4% of each other but with upwards of 15% undecided. That doesn’t feel to me like a solid Yes.

Of course, a loud campaign isn’t necessarily a winning campaign and Yes voters have plenty of reasons to be shy about their intentions. The likelihood is that No will struggle to reach most of the undecided: if they were inclined to vote that way they’d already be there. The question is whether Yes can motivate them instead.

What does all this have to do with David Cameron? Domestically, it again reinforces the message of responsible spending, of fixing the roof while the sun shines or at least making a start once the storm’s passed. Within the EU, it means the UK is no longer the most awkward member. True, the notion of opting out of ever closer union might be heretical to some but at least Britain wants to do it by changing the rules and staying within the rules. Greece’s game-playing, by contrast, is disruption of a different order. There’s an incentive for the Euro-elite to differentiate between the two approaches. Furthermore, there’s a real risk of Greece not only leaving the Eurozone but the EU itself. To lose one member may be unfortunate but to lose two would risk starting a fashion. There is therefore a strong incentive to cut a deal.

But it’s not just about appeasing the Brits. The Eurocrisis has been the beginning of the end of the Delors-era EU: the Europe of the Social Chapter and the federalising-through-regulation. The austerity programme, forced on many members in part via the Euro, has meant a rolling back of the social agenda. Put simply, it’s shifting the EU to the right. And that’s the positive case for Cameron to put to the sceptics in his own party.

David Herdson


The Greek finance minister says he’d rather ‘cut his arm off’ than sign a deal that doesn’t include debt relief

Thursday, July 2nd, 2015

The betting markets seem to believe that Yes will win, but I suspect whatever the outcome either the Greek government or the Euro in Greece will be gone shortly after the referendum result is announced. This might lead to the government, money, people and businesses wanting to get out of Greece like a bat out of Hellas, it won’t be just a flesh wound for Greece.

All of this is just a few days before George Osborne presents his summer budget



The Ipsos Mori issues index for June

Wednesday, July 1st, 2015



The big risers are Immigration/Immigrants and EU/Europe, which seems understandable given the focus on the EU referendum since the election. The big faller is the economy, which maybe confirmation of the fifteen year high in consumer confidence that the pollster GfK found yesterday.

For me the most interesting aspect of this polling is the below chart.

Issues EU

There’s a real difference between the ages, so the older groups are more concerned by the EU than younger ones, this as has been noted before, could help OUT win the referendum with older voters the most likely to vote.

The fieldwork for this polling ended on the 15th of June, so before the recent events in Greece and Tunisia.

The data tables are available here.



Betting on when the Greek banks reopen

Tuesday, June 30th, 2015

Banking 2

For the Greek people, it appears this tragedy has been going on longer than it took Odysseus reach home after the fall of Troy, but looking at the above tweets, it is looking like that we are approaching the end phase of Grexit. Last night, the Greek Prime Minister indicated he would resign if the Greek’s voted yes in Sunday’s referendum.

So on that basis the 1/2 on the banks opening on July 8th or later might be the way to go, right now, we don’t know what the Greek currency or government will be in a week’s time, until we do, the banks will remain closed is my thinking.

The link to the Paddy Power market is here.


Note – This thread was written around 12.15pm BST, so the situation might have changed since then please check the news before you place any bets, the Greek government’s approach indicates they have lost their marbles, or will the EU delay Acropolis Now, either way, the Greek banks are going  to be the centaur of attention for the next few days.


In Greece the crisis over the Euro is set to become a Drachma

Saturday, June 27th, 2015

It appears, unsurprisingly, that all the bookies have suspended their markets on the outcome of the referendum and Greek exiting the Euro after this announcement

This is all happening eleven days before George Osborne’s presents his emergency budget, it might strengthen his case for austerity, it may also end the clamour for tax cuts, particularly the top rate of tax is unlikely to be cut from 45% given the wider economic mood.



Greece is the word for the next few days

Friday, June 26th, 2015

It will be a case of this referendum dominating events for the eight days at least, and undoubtedly longer, it appears that Alexis Tsipras is trying to give their creditors a Grecian Burn, how will they respond?

The Guardian reported last week that

A recent opinion poll for the news website Newsit showed as many as 74% of Greeks back the euro – with fully 50% saying they would be prepared to accept “major concessions” by the country’s Syriza-led government if it would help break the deadlock with bailout lenders. “We have to stay in,” said Votskaris. “If we leave, things will only get far, far worse.”

I genuinely don’t know how this referendum, regardless of the result, will impact on the economy, or the politics in this country or our own EU referendum, it will all depend on the outcome of this Greek referendum, which is held just three days before George Osborne’s budget.




Saturday, June 20th, 2015


Greece’s brinkmanship is risking its membership of the EU

Quite why the received wisdom has taken root that should the Greek government default on its debts then it follows that Greece will leave the Eurozone is something of a mystery. Logically, the two do not follow at all. Several cities and even states in the US have defaulted without leaving the Dollar zone and while Greece is a semi-sovereign country rather than a province in a federation, which makes a currency switch for them far easier, the American examples prove the move to be unnecessary.

Furthermore, a return to a Drachma would do little to help. As rcs1000 noted on politicalbetting earlier this week,

“Greece’s problems are four-fold: they have one of the least flexible labour markets in the developed world, they collect too little tax, they think it is OK for civil servants to retire in their mid-50s, and corruption is rife. Leaving the Euro will not solve any of those issues.”

And he’s right. Indeed, there’s every reason to expect that a Greek government outside the Euro would use the flexibility that comes with an independent currency to put off solving those problems.

There’s another reason why a Greek exit from the Eurozone (what we’ll call Grexit-light), is unlikely: there’s no provision for it in the treaties. That’s not necessarily an insurmountable problem; political will and force of events can enable rules to be fudged and ways to be found. Still, true believers in the European Project will be loath to set a precedent if there’s an alternative.

However, there’s also the opposite solution: Grexit-heavy, or GrEUxit, if you like. Greece’s electorate and politicians have set in place a momentum which could very easily produce that result. Tsipras and his Syriza colleagues are holding so firm against the creditors’ demands partly because it’s what they believe but also because they have the backing of the Greek public. From the 36% they polled in this January’s election they’re now routinely scoring in the low-40s. And why not? For as long as they can deliver the best of both worlds – keeping the money flowing while easing the creditors’ conditions – floating voters will keep backing them.

But continuing to achieve that may very easily prove unsustainable, perhaps as soon as within the next few days. It relies on those owed the money continually backing down in games of brinkmanship. The never-ending nature of those games may easily lead the IMF, EU and others to conclude that the one-off pain of a default is less than the lingering nature of the alternative.

In any case, events may force either side’s hand rapidly. The scale of withdrawals from Greece’s banks would already be reaching ruinous levels were it not for emergency funding from the ECB, which will review its funding again on Monday. Also on Monday is the scheduled meeting of the leaders of the Eurozone countries. It’s hard to believe that the two meetings are not closely connected. Failure to reach agreement by the politicians is likely to lead to a still greater run on the banks but without agreement, can the ECB, having said it would review matters, credibly carry on regardless? Probably not. In which case, we’d have arrived at a very messy endgame, with tempers and recriminations rising so high among public and politicians that GrEUxit would have to be on the table.

Is there an alternative? Even if Tsipras wants to compromise, he couldn’t deliver it in Athens without doing a MacDonald: splitting his party and governing in coalition with his opponents – which there’s absolutely no indication he’d even contemplate never mind try (and the fate of Pasok should explain why). So it comes down to whether the creditors are willing to figleaf another climbdown. That may yet happen – the instincts of compromise and solidarity run deep within Europe’s leaders – but it’s far from guaranteed. Alternatively, Tsipras may be willing to risk the warm embrace of the Russian bear or the Chinese dragon in a meaningful sense, though the question would have to be what price they’d extract in return.

The Eurocrisis has rumbled on for so long now (close to half the life of the Euro itself), that each new deadline surpassed and crunch meeting navigated tends to increase confidence that the next ones will be too. But to believe that would be dangerously complacent. A Greek economist on Radio 4 yesterday said he was optimistic because both sides want to do a deal. That they do. The question is whether they want to do one enough. That, I think, they don’t. Expect fireworks.

David Herdson