The United States Isn’t Immune to Grexit Fallout

Greece’s anti-austerity Syriza party and European leaders are scrambling to find a deal that would allow Athens to pays its bills; if they don’t, Greece could run out of money in the coming months and get kicked out of the eurozone. And that wouldn’t be good for Europe or the United States.

The United States has very little direct exposure to Greece, meaning the Mediterranean nation’s exit from the European monetary union (or Grexit, to use the awkward nickname for the possibility of Greece leaving) would not directly cause financial disaster in America. But because of the global nature of the economy,  the United States is exposed to countries that in turn are directly impacted by what happens in Greece — Germany, most importantly — and a Grexit would add another level of uncertainty to a continent already rocked by the economic fallout from the war in Ukraine.

It would also raise the possibility that a country with a larger economy — Italy, for instance — could be kicked out of the European Union, an event that would have far more reaching implications around the world. Europe is on the verge of setting a dangerous precedent.

The issue between Greece and its European creditors is simple: Athens is about to run out of cash and can’t pay its bills. It wants a new line of credit before its current loan deal expires Feb. 28. But European leaders, particularly German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble, are skeptical that Greece’s new leftist prime minister, Alexis Tsipras, would follow through on promises to cut budgets (Tsipras campaigned against the austerity programs forced on Greece by Europe). It’s a dangerous game of chicken both sides have been playing for years.

Greece submitted a new loan application Thursday. If it is not accepted by the European Union, Greece could go bankrupt in the coming months. European leaders could then decide it’s not worth dragging along Greece’s stagnant economy, as the EU has done for the last five years, and kick it out of the monetary union.

The immediate impact — the euro would tank — would, in the short term, bolster the dollar. But the United States is Europe’sbiggest trading partner, and EU nations would then be paying for American products with weak European currency, meaning European consumers could purchase less.

An equity trader in Chicago, who asked not to be named to speak freely on the possible fallout, said a Greek exit would set a dangerous standard in Europe. It would also rile markets both overseas and at home as traders express displeasure over the volatility it would cause.

“The risks are more than just economic at this point. There is concern over any precedent set with regards to other struggling European nations, such as Portugal, Italy, and Greece. Because it’s such a massive economic entity, you’ve got to worry about anything that will push Europe closer to a recession,” the trader told Foreign Policy. “There’s geopolitical concern over Russia and Ukraine, economic activity is already sluggish, and now you’re looking at even more potential destabilization. So yes, there is concern” about spillover to U.S. markets, the trader said.

There worries prompted U.S. Treasury Secretary Jack Lew to call Greek Finance Minister Yanis Varoufakis on Wednesday towarn of “immediate hardship” if a debt deal is not reached.

According to Edward Goldberg, a professor at Baruch College and the New York University Center for Global Affairs, in the long term the Grexit could also force Washington to reevaluate its faith in Germany as the leader of Europe.

“The U.S. needs Germany as a strong partner who has assumed the leadership of Europe,” he said. “Keeping Europe stable is a key interest of the United States…. It could create [an] additional fault line in Europe if Greece leaves the eurozone.”

Russian Envoy Says Obama’s Extremism Summit a “Mess”

Despite bitter differences over the fate of Syria and Ukraine, the United States and Russia still agree on one thing: The need to confront violent Islamic extremists from North Africa to the Middle East. But forging a coordinated strategy for combating the scourge has been complicated by the deteriorating state of relations between the Cold War superpowers.

With foreign dignitaries gathered in Washington for President Barack Obama’s conference on extremism, Russia’s U.N. envoy Vitaly Churkin denounced what he perceived as the latest American slights against Russia. He accused the U.S. of failing to seek Moscow and other capitals’ views on the event’s agenda, and said it snubbed Russia’s close allies, including Serbia, which was not invited to the conference.

“The United States believes in its exceptionalism and it has to say at every corner that the United States is going to lead,” Churkin said. “Fine, I’m prepared to listen to those statements if they want to position themselves this way. … What the hell.”

He added: “But they should not proceed from this premise in their relations with Russia and China, really, because they should take advantage of our willingness to cooperate.”

The Russian diplomat also offered a not so subtle warning that Russia’s cooperation on matters of vital importance to Washington, like the Iranian nuclear negotiations, should not be taken for granted. “Russia is a very responsible member” of the international community, said Churkin, noting that Moscow had worked very hard to have the Iranian nuclear talks succeed. “It would not take much for Russia to do some mischief in those talks, to make agreement even more difficult.”

Speaking Wednesday night on a panel on the state of U.S.-Russian relations at the Harvard Club in midtown Manhattan, Churkin predicted that the American conference would dissolve into a “mess.”

His remarks at the panel discussion – which was moderated by Serbia’s former Foreign Minister Vuk Jeremic, and included Columbia University economist Jeffrey Sachs, former Australian Prime Minister Kevin Rudd and former German economic and foreign minister Karl-Theodor zu Guttenberg — underscored the strength of official Russian resentment against the United States.

Churkin bridled at what he characterized as American moralizing about Russian conduct in the world. It’s very hard, he said, to engage in discussions of moral equivalence with Washington “because the United States, of course, you always have the moral superiority.”

A week ago, Russia championed the passage of a U.N. Security Council resolution aimed at helping to strangle the ability of the Islamic State and al Qaeda to raise money through the sale of oil, gas, antiquities and the kidnapping of hostages. Following the vote, Samantha Power, the U.S. ambassador to the United Nations, voiced strong U.S. support for the resolution in remarks to the council. But she made no mention of Moscow’s contribution, and instead took a swipe at Russia and China for blocking an earlier resolution that would have subjected Syrian leaders to the International Criminal Court.

Churkin accused the United States of pushing the United Nations to the sidelines, saying the international body should be the one who is leading in countering extremism.

America’s insistence on staking out a leadership role in the fight against terrorism would only embolden jihadists to take up the fight, Churkin said. It will “attract the extremists, you know, to fight that American-led coalition,” he said.

He also complained that while the Obama administration claims to be launching a broad international fight against extremists, it “did not consult us” about the substance of the meeting. “Originally, they did not even invite us,” Churkin said.

He lambasted the White House for inviting envoys from the Organization for Security and Cooperation in Europe to the counter-extremist event but ignoring Serbia, which currently chairs the group. Meanwhile, he said, Kosovo was asked to participate, even though it is not a member of the U.N.

And though Russia is eager to work with the U.S. on battling extremism, Churkin had low expectations on what the White House conference would yield.  “As far as I’m concerned it’s going to produce a mess,” he said.

The U.S. mission to the United Nations and the State Department did not respond to requests for comment on Churkin’s remarks.

The U.S. did invite a delegation from Russia, which was headed by Moscow’s top spy, Aleksandr Bortnikov, the director of Russia’s Federal Security Service (FSB), Russia’s modern day KGB.

The three-day meeting began Tuesday with a focus on the domestic threat of extremism in the U.S., and shifted on Thursday to the international effort to combat terrorism. Speaking Thursday morning at the State Department before representatives of more than 60 countries, President Obama painteda grim portrait of a world buffeted by terrorism.

“As we speak, ISIL is terrorizing the people of Syria and Iraq and engaging in unspeakable cruelty,” he said, using an acronym for the Islamic State in Iraq and the Levant.

He said extremists linked to the Islamic State “murdered Egyptians in the Sinai Peninsula, and their slaughter of Egyptian Christians in Libya has shocked the world. Beyond the region, we have seen deadly attacks in Ottawa, Sydney, Paris and now Copenhagen.”

Obama pressed the delegates, who were joined by U.N. Secretary General Ban Ki-moon, to return to the U.N. General Assembly next September to “take concrete steps together” to tackle terrorism. “We are all in the same boat. We have to help each other.”

Churkin said the “possibility” of Russia and the United States “working together is out there.” But he said “we need to overcome this crisis” in relations and “we need to learn some lesson and we need to start with a new beginning.”

What Greece should do or shouldn't

ial bargain in the 1950s between post-Nazi West Germany and its wartime victims, European integration has been built on compromise. So there is huge pressure on Greece’s new Syriza government to be “good Europeans” and compromise on their demands for debt justice from their European partners — also known as creditors. But sometimes compromise is the wrong course of action. Sometimes you need to take a stand.

Let’s face it: no advanced economies in living memory have been as catastrophically mismanaged as the eurozone has been in recent years, as I document at length in my book, European Spring. Seven years into the crisis, the eurozone economy is doing much worse than the United States, worse than Japan during its lost decade in the 1990s and worse even than Europe in the 1930s: GDP is still 2 percent lower than seven years ago and the unemployment rate is in double digits. The policy stance set by Angela Merkel’s government in Berlin, implemented by the European Commission in Brussels, and sometimes tempered — but more often enforced — by the European Central Bank (ECB) in Frankfurt, remains disastrous. Continuing with current policies — austerity and wage cuts, forbearance for banks, no debt restructuring or adjustment to Germany’s mercantilism — is leading Europe into the ditch; the launch of quantitative easing is unlikely to change that. So settling for a “compromise” that shifts Merkel’s line by a millimeter would be a mistake; it must be challenged and dismantled.

While Greece alone may not be able to change the entire monetary union, it could act as a catalyst for the growing politicalbacklash against the eurozone’s stagnation policies. For the first time in years, there is hope that the dead hand of Merkelism can be unclasped, not just fear of the consequences and nationalist loathing.

More immediately, Greece can save itself. Left in the clutches of its EU creditors, it is not destined for the sunlit uplands of recovery, but for the enduring misery of debt bondage. So the four-point plan put forward by its dashing new finance minister, Yanis Varoufakis, is eminently sensible. This involves running a smaller primary surplus — that is a budget surplus, excluding interest payments — of 1.5 percent of GDP a year, instead of 3 percent this year and 4.5 percent thereafter. Some of the spare funds would be used to alleviate Greece’s humanitarian emergency. The crushing debts of more than 175 percent of GDP would be relieved by swapping the loans from eurozone governments for less burdensome obligations with payments tied to Greece’s GDP growth. Last but not least, Syriza wants to genuinely reform the economy, with the help of the Organization for Economic Cooperation and Development (OECD), notably by tackling the corrupt, clientelist political system, cracking down on tax evasion, and breaking the power of the oligarchs who have a stranglehold over the Greek economy.

Had the Varoufakis plan been put forward by an investment banker, it would have been perceived as perfectly reasonable. Yet in the parallel universe inhabited by Germany’s Finance Minister Wolfgang Schäuble, such demands are seen as “irresponsible”: Greece must be bled dry to service its foreign creditors in the name of European solidarity.

While the Greek government is certainly in the right, there is still fear that the might of the German government will prevail. The Greek government may run out of cash — perhaps as soon as next month. Faced with a run on Greek banks, the ECB could deny the country’s central bank the right to provide them with the emergency liquidity that they need to survive. At that point, compromise — surrender — could impose itself.

Or not. The belief that Greece has little leverage in its negotiations with eurozone authorities is false. If no agreement is reached and Greece is illegally forced out of the euro by Berlin and Frankfurt, it would doubtless default on all its debts to both eurozone governments and the ECB, as well as the Bank of Greece’s Target 2 liabilities. Speculation would soon start about which country might be next to exit the euro — Portugal? — and the single currency would suddenly look eminently revocable.

Do Berlin and Frankfurt really want to push Athens over the brink? I doubt it. Especially since, freed of its external debt and an overvalued exchange rate, Greece would doubtless be growing again once the immediate chaos subsided. After all, even an economy as badly managed as Argentina started growing again only a year after the government defaulted and junked its dollar peg in 2002.

Of course, eurozone authorities may miscalculate, or allow their emotions to trump economic logic. And since Athens does not want to leave the euro, it also has a fallback option, as Willem Buiter, chief economist of Citigroup, and John Cochraneof the University of Chicago have pointed out. The Greek government could meet its domestic obligations, such as pension payments, by issuing tradeable IOUs that could also be used to make tax payments — in effect, creating a parallel currency. This virtual money could also be used for other purposes: for instance, to recapitalize ailing banks. That would enable the Greek government to default on its EU creditors relatively painlessly, while remaining within the euro.

The eurozone establishment and much of the media think Greece is foolish to stand up to Germany. But what would be truly foolish is giving in. That would leave only the neo-Nazis of Golden Dawn in the anti-Merkelism camp, which might portend ill political omens. So long as the Greek government is willing to stand firm — as a vast majority of Greeks and many Europeans are urging it to — it can obtain a fairer deal for the Greek people and, with luck, the eurozone.

Prime Minister's Tsipras statements now

Tsipras: Can't treat Greece as a debt colony any more

Over in Athens, Greek prime minister Alexis Tsipras is announcing his nominee for the presidency....and attacking the mistakes of the past at the same time.

Speaking in parliament, Tsipras insisted thatGreece can no longer be treated like a colony, or a European pariah .

For the first time, our country has its own voice, which is being heard also in the streets of Europe, he declared....adding that Greece will exit the ‘debt trap” created by its austerity programme.

We may not have solved all our problems in the last three weeks, but Greeks no longer feel humiliated....they feel proud and dignified, he says.

And Tsipras also takes a jibe at Wolfgang Schuable for saying a few days ago that he felt sorry for Greeks.

— Fabrizio Goria (@FGoria)February 17, 2015

* Greek PM says Schaeuble should not pity people who raise their head high - RTRS

Schäuble: Situation will be difficult without Greek deal

Schäuble: Situation will be difficult without Greek deal

Wolfgang Schäuble went on to reiterate that his discussions with Yanis Varoufakis have not been acrimonious and he has again refused to speculate on quite what would happen after February 28 if there is no deal.

“I have said it three times, I have nothing to reproach about the personal contact I have had with my Greek colleagues.”

On what happens after the bailout deal expires at the end of the month, he said:

“If this programme is not concluded in an orderly manner a difficult situation will ensue...But there is no sense in speculating over what will happen.”

The German finance minister also said:

“All this speculating and excitement don’t help anything. Of course, we know that whatever scenario the situtation for Greece is extraordinarily difficult and for Europe too. That is not in question at all. But it won’t be made better by us excitedly running around the place...saying oh God, oh God, oh God... And I would point to the so-called financial markets... and they are completely unaffected, they are completely unaffected.”

And there was a light-hearted moment at the end.....

Asked a question in English at the end of the press conference, Schaeuble said this was still a German press conference and appeared to add a little dig at George Osborne, the finance minister of a non-euro member, but vocal on Greece nonetheless.

“I hope George Osborne will deliver some press conference and he is the most engaged mitglied [member] of the eurogroup.”

(hat-tip to Katie Allen for the translations)

— Yannis Koutsomitis (@YanniKouts)February 17, 2015

Schäuble is basically saying We won't kick Greece out of the Eurozone, she'll hv to decide on her own (In the mean time we'll sterilize her)

Ομιλια Πρωθυπουργού ΤΩΡΑ

"Δεν μπορουν καποιοι πια να συμπεριφέρονται στους Ελληνες σαν να ειναι άποικοι ".
"Οι Έλληνες αισθάνονται πιο αξιοπρεπείς "
"Η Ελλαδα ειναι εδώ,παρουσα και θα παλέψουμε για να βγούμε απο την καταστροφή του μνημονίου "
"Η ελληνική Δημοκρατία δεν απειλεί και δεν απειλείται. Δε δέχεται όρους Και δεν θέτει  Διαπραγματεύεται. Εχει φωνή."
"Για πρωτη φορα η ελλαδα λεει οχι και το εννοεί "
"Ο κυριος Σόιμπλε εχασε την ψυχραιμία του. Απευθύνθηκε υβριστικά προς τον ελληνικό λαό.Θα του πω λοιπον πως να λυπάται τους λαους που περπατάνε με το κεφαλι σκυφτό. Αυτους τους λαούς να τους σέβεται και να τους θαυμάζει "....
Αυτα ειναι καποιες απ τις δηλώσεις του Α. Τσιπρα αυτη την ώρα.

Art Agenda: 6 Things To Do and See in London This Week

MONDAY February 16

“Staying Power: Photographs of Black British Experience 1950s–1990s" exhibition opens at Victoria and Albert MuseumIn collaboration with The Black Cultural Archives, the Victoria and Albert Museum displays a number of photographs exploring the work of Black British photographers in the second half of the 20th century. Consisting of images from the museum's collection, the exhibition covers topics ranging from mass migration to hip hop fashion in South London.
Victoria and Albert Museum, Cromwell Road, SW7 2RL, February 16 – May 24. Admission Free.

TUESDAY February 17

Artist Kirk Palmer gives a talk at Daiwa Anglo-Japanese FoundationTalk given by artist Kirk Palmer and University of Nottingham professor Mark Rawlinson. Palmers's work, currently on display at the foundation, explores the existential nature of human relationships with the world through still and moving images.
Daiwa Anglo-Japanese Foundation, 13-14 Cornwall Terrace Mews, NW1 4QP. 6:00 – 7:00pm. Admission free but online booking required. 

WEDNESDAY February 18

Director's tour of “Freud and Eros: Love, Lust and Longing" at Freud MuseumA guided tour of the exhibition “Freud and Eros: Love, Lust and Longing," given by Freud Museum director Carol Seigel. The show explores Sigmund Freud's revolutionary ideas on love and the libidinal drive, as well as responses by contemporary artists. The audience will also have a chance to explore Freud's last home, including his collection of antiquities, and his iconic psychoanalytic couch.
Freud Museum, 20 Maresfield Gardens, NW3 5SX. 6:30 – 8pm. Tickets are £10, £7 concessions and Members of the Freud Museum.

THURSDAY February 19

Private view of Catrin Morgan's new exhibition “Relay" at dalla Rosa Gallery“Relay," Catrin Morgan's second exhibition at dalla Rosa Gallery will run from February 19 through March 21. Divided into three parts (transmission, interception, and reception,) the works examine the relationships between military intelligence and domestic spaces.
dalla Rosa Gallery, 121 Clerkenwell Road, EC1R 5BY. Preview: 6.30 – 8.30.

FRIDAY February 20

Thomas Joshua Cooper's “Scattered Waters – Sources Streams Rivers" opens at the Fleming CollectionThe celebrated landscape photographer Thomas Joshua Cooper creates sequences of photographs of remote points around the world. “Scattered Waters – Sources Streams Rivers," comprises a series of images of rivers in Scotland that are significant to his identity.
The Fleming Collection, 13 Berkeley Street, W1J 8DU, February 20 – April 11 2015. Private view Thursday February 19 6:30pm – 8:30pm.

SATURDAY February 21

Keston Sutherland's Performance at Cell Project SpaceThe British poet will read his work in progress Jenkins, Moore and Bird. Sutherland's writings undermine the familiar modes of poetry, mixing the lyric tradition with languages of protest, stock market exchange, and information technology. The reading will take place inside Natalie Dray's current exhibition, "DRAY".
Cell Project Space, 258 Cambridge Heath Road, E2 9DA, 5:00pm. Admission free.