jakke

May 04 2012 ∞

hey so go read this profile of the campaign of the guy who's almost certainly going to be the next Prime Minister of Greece

Some highlights:

  • His TV ads use “nationalist images”, including Alexander the Great and the Byzantine church of Saint Sophia in Istanbul. Consider why that second one is problematic in a historical context.
  • “During the campaign, which uses music from the Pirates of the Caribbean movies, he has refused interviews with the foreign press and rejected a call for a TV debate from Venizelos.” So clearly effective campaign tactics are very very different in Greece.
  • If he comes close to winning a majority but doesn’t quite make it, he might try to trigger a second election to see if he gets a majority the second time. Right before the deadline for the new IMF funding. Good luck with that. 

So basically it sounds like Greece is in for a fun ride if he ends up winning. Although to be fair if he doesn’t end up winning then there’s probably no stable government so that’s not much better.

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May 01 2012 ∞

so Greece is having an election this weekend!

Incredibly frustratingly, there’s a blackout on the publication of the poll results for the two weeks before the election, and the twelve polls released in the three days leading up to the blackout were all over the place.ND (the mainstream centre-right party) is almost definitely in first place and PASOK (the mainstream centre-left party) is almost definitely in second place. Beyond that, though, no idea what’s happening. There could be as many as ten or eleven parties getting seats in the legislature. And obviously there could be substantial movement in the last couple weeks - probably not enough to knock ND out of first place, though. (The first-place party gets an automatic 50-seat bonus, while the other 250 seats are distributed proportionally - so coming in first is a big deal.) What can we expect from the Greek election?

Basically, the Greek parliamentary system goes through a series of contingencies. If one fails they move onto the next one. Here’s the whole process, with (totally estimated and probably not accurate percentages) to give some indication of how likely things are to proceed to each stage:

Does any party have a majority? (100%, since this is the first stage)

If so, perfect! Problem solved. This is incredibly unlikely, though - even with the fifty-seat top-up.

Can the largest party form a viable coalition? (95%)

If the largest party doesn’t have 151 seats even after its fifty-seat bonus, the President gives the largest party a chance to form a coalition. (The President is a figurehead with no governing role except in extraordinary circumstances; Canadians can think of this as basically equivalent to the Governor-General.) It the largest party is ND, then they and PASOK will likely form a coalition to soft-pedal the populace on continued austerity compliance. This would be exactly the same coalition that’s currently in power before the election.

Can the second-largest party form a viable coalition? (40%)

If the largest party (which, remember, got a fifty-seat bonus) can’t form a coalition, then the second-place party gets a chance. If this is PASOK, then there’s very little chance they can form a majority coalition, because they’re basically the party of the austerity program. If it’s someone else like the Coalition of the Radical Left or the populist (right-wing nationalist) Independent Greeks then maybe they could put together some kind of cross-ideology anti-austerity coalition government. Note that the Communists refuse to join any coalition of any kind and they will probably get around 10% of the seats which means a successful second-place majority coalition would have to include basically everyone except the first-place party and the Communists.

Can the third-largest party form a viable coalition? (35%)

If the two biggest parties can’t form a majority coalition government, then the third-place party gets to take a crack at things! This like giving all the king’s horses a chance to reassemble Humpty Dumpty - done out of tradition, but incredibly unlikely to be effective.

Okay, time to try the whole election thing again. (34%)

If the third-biggest party can’t form a viable majority government, then a top judge gets appointed as a caretaker Prime Minister just long enough to arrange another set of elections. This has happened once before, and it went pretty smoothly. Hopefully the caretaker administration can resist potential pressure from the EU to suspend elections indefinitely to implement an austerity program, because without elected legitimacy the government would almost certainly face widespread violent protests. (Which it could probably withstand. Greece has a huge military for its size. But we don’t want things getting there.)

Not really sure how things would proceed after this point. I mean, if you hold a new election, and he results are equally unstable, then what do you do? Almost certainly there would be changes to the electoral law to make it harder for small parties to enter government, and then they’d run yet another election. By this point it would likely be well into the fall and the Greek government would almost certainly have lost the financial ability to provide basic services. So yeah„ hopefully things do not get this far.

7 notes

Apr 19 2012 ∞

In the past two days, four agencies have released polls for the upcoming Greek election: here, here, here, and here. This is a lot of data all at once, and it allows for a relatively clean prediction of the election results were the ballot today: assume all these polls are sampling the same population, and that any variation between polls reflects sampling error. The electoral system is mostly proportional with a few tweaks, so it’s relatively straightforward to convert poll results into seats.

Here are the results. If you like, you can compare them to the same prediction for the polls from March. Some highlights:

  • Thanks to the fifty-seat bonus for the winning party, it’s still likely that a eurozone-friendly bailout-backing coalition (like the one currently in power) will still be viable. The centre-right ND looks almost certain to pick up that fifty-seat bonus, and so PASOK and ND (the only parties that back the bailout) have a very high probability of forming a majority coalition. 
  • New right-wing nationalist party ANEL is gaining ground rapidly, and is close with SYRIZA (the radical left) for third-party status. The KKE (the communists) and DIMAR (a new left-wing antiausterity party) are not far behind. It’s not inconceivable that half a dozen parties will each have at least 10% of the seats, which obviously makes for a totally unworkable legislature. (Note that the KKE will never enter a coalition government, out of principle.)
  • The Green Party continues to hover on the edge of the 3% threshold for representation, while the fascist XA is virtually guaranteed to break into representation. Since the eurozone is desperate for an austerity-backing coalition after the election, horrible fringe parties like these Nazi-idolizing pigs actually have a chance at participating in government.

Anyway, the election is set for May 6, so expect more updates as we get closer. In particular, it’s important to pay attention to any gains by ANEL (which are almost certainly at the expense of ND) or DIMAR (which are almost certainly at the expense of PASOK). If the ND + PASOK coalition can’t muster 151 seats, Greece’s economic and political future gets pretty ambiguous.

EDIT: Note that I’ve redone the graphs as initially the standard errors were way too big. This has obviously affected the results substantially. Sorry.

2 notes

Apr 08 2012 ∞

Hey so it looks like the Greek election will be happening in less than a month. Here I’ve tried to predict the outcome of the election based on the five polls published in March; the standard error is taken from the variation between polls. Because there’s a 3% threshhold for representation and a fifty-seat bonus for the winning party, some of these histograms look a little strange. Here are some highlights:

  • In basically every possible outcome, the centre-right bailout-backing ND (who, remember, were the party who initially fudged the debt numbers with the help of Goldman Sachs) win the election and get the fifty bonus seats. They’re almost certainly going to be running the government after the election, but it will definitely be a coalition.
  • Two new parties (the centre-left DIMAR and the centre-right ANEL) are almost certainly going to be entering the legislature in a big way. Both are firmly opposed to the austerity measures. 
  • The only two parties that support austerity (ND and the incumbent PASOK) will probably have enough seats to keep the eurozone-backed program on track; odds are around two-thirds that the two parties have enough seats for a majority. In the other one-third of outcomes, there’s no clear path to continued austerity measures.
  • The Greens and the fascist scum XA are very likely entering the legislature, while the nationalist LAOS (who initially backed austerity, then changed their minds) might be losing all their seats thanks to the cutoff.
  • SYRIZA (the Radical Left) and KKE (the Communists) will both be making big gains, and could potentially hold the balance of power. However, the KKE refuses to ever join a coalition.

So yeah, that’s how things are looking right now. Of course there is still a month until the election, and things are very volatile - but for now, it looks that the most likely outcome is the same ND/PASOK austerity coalition returning to power with a greatly reduced share of the vote, and several new parties entering the legislature. If ND and PASOK can’t muster a majority, then the prospects for other stable coalitions are really murky.

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Mar 31 2012 ∞
Hey so here’s my prediction of how things are going to go in the Greek election, based on the most recent available polls. Since their system is almost entirely proportional (with a 3% threshhold and a 50-seat bonus for the winning party) it’s straightforward to go from polls to seats. And here are the results. Bear in mind that there are 300 seats in total, so the magic number for a government is 151. Unsurprisingly, things are going very terribly for PASOK (the party that won the last election) and ND (the party that got Greece into this mess by forging debt numbers with Goldman Sachs in the first place). However, as long as ND gets the most votes, they’re still going to be the biggest party thanks to the 50-seat bonus. In fact, it looks like PASOK and ND will be just on the edge of forming a 151-seat coalition with less than 35% of the vote.  From the debt crisis point of view, it’s absolutely essential to the deal that PASOK and ND form a stable governing coalition after the election. All of the other parties are vigourously opposed to the austerity package. In particular, DIMAR was formed a few months ago as a leftist alternative and has been gaining steadily, while ANEL wasn’t even included in the polls until March but is looking likely to form the main opposition. I’d be very surprised if ANEL didn’t make substantial gains against ND; they’re both centre-right, but ANEL is more vigourously nationalistic with a strong anti-austerity stance (and some rhetoric about Germany still owing money for World War Two, which is probably inevitable). If ANEL were to gain, oh, two percentage points relative to ND, then there would be absolutely no way that PASOK and ND could continue to maintain a coalition government that kept up the existing eurozone deal. Things would get very messy very quickly. Rounding out the parties (in case you’re wondering) are the communist KKE, the leftist SYRIZA, the nationalist LAOS, and the fascist scum XA. Note that the KKE refuses to participate in any coalition government as a matter of principle, so the leftist anti-austerity parties (KKE, DIMAR, and SYRIZA) have zero chance of forming a governing coalition even if ND collapses. I’m also not sure how much social-desirability bias there is in people not wanting to admit they’re the kind of disgusting filth who would vote for XA. Seriously hoping that there’s not a big surge there. I have zero doubt that the rest of the eurozone would gladly accept them into the governing coalition if they held the balance of power, despite the fact that they are literally and explicitly neo-Nazis.

Hey so here’s my prediction of how things are going to go in the Greek election, based on the most recent available polls. Since their system is almost entirely proportional (with a 3% threshhold and a 50-seat bonus for the winning party) it’s straightforward to go from polls to seats. And here are the results. Bear in mind that there are 300 seats in total, so the magic number for a government is 151.

Unsurprisingly, things are going very terribly for PASOK (the party that won the last election) and ND (the party that got Greece into this mess by forging debt numbers with Goldman Sachs in the first place). However, as long as ND gets the most votes, they’re still going to be the biggest party thanks to the 50-seat bonus. In fact, it looks like PASOK and ND will be just on the edge of forming a 151-seat coalition with less than 35% of the vote. 

From the debt crisis point of view, it’s absolutely essential to the deal that PASOK and ND form a stable governing coalition after the election. All of the other parties are vigourously opposed to the austerity package. In particular, DIMAR was formed a few months ago as a leftist alternative and has been gaining steadily, while ANEL wasn’t even included in the polls until March but is looking likely to form the main opposition. I’d be very surprised if ANEL didn’t make substantial gains against ND; they’re both centre-right, but ANEL is more vigourously nationalistic with a strong anti-austerity stance (and some rhetoric about Germany still owing money for World War Two, which is probably inevitable). If ANEL were to gain, oh, two percentage points relative to ND, then there would be absolutely no way that PASOK and ND could continue to maintain a coalition government that kept up the existing eurozone deal. Things would get very messy very quickly.

Rounding out the parties (in case you’re wondering) are the communist KKE, the leftist SYRIZA, the nationalist LAOS, and the fascist scum XA. Note that the KKE refuses to participate in any coalition government as a matter of principle, so the leftist anti-austerity parties (KKE, DIMAR, and SYRIZA) have zero chance of forming a governing coalition even if ND collapses.

I’m also not sure how much social-desirability bias there is in people not wanting to admit they’re the kind of disgusting filth who would vote for XA. Seriously hoping that there’s not a big surge there. I have zero doubt that the rest of the eurozone would gladly accept them into the governing coalition if they held the balance of power, despite the fact that they are literally and explicitly neo-Nazis.

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Mar 16 2012 ∞

Greece on the breadline: cashless currency takes off

In recent weeks, Theodoros Mavridis has bought fresh eggs, tsipourou (the local brandy: beware), fruit, olives, olive oil, jam, and soap. He has also had some legal advice, and enjoyed the services of an accountant to help fill in his tax return.

None of it has cost him a euro, because he had previously done a spot of electrical work – repairing a TV, sorting out a dodgy light – for some of the 800-odd members of a fast-growing exchange network in the port town of Volos, midway between Athens and Thessaloniki.

In return for his expert labour, Mavridis received a number of Local Alternative Units (known as tems in Greek) in his online network account. In return for the eggs, olive oil, tax advice and the rest, he transferred tems into other people’s accounts.

[…]

Tems has been up and running for barely 18 months, said Maria Choupis, one of its founder members. Prompted by ever more swingeing salary cuts and tax increases, she reckons there are now around 15 such networks active around Greece, and more planned. “They are as much social structures as economic ones,” she said. “They foster intimacy and mutual support.”

The network is currently busy transforming a disused building owned by Volos university into a permanent exchange and barter space. It will host a daily market from next month at which members can meet and exchange without using cash. Several highly successful open-air markets were held throughout last summer, Choupis said, until the weather got too cold.

So this is actually a really cool idea.

Greece basically needs a much cheaper currency that’s basically useless for imports to help its economy recover. In a regular situation, this would happen through a steep decline in the price of the drachma. This can’t happen for Greece, because it’s such a small part of the overall eurozone - so the government is using all kinds of drastic policies like wage cuts to get the same effects. But that’s not sufficient; tems has all kinds of advantages:

  • Consumption needs. This is the most basic upside: if you’re a producer using the euro, then you want to do business with foreigners as much as possible, because they tend to be reliably richer. If you’re using tems, then you basically have to trade within Greece. So this makes more goods and services available within Greece.
  • Social capital. This system is really heavily based on the notion that trading should be a social process. Using a currency unit with very limited legitimacy like this means that you really have to trust people to accept it, so meeting people who are also using tems and interacting with them builds interpersonal trust. The organizers have also promoted this by organizing the open barter events. Networking and trust are really helpful for economic growth, especially in a society like Greece where basic support and infrastructure have been hugely disrupted by the harsh government austerity measures in the last few years.
  • No seigniorage. Because the tems system is set up and managed by a nonprofit organization, there is no temptation for the government to increase its own revenue or stimulate the economy by printing more units - because the people behind the currency don’t actually benefit from such issuance.

You can read more about the nonprofit behind tems here. (It’s in Greek, but Google Translate can help you out.) They seem to be fully aware of all the upsides and going but this in a positive proactive manner. 

However, tems isn’t really a panacea for Greece. It can’t be a full substitute for a devalued currency in the domestic economy. Here are some of the more significant downsides:

  • Limited scale. For whatever wonderful characteristics tems have, adoption has been pretty slow - Volos has around 800 participants out of a population of almost 150,000. This is definitely enough people to run a barter network, and it takes time for such a new system to expand. However, if only well-connected Internet-using people are adopting tems, the benefits might be pretty limited.
  • Motives of operators. From what I can tell, so far the people behind tems have nothing but positive intentions. However, if at some point in the future they become corrupt and start trying to get seigniorage revenue out of tems - from issuance, preferred exchange rates, or however else - then this will effectively make the currency way more difficult and costly to use as an alternative to the euro.
  • Tax collection. The government doesn’t see tax revenue from these alternate-currency transactions. This is great for citizens, because sales tax is a punishingly high 23% - but the government is largely in this position because it’s so strapped for cash. Alternate currencies make the problem even worse.

So yeah. Greek citizens are going rough a really tough time, and it’s reassuring to see people finding ways to get by. But it’s not entirely clear to what extent systems like tems can solve their problem.

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Mar 08 2012 ∞

Private Investors Said to Agree to Swap About 85% of Greek Debt

So it looks like it’s finally happening! After years of promising that the private sector would never have to take any losses on their holdings of Greek government debt, the Greek government is imposing losses on private holders of its debt. This represents the largest debt restructuring every in history. Since it looks like Greece came in above the 75% threshhold but below the 90% threshhold, they will be forcing some investors to participate. But at least this means their debt load is going to be reduced, right?

It will be interesting to see how things go with this when markets and governments start back up Monday morning. In particular:

  1. Will the Greek government be tempted to backslide, now that the deal has been agreed upon and the investors can’t back out of accepting a steep cut to the value of the Greek government debt they hold? If not, will the parties opposing austerity gain sharply in the polls?
  2. How difficult will it be for heavily indebted eurozone governments like Portugal or Spain (or heavily indebted Spanish regional governments like Catalonia and Andalusia) to borrow now that investors know the EU is willing to impose losses on the private sector? Will their interest rates spike?
  3. Will investors trust credit default swaps anymore? This is the first substantial government debt crisis since credit default swaps became widespread; if they’re not going to pay out unless the government explicitly and suddenly defaults, then what’s the point?

Also, it’s worth noting that things are going to continue to get worse in Greece before they get better. The unemployment rate recently rose to an absolutely dismal 21 percent, and it’s over 50 percent among the 15-24 age group - so that is a huge number of young people with absolutely no prospects. Not exactly an optimal situation in terms of political or social stability.

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Mar 07 2012 ∞

Investors With 58% of Greek Bonds Agree to Swap

So far, this is pretty reassuring. The deadline is tomorrow evening, and while the Greek government’s target of 90% participation won’t be met, they’ll probably get something like 80% - which is realistically enough to force the rest to participate. There will always be some holdouts, including five Greek social security funds that are inexplicably not being compelled to participate. But at this point all the banks in Greece and Cyprus are participating, and lots of other big banks are participating, and so it’s almost certainly going to go through.

What will happen if a substantial proportion of bondholders (say, 20%) are required to accept losses? I’m honestly not sure; it probably won’t be officially declared a default, in the sense that credit default swaps will almost certainly not be required to pay out. In a way this is a good thing, because it means that banks aren’t going to find themselves scrambling to raise billions of euro to pay out the credit default swaps. However, it’s also possibly really suboptimal in that if investors don’t think credit default swaps will protect them when a eurozone country runs out of money, they’ll start charging higher interest rates to compensate for that additional risk. This could quickly become a problem for Portugal (and in the future also for Spain) because those higher interest rates will mean that borrowing will get much more expensive for countries that are already highly indebted.

Also, once the swap has gone through there will be huge pressure in Greece to reverse some of the more unpopular austerity measures, because it’s not like the banks can ask for the money back after the fact, right? But this is unquestionably a terrible idea as right away all the investors in the world would stop lending to the Greek government (because they’d know it couldn’t be trusted) and Greece would default right away. 

Anyway, will be interesting to see how things go. The deadline is 10 pm Athens time tomorrow, which is noon in my time zone (and probably somewhere in the early afternoon in yours).

2 notes

Mar 06 2012 ∞
So there’s a new poll out for the Greek legislative elections that will hopefully be happening in April or May, conducted by Public Issue. The Greek system tends to be very proportional to overall vote (other than the forty-seat bonus for the winning party) so it’s easy to translate vote share into Parliamentary seats. Here’s what this most recent poll would predict. There are nine parties meeting the 3% threshhold for representation! Some highlights: Since the total number of seats is 300, the majority threshhold is 151. Currently, the two big centrist parties combined will have very close to this many seats. They are the only parties who will back the bailout and austerity plan that’s keeping Greece from defaulting, so not sure what will happen if they can’t form government. Several new leftist parties look like they’re going to be represented. DIMAR (the Democratic Left) is a new party that’s been gaining in popularity in recent months. OP is the Green Party of Greece, and they’re polling above the 3% threshhold for representation. DISY is composed of former PASOK MPs who rebelled against the party, and they seem to be doing pretty well too. SYRIZA (the Radical Left) and KKE (the Communists) are headed for a big bump in popular support. Note that the KKE refuses to join any coalition government on principle, so there’s no practical way the leftist parties could ever form government even if they outperform this poll. LAOS is an unpleasant nationalist conservative party who are basically repeating their performance from last election. XA (Golden Dawn) is neo-Nazi scum - as in, they are explicitly mimicking the Nazis. They use the Nazi salute and everything. This is obviously despicable beyond description, and the fact that they’re gaining seats is a sign of how hazardously broken the Greek system is. Worth noting that the abstention rate on this poll was 27.5%. That’s a pretty high declared abstention rate for a Greek poll. Not sure if those voters will be persuaded to come on board with ND or PASOK, or possibly a new anti-austerity party like DIMAR or DISY, or what - but a very low turnout would look really bad as the Greek Parliament has already not been looking so legitimate lately. For what it’s worth, I’m pretty unconvinced that ND and PASOK will be able to form a majority coalition. What will happen? Possibly another election (which Greece has done with deadlocked Parliaments in the past) or possibly the EU will just start making budget decisions without Greek input. If it’s the latter, I can’t imagine Greece staying in the eurozone for much longer.

So there’s a new poll out for the Greek legislative elections that will hopefully be happening in April or May, conducted by Public Issue. The Greek system tends to be very proportional to overall vote (other than the forty-seat bonus for the winning party) so it’s easy to translate vote share into Parliamentary seats. Here’s what this most recent poll would predict. There are nine parties meeting the 3% threshhold for representation! Some highlights:

  • Since the total number of seats is 300, the majority threshhold is 151. Currently, the two big centrist parties combined will have very close to this many seats. They are the only parties who will back the bailout and austerity plan that’s keeping Greece from defaulting, so not sure what will happen if they can’t form government.
  • Several new leftist parties look like they’re going to be represented. DIMAR (the Democratic Left) is a new party that’s been gaining in popularity in recent months. OP is the Green Party of Greece, and they’re polling above the 3% threshhold for representation. DISY is composed of former PASOK MPs who rebelled against the party, and they seem to be doing pretty well too.
  • SYRIZA (the Radical Left) and KKE (the Communists) are headed for a big bump in popular support. Note that the KKE refuses to join any coalition government on principle, so there’s no practical way the leftist parties could ever form government even if they outperform this poll.
  • LAOS is an unpleasant nationalist conservative party who are basically repeating their performance from last election. XA (Golden Dawn) is neo-Nazi scum - as in, they are explicitly mimicking the Nazis. They use the Nazi salute and everything. This is obviously despicable beyond description, and the fact that they’re gaining seats is a sign of how hazardously broken the Greek system is.
  • Worth noting that the abstention rate on this poll was 27.5%. That’s a pretty high declared abstention rate for a Greek poll. Not sure if those voters will be persuaded to come on board with ND or PASOK, or possibly a new anti-austerity party like DIMAR or DISY, or what - but a very low turnout would look really bad as the Greek Parliament has already not been looking so legitimate lately.

For what it’s worth, I’m pretty unconvinced that ND and PASOK will be able to form a majority coalition. What will happen? Possibly another election (which Greece has done with deadlocked Parliaments in the past) or possibly the EU will just start making budget decisions without Greek input. If it’s the latter, I can’t imagine Greece staying in the eurozone for much longer.

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+ ∞

Goldman Secret Greece Loan Reveals Two Sinners

On the day the 2001 deal was struck, the government owed the bank about 600 million euros ($793 million) more than the 2.8 billion euros it borrowed, said Spyros Papanicolaou, who took over the country’s debt-management agency in 2005. By then, the price of the transaction, a derivative that disguised the loan and that Goldman Sachs persuaded Greece not to test with competitors, had almost doubled to 5.1 billion euros, he said.

Papanicolaou and his predecessor, Christoforos Sardelis, revealing details for the first time of a contract that helped Greece mask its growing sovereign debt to meet European Union requirements, said the country didn’t understand what it was buying and was ill-equipped to judge the risks or costs.

Wow. So basically, the Greek government was using particularly sneaky swap contracts to disguise its debt burden so as to qualify for eurozone membership and get re-elected, and Goldman Sachs was taking advantage of the Greek government’s high desperation and low financial literacy to yentz the Greek taxpayer to the tune of hundreds of millions of euro.

Oh, and not mentioned in this article but definitely relevant here? The guy who was running the Central Bank of Greece at the time (who was almost certainly aware of the deal) was Lucas Papademos, who’s currently the unelected EU-installed Prime Minister of Greece. Awesome.

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