Cool Video: Greece Revisited

This Cool Video was posted by Euronews.  It is about 2.5 minutes long.  The basic premise is that the Syriza coalition in Greece is acting like a good opposition party, not too different than the current Prime Minister Samaras who was critical of the previous Socialist government and the austerity agreement negotiated with the official creditors, when he was in opposition.

Much of the coverage of Greece seems to assume that Syriza is going to secure a majority.  This does not appear to be the most likely scenario.  While it is ahead in the polls, that lead has been narrowing, and Syriza is not drawing sufficient support to indicate it will control a majority of seats in parliament even after it were to get the 50-bonus seats given to the first place winner.   It appears that Syriza needs to be showing popular support above 30% to indicate a chance for a majority, assuming some parties doe not make the threshold to be represented in parliament. 

We recognize that both Greece and its creditors are in a different and stronger position than previously in the crisis.  The Greek economy has been showing some pockets of better macro economic performance.  Most importantly it is running a primary budget surplus (excludes debt servicing costs).  This improves its negotiating position.

On the other hand, there is significantly less contagion.  There has been fundamental improvement in Spain and Ireland, for example.  In addition, the institutional capacity building in Europe has given officials tools and resources it did not have previously.

European officials had indicated that when the Greek aid program came to an end, and Greece had achieved various macro-economic and technical objectives, there was scope for additional accommodation.  Operationally, it means lengthening maturities and lowering rates.   There is room for compromise, which is being lost on many observers now, who seem to be increasingly caught up accusations seeking to renegotiate debt obligations is tantamount to blackmail.   

Countries are not people.  Time frames are considerably longer, and least we forget that Germany, Europe's great creditor now finished its WWI obligations in 2010.