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Will Greek politicians sign and end (temporarily) the Greek debt crisis?

02/08/2012 6:07 pm EST


Jim Jubak

Founder and Editor,

Now a deal is in the hands of Greece’s politicians. Doesn’t exactly fill me with confidence (or the Greeks either from the man/woman on the street interviews I’ve read). But I think a deal will get done (“done,” of course, remaining a very flexible term in this crisis) by tomorrow when the Eurogroup convenes a meeting of EuroZone finance ministers at 6 p.m. (Brussels time.)

The last major structural obstacle was—apparently--negotiated away today when the European Central Bank—reportedly—agreed to participate in a write down of its holdings of Greek government bonds. (Although in a fashion that allows the central bank not to take a loss on its bonds—and maybe even to book a profit. Ah, bank accounting.)

That leaves it up to Greek politicians to sign or not. If they don’t, the troika that holds the cash—the International Monetary Fund, the European Central Bank, and the European Commission—won’t agree to turn over the money and the crisis will grind on.

The issue now seems to be who will sign and what signatures the troika will require.

Prime Minister Lucas Papademos, Finance Minister Evangelos Venizelos and Bank of Greece Governor George Provopoulos have, apparently, agreed to sign the 43-page agreement that promises a 20% cut in the minimum wage, lower pension payments, and permanent spending cuts.

The problem, of course, is that Papademos is head of a caretaker government that only holds office until elections likely to be held in April. Will the troika be willing to accept these signatures as sufficiently binding on the next Greek government?

Earlier in the negotiations the troika was demanding that the leaders of all Greek political parties, and especially Antonis Samaras, leader of the New Democracy party, sign the agreement. (New Democracy is ahead in the polls for an April election with a projected 30% of the vote.) Samaras has steadfastly refused to sign, calling it an insult. Now that push has come to shove, however, he will either sign (figuring he’s made his point with voters), or he won’t. His refusal to sign can itself go either way—either deepening the crisis or resulting in a concession by the troika. (It’s quite possible that the troika will decide that it’s not worth betting the future of the euro on getting Samaras to sign because a Samaras pledge isn’t worth much. It was the willingness of the New Democracy government he ran to lie early and often about the Greek budget while it was in power that let Greek finances build to a crisis.)

If you like your financial humor black, may I recommend the Tweets of the fake Angela Merkel (@Angela_D_Merkel) I particularly liked the January 14 Tweet “Nicolas locked in his bedroom & won't come out. Says everybody hates him. Hard to disagree.”

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