The negotiations looked hopeless up to Monday morning when some prime ministers tweeted that they had a deal with Greece and the EU "president" Donald Tusk announced that they had agreekment. I thought that he was forgetting basic English words – but it was actually meant to be a funny word. Just like there is Grexit, Grexitus, and Greferendum, there exists a-Greek-ment. If he invented this word himself, he has a small plus from me. It's not as funny as Donald Marzy but it is funny enough for a successor of a wet rag.
What Tsipras has signed seems like a very ambitious deal. Within 60 hours or so, they have to write down and implement new laws about the pension reform, broadened tax base, new retail laws including Sunday trading, new value-added tax rates, reversal of fiscally detrimental 2015 hiring decisions, weakening of labor unions, laws to guarantee the independence of the statistical bureau, laws that make certain dynamical spending cuts automatic in the case of a weakened economy, end to political interference in the bank sector hiring, and privatization of the electric grid and many other things.
A €50 billion fund containing "valuable Greek assets" will exist to provide the system with some collateral (instead of Crete) but it will be located in Athens rather than Luxembourg as previously planned. Well, as long as the German army will be capable of invading and preventing the assets from being stolen by someone, it's OK with me.
As you can see, Tsipras and comrades had to surrender in almost all respects (the deal is vastly harsher than the proposal that was rejected in the referendum), they had to obediently lick all of their red lines from the floor. But it was needed because they have brought the economy into a much more sorrow shape in the last 2-3 weeks – which requires the surgery to be more radical, too – and they have started to realize this simple fact.
Greece will get some €7 billion in this week, extra €5 billion by August, extra €35 billion in three years, and so on. If this were a plan for a generic country – and not a country with the track record of Greece – I would think that it's an extremely promising bailout.
However, we are talking about Greece which is why I am similarly skeptical as most Czechs and Slovaks, among others. When the celebrations of thegreekment were already underway, the Czech oligarch finance minister Babiš reiterated his opinion that Greece should leave the Eurozone because the existential problems will return. His predecessor and archrival Miroslav Kalousek had the same opinion – he has favored Grexit, perhaps the temporary one. The boss of the center-right opposition party, ODS, Prof Petr Fiala said that the new bailout is like extinguishing fire by petrol – and a suicide of the Eurozone. Slovak PM Robert Fico said that if even Slovakia had been able to carry out the reforms, Greece must be able to do the same thing so there is no room for any mercy from the Slovak side. Czech and Slovak politicians generally suggest that we won't pay a penny but I think that we will be forced to think different.
The debt of Greece – an amount of money that may turn out to be wasted and never returned – will jump from €325 to something like €400 billion. It's some quasi-infinite number, anyway. ;-) But on the other hand, the potentially avoidable damages caused by the complete collapse of all aspects of the Greek economy would be higher, I tend to think. And the EU wants to print lots of new money and send them into circulation which is why this is not such a terrible loss.
They could have earned at least a few billion to fund these new loans. The daily volume of stocks traded on the New York Stock Exchange is about $170 billion. You may imagine what it is elsewhere. The EU folks could have bought this amount of stocks (especially some sensitive stocks) at one moment, or one day, then announce the agreement, and then sell the stocks with a 1% profit. At least, a few billion dollars could have been earned in this way – due to the predictable obsession of the markets with this otherwise unimportant country.
During the weekend, I was stunned by the reactions of some far left-wing folks like the economists Stiglitz, Krugman, and many others – not to mention hundreds of thousands of Twitter users who were retweeting various retarded #ThisIsACoup hashtags. If Obama's universal healthcare weren't dysfunctional, all these Krugmen and Stiglitzes would already own a comfy bed in a psychiatric asylum.
I don't know whether there's any chance that Greece will be able to write and adopt the laws – laws that are much more serious versions of similar laws against which Tsipras and comrades have fought for years and built their careers on this opposition to "austerity". Euclid Tsakalotos' predecessor Yanis Varoufakis needed 5 months to write 3 speeches about the cheap loans' equivalence to the carpet bombing of Germany in 1945, the creditors' equivalence to the Islamic State, and other things. And now, Tsakalotos has 50 hours to establish a modern Greek state on the territory of the banana republic where he became a finance minister, write the complete set of laws, convince the Greek population to embrace them, and bring them into reality.
It may be hard, indeed! ;-)
But if he doesn't even try, it is now at least "more likely than not" that soon after these plans fail, the ECB will withdraw the ELA program from the Greek banks. Almost all the circulation of cash – and real activity dependent on this circulation – will stop in Greece, starvation, protests, and fights will begin, and the physical survival of the Syriza officials will become indefensible. Believe it or not, it is much cheaper for them to accept that they have been 100% wrong throughout their all lives.