Capitulation

In econo-speak it refers to a condition in which a market has given up the illusion that it’s ‘assets’ have any particular value at all.

Greek Bailout Goes to Servicing the Debt

Real News Network

August 12, 2015

As Costas Lapavitsas pointed out in his speech at the Democracy Rising conference a couple of weeks ago in Athens, it’s extremely unrealistic to expect given the pathetic performance of the privatization program today that anything near 50 billion euros is going to be generated by the sale of Greek state assets, particularly with the economy in shambles, which drastically reduces the value of many of these assets. And with the instability, which is going to be a great concern to potential acquirers of these assets.

And what’s likely to happen is that the sale of these assets is not going to generate anywhere near that amount of money, so that there isn’t going to be any money available for investment. It’s basically all going to go towards recapitalizing the banks. Perhaps if you can get up above 25 billion euros, some portion of the debt will be paid down with the proceeds.

The point I think that we ought to really bear in mind, there are a number of them, in assessing the importance of this deal, is that first of all there’s no agreement to date on debt relief. And if Greece does not get, as the IMF staff now plainly acknowledges, a dramatic writedown of its debt or equivalent measures, then its debt will remain unsustainable. And it almost certainly is going to default eventually, and that would precipitate in all probability an exit from the eurozone. So the very purpose of this deal would be defeated.

The Guardian view on the Greek bailout: a deal that addresses nothing

The Guardian

Tuesday 11 August 2015 14.46 EDT

The Greek PM simply threw in the towel. Pre-referendum sticking points, fiscal perks for Greek islands and reduced VAT on fuel, suddenly paled beside new extreme austerian demands.

A ludicrous €50bn in asset sales were demanded, sweetened only by the concession that Athens could keep an eighth of the cash, while the majority went to foreign debtors and banks. Mr Tsipras spun this as a sovereign wealth fund, implying investment in a more prosperous future. The reality is more like being forced to sell your house, and then being allowed to hang on to a fraction of the proceeds. Controversial cuts to pensions are coming at speed. The traditional European way was to sneak the nastiest medicine down along with a mouthful of fudge, but no more.

…

Mr Tsipras is left pretending that somewhat revised targets on the fiscal surplus, in truth little more than a retrospective accommodation to the reality of GDP and tax revenues disappearing in the new slump brought about by Greece’s stringent capital controls, represent a major concession.

…

This week’s “deal” may allow the German and Greek leaders to duck a few local political bullets, but the bombs that threaten the euro more widely have still not been defused.

Extend and pretend is a Ponzi scheme at best.