Vox - Greek debt crisis: "Grexit" fears spread across Greece and the EUhttps://cdn.vox-cdn.com/community_logos/52517/voxv.png2015-07-13T07:31:45-04:00http://www.vox.com/rss/stream/86254762015-07-13T07:31:45-04:002015-07-13T07:31:45-04:00Read the full agreement between Greece and its creditors
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<p>Overnight, Greece reached a deal with its eurozone creditors. The tl;dr is that Greece gave way on virtually everything, in exchange for receiving a volume of financial assistance that should allow its banks to reopen and the country to continue using the euro as its currency. But the full austerity-and-reform agenda that Greek Prime Minister Alexis Tsipras successfully campaigned against twice is going to happen anyway — the price Greece pays for being unwilling to walk away from the eurozone.</p>
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<p style=" margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;"><a style="text-decoration: underline;" href="https://www.scribd.com/doc/271435306/Eurosummit-Statement-on-Greece" title="View Eurosummit Statement on Greece on Scribd">Eurosummit Statement on Greece</a></p>
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https://www.vox.com/2015/7/13/8945453/greece-crisis-agreementMatthew Yglesias2015-07-12T19:50:02-04:002015-07-12T19:50:02-04:00This German demand of Greece is stunningly hypocritical — and incredibly telling
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<p>There's a lot that's going down in Greek crisis negotiations this weekend, but if you want to understand what's <em>really</em> happening, then pay close attention to the fairly petty dispute about regulations on Sunday shopping.</p>
<p>Let's get things started with this paragraph from the German memo of things Greece should do (emphasis added):</p>
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<p>adopt more ambitious product market reforms with a clear timetable for implementation of all OECD toolkit 1 recommendations, <strong>including Sunday trade</strong>, sales periods, pharmacy ownership, milk, bakeries, [over the counter pharmaceutical products in a next step], as well as for the opening of macro-critical closed professions (e.g. ferry transportation). On the follow-up of the OECD toolkit-II, manufacturing needs to be included in the prior action;</p>
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<p>This is a brief, poorly written reference to a long series of policy recommendations you can read in this <a href="http://www.oecd.org/daf/competition/Greece-Competition-Assessment-2013.pdf">audit of Greek economic policy</a> undertaken by the Organization for Economic Cooperation and Development. The Sunday provision is very simple and easy to understand — Germany thinks Greece should change its law so stores can open on Sundays on the same terms as they open on any other day.</p>
<p>What the German government is asking the Greek government to do about this is something that Germany rather infamously declines to do itself. In other words, <a href="http://www.vox.com/2015/7/8/8911885/greece-crisis-eurozone-better-off-grexit">they think the eurozone would be better off without Greece</a> but they don't want to come out and say so. So they're piling on demands and hoping Greece turns them down.</p>
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<p lang="en" dir="ltr"><a href="https://twitter.com/mattyglesias">@mattyglesias</a> Back in '95, I spent my birthday & 1st day in Germany buying food at a gas station, b/c Sunday. I had no idea stores closed.</p>
— Amy Burkhardt (@aim4thahardt) <a href="https://twitter.com/aim4thahardt/status/620287442873155584">July 12, 2015</a>
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<p lang="en" dir="ltr"><a href="https://twitter.com/mattyglesias">@mattyglesias</a> Seriously! I remember trying to find TP on a Sunday while living in Munich.</p>
— Laurel Justin (@laureljustin) <a href="https://twitter.com/laureljustin/status/620359279917137920">July 12, 2015</a>
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<p>It's been a couple of years since I've been to Germany, so I thought maybe the explanation here was that Angela Merkel had some huge change of heart about Sunday shopping and was spearheading a major reform initiative.</p>
<p><a href="http://www.bloomberg.com/news/articles/2014-12-11/germans-cling-to-shop-free-sundays-as-france-opens-doors">But no</a>:</p>
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<p>Germany, Europe’s largest economy, is at odds with a trend across the region in recent years to liberalize labor laws that previously kept stores closed on Sundays. As a result, the country’s bricks-and-mortar shops risk missing out on sales as they face stiffer competition from Internet retailers.</p>
<p>Two weeks ago, Germany’s top administrative court stopped the state of Hesse -- home to the country’s financial capital of Frankfurt -- from letting libraries, video stores and lottery sellers operate on Sundays, ruling it was protecting the right of workers to have the day off.</p>
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<p>And:</p>
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<p>Germany is out of step with European neighbors. France announced a plan Dec. 10 to loosen Sunday shopping restrictions as part of Economy Minister Emmanuel Macron’s effort to free up business and bolster growth. His bill proposes extending the number of Sunday openings to 12 a year from five, as well as allow year-round shopping for stores in certain tourist areas.</p>
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<p>It's simply not credible to believe that this is a genuine sticking point for the Germans. They are looking for reasons to keep disagreeing.</p>
https://www.vox.com/2015/7/12/8939937/greece-sunday-shopping-germanyMatthew Yglesias2015-07-10T21:00:20-04:002015-07-10T21:00:20-04:00Greek parliament approves capitulation to European creditors
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<figcaption>Prime minister Alexis Tsipras speaks in the European Parliament on Wednesday. | Michele Tantussi/Getty Images</figcaption>
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<ul>
<li><span>The Greek parliament has narrowly approved a package of €13 billion in tax hikes and spending cuts designed to win approval from Greece's European creditors.</span></li>
<li><span>Prime minister Alexis Tsipras must now convince European leaders to accept the package in exchange for providing Greece with another round of bailout funding.</span></li>
<li><span>European leaders are meeting over the weekend to consider the Greek proposal.</span></li>
</ul>
<h3>The new proposal represents capitulation by the Greeks</h3>
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<p>The full text of the Greek government's proposal to its European creditors is now <a target="_blank" href="https://cdn0.vox-cdn.com/uploads/chorus_asset/file/3860854/Prior-action-final-version-July-2015.0.pdf">publicly available</a>, and the Financial Times has a <a href="http://blogs.ft.com/brusselsblog/2015/07/10/leaked-greeces-new-economic-reform-proposal/">helpful rundown</a> showing that the new Greek proposal is extremely similar to the reform package Greek voters rejected so decisively on Sunday.</p>
<p>The Greeks have agreed to virtually all of the European creditors' major demands. The remaining disagreements are mostly about the timing and details of these reforms. For example, European leaders had demanded that Greeks drop a special tax break for Greek islands and adopt a uniform tax rate across the country. In the past, Greece opposed the proposal. But now, Greece is offering to phase in the higher tax rate over 18 months in all but "the most remote" islands.</p>
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<p>Similarly, the Financial Times reports that Greece's creditors want pension cuts to take effect immediately, while Greece wants to wait until October for the plans to take effect.</p>
<h3>The Greeks have very little leverage</h3>
<p>Greek Prime Minister Alexis Tsipras swept into office earlier this year promising to renegotiate the terms of Greece's bailout, but he didn't have the leverage to do it. He didn't have any leverage before he called a referendum on the European proposal two weeks ago, and winning the referendum hasn't given him any additional leverage.</p>
<p>The current stalemate is causing <a href="http://www.vox.com/2015/7/9/8923381/greek-debt-crisis-uncertainty">a lot more economic pain</a> for ordinary Greeks than for ordinary Germans or Italians, and a Greek exit from the eurozone <a href="http://www.vox.com/2015/6/17/8793945/greece-important">wouldn't cause the kind of continent-wide meltdown</a> it might have caused in 2010.</p>
<p>The question now is whether European leaders are willing to accept Tsipras's near-total surrender. They're meeting over the weekend to consider the Greek proposal. Officially, their last offer expired on June 30. But they don't want to force Greece out of the eurozone, so they may be willing to show a bit of flexibility.</p>
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https://www.vox.com/2015/7/10/8931729/greek-parliament-passes-austerityTimothy B. Lee2015-07-10T14:00:03-04:002015-07-10T14:00:03-04:00The new Greek debt crisis question: Can Europe take "yes" for an answer?
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<p>Two weeks ago, the big question in the Greek debt crisis was whether the Greek government would capitulate to its creditors' demands and get the short-term money it needs to stay in the eurozone. Now, after two dramatic weeks of deadlines and red lines and banking emergency and a referendum, the situation is reversed. Greece's European partners need to decide whether they want to take "yes" for an answer and keep Greece in the eurozone, or whether they want to find a pretext to say "no" and try to force Greece out.</p>
<h3>Where things stand right now</h3>
<ul>
<li>Days ago, Greece's creditors set a Sunday deadline for the country to come up with an acceptable set of budget plans and economic reforms or else have its banking system completely cut off by the European Central Bank.</li>
<li>Thursday night, Greece presented a plan that represents a near-total surrender on all relevant points.</li>
<li>Rather than give a quick answer, Greece's European partners called for a couple of days of study in advance of a Saturday meeting, essentially guaranteeing that a "no" verdict on the deal will leave no time for future negotiations. </li>
<li>Even though Greece has given in to all of its creditors' important demands, there is a school of thought that says the <a href="http://www.vox.com/2015/7/8/8911885/greece-crisis-eurozone-better-off-grexit">eurozone will be stronger without Greece</a>.</li>
<li>There is also a school of thought that says <a href="http://www.vox.com/2015/7/5/8890145/greece-referendum-vote-no">Greece will be better off leaving the euro</a>.</li>
<li>There's just enough wiggle room left that Europe could find a reason to tell Greece no, even though there aren't many outstanding issues remaining.</li>
</ul>
<h3>Greece has surrendered, but Europe is equivocating</h3>
<p>The latest Greek proposal represents an essentially total cave-in by Greece to what its creditors had been demanding. The two main remaining outstanding points of disagreement are essentially trivial:</p>
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<li>Greece wants to exempt hotels on some small outlying Greek islands from sales tax increases.</li>
<li>Greece wants to implement pension reforms in October rather than right away.</li>
</ul>
<p>If Prime Minister Alexis Tsipras had made this offer in February, the deal would have been sealed immediately, with Europe's creditors jumping for joy. If he'd made it as recently as two weeks ago, the deal would have been greeted extremely warmly. But over the past 24 hours many eurozone finance ministers have sounded skeptical, despite their near-total victory on all important matters.</p>
<p>Finnish Minister of Finance Alex Stubb made a great show of not being impressed:</p>
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<p lang="en" dir="ltr">Our matter-of-fact-state-of-play-press-release. <a href="https://twitter.com/hashtag/Greece?src=hash">#Greece</a> <a href="http://t.co/pJgLOmhF8s">http://t.co/pJgLOmhF8s</a></p>
— Alexander Stubb (@alexstubb) <a href="https://twitter.com/alexstubb/status/619472976929529856">July 10, 2015</a>
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<p>Slovakia's Peter Kažimír was by turns noncommittal and cryptic:</p>
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<p lang="en" dir="ltr">It seems we have progress on <a href="https://twitter.com/hashtag/Greece?src=hash">#Greece</a>. It's still not clear whether this will be enough and no further frontloading will be needed <a href="https://twitter.com/hashtag/Eurozone?src=hash">#Eurozone</a></p>
— Peter Kažimír (@KazimirPeter) <a href="https://twitter.com/KazimirPeter/status/619468251018297344">July 10, 2015</a>
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<p lang="en" dir="ltr">Following latest developments, listening to <a href="https://twitter.com/hashtag/Greece?src=hash">#Greece</a> govt officials one can wonder how quickly can caterpillar turn into butterfly <a href="https://twitter.com/hashtag/Eurozone?src=hash">#Eurozone</a></p>
— Peter Kažimír (@KazimirPeter) <a href="https://twitter.com/KazimirPeter/status/619468391707860992">July 10, 2015</a>
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<h3>Greece and Syriza have a credibility problem</h3>
<p>If the idea of the finance ministers of Finland and Slovakia blowing up the eurozone over whether pension cuts happen in mid-July or 10 weeks later in October sounds ridiculous, that's because the issue at this point has much less to do with what is being proposed than with who is proposing it.</p>
<p>The politics of Greece in Europe are profoundly shaped by the widespread perception that Greece <a href="http://www.vox.com/2015/7/8/8911885/greece-crisis-eurozone-better-off-grexit">got into the eurozone by cheating</a> and then got itself deeper into debt by cheating some more. And it gets worse than that. Chief economist at the International Monetary Fund <a href="http://blog-imfdirect.imf.org/2015/07/09/greece-past-critiques-and-the-path-forward/">Olivier Blanchard blogged a defense of the IMF's conduct</a> on Thursday in which he blamed the initial failure of the Greek austerity-and-reform process on the idea that "many of these reforms were either not implemented, or not implemented on a sufficient scale."</p>
<p>Meanwhile, Tsipras looks personally untrustworthy and erratic to many European government officials.</p>
<ul>
<li>He comes from a far-left political party that has no natural ideological allies inside any European Cabinet. </li>
<li>He has twice now won elections by promising Greek voters an end to austerity that he can't deliver.</li>
<li>He has alternately denounced Greece's European creditors and professed a desire to work with them.</li>
<li>He's now offering a deal that is <em>extremely </em>similar to the one he rejected a week and a half ago, even though the <a href="http://www.vox.com/2015/7/9/8923381/greek-debt-crisis-uncertainty">rejection itself has been extremely</a> costly to the Greek economy.</li>
</ul>
<p>What this adds up to is significant European concern that anything the Greeks agree to in a moment of crisis will be substantially set aside once the crisis is averted.</p>
<h3>Europe has pretexts for rejecting the offer</h3>
<p>Of course, European finance ministers can't officially say they are rejecting the Greek proposal because they personally dislike Greece's prime minister. But the handful of remaining points of disagreement do give them grounds for rejecting the offer if they are looking for a pretext. Even better, <a href="http://www.vox.com/2015/7/9/8923381/greek-debt-crisis-uncertainty">the economic chaos unleashed this week in Greece</a> by last weekend's referendum means that the situation has changed:</p>
<ul>
<li>Greek banks are in much worse shape, and require more in the way of liquidity assistance to stay solvent.</li>
<li>The Greek economy is far weaker than it was a month ago, so Greece's debt-to-GDP ratio looks worse.</li>
<li>Tax collections and debt payments have been thrown into chaos by uncertainty, so Greece's fiscal needs have grown.</li>
</ul>
<p>None of these add up to incredibly compelling reasons to give Greece the boot. That's why countries like France and Italy, which perceive a strong self-interest in keeping Greece in the fold, seem extremely pleased with Tsipras's latest offer. But to those European officials who are overall skeptical of the merits of Greek membership in the eurozone, there is enough wiggle room to find a reason to say no.</p>
<h3>Greece may want to get kicked out</h3>
<p>One potential explanation for Tsipras's erratic behavior is that Greece may <em>want</em> to get kicked out of the eurozone.</p>
<p>Many foreign observers <a href="http://krugman.blogs.nytimes.com/2015/07/09/argentine-lessons-for-greece/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body">look at the precedent of Argentina</a> and believe that defaulting on its external debts will improve the Greek economy, at least in the medium term.</p>
<p>But this idea is extremely unpopular with Greek voters. Consequently, it is at least conceivable that the Greek government favors leaving the eurozone but does not want to <em>say</em> it favors leaving the eurozone. If that is correct, the country's optimal strategy would be to try to get itself kicked out of the eurozone while also making a great show of the extreme lengths to which it was willing to go to stay in.</p>
<h3>The deadline could slip</h3>
<p>Officially, all this will be settled by the weekend. Either Greece's European creditors will accept the deal, or else the deadline will pass and Greece will be forced off the euro.</p>
<p>This would start with the European Central Bank declining to offer continued support to the Greek banking system. At that point, the Greek government would need to start doing it itself. To do that, Greeks would need their own currency. Here's how it would probably be introduced:</p>
<ul>
<li>Order banks to close for several days so they can reprogram their computers.</li>
<li>Pass a law redenominating every Greek financial asset, wage and price contract, social assistance benefit, and other commercial transaction subject to Greek law from euros into drachmas. Yesterday's 100 euros will be tomorrow's 100 new drachmas.</li>
<li>Begin collecting taxes in new drachmas, to ensure that the currency has some value to Greek people.</li>
<li>Let people keep using euro coins and bills for everyday transactions, recognizing that €100 will probably buy you <em>way</em> more than 100 new drachmas' worth of stuff.</li>
<li>Start the process of printing physical new drachmas to be introduced several months down the road.</li>
</ul>
<p>But the deadline itself is somewhat artificial. European officialdom is really good at kicking cans, delaying deadlines, and dragging things out. If they want to, European leaders could easily decide to keep Greek banks on life support for another week and allow for more rounds of talks.</p>
https://www.vox.com/2015/7/10/8928445/greek-crisis-latest-proposalMatthew Yglesias2015-07-09T12:30:02-04:002015-07-09T12:30:02-04:00Germany's finance minister proposed swapping Greece for Puerto Rico. Jack Lew said no.
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<p>German Finance Minister Wolfgang Schauble, evidently tired of getting phone calls from American officials urging Germany to restructure Greece's debts, <a href="http://www.bloomberg.com/news/articles/2015-07-09/schaeuble-jokes-he-offered-lew-greece-for-puerto-rico">says he trolled Treasury Secretary Jack Lew</a> a bit about the <a href="http://www.vox.com/2015/7/1/8872553/puerto-rico-crisis">ongoing debt crisis in Puerto Rico</a>.</p>
<p>"I offered my friend Jack Lew these days that we could take Puerto Rico into the euro zone if the U.S. were willing to take Greece into the dollar union," Schauble said to Bloomberg. "He thought that was a joke."</p>
<p>Presumably Schauble was, in fact, joking, but it's worth saying this would be a terrible trade for the United States of America. Puerto Rico is both smaller than Greece (3.5 million people versus 11 million) and considerably richer ($23,678 GDP per capita versus just $18,863).</p>
<p>Nor are the debt situations remotely comparable.</p>
<p>Puerto Rico owes about $70 billion, giving it a debt-to-GDP ratio of nearly 70 percent, while Greece owes €323 billion, or about 172 percent of Greek GDP.</p>
<p>Last but by no means least, while Puerto Rico is in serious trouble from the standpoint of Puerto Rico,<em> </em>it is not by any means posing a threat to the stability of the United States of America or the dollar as a viable economic zone. Maybe the US Congress will <a href="http://www.vox.com/2015/7/7/8906515/hillary-clinton-puerto-rico-bankruptcy">let Puerto Rico default on its municipal debts</a>, or maybe it will give bondholders an unrestricted right to try to immiserate the island. Either way, many Puerto Ricans will probably continue moving to the US mainland. And either way, those Puerto Ricans who do remain on the island will nonetheless be protected by Social Security, Medicare, Medicaid, the FDIC, and other US government programs.</p>
<p>Puerto Rico is, in other words, richer than Greece, better protected on the downside, and <em>also</em> less of a problem for the rest of the dollar area. So while this was a nice try by Schauble, the USA is better off standing pat.</p>
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https://www.vox.com/2015/7/9/8922379/schauble-puerto-ricoMatthew Yglesias2015-07-08T11:30:02-04:002015-07-08T11:30:02-04:005 reasons the eurozone could be stronger without Greece
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<p>To many American Europhiles, it seems obvious that furthering European integration and unity — "the European Project," as they say — and finding a deal between Greece and its European partners are identical.</p>
<p>But things look rather different to Europeans. What I've learned over the years speaking to politicians and public officials in Brussels, Frankfurt, Berlin, Strasbourg, and Washington is that many European integrationists take a hard line on Greece in part because they think Europe would be stronger without Greece.</p>
<p>It's a risky approach. Sufficiently risky that few people articulate it publicly. And nobody wants to actively kick Greece out of the European Union. But plenty of people think that Europe should set a very high bar for Greece, and that if Greece responds to that bar by choosing Grexit the rest of the continent will be better off. Here's why.</p>
<h3>1) Greece cheated</h3>
<p>American economists commenting on the situation don't like to dwell on this point because, macroeconomically speaking, it's irrelevant. But the fact of the matter is that <a href="http://www.bloomberg.com/news/articles/2011-05-26/greece-cheated-to-join-euro-sanctions-since-were-too-soft-issing-says">Greece got into the eurozone by cheating</a>. To get in, it needed a budget deficit of less than 3 percent of GDP. Officials presented cooked books in 2000 portraying their real deficit as below 1 percent, even though they've basically never gotten below 3.</p>
<p>Having gotten in by cheating, Greece managed to avoid sanctions for breaking the EU's fiscal rules by cheating some more — <a href="http://www.spiegel.de/international/europe/greek-debt-crisis-how-goldman-sachs-helped-greece-to-mask-its-true-debt-a-676634.html">this time with the connivance of Goldman Sachs</a>.</p>
<p>From the standpoint of the current Greek government and much of the global left, this simply goes to show how absurd the volume of moralistic outrage directed at Greek profligacy is. Everyone's hands were dirty in this, from giant investment banks to the European Commission's political overseers. Nor was Greece alone in these kinds of shenanigans. France and Germany both found themselves poised to be penalized for violating deficit rules in the mid-aughts, and rather than cheat they used their clout to <a href="https://www.ecb.europa.eu/press/key/date/2005/html/sp051013.en.html">water down the rule</a>.</p>
<p>But naturally enough, the view of the French and German governments and EU staff is that they are all blameless. The problem with Greece cheating, according to people who are not Greek, is that Greece cheated.</p>
<p>The European Union is, naturally, driven by norms as well as rules. And the overwhelming consensus in European officialdom is that the Greek state repeatedly violated the relevant norms in a unique and disturbing way. The political integration of Europe is inherently a political project, and in political terms the fact that Greece got in by cheating is <em>very</em> relevant.</p>
<h3>2) Banking union is happening</h3>
<p>Part of the eurozone's problem has been the absence of a continent-wide deposit insurance system. In America, if a ton of banks in Florida fail due to unwise lending in the face of a housing bubble, a nationwide agency — the FDIC — bails out the depositors. By contrast, in Europe, the problems of Irish banks fell exclusively on Irish taxpayers, and of Greek banks on Greek taxpayers.</p>
<p>Europe is trying to fix this. But it would be easier to fix if Greece left the eurozone.</p>
<p>In September 2012, the European Commission — the EU's executive arm — issued a white paper called <a href="http://ec.europa.eu/finance/general-policy/banking-union/index_en.htm">"A Roadmap to a Banking Union,"</a> and over the past two and a half years Europe has been walking down that path. There's even an explainer on <a href="http://ec.europa.eu/information_society/newsroom/cf/fisma/item-detail.cfm?item_id=20758&newsletter_id=166&lang=en">how it is supposed to work</a>, though as is often the case with EU documents it reads a bit like a Dutch guy and a Slovenian guy sat down to write an English-language document whose intended readers are Italian. In fact, that's probably exactly what happened.</p>
<p>They key points, however, are actually pretty simple:</p>
<ul>
<li>The European Central Bank now operates as a eurozone-wide bank regulator, complete with a eurozone-wide set of regulations.</li>
<li>There is a eurozone-wide equivalent of America's FDIC called the Single Resolution Board to ensure bank deposits and handle the disposition of failed banks.</li>
<li>The SRB will obtain the funds it needs through eurozone-wide taxation of banks that operate in the eurozone. </li>
</ul>
<p>The SRB has even been given a German chair, Elke König, formerly of Germany's bank regulatory agency, so everyone knows it's serious. If you are having a very dull day, you can watch her and her fellow board members be interviewed by the SRB's communications chief in English here:</p>
<p><iframe frameborder="0" src="https://www.youtube.com/embed/i0uwq4IeghY" height="315" width="560"></iframe></p>
<p>This is all good news for the long term. But for the medium term, it means that so long as Greece is in the eurozone, the problems of Greek banks are, to an extent, everyone's problems. If Greece leaves, the shiny new system can start working without being burdened by Greek issues.</p>
<h3>3) The eurozone's newest members don't like Greece</h3>
<p>When the Greek debt crisis really became acute in 2010, the eurozone had 16 members. Today it has 19. The three new members — Estonia, Latvia, and Lithuania — joined <em>after</em> the structural failings of the project became clear. These countries are incredibly enthusiastic Europhiles (they see membership as an implicit guarantee of independence from Russia), and they really hate Greece.</p>
<p> </p>
<blockquote lang="en" class="twitter-tweet">
<p dir="ltr" lang="en">Latvian FinMin has no sympathy for <a href="https://twitter.com/hashtag/Greece?src=hash">#Greece</a> : "Our economy contracted by 20%, we cut the administration by 30%, including wages and staffs"</p>
— AnneSylvaineChassany (@ChassNews) <a href="https://twitter.com/ChassNews/status/618378086657183744">July 7, 2015</a>
</blockquote>
<p> </p>
<p>
<script charset="utf-8" src="//platform.twitter.com/widgets.js"></script>
</p>
<p>Slovakia (which joined in 2009) and Slovenia (which joined in 2008) have also been noticeably unsympathetic to the Greek position. These countries are poorer than Greece, and they feel the idea that Greece deserves special financial assistance because it borrowed a lot of money in the past is ridiculous.</p>
<p>European policymakers, naturally, are enthusiastic about countries that are enthusiastic about the European project. They see the thrifty, eager Balts as the future of Europe and profligate Greeks as the past.</p>
<h3>4) If Greece left the eurozone, the eurozone could stop talking about Greece</h3>
<p>Europe is a big place, and there are a lot of interesting policy issues that European policymakers could be talking about. There is Russian aggression against its neighbors, for example. There's demographic stagnation in Germany. There's youth unemployment in France. There's what to do about Swiss tax havens. There's trying to form a trans-Atlantic free trade zone with the United States.</p>
<p>But it's hard to focus on anything other than Greece as long as Greece's old debts are perpetually throwing the continent's financial arrangements into turmoil.</p>
<p>It's clear that if an agreement is reached, whatever the Greek government agrees to will be agreed to reluctantly. Once the moment of peril is past, it will likely try to backslide (see above: Greece cheated) until a new crisis arrives. So if Greece stays in the eurozone, it means the eurozone will keep having to focus on Greece. Getting rid of Greece means the eurozone can move on.</p>
<h3>5) Europe's emerging fiscal union needs an example</h3>
<p>Over the past few years, the European Union has set up a number of measures designed to prevent a recurrence of the 2010 debt crisis.</p>
<p>The way it is supposed to work is that a country that's hit by bad economic times and finds itself in a problematic debt situation can get financial assistance from a general European stabilization fund. In exchange, it has to agree to various budget control measures. More importantly, a country that is using the stabilization fund is eligible to benefit from a European Central Bank program called Outright Monetary Transactions (OMT) that in theory will cap borrowing costs.</p>
<p>All of this — but especially the Outright Monetary Transactions — is regarded with considerable suspicion in Germany and some other countries. They worry the program will become a pretext for the central bank to write blank checks to profligate governments.</p>
<p>The Greece situation, legally speaking, doesn't actually relate to these arrangements. But it does involve the same institutions. If Greece doesn't reach a deal with its creditors, which in turn leads the ECB to demolish Greece's banking system, which then leads Greece to quit the eurozone, that will be powerful proof that Europe is not afraid to punish malefactors — and the example of Greece will make it that much less likely that other eurozone members will let themselves fall into Greece's position in the future.</p>
<h3>Vox Video</h3>
<div data-volume-id="3285" data-analytics-placement="entry:middle" data-volume-placement="article" id="volume-placement-4670" class="volume-video" data-volume-uuid="52e4fcc8b" data-analytics-label="How the euro caused the Greek crisis | 3285" data-analytics-action="volume:view:entry:middle" data-analytics-viewport="video"></div>
https://www.vox.com/2015/7/8/8911885/greece-crisis-eurozone-better-off-grexitMatthew Yglesias