Basically any time you have only option a) and option b), you aren't trying very hard to find another option. Here's just one, off the top of my head:

C) Germany doesn't want to screw Greece, but believes that a debt cut will cause enough damage to the value of the Euro (or enough burden on the supporting nations and the IMF and/or ECB) that the entire Eurozone will suffer for the financial mismanagement of one member.

You can't look at it too personally and see that as an option, I suspect. But I find that if I can't figure something out, it helps to try to imagine how someone else can be thinking of themselves and come to a conclusion that hurts me, even though they have no desire to cause harm.

hmm fair enough.
Might be. Since we don't have the figures we can't really know.

But ok, i see. Germany wants to take the risk of doing that so more Greek people can put their trust in radical parties (far right wing Golden Dawn, far left wing Communist party) that desire Greece out of the Eurozone and Europe as long as they have power to do so.

Cause now Tsipras' party will fall, everyone hates ND, PASOK. People don't like Potami for their leader. So next election Golden Dawn might have 20% , communists 11% etc. Fucking chaos!

Good job!!

I would have said the same thing 10 years ago about fascist dictators.. but there is always one country that has to be the exception to the rule it seems. Anyhow, I was just thinking a conspiracy theory aloud, when it comes down to it, in some way I hope EU would never allow this. But my faith erodes ever so slowly... also.. EU applies Realpolitik. It does not act on moral or ethical considerations, ever. Look at the refugee situation and despair for that is the face of the EU when it puts it's own members interests before ethical considerations. And even before certain members own considerations.

Remember whenever we talk about Greece and another week went by, another 20000 refugees landed on EU shores. Refugees that are considered criminals if they even so much as cross into another nation than the one they landed in. The EU, in true realpolitik fashion, has created a fortress in core Europe whose sole goal is to avoid refugees staying here for too long (or even getting here -> Frontex).

Imo, this is "Realpolitik" as it lives and breaths.. it's definitely worth to google the english wiki for that. It seems Germany decided that a potential Grexit / default does less damage than a given debt cut and acts upon it. This means the higher government did the math, by the way.. and projected all possible outcomes including political stuff (especially France is another economic problem waiting to happen).

So this means the decision isn't even about Greece anymore, at this point the considerations are for secondary and tertiary effects, well beyond Greece.

I know that is little consolation considering how badly the Greek people are suffering. But Realpolitik is not personal.... Greece just picked the worst possible time to default, in between Refugees and UK referendum...

German leaders already knew for ages that the greek debt was not sustainable (if we go by the merkel quote in wikileaks), and they have only openly admitted it now. So they agree with the IMF on the statement of unsustainability.

They don't agree on what to do with it. Firstly, a debt is, more than anything else, a tool. As long as you maintain a country or an individual indebted, he is yours (that was a core principle of post-independance neocolonialism). Secondly, what matter to Schäuble and Merkel are the creditors (much much much more than the whole "evil" greek population), and those don't want the debt's value touched. Thirdly, interests make a debt is a source of income. Don't forget that between 2010 and 2014, the loan to greece has brought 729 million € to the french state, and between 2010 and 2013 the ECB got 2 billions per year for it.

(Technically, since 2013, these interests are supposed to be given back to Greece, as profiting from his collapse seems a bit too awkward - and so for one year, Greece did get that money, 2 or 3 billions. But since 2014, this is blocked again as a pressure tool.)

The point is : admitting that a debt is unsustainable, and giving up on it, are two very different things. A debt has many other functions than "being paid back". Think of all the years where european politicians have used it as a moral argument for pressuring Greece : "obey because you are awful people because you don't want to pay your debt back", while knowing that paying this debt back was not feasible. Think of the role these discourses play in the international images of greeks, and the anti-greek support it can leverage. All this time, the debt unsustainability was a blatant open secret, publicly pointed out by a quantity of observers dismissed as "biased" (that is : not fanatically neoliberal), and politically ignored. Do you think that this fact being now official will change discourses and attitudes that much ?

That's a different situation. One thing is an elected government changing parts of the constitution and going one step towards dictatorship. Dialogue is the right choice here. The other thing is a military coup, where some random General gets rid of the elected government, ignores the constitution and does whatever he likes. There's no place for dialogue. In one situation you can try to tell your partner that democracy is the right way. In the other situation democracy's already dead and burried. One thing is hardly compatible with european values. The other thing is a crime.

Yeah, exactly some of my thoughts Telika.

Anyway... let's see what tomorrow will bring.

[spoiler]
Btw... in a fully "corrupted blackmailing Greek government" universe we could force all the illegal immigrants that have arrived here (over the last 6 years) to pay the government $5000 to transport them safely to Germany.
$5000 is what they paid to get from their countries to Greece.
If 1.000.000 immigrants do that (the number is not extreme btw, we might have received more) we'll be able to pay this new memorandum!

Problem solved.

Of course Germany will send them back once they discover this. Do this 3-4 times and you'll actually be able to repay this debt fully. On the expense of these poor people that came here to find a better future. But who cares? Right? I mean "as long as we get our money back"... /sarcasm off [/spoiler]

Funny and smart :) kudos

Yes, repetition is powerful. But I adjust my rhetoric methods to the audience. Case in point, I replied to you without sarc.

Also, what am I supposed to do in the face of misunderstanding or flat out strawmanning of my arguments? I sometimes wonder, it feels like a religious inquisition court, or a party purity committee, to be more in context. Don't take me wrong, if it was my life and family at risk I might confess, hope for the gulag instead of an execution. But even then, I'd suspect I was being Starked a la GoT... no mercy to traitors.

Billions in government debts have been written off in the past. This is not a new concept. The IMF itself, in internal papers, has said that much or most of the Greek debts are likely uncollectable. I frankly find it hard to believe that you aren't aware of the fact that bad debts get written off all the time.

Now it's true it hasn't happened often with so called "developed" countries, but it has happened with developing and "third world" countries often. Do I really need to provide links? Debt forgiveness is a known procedure with governments for decades. I imagine there's probably even a wiki on the subject.

ADDIED: Not for nothing, but the internal IMF documents showing that they know the debts are bad combined with the refusal to even consider forgiving some of it is proof positive this is NOT about a "financial crisis." This is about a political crisis, and it's about regime change in Greece. Because if the Greek people can elect a "left" government and see relief, then this would likely be repeated in other peripheral EU countries (Spain and Italy come to mind first) and that simply CANNOT BE TOLERATED by the right wing governments of the world today. Syriza hasn't ever proposed anything even remotely radically left, and 3 decades ago their politics would've been considered moderately left of center, but after the rightward shift over the past 30 years, even such moderate left positions are considered radical and must be dealt with. That's what this crisis is about now. And it's not going to end until the current government is out of power. Then when the Greek people "come to their senses" and elect a more appropriate government (i.e. more right wing) then some debts will be forgiven (because they HAVE TO BE, they're unsustainable at current levels) and some moderate progress will be made. But for now, the reason for the burning bridges approach from the troika is because this is now a political crisis and it must be dealt with severely. Or the next thing you know leftist governments will start winning all over Europe.

I don't think you understand how serious the situation really is ;) If Troika were already negotiating there'd be no problem. But currently the EU Zone heads haven't even agreed whether to give Greece a 3rd chance for negotiations. And even if they agree, this has to pass 18 national government votes first. Even if emergency is declared, this has to pass 85% of votes in the EU Zone.

THEN Troika will negotiate, and the result has to, again, pass all 18 national Euro zone governments votes, or 85%. Remember that when you see Greek banks being closed for 11 days. Currently they haven't even agreed whether to agree with each other or not. On Sunday is the dead-line to agree whether to disagree or not.

So yes, this is definitely a Realpolitik issue. And Greece is caught in the middle of very powerful blocs, 1 who favor debt cut, and 1 who think this would kill the Euro zone by destabilizing other nations as you correctly write...

It's only partially about Greece at this point, a typical sign of Realpolitik at work.

Now if, lifting all ambiguity on their intents, these rotting assholes find a way to expel Greece (or overthrow its government) despite its "omg even harsher than demanded" concessions, things will really start to get hilarious. The hypocritical falshood of both the debt excuse ("pay your unsustainable debt !") and the measures conditionality ("agree with our impossible conditions or else we kick you out, hmm wait you... were not supposed to agree with them") are getting unmanageably blatant.

At this point, the whole EU thing should be shattered, that's all. The sooner the better.

As I said in my previous post, an end to austerity was never an option. The Greeks could just have well voted that they didn't want the sun to rise tomorrow. Greece is out of money, and without the ability to secure further loans will be facing a brand of austerity that will make the current proposals look like a happy memory. This is the case even if Greece declares that it will be making no more payments on any of its current loans. It's not just a matter of them wanting the loans to be written off, it's wanting them to be written off, followed up immediately by taking out new loans. Why would any creditor consider that a reasonable course of action?

The fundamental problem was that Greece as a country has been living beyond its means (what its GDP allows for), and doing so by running constant deficits and financing those with loans. This has been going on for two decades; the crash in 2009 just made it impossible to hide the situation anymore (before then the Greek government was basically cooking the books so it could continue to secure more loans). And the Greek people aren't innocent in this either. They've basically thrown a shit-fit (protests, riots, burning cars, etc) every time anyone in government tried to cut back on spending or increase income (public sector wages, pensions, tax increases, union protections that kept salaries inflated, etc). Not to mention that tax evasion is pretty much a national pass-time in Greece. Oh, and also electing politicians who were making obvious unrealistic promises (Syriza is a prime example of this).

Also, keep in mind that one debt write-off/write-down already occurred. As part of the second bailout package a significant portion of Greek debts were written off, and for the remaining debt the repayment timeline was extended and the interest rates were lowered. Also, although the period of austerity from 2009-2014 was rough for both the Greek people and the Greek economy (GDP contracted by around 25%), it actually brought the Greek government spending under control (they ran a surplus in 2013 and 2014, sans debt payments), and were looking like they were close to regaining access to private equity markets (meaning people other than the troika would be willing to loan them money). It was also looking like unemployment was starting to turn around and that the contraction of the economy and stopped.

However, Syriza then got elected on their anti-austerity platform and stopped the austerity measures that the Greek government had previously agreed to in order to secure the bailout program. As a result of this further bailout funds were suspended, leading to the current liquidity crisis that Greece is facing. Basically the current Greek government, with the support of the majority of the Greek people, refused to honor the agreements they'd made to get the previous debt write-off and bailout, and overall have also refused to behave responsibly with respect to the country's finances. Given this, it should be obvious why there's no appetite among the creditors for further debt write-offs, and why many of them are quite resistant to loan more money to Greece. Also, keep in mind that all this money going to Greece is pretty much coming out of the pockets of the citizens of other EU countries (either directly through their taxes, or by devaluation of the Euro). The Greek people may want austerity to end and their debts to be written off, but neither of those decisions are theirs to make, nor do their wishes trump the wishes of the rest of the EU citizens who are being asked to pay for this problem of Greece's making.

Actually I was genuinely questioning what you were saying.

From you:

You are projecting what you believe will be the future, and right now there is certainly a direction towards less safety nets in Europe. The problem is your statement presents it as an inevitability. Which then leads to my question of whether you are promoting apathy and individualism - you see the direction coming as inevitable, you've become a fatalist etc.

If there's a bias it seems to be coming from you.

Cheers.

I'm aware. I was going to reply again but DarrkPhoenix has covered everything I would have said. I guess right now you're more optimistic than I am about bank willingness to loan money to a serial defaulter. Time will tell, I guess; I'm just a computer nerd. International economics are sometimes interesting but never my specialty.

They want austerity to not be increased further (they are already crushed by it) and the debt has to be cut off (it can not be paid, you are not "refusing" to give me 250 liters of your blood if your body only contains 5).

The austerity's humanitarian cost was leading to a 1% budget surplus (yay, number that counts), the country was already being bled dry for that. Increasing that human cost, in order to arbitrarily push the surplus to a 2% the next year, 3% the next year (because because) is a bit obscene. But again, who cares about feasability and human costs. Give people abroad a feel that their comfort is at risk (the Greek debt is peanuts on european scales), and presto, insta-lynchmob.

But this "greeks are just leeches refusing any discomfort and refusing to pay their dues" narrative will come at a cost. Locally, the risk of increased misery and political destabilization (I'm not mentionning the direct impact on people's lives because who gives a shit about greek human beings). But abroad, once people will have swallowed that greeks have been punished for inane caprices, what will happen when they'll ask to merely slow the neoliberal bulldozer ? "Hey as we are not like these dirty greeks at all, we thought we could just--" and wham. Same crackdown, same public discourses by the EU authorities.

Being unclear about where the line is drawn (lying about the nature of greek revendications and their motives) may lead other people to assume that their own "reasonable" protests would be tolerated "in contrast". This may defeat the purpose of Greece's public punishment.