Imagine Greece as a homeowner, let's call him Alex. He's just received an agreement in principle to re-mortgage his property.
We are reminded of this as it relates to the Troika's exercise of its power over Greece. pic.twitter.com/W8jgpO1hjI— IDEAeconomics (@IDEAeconomics) August 8, 2015
After years of struggling to re-pay his mortgage and maintain the property, Alex has finally managed to convince the mortgage company that he'll stop spending money on going out and instead, fix the roof in return for an agreement 'in principle' from the lender to stamp up some more cash.
Now Alex just has to show the lender all of his bank statements and prove on paper that he will make cuts to his monthly budget with a sincere promise that the roof will be fixed over the next three years. After which Alex will no-doubt have to re-mortgage again.
Alex is 'Greece' — the mortgage company is the 'Troika', and the drama continues.
The very government elected by the people to end austerity, public sector job cuts and tax rises has reneged on its promises to keep the Troika happy.
Greek Prime Minister Alexis Tsipras held last minute telephone talks with German Chancellor Angela Merkel, French President Francois Hollande, European Commission President Jean-Claude Juncker and European Parliament President Martin Schulz to make sure the deal was struck "in principle" by Tuesday.
The Syriza government must now pass the reforms through parliament by Friday to secure the $94 billion (€86bn) bailout package that the Budenstag says will only last for three years.
Has Alexis Tsipras Fixed It Then?
Tsipras has secured the technicality of the bailout — keeping to his side of the bargain and agreeing to all of the Troika's demands. But a political assessment of the deal must now be made.
— Alex Andreou (@sturdyAlex) August 10, 2015
So, Greece, here's the plan. Raise your taxes and take on even more debt. It's been working a treat so far, no?— Daniel Hannan (@DanHannanMEP) August 11, 2015
Speaking to German TV just before the third bailout was approved, deputy finance minister Jens Spahn said:
"It is about a three-year program… this has to be debated thoroughly. There appears to be more willingness from their [the Greek] side and the talks seem to be more constructive. But it's also important to note that this has to be the case for the next three years and not for three days."
Germany, the largest single contributor to Greece's two previous bailouts has stressed the importance of the bailout program is not just seen as a sticking plaster — but a proper solution for the debt-laden country.
But Tsipras will be keen for the technicalities of the bailout "in principle" agreement to be ironed out as soon as possible. Greece needs three billion euros to pay off the European Central Bank by August 20 — and it needs the money from the bailout package to honor that repayment.
Drama Goes On, However
But the drama is not quite over — the Syriza party are still in the wings with some members poised to voice their opposition to the deal. Since 2010 successive governments have swapped austerity measures for money, relying on $263 billion (€240bn) of international bailout cash in the last five years.
C. Goodhart endorses the idea central to our restructuring proposal to the troika http://t.co/ReKfxTNlsY Will creditors become partners?— Yanis Varoufakis (@yanisvaroufakis) August 6, 2015
And for more money — Greece must now stick to a strict timetable to, amongst other reforms, change the pension system, privatize the electricity network, reform Sunday trading rules and overhaul pharmacy ownership.
As for Alex the homeowner, he's about to become even poorer, forced to operate on a tighter budget for food, heating and medicines, just to pay for that roof.
The roof may well remain over his head — but life inside the house is set to get harder.