I’ve been somewhat glued to my phone and to twitter since the meetings first started on Saturday. Did they begin on Saturday? It’s all beginning to blur.

Fun parts:

  1. Wolfgang Schäuble embarrassing himself by apparently allowing the talks to get “violent”.
  2. Wolfgang Schäuble having to remind people that he’s not stupid.

Less fun parts:

  1. The Finns suddenly emerging as the people that want to force a Grexit.
  2. That awkward “leaked” document that suggested Greece be put in the naughty corner without Euros for five years. And, as they say, there is nothing more permanent than “temporary measures”.

The main conclusion: do not embarrass ze Germans. Because they will thoroughly humiliate you though.

In truth, this whole “No” referendum is really looking a lot like the last time that Greece said “Oxi” to the powers of Europe: one brief moment of national pride, followed by occupation.

Anyway, I’m going to try something new and attempt to write this as the news of the apparently unanimous outcome is breaking.

This tweet just came out from Mr Tusk:

Screen Shot 2015-07-13 at 9.11.25 AM


What they mean by agreement is: “Agreement that we will do these things if these other things are done by the Greek Parliament by Wednesday and also if these original things are ratified by 7 national parliaments, including that of Greece.”

The big things mentioned in the press briefing (and by the Eurogroup leaders as they left just now):

  1. Mr Tusk called it an “Agreekment”. Which was kind of funny but probably offensive and we might just have to forgive him because of all the no sleep.
  2. The 17 hours of meeting, and the 14 hours that preceded that, were mentioned more than once. It’s clear that everyone is fatigued.
  3. The Agreekment still needs to be ratified by Greece and 6 other national parliaments.
  4. Greece has a lot of legislation to pass by Wednesday – but according to Angela, that legislation has already been drafted, so “trust can be regained”.
  5. Syriza will have to repeal the anti-austerity legislation that it passed in February #destroythem
  6. There is talk of some bridge-financing (and ESM financing) – but that will have to be settled later today by the Eurogroup finance ministers.
  7. Tsipras talked about a growth plan and a debt restructuring having been achieved, and said that those who had not paid in the crisis would now pay (presumably the oligarchs?). But my Greek isn’t quite up to scratch – so don’t take my almost-certainly-mistranslated-word for it.
  8. Angela did confirm some of that: saying that Angela the Eurogroup is willing to grant longer maturities and a grace period if all the conditions are met (which is an effective debt restructuring, even if it’s not an out-and-out haircut).
  9. That €50 billion fund that so enraged everyone last night is going to be set up to monetise Greek assets; and it’s going to be managed by experts, who will manage it from within Greece.
  10. The fact that it’s going to be managed from Greece is a win, because allegedly Mr Schäuble wanted to manage it from Luxembourg, allegedly under the auspices of a company chaired by Mr Schäuble, allegedly. This screen capture from the Guardian’s live feed:

    Search through the livefeed for this here.
    Search through the livefeed for this here.
  11. Mr Juncker is entirely confident that the Greek people haven’t been humiliated, and that the relevant legislation can be passed.

Judging by the reactions on Twitter (I mean, #ThisIsACoup is still trending), the big issue is going to be that privatisation fund.

The €50 Billion Fund

Frankly, I think that the privatisation fund is one of the best ideas to come out of this whole confrontation.

Perhaps that’s insensitive. But consider:

  • The biggest problem with the privatisation program was timing – it’s a terrible idea to sell national assets in a depression.
  • Why? Because in a depression, the future cash flows of any enterprise are either negative, or approaching it rapidly, because the economy is shrinking.
  • So if you wanted to sell those assets, the traditional valuations methods would strongly imply that you’d almost have to pay someone to take those assets off your hands.
  • Ideally, what you want to do is monetise those assets by borrowing against them. That way, you can bring the house back in order, and when you’re on a pathway to growth, you then can sell those assets for reasonable value in order to settle that debt.
  • To say nothing of the fact that the really successful State-Owned Enterprise models tend to involve being “run by technocrats” rather than “run by persons of political patronage”…

I guess it’s all really in the implementation – and no one knows the details. But as ideas go, I like it.

But having said that: this whole conversation will be moot if the Greek parliament decides that it can’t stomach all the dictation from the Eurogroup.

In my mind, I think that the capitulation here is not so terrible in economic terms. Sure, there’s not enough debt restructuring, and Tsipras has lost his face. But actual Greek reforms in those areas where it is being demanded (labour markets, product markets, etc) are good things.

And I find myself back where I was two weeks ago. The point of Grexit should be when Greece has followed through its reform process, and the Eurogroup has failed to respond to that success with more permanent debt relief.

But that’s all in theory. In practice…we’re asking politicians to undertake their own pyrrhic victories. Their close-to-unanimous decision-making on the initial proposal on Friday gives me hope – but I’m not exactly overwhelmed by it.

We’ll have to see.

Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.