Courtesy of Mish.
On Friday, the German Bundestag Backed the Greek Bailout Extension. Ahead of the vote, many commented that Greece collapsed.
It’s not all that simple as I have explained.
The likely explanation for the alleged collapse of Syriza is Greece did not have a primary account surplus. Had it left now, it would have been forced off the euro, violating a campaign promise of Syriza.
Caving in required temporary caving in of other campaign promises.
Both Sides Got Something
The four-month extension gives Greece a better chance to prepare for default while allowing Greece to stay on the euro. The extension also give the ECB four more months to prepare for Grexit or default.
Properly analyzed, both sides got something. Isn’t that what usually happens in complex negotiations?
Third Bailout Needed
Meanwhile, it’s pretty clear that Greece needs yet another bailout.
I wrote about the bailout issues and the primary surplus issues on February 11 in Third Greek Bailout? Another €53.8 Billion Needed? Primary Account Surplus Revisited.
“Real” Negotiations Begin