Föhrenbergkreis Finanzwirtschaft

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High Noon In Davos: Tsipras vs. Schäuble

Posted by hkarner - 22. Januar 2016

Friday, January 22, 2016, Observing GreeceKastner

Seldom have I witnessed such a discrepancy between what media reported and what actually happened. I watched the entire panel discussion yesterday in Davos on live stream. Never would I have thought what kind of a High-Noon-Event the media would make out of it.

Die Welt reported that Tsipras had made himself a laughing stock. So much so that, immediately after the discussion, yields on Greek bonds jumped high. On the other hand, the Greek blog KeepTalkingGreece reported that Schäuble had called Tsipras stupid. What had actually happened?

At one point, Tsipras said that „we not only have to become more competitive, we also have to become more productive. We must not only look at labor costs“. According to Die Welt, die audience was in shock and could only shake heads. Did Tsipras not even understand the difference between labor costs and unit labor costs? Did he not even understand that becoming more productive is a precondition for becoming more competitive?

I can literally picture how members in the audience, shocked by Tsipras‘ statement, immediately texted their brokers to sell Greek government bonds because if the Prime Minister is confused about unit labor costs, the country will have to go down the drain.

And Schäuble? Did he really call Tsipras „stupid„? Well, my impression was that Schäuble had decided to show his charming side on the panel. Early on in the discussion, he made comments like „as the Greek Prime Minister said“ or „I agree with the Greek Prime Minister“. This, of course, was not in relation to Greek finances but to the refugee problem, instead. As regards Greek finances, one would have had to be very naive to expect that Tsipras & Schäuble would suddenly fully agree. But as things go: Bill Clinton still gets praised for coining the phrase „It’s the economy, stupid!“ but when Schäuble says „It’s the implementation, stupid!“, some people see it as an offense instead of a reference to Bill Clinton’s slogan.

Overall, I thought Tsipras handled himself well and Schäuble was far from his aggressive potential. In fact, I would give Tsipras credit for the best line in the entire discussion: Schäuble explained that any change to the existing agreement would require him to go back to the Bundestag and seek approval. This, he said, would be like „walking into a room full of dynamite carrying a burning candle“. Tsipras’s response was: „I do not recommend carrying a burning candle into a room full of dynamite. Instead, we should first remove the dynamite and light the candle thereafter!“


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