but the vote gave them an extra bargaining chip. The EU doesn't want Greece leading a parade of poorer nations out of the EU and will likely loosen the screws a bit.

The deal they signed is WORSE then the one rejected in the referendum.

The referendum was imaginary, public relations leverage. It wasn't real leverage.

Real leverage was Greece's banks not being able to function without outside assistance.

And, real leverage was the Eurozone giving Greece one chance--one--to give its best offer to convince them that it as serious. Or face expulsion from the Eurozone.

When Greece broke off negotiations, it substituted negotiations with the Troika with negotiations against itself--they had to propose something that would induce the other side to accept it, knowing there wouldn't be a counteroffer if it were too low.

They will get some debt relief in terms of restructuring, but they would have gotten that anyways, and they certainly would have found more sympathetic parties across the table in other Eurozone countries.

This may be a totally ignorant question. I have only the most vague idea of what is happening with Greece, and my concepts tend to boil down to "austerity is bad", "Germany wants Greece to engage in austerity to pay back massive bail out loans", "Greece had a tax evasion problem", etc.

Today I heard a complaint that one of the austerity measures is a VAT tax that might discourage tourism in Greece. All of Europe is basically a tourist Disneyland. When I did the Eurail thing during college, I had very little interest in Germany and did not learn German in college - yet I ended up visiting an astounding amount of German tourist trap spots that were essentially set in my way via convenient youth hostels and the centrality of that country to the Eurail system. I probably visited more German cities than anywhere else though my primary areas of interest were France and Italy, where I was learning to speak the languages of those countries!

Anyway, I just had a suspicious thought. What if behind a lot of seeming "austerity negotiations" is intra-European competition for tourist dollars? If more expensive VAT for Greece means tourism is discourage there, then tourists go to other places in Europe and spend their money in other countries. Because of the way the Eurail system works, that is often Germany.

By the way, back when I was doing my grand tour of Europe, it was hard to get to Greece via train. Therefore, I didn't go. To this day, I regret that. The friend I was traveling with chose to go to Greece why I chose, on the same limited timetable, to go North to Prague. If this is still true, Greece already gets cheated of tourist dollars just by the way the transportation system works while Germany gets more tourist dollars that in it deserves just because it sits at the center of the transportation web. I wonder if anyone ever thinks about that.

This same calculation of "ability to make money off of tourist dollars" should go into assess the situations of Spain and Portugal. Portugal, especially, is off the beaten track as far as the train system is concerned. At least it was when I was there. I didn't visit Portugal because, like Greece, it would have required a week round-trip to do so. Another issue was representation of crime in particular countries/cities in tourist guides. As a single female traveler, I paid a lot of attention to these. I remember Spain and Southern Italy had particularly bad reputations during my trip, so I missed out on Seville, Alhambra, and Pompeii.

Anyway, it seems to me the people of Greece have already been living under austerity for a long time, and that obviously isn't working to fund the Greek government. They probably need to go after and publicly punish a few of their major tax evaders. But the person on the street in Germany may need to be educated, too. Is their country wealthy because they've KEPT places like Greece poor by diverting/strangling their tourist trade?

to other places in Europe than the other way around.

France gets almost three times as many foreign tourists, Spain gets about twice as many.

The VAT is a pretty simple thing--Greece needs revenue. And it's shown a very, very bad record in collecting income taxes. Lots of promises to improve its record in that regard, but promises don't bring in revenue.

VAT in Greece could cost German tourists who go there more than it would benefit German tourism operators.

Also, Greece and Germany aren't particularly close to one another, and the appeal for each is so different that I don't think it's much of a competition thing.

The Eurail system would go through Germany nonetheless. I can see how France might get more tourists: their situation is the same as Germany: they are central to the train system. However, I'm really surprised about Spain. Perhaps it's because it's cheaper to take a vacation there. When I was there tourism was low because of the crime.

If tourists are discouraged from going to Greece, they can't collect VAT to help their economic problems. That's the point that was made on the radio this morning.

the US. Lots of beach attractions plus the cultural sites in Barcelona, Madrid, Andalucía.

Spain would figure to get the tourists that decide Greece is too expensive, in all likelihood.

A big deal was that Greece was not taxing anything in the islands where most tourists go.

IMHO the US and various State government is verging on the same thing: lowering taxes to boost the "oppression of big government" and revive local economies. But meanwhile Federal, State, and Local governments lose funding for infrastructure. Our highways go to pot. Our education system gets defunded. Community agencies and social programs are dismantled. Money that was used to even out the economic fortunes of the country is ultimately divested, leaving local sharks free to gouge and speculate and the local indigent poor falling through the cracks.

But because people with certain kinds of businesses aren't burdened by taxes or are enjoying the ability to speculate on real estate thanks to eternal low credit (Yellen's "quantitative easing&quot , the US economy is always "reviving" and employment is always "recovering".

We just didn't have to take out a big loan like Greece to survive because our government robbed the savings of small taxpayers by taking a loan from the Social Security Trust Fund that it can never pay back (unless it robs the small taxpayers once again).

I'll go with (3,4,5).

(1) may not be entirely accurate. It depends on the details. In the case of a sloppy, inefficient, corrupt economy, austerity was supposed to eliminate a lot of inefficiencies. It didn't. Instead, they cut spending while not doing a whole lot to clean up the corruption. Greece had "austerity" implemented, but it was one of many possible austerities and not the austerity that was expected. Hence the frustration now on the part of the EU.

Would it have turned out better or worse had the measures been implemented fully and in a timely manner? I have no idea. Most economic predictions are judged very good if they're no more than 20% off.

(2) We have precisely that in the US, and the assumption is that there's no provision for wiggle room or negotiations. Now it's getting close to being competely involuntary, but that's not how they got to this point.

Note also that what you're describing is precisely Texas, California, or other states that have had large budget shortfalls. They have to cut expenses or push up revenues to maintain a balanced budget--that's the essence of austerity. The only saving grace is that there's somebody to help bail them out in some ways and manage some of the macroeconomics (notice, though, that the states then lose control over their territory). But take one of the Carolinas, for instance: They had to borrow money, a lot of it, to keep their unemployment compensation system liquid. In true EU fashion, the US government didn't write off the debt but required it to be repaid.

Even the freedom to print money doesn't always work. Take Venezuela. If the real bane of all economic existence was austerity, you'd think Venezuela would be rolling in prosperity.

but it's not a way to live everyday life

Not sure why you think the US has involuntary austerity--the US has no trouble finding people to purchase bonds, and it can print its own money.

If anything, the US should be selling more bonds to finance infrastructure.

California has managed to do quite well recently--overcoming shortfalls by growing the economy

Illinois, on the other hand . . .

Venezuela is a basket case, at least Greece has the excuse of having no resources. But, petro states wind up being addicted to the oil income--"why should our people have to produce anything, we have oil"--doesn't change under rightwing or leftwing governments