Greece and Europe have reached a deal. The goal is keeping Greece in the currency union, but it's unclear whether the plan will really do what it's supposed to do -- even in the short term, and even if the agreement is ratified, which it might not be.
The Greek banks are nearly out of cash, and confidence is in short supply among the Greek people. The deal agreed to Monday morning will do little to restore that confidence, since it will likely further dampen the Greek economy in general. To prevent Greeks from making a run on the banks with the hope of getting their deposits out, the limits on withdrawals at banks imposed last month might have to remain in place for "a long time," as Dan McCrum writes in The Financial Times.
Technically, Greeks are still using the same euros they did before, but those euros mean something different for the foreseeable future. Since you can't withdraw them from Greek banks and take them to other countries -- or even use them to make purchases online -- they don't really represent a common currency, shared across Europe. The euro is failing in its basic purpose of facilitating trade across Greece's borders. There are euros, and then there are Greek euros.
Alexis Tsipras, the Greek prime minister, told reporters the agreement meant the idea that Greece might leave the euro was "a thing of the past." In one sense, though, Greece is already out the door.
What's in Wonkbook: 1) Greek debt 2) Clinton's speech on the economy 3) A deal with Iran could be announced Monday, and more
1. Top story: Greek prime minister acquiesces
Greece must accept continued austerity to stay in the euro. Prime Minister Alexis Tsipras "agreed to sequestrate €50bn of Greek assets — for privatisation, bank recapitalisation and debt repayment — and put them into a special Athens-based fund. However, Greek officials warned that such violations of Greek sovereignty and democracy would be impossible to pass through a restive Greek parliament. ... Mr Tsipras has promised to pass tough new reform laws, including on tax and pensions, by Wednesday and prepare further rapid reforms, such as labour market liberalisation, opening up closed professions, deregulating Sunday trading and reinforcing the financial sector. In a particularly humbling move, the government has to reverse some of the extra spending measures it introduced earlier this year, when it trumpeted its ambitions to end five years of EU-imposed austerity." Stefan Wagstyl, Alex Barker, Anne-Sylvanie Chassany and Duncan Robinson in The Financial Times.
Tsipras could lose his job. "Successful passage, however, would not a guarantee that Greece would be saved. Rather, it would merely open the door to a final agreement later this week for a three-year bailout – Athens’ third in five years -- worth as much as $96 billion and carrying far more onerous conditions than a deal rejected in a Greek referendum on July 5th. ... The result was particularly bittersweet for Greek Prime Minister Tsipras, a leftist maverick who over the course of the last two weeks went from defiance to near-total capitulation. ... It remained unclear if Tsipras could comply with creditor demands to win the passage of sweeping measures by Wednesday without putting down an insurrection within his party, being forced to forge a new unity government, call for new elections or even resign." Anthony Faiola and Ylan Q. Mui in The Washington Post.
EL-ERIAN: Tsipras is a political genius, though. "When an impressive electoral victory carried him to office in January, he inherited a horrid economic and financial situation. He initially struggled to gain control, and relations with creditors collapsed in an acrimonious mess. But as Greece teetered on the edge of an economic and institutional abyss, he repeatedly caught everyone off guard by taking charge of a narrative that was slipping away both at home and abroad. ... Through it all, Tsipras obtained the support of other Greek political parties, strengthening his bargaining position both at home and abroad. In addition, he is now drawing some support from other peripheral European countries, which had been hostile to the idea that Greece could receive preferential treatment within the euro zone. The net result is that Tsipras may be close to delivering a policy proposal that could be approved by the Greek Parliament and prove acceptable to European creditors and the International Monetary Fund." Bloomberg View.
O'BRIEN: Germany tried to kick Greece out of the euro. "Under the plan, the only way Germany would let Greece stay in the euro now is if it sells 50 billion euros of 'very valuable Greek assets,' allows international observers to monitor its bailout, and puts automatic spending cuts in place in case it misses its deficit targets. ... Sure, selling assets would lower Greece's debt today, but it would make the rest of Greece's debt harder to pay back tomorrow—which, according to the International Monetary Fund, is already unpayable. It's the kind of thing you ask for if you want Athens to say no." The Washington Post.
MÜNCHAU: Greece's creditors have destroyed the European project. "They have destroyed the eurozone as we know it and demolished the idea of a monetary union as a step towards a democratic political union. ... They demoted the eurozone into a toxic fixed exchange-rate system, with a shared single currency, run in the interests of Germany, held together by the threat of absolute destitution for those who challenge the prevailing order. The best thing that can be said of the weekend is the brutal honesty of those perpetrating this regime change. ... The fact that a formal Grexit may have been avoided for the moment is immaterial. Grexit will be back on the table when you have the slightest political accident — and there are still many things that could go wrong, both in Greece and in other eurozone parliaments. Any other country that in future might challenge German economic orthodoxy will face similar problems." The Financial Times.
2. Clinton's speech on the economy
Hillary Rodham Clinton will give a big speech on economic policy Monday. "Clinton will argue that ensuring middle-class wages rise steadily along with executive salaries and company profits is the defining economic challenge of our time, her campaign said. With one eye on the growing support for socialist Vermont Senator Bernie Sanders, who is also seeking the Democratic nomination, Clinton will lay out her economic vision in the address at The New School university in Manhattan's Greenwich Village at 10 a.m. EDT." Alistair Bell for Reuters.
Chart of the day: One of Clinton's goals is to enable more women to work. The rate of participation among women in the labor force has declined in the past few years after nearly doubling since the Second World War. The Washington Post.
She'll talk about the capital gains tax. "Presidential contender Hillary Clinton will pledge to 'reform' capital gains taxation in coming weeks as part of her plan to fight an excessive focus on quick profits in capital markets... Such a pledge would appear to be a shift from her position when she last campaigned for the party's nomination in 2008. In a primary debate that year, she stood by legislation signed by her husband, Bill Clinton, in 1997 when he was president. ... In 2012, the top capital gains taxation rate was raised back up to 20 percent for the wealthiest earners. For a period in the 1970s, the maximum taxation rate for long-term capital gains was almost 40 percent." Luciana Lopez for Reuters.
On Tuesday, she'll meet with Democrats in Congress. "She's done stump speeches, and small intimate meetings to sway likely voters. Now Hillary Clinton is set to make her 2016 candidate debut on the Hill. Six years after leaving her Senate seat, Clinton will arrive at the Capitol on Tuesday as the frontrunner for the Democratic presidential nomination, and she already has many party lawmakers on board." Rachel Roubein in National Journal.
DIONNE: As her husband did, Clinton is betting on the economy. "The coming week could mark the beginning of a genuinely substantive debate between Republicans and Democrats over how to define the nation’s economic problems and relieve its economic anxieties. ... Her package includes new benefits for individuals (family leave, child care, more affordable access to college) and new incentives to encourage companies to think long term, not short term, while also improving rewards to their workers. Other incentives will promote profit-sharing, and her adviser said that she will, over time, make proposals on executive compensation along the lines of a bill introduced by Rep. Chris Van Hollen (D-Md.). It would give chief executives less favorable tax treatment for their bonus packages unless they offered wage hikes to their workers matching increases in productivity and the cost of living. Clinton’s ideas reflect a wide center-left consensus on behalf of bottom-up or, as many progressives call it, 'middle-out' economics.' " The Washington Post.
TANKERSLEY: The debate among Democrats is between growth and redistribution. "There are very few unspoken rules among major-party candidates for president, and Bernie Sanders is breaking one of them. He’s saying that America’s leaders shouldn’t worry so much about economic growth if that growth serves to enrich only the wealthiest Americans. ... Sanders’s position inverts decades of orthodoxy among liberal and conservative candidates alike, by prizing redistribution above all else. It taps into the mounting frustration in America, particularly among more liberal voters, with the widening gap between the rich and everyone else. ... Clinton will unveil the broad strokes of her economic vision Monday in a speech in New York. Previewing the speech, aides say she is also seeking to push economic growth whose benefits are broadly shared. Yet Clinton is not likely to say that fighting inequality requires a trade-off with growth." The Washington Post.
3. In case you missed it
Diplomats could announce a deal with Iran on its nuclear program Monday. "Negotiators are on the threshold of finalizing a historic nuclear deal with Iran, diplomats said Sunday as they tried to reach consensus on a few outstanding issues that have caused the talks to drag on past one deadline after another. ... Political figures in the Middle East, Europe and Washington appeared to be preparing for an agreement that would restrict Iran’s nuclear program for more than a decade, lift international sanctions that have battered its economy and potentially alter the way Iran interacts with the rest of the world." Carol Morello in The Washington Post.
Scott Walker is running for president. "Often labeled by Democrats as America's most divisive governor, Walker's biggest and boldest political action came in 2011 when he won the right to restrict collective bargaining for most public workers in Wisconsin, instantly making him a villain to the labor movement and hero to many conservatives. In virtually every speech he gives, Walker recounts how as many 100,000 people protested his actions. The episode, which included weeks of demonstrators camped out below the gilded ceilings of the capitol in Madison, is his biggest Republican calling card. ... The primary race... will also be a delicate balance for Walker, who polls suggest has more potential than most other candidates to win support from all three major segments of the party's primary electorate: Christian conservatives, Tea Party activists, and business-oriented Republicans." John McCormick for Bloomberg.
The memory of the siege at Waco, Tex. fuels conspiracy theories on the right. "On Wednesday, the Army is scheduled to begin two months of training exercises across the American Southwest. ... Conspiracy theorists were singularly imaginative after these war games, code-named Jade Helm 15, were announced. Among the dire predictions: Citizens’ guns will be confiscated. Political opponents of President Obama will be rounded up and herded into detention centers. Mr. Obama will suspend the Constitution and cling to office indefinitely. All this is part of a plan to establish a 'new world order.' ... For right-wing militias and so-called Patriot groups, Waco amounts to evidence of a tyrannical, illegitimate government unblinkingly prepared to kill its own people. In early 1993, a religious sect with apocalyptic visions, the Branch Davidians, was ensconced in a compound called the Mount Carmel Center, just outside Waco, Tex. ... The specter of Waco has not faded. Right-wing extremists regularly invoke it as a defining moment, proof of Washington’s perfidy." Clyde Haberman in The New York Times.