The cities of the world are made up of houses, streets, squares, factories and parks but they are also full of interstitial spaces, what the French call vague grounds because their destination is undefined. Along the urban railways, around the abandoned factories, between one large block of flats and another in the banlieue, these areas loved by rats and vipers are generally and joyfully used by citizens as landfills, places of obscure trafficking or illegal settlements.
Not in Germany. The vague lands are meticulously surveyed and put on income. The municipalities publish a list of these spaces every year and examine the numerous applications of the applicants, who are individual citizens or, more often, organized associations of citizens with a regular identification card. The applicants pay an annual fee and obviously, being in Germany, they are not free to do as they please on these lands, but must divide up the space assigned to them according to precise criteria.
No more than a third (the average size of the lot is 300 square meters) can be used as a vegetable garden, a third must be kept as a lawn and a third must have an ornamental purpose (plants or flowers). Given the absence of balconies in German homes, citizens willingly pay to be able to vent their love for flowers and plants and make their city more beautiful.
Everything can be said about the Germans, but not that they are wild neoliberals. From the medieval guilds to the foundation of the welfare state by Bismarck up to the subjection of big industry by National Socialism, Germany has always been characterized by a dirigiste and regulatory state and by a thriving and very orderly civil society in which even the friends who found at the bar have a president, a secretary and a treasurer. Even the Bundesrepublik has always been inspired by the ordoliberal ideology of the social market economy, an oxymoron in which the emphasis has always fallen on the social rather than on the market.
It therefore sounds a bit excessive that the distance between Merkel and Tsipras is often presented and experienced as a clash of civilizations between savage neoliberalism on the one hand and dignity, solidarity and hope on the other. Sounds even more excessive when you consider that the top Juncker plan (which Tsipras would probably have signed if he hadn't understood that his majority would not have supported him) finally saw a gap between the parties on just three points for a total amount of 600 million euros (even less according to some sources). Wild neoliberalism and the Europe of bankers were asking for remove the VAT discount from the islands, of lower military spending and to start immediately pension reform. The dignity and hope front wanted to keep the VAT lower on the islands, not cut military spending and start the pension reform from October. The points on VAT and military spending, incidentally, were considered indispensable by the Independent Greeks of Kammenos, Syriza's right-wing allied group.
With the company success of the referendum, Tsipras strengthened himself not towards creditors but towards his home front. Parliamentary approval of the agreement with creditors, very problematic before the referendum, is today guaranteed by a practically blank delegation of the entire Greek political system, which has pledged to ratify any agreement Tsipras brings home.
However, the surprise referendum stiffened, not weakened, the creditor front. It is particularly in Germany that anti-Greek sentiment has strengthened in the parties, in the press and in public opinion. Curiously, the political force most aligned in favor of expelling Greece from the euro is the SPD, which hopes in this way to tighten the belly of the electorate and put Merkel in even greater difficulty. If Tsipras takes advice from Juncker (as already evident from the easing of requests on the debt) and presents a proposal for reforms more serious (as is probable) the decision to push for an agreement or for a definitive break will at that point be up to Merkel alone, who will have to evaluate by Sunday evening whether or not to trust Tsipras. Thus we will have the third Sunday of total uncertainty and the third thrilling Monday. Our bet (on which to bet a few calls, certainly not the wallet) is that Merkel decides for the agreement. This will cost much of her political capital but probably not her stationery.
If so, from Monday we will begin to worry more about China than Greece. The bursting of the Chinese bubble it is the consequence of a hike that was technically very poorly managed by the Chinese authorities. However, the rise was also the result of the best intentions. Having finally embarked decisively on the path of economic reforms (more consumption, less investment and the downsizing of the semi-public industrial conglomerates), the government had prepared the stock market hike with the four objectives of privatizing a significant part of its holdings, compensating the middle class of lower economic growth, provide it with an alternative to investment in real estate and encourage domestic consumption through capital gains.
The bursting bubble is clearly a serious incident in terms of image domestically and abroad. It must also burn a lot, because few countries are as sensitive to their image as China.
Having said this, it seems significant to us that the first reactions (more expansionary monetary policy, moralisation of placements with a limit on the price-to-earnings ratio, confirmation of the reform path) are heading in the right direction. As for the effect of the crash on the Chinese and global economy, it must be remembered that the wealth of the Chinese middle class is much more in real estate than in the stock market and that current prices, assuming they hold, are in any case higher than those of a year ago. As for margin buying, which is now incurring serious losses, it should not be forgotten that it is the counterpart of short selling. Someone must have made money on these sales. Partly, sure, it's foreign investors, but partly it's probably Chinese banks as well.
As far as the global economy is concerned, we do not recall particular enthusiasm and upward revisions of economic growth estimates in Asia, Europe and America at the time of the increase, so it does not seem justified to hypothesize now the devastating consequences of the current decrease. In the medium term, for the purposes of global growth, the fact that China stays on the reform path is much more important than the stock market crash.
Since the worries never end, if we talk less about Greece we will end up talking more about oil too. The decline in progress confirms the greater efficiency of the crude oil market at the time of shale oil compared to the monopoly market at the time of OPEC. At 60 dollars the offer is immediately reactivated, below 50 the production is immediately reduced.
Operationally, it seems rational to us to arrive lightly at next Monday's deadline. While a deal seems a bit more likely to us than a deal, the downside in the bad case would be much greater than the upside in the good case.
