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Troika Offers Greece Third Bailout Program, Prepares Emergency Plan If No Deal
Troika Offers Greece Third Bailout Program, Prepares Emergency Plan If No Deal
On the heels of Thursday’s failed Eurogroup meeting and heading into what is again being presented as an all or nothing, “Lehman weekend” for Greece and its creditors, reports suggest the troika has offered Greece a third bailout program:
- GREEK CREDITORS OFFER EU15.5B OVER NEXT 5 MONTHS: HANDELSBLATT
- ECB, IMF, EU OFFER GREECE 3RD AID PROGRAM: HANDELSBLATT
- GREECE’S CREDITORS PROPOSE EU15.5B TIED TO AID DEAL: OFFICIAL
Here are the details, according to Bloomberg (citing an unnamed EU official):
EU creditor proposal foresees EU8.7b in EFSF funds: officialCreditor proposal foresees EU3.3b in SMP profits: EU official
Creditor proposal foresees EU3.5b in IMF funds: EU official
If true, this would mark a dramatic about-face for the IMF which had suggested it would not be interested in participating in a third Greek program. Similary, lawmakers in Berlin have voiced their opposition to a third bailout program for Athens as the German public has grown tired of throwing money at the Greek ‘problem.’
European finance ministers will meet again on Saturday. Angela Merkel, who met with Greek PM Alexis Tsipras and French President Francois Hollande on Friday, has indicated that a deal must be struck before the market opens on Monday. Here’s a bit of color from Reuters:
The leaders of Germany and France discussed extending Greece’s bailout programme and providing financing with Greek Prime Minister Alexis Tsipras on Friday on the eve of a decisive meeting of euro zone finance ministers, a French source said.
…click on the above link to read the rest of the article…
Greece Rejects “Totally Unaccepetable” IMF Counterproposal Demanding Pension Cuts, VAT Hike
Greece Rejects “Totally Unaccepetable” IMF Counterproposal Demanding Pension Cuts, VAT Hike
As reported earlier and as tipped here on Monday, markets will have to call off the party for now because the focus of the Greek debt deal negotiations has now shifted back to Brussels after all eyes had turned briefly to Athens on Tuesday following reports which indicated a deal in principle had been struck. Here’s what we said less than 24 hours ago:
The IMF demands no tax hikes and pension cuts. Instead it will get almost exclusively tax hikes, amounting to 92% of the proposed measures, and just a few cuts, few of which actually impact Greek pensions. In short: the proposal is not only unsustainable, it is also unenforceable, something which the Germans – already facing a third Greek bailout – will be quick to point out.Which is why tomorrow, after Tsipras is finished with the meeting with the Troika, he will have a new homework assignment: revise the “final final” proposal and come up with much less in tax hikes, much more in spending cuts: something which the already furious hard-line elements within Syriza will have a field day with.
And that is precisely what happened. As WSJ reports, creditors have decided to stick to their “red lines” after all:
Significant divisions remain between Greece and its international creditors over measures Athens must implement before receiving desperately needed bailout aid, according to a document seen by The Wall Street Journal on Wednesday ahead of a crucial meeting of eurozone finance ministers.Key points of disagreement are corporate taxation, the overhaul of Greece’s pension system and value-added taxes, according to the document. For instance, Greece had planned to increase corporate taxes to 29%, but in the document creditors limited increase to 28%. That may cause new budget shortfalls that need to be plugged with other measures.
…click on the above link to read the rest of the article…
“No Deal”: Tsipras Says Creditors Did Not Accept Greek Proposal
“No Deal”: Tsipras Says Creditors Did Not Accept Greek Proposal
Who could have possibly foreseen that the IMF would throw up all over the Greek “proposal”… aside from this post here “Why The IMF Will Reject The Latest Greek Proposal In Just Two Numbers” yesterday afternoon of course. In any event, moments ago Bloomberg reported that just as we wrote here yesterday afternoon, there is no deal and that Greek PM Alexis Tsipras told his associates that creditors not accepting equivalent fiscal measures has never happened before, according to a Greek govt official, who asked not to be named in line with policy.
Creditors “not accepting parametric measures has never happened before. Neither in Ireland, nor in Portugal, nor anywhere. This strange stance can hide two scenarios; they either don’t want an agreement or serve specific interests in Greece,” the official cited Tsipras as saying.”
As a reminder, Tsipras is meeting Wednesday with European Central Bank President Mario Draghi, International Monetary Fund Managing Director Christine Lagarde and European Commission President Jean-Claude Juncker in an effort to reach a deal before Greece’s bailout expires and about 1.5 billion euros ($1.7 billion) in payments come due to the IMF on June 30.
Here is the man himself tweeting as much and confirming that the blame game continues:
The repeated rejection of equivalent measures by certain institutions never occurred before-neither in Ireland nor Portugal. #Greece (1/2)
…click on the above link to read the rest of the article…
Does The IMF Actually Want To Cause A Greek Debt Default?
Does The IMF Actually Want To Cause A Greek Debt Default?
When it comes to geopolitics, there are often wheels working within wheels that are working within wheels. Once in a while we get a peek behind the scenes, but for the most part the machinations of the global elite remain shrouded in mystery most of the time. And sometimes the global elite appear to be doing things that, on the surface, do not seem to make much sense at all. What is going on in Europe is a perfect example of this. If everyone was negotiating honestly, I believe that a Greek debt deal would have been reached by now. As this endless crisis has stretched on month after month, it has become increasingly apparent that more is going on here than meets the eye. In particular, the IMF has been standing in the way of a deal time after time. So what do IMF officials want? Are they looking for the “unconditional surrender” of this new Greek government in order to send a message to other governments that would potentially defy them? Or could it be possible that the IMF actually wants a Greek debt default for some other insidious reason?
When the latest Greek proposal was embraced with enthusiasm by EU officials, many hoped that this meant that the crisis would soon be resolved. But it turns out that there is still one very important player that is not happy, and that is the IMF. The following comes from the Wall Street Journal…
But the IMF is still unhappy with key aspects of Greece’s new economic proposals and German officials were irritated by the speed with which the commission welcomed them, warning that much work needs to be done.
Greece’s plan calls for reducing the deficits in its pension system and government budget by relying heavily on raising taxes and social-security contributions, whereas the IMF wanted bigger spending cuts.
The Washington-based IMF has said Greece’s economy is already too heavily taxed and that too many additional tax increases would hurt economic growth, making it harder to pay down Greece’s debt.
“It is still short of everything that should be expected,” IMF Managing Director Christine Lagarde said Monday, suggesting Greece will have to modify its proposals significantly to win the IMF’s backing.
…click on the above link to read the rest of the article…
Will Seizure of Russian Assets Hasten Dollar Decline?
Will Seizure of Russian Assets Hasten Dollar Decline?
While much of the world focused last week on whether or not the Federal Reserve was going to raise interest rates, or whether the Greek debt crisis would bring Europe to a crisis, the Permanent Court of Arbitration in The Hague awarded a $50 billion judgment to shareholders of the former oil company Yukos in their case against the Russian government. The governments of Belgium and France moved immediately to freeze Russian state assets in their countries, naturally provoking the anger of the Russian government.
The timing of these actions is quite curious, coming as the Greek crisis in the EU seems to be reaching a tipping point and Greece, having perhaps abandoned the possibility of rapprochement with Europe, has been making overtures to Russia to help bail it out of its mess. And with the IMF’s recent statement pledging its full and unconditional support to Ukraine, it has become even more clear that the IMF and other major multilateral institutions are not blindly technical organizations, but rather are totally subservient lackeys to the foreign policy agenda emanating from Washington. Toe the DC party line and the internationalists will bail you out regardless of how badly you mess up, but if you even think about talking to Russia you will face serious consequences.
The United States government is desperately trying to cling to the notion of a unipolar world, with the United States at its center dictating foreign affairs and monetary policy while its client states dutifully carry out instructions. But the world order is not unipolar, and the existence of Russia and China is a stark reminder of that. For decades, the United States has benefited as the creator and defender of the world’s reserve currency, the dollar.
…click on the above link to read the rest of the article…
History in Free Verse
History in Free Verse
History might not rhyme, exactly, but it’s not bad for free verse. Greece is this century’s Serbia — a tiny, picturesque backwater nation blundering haplessly into the center stage of geopolitics. And the European Union is, whaddaya know, Germany in drag, on financial steroids.
Nobody knows what will happen next in the struggle to wring some kind of debt repayment promises out of poor Greece. Without “restructuring” — a virtual national bankruptcy proceeding — there can be no plausible promises of repayment. Both sides seem to have exhausted their abilities to juke their way out. The European Union and its wing-men at the European Central Bank (ECB) and the International Monetary Fund (IMF) can only pretend to kick that fabled can down the road because it has turned into a cement-filled 50-gallon drum. The Greek government can only pretend to further dismantle its civil service and pension systems lest angry citizens toss it out and replace it with a new government, perhaps an ugly and pugnacious one made up of Golden Dawn party Nazis.
In the background, Spain, Portugal, Italy, Ireland, and perhaps even France wait without peeping to see if Greece is allowed to restructure, because you can be sure they will demand the same privilege to debt relief. But that’s hardly possible because the ECB has been engineering a shift of debt-holding away from the big corporate banks — which made all the stupid loans — to the taxpayers of their member states, especially Germany, which stands to be the biggest bag-holder when a contagion of serial default seeps across the continent.
…click on the above link to read the rest of the article…
IMF Violates IMF Rules, to Continue Ukraine Bailouts
IMF Violates IMF Rules, to Continue Ukraine Bailouts
The IMF, whose bailout operations are absorbed by the taxpayers in the member countries whenever a particular bailed-out nation defaults, announced on Friday, June 19th, that it will “continue to support Ukraine through its Lending-into-Arrears Policy even in the event that a negotiated agreement with creditors in line with the program cannot be reached in a timely manner.” Though this new “Lending-into-Arrears” policy violates two IMF rules, it was justified by the IMF’s Managing Director Christine Lagarde on the basis of the Ukrainian government’s “continued efforts to reach a collaborative agreement with all creditors.”
In other words: a statement by Ukraine’s government that it wants to reach an agreement with its private creditors is being used by the IMF as if it were an excuse to extend into the indefinite future the IMF’s continued taxpayer-guaranteed financing of (‘lending’ to) the Ukrainian government, despite the fact that the IMF is violating two of the IMF’s own most-basic rules restricting its lending-authority — these rules are lending-restrictions whose purpose was to reduce the riskiness of the IMF’s lending, and so to minimize the amount that the IMF will be taking from taxpayers to fund its losses:
1: The IMF does not lend to nations at war — but Ukraine continues being at war against its former Donbass region despite the Minsk II ceasefire agreement; ceasefire violations, especially by the Ukrainian side, continue regularly.
2: The IMF does not lend to nations that are likely to default — but every independent source categorizes Ukraine as being virtually certain to default, and the only actual question regarding Ukraine is: when? The IMF’s answer: we’ll keep lending, building Ukraine’s public debt even higher, until our aim is achieved, and then we won’t — and that’s when the default will occur — the default will happen when we decide it will happen. It will happen when we will stop lying and saying that it won’t happen.
…click on the above link to read the rest of the article…
“The Collateral Has Run Out” – JPM Warns ECB Will Use Greek “Nuclear Option” If No Monday Deal
“The Collateral Has Run Out” – JPM Warns ECB Will Use Greek “Nuclear Option” If No Monday Deal
(via Corriere)
Although estimates vary, Kathimerini, citing Greek banking officials, puts Friday’s deposit outflow at €1.7 billion. If true, that would mark a serious step up from the estimated €1.2 billion that left the banking system on Thursday and serves to underscore just how critical the ECB’s emergency decision to lift the ELA cap by €1.8 billion truly was. “Banks expressed relief following Frankfurt’s reaction, acknowledging that Friday could have ended very differently without a new cash injection,” the Greek daily said, adding that the ECB’s expectation of “a positive outcome in Monday’s meeting”, suggests ELA could be frozen if the stalemate remains after leaders convene the ad hoc summit. Bloomberg has more on the summit:
Dorothea Lambros stood outside an HSBC branch in central Athens on Friday afternoon, an envelope stuffed with cash in one hand and a 38,000 euro ($43,000) cashier’s check in the other.
She was a few minutes too late to make her deposit at the London-based bank. She was too scared to take her life-savings back to her Greek bank. She worried it wouldn’t survive the weekend.
“I don’t know what happens on Monday,” said Lambros, a 58-year-old government employee.
Nobody does. Every shifting deadline, every last-gasp effort has built up to this: a nation that went to sleep on Friday not knowing what Monday will bring. A deal, or more brinkmanship. Shuttered banks and empty cash machines, or a few more days of euros in their pockets and drachmas in their past – – and maybe their future.
For Greeks, the fear is that Monday will be deja vu, a return to a past not that distant. Before the euro replaced the drachma in 2002, the Greeks were already a European bête noire, their currency mostly trapped inside their nation, where cash was king and checks a novelty.
…click on the above link to read the rest of the article…
Bank Of Greece Pleads For Deal, Says “Uncontrollable Crisis”, “Soaring Inflation” Coming
Bank Of Greece Pleads For Deal, Says “Uncontrollable Crisis”, “Soaring Inflation” Coming
The situation in Greece has escalated meaningfully since last week. After the IMFeffectively threw in the towel and sent its negotiating team back to Washington on Thursday, EU and Greek officials agreed to meet in Brussels over the weekend in what was billed as a last ditch effort to end a long-running impasse and salvage some manner of deal in time to allow for the disbursement of at least part of the final tranche of aid ‘due’ to Greece under its second bailout program. Talks collapsed on Sunday however as Greek PM Alexis Tsipras, under pressure from the Left Platform, refused (again) to compromise on pension reform and the VAT, which are “red lines” for both the IMF and for Syriza party hardliners.
By Monday evening it was clear that both EU officials and Syriza’s radical left were drawing up plans for capital controls and a possible euro exit with Brussels looking to Thursday’s meeting of EU finance ministers in Luxembourg for a possible breakthrough. That seems unlikely however, given that Athens is sending FinMin Yanis Varoufakis whose last Eurogroup meeting ended with his being sidelined in negotiations after putting on a performance that led his counterparts to brand him an amateur, a gambler, and a time waster. For his part, Varoufakis says no new proposal will be tabled in Luxembourg as Eurogroup meetings aren’t the place for such discussions, which is ironic because Jean-Claude Juncker said something similar not long ago when the Greeks were trying to get a deal done at the very same Eurogroup meetings.
Perhaps realizing that pinning everyone’s hopes on a Thursday breakthrough is a fool’s errand, the EU will reportedly convene a high level, emergency meeting over what we’ve suggested may be a “Lehman Weekend” for the market.
…click on the above link to read the rest of the article…
What’s Next in the Greek Farce and Why
What’s Next in the Greek Farce and Why
The Man They Hate with a Passion
Euro area politicians and IMF bureaucrats really hate Yanis Varoufakis’ guts with a passion. The media are full with denunciations of the man as “unprofessional”, negotiators of the euro-group let it be known (anonymously, natch) that “it got to the point where eyes roll”, that they were “sick and tired of being lectured about austerity and the effects of the crisis”, in short, it was “impossible to do business with him”.
Why do they hate him so much? Allegedly ,“any sympathy for Greece was eroded by his failure to draft concrete proposals.” Typical Mediterranean lazy bum is the message, in other words. Big on vacuous emoting, but doesn’t want to waste time on doing his homework (plus, he wears no tie…you have to be clad in the technocratic uniform if you want to be taken seriously).
The eurocrats really hate this one. They’re probably all trying to channel Tony G when they meet Varoufakis.
Photo credit: Alkis Konstantinidis / Reuters
Forgive us if our BS meter starts twitching when they are quoting unnamed officials with such pronouncements all over the mainstream press and are hammering the message home with unwavering regularity on Europe’s state-controlled TV stations. The reality is probably this: they hate him because he isn’t one of them.
Varoufakis is no politician, and apparently has no intentions of becoming one. His economic views may be a bit blue-eyed given his alliance with a bunch of lefties, but where and when has he said anything about the Greek situation that was not substantially correct?
…click on the above link to read the rest of the article…
Starvation Is The Price Greeks Will Pay For Remaining In The EU
Starvation Is The Price Greeks Will Pay For Remaining In The EU
Syriza, the new Greek government that intended to rescue Greece from austerity, has come a cropper. The government relied on the good will of its EU “partners,” only to find that its “partners” had no good will. The Greek government did not understand that the only concern was the bottom line, or profits, of those who held the Greek debt.
The Greek people are as out to lunch as their government. The majority of Greeks want to remain in the EU even though it means that their pensions, their wages, their social services, and their employment opportunities will be reduced. Apparently for Greeks, being a part of Europe is worth being driven into the ground.
The alleged “Greek crisis” makes no sense whatsoever. It is obvious that Greece cannot with its devastated economy repay the debts that Goldman Sachs hid and then capitalized on the inside information, helping to cause the crisis. If the solvency of the holders of the Greek debt, apparently the NY hedge funds and German and Dutch banks, depends on being repaid, the European Central Bank could just follow the example of the Federal Reserve and print the money to secure the Greek debt. The ECB is already printing 60 billion euros a month to save the European financial system, so why not include Greece?
A conservative might say that such a course of action would cause inflation, but it hasn’t. The Fed has been creating money hands over fists for seven years, and according to the government there is no inflation. We even have negative interest rates attesting to the absence of inflation. Why will creating money for Greece create inflation but not for Goldman Sachs, Citibank, and JPMorganChase?
…click on the above link to read the rest of the article…
Europe Warns Of “State Of Emergency” As Greek Stalemate Drags On
Europe Warns Of “State Of Emergency” As Greek Stalemate Drags On
Talks between Greece and creditors collapsed on Sunday after Athens once again refused to compromise on a the pension cuts and VAT hike the troika insists are necessary if the country is to receive the final tranche of aid from its second bailout program.
We noted yesterday that the charade is hardly over as Greek PM Alexis Tsipras knows he can continue to bluff for a few more weeks. Even in the event Greece misses its June 30 payment to the IMF, Christine Lagarde would need to muster the political will to send a failure to pay notice to the IMF board, at which point Athens would be formally in default and cross acceleration rights for the country’s other creditors would trigger. But Lagarde has considerable discretion on the default notice and can delay it for at least 30 days. Between this and the fact that a critical payment to the ECB is still more than a month away, we suggested that the brinksmanship was far from over and that the new ‘deadline’ would be Thursday’s meeting of EU finance ministers in Luxembourg.
On Monday the usual back-and-forth between the IMF, Greece, and EU officials continued with IMF chief economist Olivier Blanchard insisting that Greece must implement changes to pensions and the VAT in order to hit (reduced) budget surplus targets while EU creditors should reshuffle Greece’s payment schedule, reduce interest rates on the country’s debt, and, if push comes to shove, writedown Greek bonds:
…click on the above link to read the rest of the article…
IMF To Tsipras: “Do You Feel Lucky, Punk?” (But Who Has the Gun?)
IMF To Tsipras: “Do You Feel Lucky, Punk?” (But Who Has the Gun?)
In the wake of the IMF walking out of negotiations with Greece, the Financial Times says the Pullout is Amid an “Air of Unreality”.
What’s Unreal?
Sure, everyone expected Greece to buckle. But what if Greece did buckle for the nth time? Greece was eventually going to default anyway.
There is not now, nor was there ever, anything “unreal” about the inevitable default.
Earlier today German officials said “European taxpayers have been generous” to Greece. What a hoot. Now, that’s “unreal”.
What’s also “unreal” is forcing €330 billion worth of debt on a tiny country, pretending that it can be paid back.
This alleged “generous” bailout did nothing but bail out banks while forcing a hellacious depression on Greece. Taxpayers have not foot the bill yet, but they will, thanks to bondholder and bank bailouts.
Some blame Greece. And to be sure Greece made mistakes. But the real culprits are the ECB’s one size fits Germany interest rate policy, the stupidity of the eurozone agreement itself, the lack of a fiscal union, etc.
Everyone knew Greece lied to get into the eurozone. They let Greece in anyway. Isn’t that “unreal”?
“Do You Feel Lucky, Punk?”
The Guradian reports the IMF walkout this way: IMF to Alexis Tsipras: ‘Do you feel lucky, punk?’
“You’ve got to ask yourself one question. Do I feel lucky? Well, do ya, punk?” The lines spoken by Clint Eastwood in Dirty Harry sprang to mind when the International Monetary Fund (IMF) announced that it had called its Greek negotiating team home from talks in Brussels.
The IMF’s message was short and brutal. There were still major differences between Greece and its creditors. There was no progress in narrowing those differences. The two sides were well away from an agreement.
…click on the above link to read the rest of the article…
How The IMF Can Save Greece And Itself
How The IMF Can Save Greece And Itself
There’s a Reuters article by Paul Taylor today that’s thought provoking, but not along the same line of thought that the writer follows (or the twist he gives to it). Taylor concludes that the IMF would love to wash its hands off Greece, but can’t because it’s subservient to German and Brussels interests (a junior partner). However, he also describes, without realizing it, why and how the Fund can rectify that.
Not that we’re not under the illusion the IMF is prone to latch on to the following, but that it would nevertheless be an extremely wise move for the Fund, and especially for its reputation. Which, no matter how you see it, is under threat from its Asian ‘competitor’, the Asian Infrastructure Investment Bank (AIIB), not in the least because the non-western world has long found that the west has far too much power in the IMF, which after all is a global organization.
In that vein, let’s start off with an article the FT published in April 2013, by Ousmène Mandeng, who also features in Taylor’s piece. This former IMF deputy division chief pointed out what unease the IMF role in Greece caused, and how that role undermined its role as an international institution. Today, nothing has changed.
The IMF Must Quit The Troika To Survive
There are many victims of the eurozone crisis but one loser is seldom mentioned: the IMF has suffered considerable collateral damage. It has been dragged along in an unprecedented set-up as a junior partner within Europe, used as a cover for the continent’s policy makers and its independence lost. The monetary fund was set up as a technocratic institution. That, indeed, is why it was brought into Europe: it was felt that a neutral broker was needed to fix the eurozone’s problems.
…click on the above link to read the rest of the article…
Europe Gives Greece 24 Hours To Comply; Germany Draws Up Capital Control Plans
Europe Gives Greece 24 Hours To Comply; Germany Draws Up Capital Control Plans
EU officials turned up the heat on Athens Thursday after the IMF withdrew its team and sent its lead negotiators back to Washington.
In what can only be described as a half-hearted effort, Greek PM Alexis Tsipras submitted two three-page proposals earlier this week that were dismissed by creditors as “not serious.” We suggested that perhaps that was intentional as Tsipras, having bought Greece some time by opting for the “Zambian” IMF payment bundle, is simply keeping up appearances while the real negotiating is going on behind the scenes with Syriza party hardliners who Tsipras desperately needs to support any proposal before it goes to parliament in order to avoid what could quickly deteriorate into a political and social crisis.
One has to believe that Brussels understands this, but it could very well be that between Tsipras’ scathing op-ed (published two Sundays ago) and the PM’s fiery speech to parliament last Friday, creditors are becoming concerned that Tsipras might actually be starting to believe that he can effectively blackmail the EMU by threatening to prove, once and for all, that the currency bloc is in fact dissoluble no matter what manner of protestations one might hear in polite company.
So, with the IMF having thrown in the towel, and with German lawmakers set to rally behind the incorrigible FinMin Wolfgang Schaeuble in what amounts to a mutiny on the SS Merkel, Europe appears to have finally had enough because by Thursday evening, reports indicated that EU officials have given Greece 24 hours to come back with a proposal that includes pension reform and VAT increases.
…click on the above link to read the rest of the article…
