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Greek Debt Crisis
Greek Debt Crisis
Is Default or Exit Inevitable?
This past week, April 24, European finance ministers met in Riga, Latvia. High on the agenda was the topic of Greek debt negotiations. Two months after the February 28 interim agreement between Greece and the EU ‘troika’—the IMF, European Commission, and European Central Bank—in which both sides agreed to continue negotiating—little has changed. In fact, led by its de facto spokesperson, hardline German finance minister, Walter Schaubel, the Troika’s position has continued to harden since February 28.
Schaubel and other northern Europe finance minister have continued to insist for the past two months that there will be no changes in pre-2014 terms and conditions of debt payments. The Troika and Schaubel have repeatedly demanded as well, that Greece provide more details to show how it will continue to pay its debt and how it will maintain previous austerity measures.
In reply, Greece and Syriza point to the various measures they have agreed to since February 28, as well as what they agree in principle to implement in the future: pension reforms that limit early retirement but don’t cut pensions ‘across the board’, selective privatizations that avoid cutting necessary social services but not general privatizations, tax reform that make the wealthy pay their fair share, and so on.
While Schaubel and the Troika demand Greece abide by the previous debt agreement, they themselves refuse to do the same. They refuse to release to Greece the US$8 billion in loans due to Greece under the old terms of the agreement. Or to release to Greece the US$2 billion in interest earned on Greek bonds earned since 2010. In other words, Greece must adhere to the letter of the debt agreement but the Troika does not have to.
…click on the above link to read the rest of the article…
Greece €400 Million Short For Wage And Pension Payments, Rushes To Pass Troika-Friendly Laws
Greece €400 Million Short For Wage And Pension Payments, Rushes To Pass Troika-Friendly Laws
There was a brief bout of Greek risk-on euphoria following yesterday’s latest twist in the winding road to the Greek insolvency, in which the Greek finance minister Varoufakis became the latest sacrificial scapegoat to be “Nav Sarao-ed” to the angry gods of the Troika, and has been henceforth kicked out of any negotiations with the Greek “institution” creditors.
The core problem for Greece, however, remains: namely that it is still completely out of money, and as we learned yesterday, the local municipalities have mutinied, and told the government they would not hand over their cash to the central bank without their own conditions being met first, and certainly not before May 7 which may well be too late for Greece.
Which means that suddenly not only does Greece not have the nearly €1 billion in cash it will need to fund May payments to the IMF, but it is suddenly short by €400 million for wage and pension payments.
According to Bloomberg, the Greek government is €400 million short of the amount needed for payment of pensions and salaries this month, citing a Kathimerini report.
Surprisingly, this takes place even as Greece’s IKA, OGA pension funds have been informed by the government that amount needed for payment of pensions will be deposited today, while the Greece’s OAEE pension fund has said payment of pensions won’t be a problem.
In other words, someone is not telling the truth: either there is enough money or there isn’t. And if the latter case is valid, then either the government or the pensions are now openly lying to the population.
…click on the above link to read the rest of the article…
Capital Controls Arrive: Greece Begins Confiscating Deposits Of “Small Debtors”
Capital Controls Arrive: Greece Begins Confiscating Deposits Of “Small Debtors”
Last week, the Greek government issued a decree which called for local governments to transfer excess cash to the central bank so that Athens would be able to pay pensions, salaries, and the IMF. The move is expected to raise as much as €2 billion to help keep the country afloat while the country’s “amateurish, time-wasting gambler” of a FinMin feebly attempts to find some kind of middle ground with his EU counterparts and as PM Tsipras pulls out all the stops including the old EU Summit sideline end-around with Merkel and the wild card energy gas pipeline advance from Gazprom (which may portend the dreaded “Russian pivot”).
If the “temporary” local government reserve sweep constitutes what we have branded “soft” capital controls, we now have the first evidence that the “hard” variety may have arrived because as Kathimerini reports, Greek debtors are having their deposits seized in lieu of payment. Here’s more:
As the country’s finances reach a critical point, tax authorities have started seizing the deposits of small debtors, Kathimerini understands.No figures were available regarding the new crackdown but cases of debtors targeted included a citizen with a debt of just 200 euros.
The bank account of the man in question was frozen and then reopened once it was established that he had paid his dues. In several cases, including that of a citizen with a debt of 24,000 euros, bailiffs are said to have used threats to secure the cash. The initiative comes as efforts to crack down on rich Greeks with tax debts make slow progress.
…click on the above link to read the rest of the article…
Is Greece About To “Lose” Its Gold Again?
Is Greece About To “Lose” Its Gold Again?
When it comes to the topic of Greece, most pundits focus on two items: i) when will Greece finally run out ofconfiscated cash, and ii) will Greece fold to the Troika (and agree to another bailout(s) with even more austerity) or to Russia (and agree to the passage of the Russian Turkish Stream pipeline, potentially exiting NATO and becoming the most important European satellite of the USSR 2.0) once that moment arrives.
And yet what everyone appears to be forgetting is a nuanced clause buried deep in the term sheet of the second Greek bailout: a bailout whose terms will be ultimately reneged upon if and when Greece defaults on its debt to the Troika (either in or out of the Eurozone). Recall that as per our report from February 2012, in addition to losing its sovereignty years ago, Greece also lost something far more important. It’s gold:
To wit:
Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.
The “new deal”referred to is the Second Greek Bailout, which either will be extended and lead to a third (and fourth, and fifth bailout, each with every more draconian terms until finally Greece does default), or will collapse at which point the Troika will indeed have the right to seize the Greek gold reserves.
What makes this case particularly curious, however, is that it won’t be the first time Greece will have “lost” its gold. In The Tower of Basel, citing the BIS archive from Febriary 9, 1931, Adam LeBor writes:
…click on the above link to read the rest of the article…
One Last Look At The Real Economy Before It Implodes – Part 6 – Solutions
One Last Look At The Real Economy Before It Implodes – Part 6 – Solutions
All problems, all crises, have at least one solution, if not many solutions. There is no such thing as an unwinnable scenario. Some may not be smart enough or courageous enough to see it, but the solution is always there, waiting to be discovered. The only fight that cannot be won is the fight in which the enemy makes all the rules and we foolishly abide by those rules. Life is not a game of chess, and a man can choose to be more than a pawn anytime he has the guts to do so.
In the past, I have likened the liberty movement to a rebellion against not just tyrants but the game itself – a group of people willing to walk away from the chess board and make their own rules. I stand by that assertion. However, simply walking away is not enough; we must also be willing to take actions that will destroy the game entirely.
In order to accomplish this task, any rebellion against corruption of power must be self-critical – more self-critical of its own weaknesses than opposing propagandists could ever be. Most of our problems as a society are being caused by a relatively small number of elitists, but we will never be able to undo these problems without understanding our weaknesses as much as the enemy’s weaknesses. In this final installment of my six-part series, I will talk about REALsolutions to the inevitable economic implosion in front of us, but I will also discuss the shortcomings of the liberty movement as an obstacle to the success of those solutions.
…click on the above link to read the rest of the article…
Grexit: Remaining In The Eurozone Is No Longer ‘The Base Case’ For Greece
Grexit: Remaining In The Eurozone Is No Longer ‘The Base Case’ For Greece
According to the Wall Street Journal, Greece staying in the eurozone is no longer “the base case” for European officials, and one even told the Journal that “literally nothing has been achieved” in negotiations with the new Greek government since the Greek election almost three months ago. In other words, you can take all of that stuff you heard about how the Greek crisis was fixed and throw it out the window. Over the next few months, a big chunk of Greek government bonds held by the IMF and the European Central Bank will mature. Unless negotiations produce a load of new cash for Greece, there will be a default, and right now there is very little optimism that we will see an agreement any time soon. In fact, as I wrote aboutthe other day, behind the scenes banks all over Europe are quietly preparing for a Grexit. European news sources are reporting that the Greek banking system is on the verge of collapse, and over the past couple of weeks Greek bond yields have shot through the roof. Most of the things that we would expect to see in the lead up to a Greek exit from the eurozone are happening, and now we will wait and see if the Greeks actually have the guts to pull the trigger when push comes to shove.
At this point, many top European officials are quietly admitting that it is more likely than not that Greece will leave the euro by the end of this year. The following is an excerpt from the Wall Street Journal article that I mentioned above…
…click on the above link to read the rest of the article…
Noam Chomsky: “The Idea Of A Media Which Does Not Repeat US Propaganda Is Intolerable To American Leaders”
Noam Chomsky: “The Idea Of A Media Which Does Not Repeat US Propaganda Is Intolerable To American Leaders”
Few individuals polarize the public with their opinions, statements and mere presence, like Noam Chomsky. The 86 year old linguist, philosopher, cognitive scientist, logician, political commentator, social justice activist, and anarcho-syndicalist advocate, has strong opinions (and in some cases, entire schools of thought) on everything from philosophy, to sociology, to linguistics, but he is perhaps best known in recent years for his political activism which has led to death threats due to his staunch and far-reaching criticism of US foreign policy (allegedly the Anti-Defamation League “spied on” Chomsky’s appearances).
His broader outlook is a peculiar version of libertarianism (he describes himself as an anacrho-syndicalist), in which he asserts that authority is inherently illegitimate, and that the burden of proof is on those in authority. If this burden can’t be met, the authority in question should be dismantled. Authority for its own sake is inherently unjustified. He contends that there is little moral difference between chattel slavery and renting one’s self to an owner or “wage slavery.” He holds that workers should own and control their workplace.
He is has also repeatedly stated his opposition to ruling elites, among them institutions like the IMF, World Bank, and GATT.
In other words, the present, in which ruling elites (whether the BIS and “Troika) and ubiquitous US intervention in every possible foreign affair (courtesy of a State Department which, as it has now been revealed, had until recently worked on behalf of the highest foreign bidder) determine the fate of the entire world, should provide Chomsky with endless material for contemplation.
…click on the above link to read the rest of the article…
How America’s Aristocracy Extends Its Global Control
How America’s Aristocracy Extends Its Global Control
As has been well documented even by the BBC, in their 1992 classic documentary about the CIA’s (still-ongoing) Gladio Operation, America’s CIA basically took control of the international racist-fascist (i.e., ideologically nazi) movement after World War II, by protecting and hiring Hitler’s Nazis and their key aristocratic eastern European supporters undercover. The Gladio Operation was just one branch of a broader CIA strategy, developed by Allen Dulles and originally carried out by his protégé James Angleton, to use, for the purposes of America’s aristocracy, nazis’ intense racism, by retargeting it away from Jews and toward Russians, so as to weaken first the Soviet Union, and, then, after the end of that, Russia itself. (U.S. President Barack Obama’s involvement with Ukraine is very much a result of this post-WW-II pro-nazi Dulles-Angleton program.)
There were many other branches of this strategy, one being by the World Bank and IMF to introduce capitalism into the former Soviet states in a manner that would privatize their formerly government-owned assets to aristocrats in the West and in the formerly Soviet nations by means of insider fire-sales which enabled these state-assets to be picked up by cooperating local insiders at non-market super-low prices and thereby have these new “oligarchs” (the local copies there of Western capitalism’s own aristocrats) as being secret agents of the U.S. aristocracy, who would thus be extending the American aristocracy’s control eastward. Mark Ames has succinctly recounted this operation, and David McClintick did the major report on it prior to Ames.
…click on the above link to read the rest of the article…
Stunned Greeks React To Initial Capital Controls And The “Decree To Confiscate Reserves”, And They Are Not Happy
Stunned Greeks React To Initial Capital Controls And The “Decree To Confiscate Reserves”, And They Are Not Happy
Earlier today, following weeks of speculation, Greece finally launched the first shot across the bow of capital controls, when it decreed that due to an “extremely urgent and unforeseen need” (ironically the need was quite foreseen since about 2010, but that is a different story), it would be “obliged” to transfer – as in confiscate – “idle cash reserves” located across the country’s local governments (i.e., various cities and municipalities) to the Greek central bank.
Several hours later the decree which was posted in the government gazette has finally percolated among the population, and the response to what even ordinary Greeks realize is now the endgame, is less than exuberant.
Bloomberg reports, that “as Greece struggles to find cash to stay afloat, local authorities say they oppose a government decision to use their reserves for short-term financing.”
“The government’s decision to seize our reserves not only raises legal and constitutional issues, but also a moral one,” said George Papanikolaou, mayor of Glyfada, the third-largest municipality in the metropolitan region of Attica after Athens and Piraeus. “We have a responsibility to serve our citizens,” Papanikolaou said by phone on Monday. Glyfada has about 16 million euros in cash reserves, he said.
George is unhappy because as recently as tomorrow, he will find there is precisely zero euros in his public bank account, as all the money has now been forcibly sequestered by the government in order to repay future Troika, pardon, IMF obligations.
Sadly for Greece, this is the only option left as the money has now fully run out: Greek Prime Minister Alexis Tsipras ordered local governments and central government entities to move their cash balances to the central bank for investment in short-term state debt.
…click on the above link to read the rest of the article…
Is The Credibility Bubble Bursting?
Is The Credibility Bubble Bursting?
In a fiat currency system, perception is, by definition, everything. Paper money has no intrinsic value. So the people saving it and accepting it in exchange aren’t expressing faith in the money itself but in the competence and honesty — and power — of the institutions managing it. Let that faith erode and those slips of colored paper and ephemeral computer bits revert to their intrinsic value.
And on the credibility front, the trends aren’t encouraging. Consider the coverage of this weekend’s Washington DC meetings of the International Monetary Fund and World Bank, two global financial institutions that the US dominates. From the New York Times:
At global economic gathering, concerns that US is ceding its leadership role
This article is available only to subscribers, but a similar one from India’s Business Standard makes many of the same points:
US primacy seen ebbing at global meet
As world leaders converge here for their semiannual trek to the capital of what is still the world’s most powerful economy, concern is rising in many quarters that the United States is retreating from global economic leadership just when it is needed most.
The spring meetings of the International Monetary Fund and World Bank have filled Washington with motorcades and traffic jams and loaded the schedules of President Obama and Treasury Secretary Jacob J Lew. But they have also highlighted what some in Washington and around the world see as a United States government so bitterly divided that it is on the verge of ceding the global economic stage it built at the end of World War II and has largely directed ever since.
…click on the above link to read the rest of the article…
The Greek “White Knight” Emerges: Putin To Give Athens €5 Billion For Advance Gas Pipeline Fees
The Greek “White Knight” Emerges: Putin To Give Athens €5 Billion For Advance Gas Pipeline Fees
With Greece teetering on the edge of insolvency and forced to raid pension and most other public funds, ahead of another month of heavy IMF repayments which has prompted even the ECB to speculate Greece should introduce a parallel “IOU” currency, a white knight has appeared out of nowhere for Greece, one who may offer $5 billion in urgently needed cash. The white knight is none other than Vladimir Putin. “Just because Greece is debt-ridden, this does not mean it is bound hand
and foot, and has no independent foreign policy,” Putin said previously.
According to Spiegel, citing a senior figure in the ruling Syriza party, Greece is poised to sign a gas deal with Russia as early as Tuesday which could bring up to €5 billion into the depleted Greek coffers.
The move could now “turn the tide” for the debt-stricken country according to a senior Greek official.
As Reuters adds, during a visit to Moscow earlier this month, Greek Prime Minister Alexis Tsipras expressed interest in participating in a pipeline that would bring Russian gas to Europe via Turkey and Greece.
Under the proposed deal, Greece would receive advance funds from Russia based on expected future profits linked to the pipeline. The Greek energy minister said last week that Athens would repay Moscow after 2019, when the pipeline is expected to start operating.Greek government officials were not immediately available to comment on the Spiegel report.
Of course, this being Greece, the probability of actual repayment is negligible: after all the likelihood of a Greek default is astronomical, and €5 billion will do little to change the mechanics of Greek debt sustainability. And Putin very well knows this.
…click on the above link to read the rest of the article…
The Global Liquidity Squeeze Has Begun
The Global Liquidity Squeeze Has Begun
Get ready for another major worldwide credit crunch. Today, the entire global financial system resembles a colossal spiral of debt. Just about all economic activity involves the flow of credit in some way, and so the only way to have “economic growth” is to introduce even more debt into the system. When the system started to fail back in 2008, global authorities responded by pumping this debt spiral back up and getting it to spin even faster than ever. If you can believe it, the total amount of global debt has risen by $35 trillion since the last crisis. Unfortunately, any system based on debt is going to break down eventually, and there are signs that it is starting to happen once again. For example, just a few days ago the IMF warned regulators to prepare for a global “liquidity shock“. And on Friday, Chinese authorities announced a ban on certain types of financing for margin trades on over-the-counter stocks, and we learned that preparations are being made behind the scenes in Europe for a Greek debt default and a Greek exit from the eurozone. On top of everything else, we just witnessed the biggest spike in credit application rejections ever recorded in the United States. All of these are signs that credit conditions are tightening, and once a “liquidity squeeze” begins, it can create a lot of fear.
Over the past six months, the Chinese stock market has exploded upward even as the overall Chinese economy has started to slow down. Investors have been using something called “umbrella trusts” to finance a lot of these stock purchases, and these umbrella trusts have given them the ability to have much more leverage than normal brokerage financing would allow. This works great as long as stocks go up. Once they start going down, the losses can be absolutely staggering.
…click on the above link to read the rest of the article…
Is May 9 The Grexit Date?
Is May 9 The Grexit Date?
Yes, more Greece, ever more Greece. Well, the focus is still very much there. It’s not the only topic, obviously, China warrants interest too, certainly with things like Tyler Durden quoting Cornerstone Macro as saying China’s true economic growth rate was just 1.6% in Q1 2015, not the official government number of 7%. Never trust anyone, especially a government, that consistently meets or beats its predictions. With housing prices falling the way they have, -6% or thereabouts, and over 70% of Chinese private investment in real estate, it’s hard to see how a 7% GDP growth number could pass scrutiny. Sure, there’s the stock market bubble, but even then.
But for now back to Athens. Or Washington, actually, where Yanis Varoufakis finds himself. From what we can gather on his schedule, Varoufakis has (or has had) meetings with Obama and Lagarde on Thursday, and with Mario Draghi, Jack Lew and Wolfgang Schaeuble on Friday.
Also on Friday, he’s meeting sovereign debt lawyer Lee Buchheit, who’s a partner at New York law firm Cleary Gottlieb [..Steen & Hamilton], and has helped restructure debt for various countries. The Guardian, back in 2013 (how times have changed!), portrayed Buchheit as the ‘fairy godmother to finance ministers in distress’:
This is the man who stands up to the vulture funds – so named because they buy up the debt of desperately poor countries in order to chase them through the courts for repayment. So it is something of a surprise to meet a slight, mild-mannered lawyer, with more than a whiff of academia about him.
…click on the above link to read the rest of the article…
Spelling Out The Big Reset
Spelling Out The Big Reset
As economies age, debt builds up. Advanced economies – those with the highest borrowing ratings by the reputable agencies they developed – have it clogging up inside all their arteries. The Big Reset will finally become inevitable, as has been acknowledged by the IMF head Largarde, mentioning the year 2020. But what must an Armageddon debt reset necessarily involve? Few have spelled it out, not even in the famous book with the same title “The Big Reset” by Willem Middelkoop.
Revision on money creation mechanics: unwrapping the meaning of ‘Reserves’
At the center of it all, wrapped by layers of secrecy and protected on the outside by purposefully confusing jargons is this concept of Reserves. Let’s understand it to mean ‘net worth’, ‘collateral’, or whatever a banking entity’s ‘really worth’, because what banking entities do, is to use this asset as backing to create instruments and derivatives, like loans, or even money, and expand the money supply. In long tradition, the ultimate reserve asset is of course gold. When the bank’s (or central bank’s) worthiness comes into doubt (like to many gold-deposit receipts flying around), people come for the ‘reserves’. If the reserves satisfy the claims, then it’s good.
…click on the above link to read the rest of the article…
“Odious Debt” Has Finally Arrived: Greece To Write Off “Illegal” Debt
“Odious Debt” Has Finally Arrived: Greece To Write Off “Illegal” Debt
It was back in June 2011 when we first hinted that the time of Odious Debt is rapidly approaching.
As a reminder, this is what Odious Debt is: In international law, odious debt is a legal theory which holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are thus considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.
Today, nearly four years later, Odious Debt is now a reality in Greece, where Zoi Konstantopoulou, the head of the Greek parliament and a SYRIZA member, released two videos which have promptly gone viral, designed to promote the investigative parliamentary committee to look into the circumstances surrounding the signing of the country’s two bailout agreements that led Greece to implement its austerity measures.
The short video spots, shown below, end with the message “Check it, Erase it” referring to the country’s 320 billion-euro debt.
That this concept emerges now is perhaps confusing: it was just a few days ago when the Greek FinMin promised to the IMF that Greece would honor all of its debt commitments. Should Greece decide that some (or all) of its debt was illegal and unenforceable, this will clearly not happen. Then again, this is the same political party that made pre-election promises whose execution would require about €30 billion according to German calculation, so the relentless flipflopping is not very surprising.
…click on the above link to read the rest of the article…
