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The IMF Leaks Greece
The IMF Leaks Greece
Whenever secret or confidential information or documents are leaked to the press, the first question should always be who leaked it and why. That’s often more important than the contents of what has been leaked. And since there’s been a lot of hullabaloo about a leaked document the past two days, here’s a closer look. Spoiler alert: the document(s) don’t reveal much of anything new, despite the hullabaloo.
On Saturday, Paul Mason at Channel 4 in Britain posted an IMF document(s) that according to him says, among other things, that the IMF expects a June 5 Grexit – in one form or another – if there is no agreement before that date between Athens and its creditors, ‘the institutions’ (of which the IMF itself is one).
The leaking is simply what it is as long as we don’t know the how and why. But the question will remain why somebody takes the risk to leak something only a small and select group of people are privy to. Is it leaked because it’s politically important, does Paul Mason pay a lot of money for leaks? Or is it perhaps an intentional leak, in this case ordered by IMF higher-ups? And if so, for what reason? A veiled threat?
Fact is that when you look through the documents Mason published, you notice that he adds his own interpretation to them. Mason, to whom documents seem to be leaked on a regular basis – he wrote about 2 more leaked documents 3 months ago – for instance suggests quite strongly in his write up at Channel 4 that June 5th is the date for a possible default.
However, the documents don’t mention that date. They only talk about June, not June 5. Mason writes about IMF ‘staff’: “They point to the €1.5 billion due to the IMF in June as the first vulnerable payment.”
…click on the above link to read the rest of the article…
Shape Of Greek Endgame Emerges: IMF Discussed “Cyprus-Like” Plan After Tsipras Warned Of Looming Default
Shape Of Greek Endgame Emerges: IMF Discussed “Cyprus-Like” Plan After Tsipras Warned Of Looming Default
As we said over the weekend, it’s all about Riga again for Greece. EU leaders will meet on Thursday and Friday in Latvia where PM Alexis Tsipras will try to secure a more favorable outcome than did FinMin Yanis Varoufakis who, last month in Riga, reportedly did more chiding and lecturing than negotiating, a performance that may ultimately cost him his job once all is said and done. The situation is far more urgent this time around, with Greece having tapped its IMF SDR account to make a payment to the Fund and with the banking sector running dangerously low on collateral that can be pledged for emergency liquidity.
A bit more color from Deutsche Bank:
One thing that is starting to come to a head is Greece. With an EU leaders summit in Riga scheduled for Thursday and Friday, we should have a good idea of where current negotiations stand by the end of the week. Talks may well pick up in pace over the next few days with a spokesman for the Syriza party saying on Greek TV (Mega) that ‘we’re striving for a mutually beneficial agreement by Friday’ while pushing the party line that ‘our mandate from the Greek people is to reach an agreement where we stay in the euro area without harsh austerity measures’…
…click on the above link to read the rest of the article…
Greece Will Default On June 5 Without Deal, IMF Leaks
Greece Will Default On June 5 Without Deal, IMF Leaks
Another week came and went with no breakthrough in negotiations between Greece and its creditors. The IMF is now fed up and has reportedly refused to be a part of any new bailout program for Greece, after Athens drew down its SDR reserves to makes its latest payment to the Fund. That money will now need to be repaid and in a move that surely marks the new gold standard for absurd circular funding schemes, Greece will likely look to use the next tranche of IMF money to payback its IMF SDR reserve which it tapped to pay the IMF. The country’s public sector employees live in limbo, not knowing from one week to the next whether they will be paid and commuters are now subjected to a 50 second looped highlight reel of the Nazi occupation meant to rally the country behind the government’s quarter trillion euro war reparations claim (they might as well just ask for a ‘gagillion’) on Germany which has now become the symbol of tyranny and debt servitude for many Greek citizens.
Given the situation, one would be inclined to think that Alexis Tsipras would be falling all over himself to cut a deal with creditors because while giving up on campaign promises to voters isn’t ideal, it’s better than going down in history as the PM who sent the country careening into a drachma death spiral, and besides, giving up on campaign promises is something most politicians do all the time (it’s a job requirement for the US presidency). Alas we were back to the now ubiquitous ‘red line’ rhetoric on Friday as Tsipras continued to employ the “tell EU officials one thing behind close doors and tell the public the exact opposite a day later” negotiating technique. Here’s more from Bloomberg:
…click on the above link to read the rest of the article…
Why Not Tell Greece How To Run A Democracy?
Why Not Tell Greece How To Run A Democracy?
I know I’ve talked about this before, but it just keeps coming and it keeps being crzay.Bloomberg ‘reports’ that the ‘German Finance Ministry’, let me get this right, “is supporting the idea of a vote by Greek citizens to either accept the economic reforms being sought by creditors to receive a payout from the country’s bailout program or ultimately opt to leave the euro.” And that’s it.
They ‘report’ this as if it has some sort of actual value, as if it’s a real thing. Whereas in reality, it has the exact same value as Greek Finance Minister Varoufakis suggesting a referendum in Germany. Or Washington, for that matter. Something that Bloomberg wouldn’t even dream of ‘reporting’ in any kind of serious way, though the political value would be identical.
Apparently there is some kind of consensus in the international press – Bloomberg was by no means the only ‘news service’ that ‘reported’ this – that Germany has obtained the right to meddle in the internal politics of other eurozone member nations. And let’s get this one thing very clear: it has not.
No more than the Greek government has somehow acquired the right to even vent its opinions on German domestic issues. It is a no-go area for all European Union countries. More than that, it’s no-go for all nations in the world, and certainly in cases where governments have been democratically elected.
So why do Bloomberg and Reuters and all the others disregard such simple principles? All I can think is they entirely lost track of reality, and they live in a world where reality is what they say it is.
…click on the above link to read the rest of the article…
When Europe Gets Greece’s Jingle Mail: Dealing with Default
When Europe Gets Greece’s Jingle Mail: Dealing with Default
The costs and consequences of Greece exiting the Eurozone may well dwarf the financial losses triggered by Greece’s default.
The term Jingle mail originated in the great popping of the housing bubble 2008-2011. It refers to defaulting homeowners mailing the keys to their house back to the lender, and it denotes the finality of default: it’s over.
The dream of ownership and easy wealth leveraged by vast debt: over. The dream that loans to marginal borrowers were as good as loans issued to qualified buyers: over.
And most importantly, the lender’s dream that marginal borrowers could somehow make the payments if the terms were tweaked is also over.
Which brings us to the jingle mailGreece is about to send Europe.Greece is analogous to the marginal home buyer who took on way more debt than the household could afford. Europe is analogous to the lender, who faces a spectrum of unsavory options:
1. Accept the reality of default, write off the loans and accept the horrendous losses.
2. Play for time by renegotiating the loan, reducing the payments, stretching the payments over a longer period, etc.
3. Bury the non-performing loan aszombie debt: the loan disappears from the performing loans but isn’t listed as a non-performing loan, either. It has become a zombie loan, neither performing nor non-performing.
Both of the latter strategies are versions of kicking the can down the road: what the lender does not want to do is report the loss and deal with the consequences (such as insolvency, lawsuits, etc.)
So the lender strings the debtor along, squeezing enough interest out to justify the claim that the loan is performing and the asset (i.e. the loan) is still worth its listed value.
…click on the above link to read the rest of the article…
Europe Preparing Greek Bankruptcy Loan “In Event Of Grexit”
Europe Preparing Greek Bankruptcy Loan “In Event Of Grexit”
Earlier today, we learned that, contrary to what Greek government officials had been implying for the better part of a week, Athens did not have enough money to make a €750 million payment to the IMF on Tuesday. Instead, Greeceborrowed most of the money (€650 million according to unnamed officials) from its IMF SDR reserves. This money must be paid back within 30 days. This effectively means that the IMF paid itself and it sets up a hilariously absurd scenario wherein assuming Greece manages to convince creditors to disburse a €7.2 billion tranche of aid later this month, the IMF will send money to Greece, who will send it right back to the IMF to replenish an IMF fund, which was drawn down by the IMF to pay itself back for money it loaned to Greece a long time ago. Put simply: Greece has taken circular funding schemes to a whole new level.
Meanwhile, the IMF is understandably fed up and according to El Mundo, the Fund will not participate in a new program for the Greeks, something which German FinMin Wolfgang Schaeuble indicated may be a dealbreaker when it comes to structuring another bailout for Athens.
The takeaway: it’s likely over. Greece lacks the cash to keep up the facade and the IMF lacks the political will to perpetuate the farce any further. This suggests that both Greece and the creditors formerly known as the “Troika” will need to resort to Plan B. There’s a problem with that however — namely that EU officials have gone out of their way to make it clear that there is no Plan B, because to admit that such a plan existed would be to admit that the euro is in fact dissoluble after all, something which is taboo in polite discussions among European politicians. Here is but one example, via Reuters:
…click on the above link to read the rest of the article…
Greece Is Now Just A Political Issue
Greece Is Now Just A Political Issue
Greece paid off the IMF yesterday with its IMF reserves. Is that a big deal? Whatever you may want to read into this, it’s been obvious for years that Greece needs major debt restructuring if it wants to move forward and have a future as a country -let alone a member of the eurozone-. Instead, the EU/troika anno 2010 decided to bail out German and French and Wall Street banks (I know there’s an overlap)- instead of restructuring the debts they incurred with insane bets on Greece and its EU membership- and put the costs squarely on the shoulders of the Greek population.
This, as I said many times before, was not an economic decision; it was always entirely political. It’s also, by the way, therefore a decision the ECB should have fiercely protested, since it’s independent and a-political and it can’t afford to be dragged into such situations. But the ECB didn’t protest. And ever since the deed was done, Brussels presents it as if it were as unavoidable as Noah building the Ark. It’s not. It’s still just another decision to put banks before people.
And in this case the people have come out on the very short end of a very long stick. That’s what the Greek discussions have been about ever since Syriza was elected, with a substantial majority, to be the government in Athens. And no matter how many times how many people may claim Greece lived above its means for years, it’s obvious that the unemployed and the hungry children and the elderly without health care did not.
…click on the above link to read the rest of the article…
Greece Effectively Defaults To IMF Using SDR Reserves To “Repay” Fund; 1 Month Countdown Begins
Greece Effectively Defaults To IMF Using SDR Reserves To “Repay” Fund; 1 Month Countdown Begins
When Monday’s Eurogroup meeting concluded without an agreement between Greece and its creditors, it should have been game over for Athens. With pensioners at their breaking point and with local governments reluctant to comply with a decree mandating a sweep of excess cash reserves, the idea that Greece would somehow be able to scrape together €750 million euros to make a scheduled payment to the IMF today seemed far-fetched at best which is why we asked the following question Monday afternoon:
Where, if not from local governments who have been extremely reluctant to comply with Athens’ cash sweep decree, and if not from the IMF which will apparently not be paying itself tomorrow after all, is Greece going to get three quarters of a billion euros in the next 12 hours?
We now know the answer to that question. As Bloomberg reports, citing Kathimerini, Greece tapped IMF reserves to pay .. well, to pay the IMF:
Greece used up ~EU650m reserves from its SDR IMF holdings account to meet loan payment of ~EU750m due to Fund today, Kathimerini newspaper reports, without citing anyone.Reserves kept in IMF holdings account need to be replenished within one month
IMF agreed over weekend for their use, given Greece’s liquidity situation; without use of those reserves, payment due today wouldn’t be possible.
Reuters has a bit more color:
Greece tapped emergency reserves in its holding account at the International Monetary Fund to make a crucial 750 million euro (539 million pounds) debt payment to the Fund on Monday, two government officials said on Tuesday.
With Athens close to running out of cash and a deal with its international creditors still elusive, there had been doubts whether the leftist-led government would pay the IMF or opt to save cash to pay salaries and pensions later this month.
…click on the above link to read the rest of the article…
IMF Preparing Greek Default Contingency Plan
IMF Preparing Greek Default Contingency Plan
The biggest slow motion trainwreck in history, one that everyone knows how it ends just not when (especially since the “when” is about 5 years overdue), that of the Greek sovereign default may just got a bit more exciting earlier today when the WSJ reported that the IMF can no longer lie – like Mario Draghi did to Zero Hedge in 2013 – that there are preparation for a Plan B. To wit: “the International Monetary Fund is working with national authorities in southeastern Europe on contingency plans for a Greek default, a senior fund official said—a rare public admission that regulators are preparing for the potential failure to agree on continued aid for Athens.”
According to the WSJ, the IMF is focusing on nations neighboring Greece, asking their national banking supervisors to “ensure that subsidiaries of Greek banks have enough assets that they can exchange for emergency financing at their own central banks—in case financing from their parent institutions is suddenly cut off—and that deposit-insurance funds are at sufficient levels, Mr. Decressin said.”
In other words, have a Greek default Plan B ready, preferably right now.
“We are in a dialogue with all of these countries,” said Jörg Decressin, deputy director of the IMF’s Europe department. “We are talking with them about the contingency plans they have, what measures they can take.”Greek banks are big players in some of its neighbors’ financial systems. In Bulgaria, subsidiaries of National Bank of Greece SA, Alpha Bank SA, Piraeus Bank SA and Eurobank Ergasias SA own around 22% of banking assets, roughly the same as Greek banks own in Macedonia. Greek banks are also active in Romania, Albania and Serbia.
…click on the above link to read the rest of the article…
Schäuble Warns of “Sudden” Greek Default
Schäuble Warns of “Sudden” Greek Default
The governments of Greece – new and old – screwed up. Other debt-sinner countries are able to borrow at near-zero or negative interest rates, simply taking money from investors with a promise to return it on a given day in the future if investors give it new money to do so. These investors, it must be said, had their brains washed by the ECB and other central banks in order to allow this to happen. But the governments of Greece somehow missed that gravy train.
Now, no one wants to lend Greece money at negative interest rates, least of all the Greeks themselves, who know their governments better than anyone else on the planet and have less trust in it than anyone else on the planet: they’re yanking their euros out of their banks even as the ECB is propping them up with fresh euros that ultimately belong to taxpayers elsewhere.
This weekend, representatives of the “institutions” – the unmentionable “Troika” – are trying the hash out a reform package with the new team from Greece that does not include Finance Minister Yanis Varoufakis, who’d been shoved aside. On Monday, the finance ministers of the Eurogroup will meet in Brussels.
Without an agreement on the implementation of the reforms, Greece won’t get the outstanding relief funds of €7.2 billion. And then what? The government has practically no funds left. Time is running out. Monday is it. The Big Day. Again.
“I don’t see that everything will be solved by then,” German Finance Minister Wolfgang Schäuble said in an interview in the Sunday edition of the Frankfurter Allgemeine Zeitung, one of Germany’s largest papers, throwing cold water on any hopes. He doubted that the Greek government even knew what exactly was going on in its finances.
…click on the above link to read the rest of the article…
Greece – Cruising Toward a “Happy End”?
reece – Cruising Toward a “Happy End”?
Bankrupt Greek Government Hopeful …
Hope dies last, as they say in Germany, but it has always been certain that the EU would do “whatever it takes”, to use a Draghi-ism, to keep Greece in the euro fold by finding a way to continue the existing extend and pretend scheme. So we are not surprised to learn that Alexis Tsipras is “hopeful” and that there has been “progress” at the talks – although it actually sounds like they have achieved precisely nothing.
Sparkly Greek prime minister Alexis Tsipras
Image via formiche.net
As Reuters reports:
Greek Prime Minister Alexis Tsipras forecast a happy end soon to fraught negotiations with creditors on a cash-for-reform deal, and the chairman of euro zone finance ministers said talks were making progress, though not enough for a deal next Monday.
However, with Greece’s cash reserves dwindling, EU officials said there was no breakthrough in talks with the International Monetary Fund, the European Commission and the European Central Bank on sticking points such as pension and labor market reforms and budget targets.
“The organization and structure of the talks has improved, compared to what it was before, but we are still quite some way away from a situation that you could describe as a final agreement being well in sight,” a senior euro zone official said.
…click on the above link to read the rest of the article…
The Choice Before Europe
The Choice Before Europe
Washington continues to drive Europe toward one or the other of the two most likely outcomes of the orchestrated conflict with Russia. Either Europe or some European Union member government will break from Washington over the issue of Russian sanctions, thereby forcing the EU off of the path of conflict with Russia, or Europe will be pushed into military conflict with Russia.
In June the Russian sanctions expire unless each member government of the EU votes to continue the sanctions. Several governments have spoken against a continuation. For example, the governments of the Czech Republic and Greece have expressed dissatisfaction with the sanctions.
US Secretary of State John Kerry acknowledged growing opposition to the sanctions among some European governments. Employing the three tools of US foreign policy–threats, bribery, and coercion–he warned Europe to renew the sanctions or there would be retribution. We will see in June if Washington’s threat has quelled the rebellion.
Europe has to consider the strength of Washington’s threat of retribution against the cost of a continuing and worsening conflict with Russia. This conflict is not in Europe’s economic or political interest, and the conflict has the risk of breaking out into war that would destroy Europe.
Since the end of World War II Europeans have been accustomed to following Washington’s lead. For awhile France went her own way, and there were some political parties in Germany and Italy that considered Washington to be as much of a threat to European independence as the Soviet Union. Over time, using money and false flag operations, such as Operation Gladio, Washington marginalized politicians and political parties that did not follow Washington’s lead.
…click on the above link to read the rest of the article…
Steps Towards a New World
Steps Towards a New World
Nowadays the exit from the so-called economic crisis in Europe has become the main topic of conversation. Various politicians, “experts” and technocrats speak of possible exits from the critical situation in which our societies have been trapped. But their proposals rarely go beyond unlimited economic growth and neoliberal austerity politics, which are being imposed in increasingly authoritarian ways [1], the consequences of which are increasingly difficult to hide. The other alternative which is being presented to us by the mass media is the one of the radical left parties (such as the Greek SYRIZA and the Spanish Podemos).
But in the midst of the heated debates and worsening living standards, on the horizon has emerged a third alternative – one coming from the grassroots. Seeing high unemployment [2], activists from various social movements have decided that since the contemporary system cannot provide them with jobs, they’ll create them outside of it. Workers from the occupied factory Vio.Me. in Thessaloniki raised the slogan: “The bosses can’t? We can!” The populations of the impoverished European societies have gotten tired of waiting for the support of their governments and have decided to take things into their own hands. Seeing that the state is not planning on helping them, that it collaborates with the corporate sector who was partly responsible for the crisis [3] – and not its alternative – the people realized that they can count only on their own powers and the solidarity in their communities.
…click on the above link to read the rest of the article…
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…
