“Greek banks are preparing contingency plans for a possible “bail-in” of depositors amid fears. The plans, which call for a “haircut” of at least 30 per cent on deposits above €8,000, sketch out an increasingly likely scenario for at least one bank, the sources said.”
On Thursday, we highlighted the pitiable plight of Greek businesses which, facing an acute cash crunch and suppliers unwilling to provide credit ahead of the country’s weekend referendum, are being forced to close the doors.
The country’s banks are set to run out of physical banknotes “in a matter of days” according to a “person familiar with the situation” who spoke to WSJ and Constantine Michalos, the president of the Athens Chamber of Commerce, fears the country’s stock of imported goods will only last for two or three more weeks.
Meanwhile, Greeks have resorted to scavenging for food and picking through dustbins for scrap metal and as we noted on Wednesday, this is hardly a recent development in Greece. High unemployment has plagued the country for years , becoming endemic and relegating many Greeks to a life of perpetual and severe economic hardship. Continue reading »
By now it should be clear to all that the only reason why Germany has been so steadfast in its negotiating stance with Greece is because it knows very well that if it concedes to a public debt reduction (as opposed to haircut on debt held mostly by private entities such as hedge funds which already happened in 2012), then the rest of the PIIGS will come pouring in: first Italy, then Spain, then Portugal, then Ireland. Continue reading »
Several days ago, we posted a NSA cable leaked by Wikileaks, in which then French finance minister Moscovici (currently a European commissioner) was admitted that the French economic situation was “worse than anyone [could] imagine and drastic measures [would] have to be taken in the next two years.” It has not improved since then.
Overnight, in another perhaps even more relevant to the current quagmire in Greece leak, Wikileaks has released another intercepted NSA communication between German Chancellor Angela Merkel and her personal assistant reveals that not only Merkel, but Schauble, were well aware that even with a debt haircut (which took place in 2012 but only for private creditors and whose impact was promptly countered with the debt from the second bailout) Greek debt would be unsustainable. Technically, she did not use that word: she said that “Athens would be unable to overcome its problems even with an additional haircut, since it would not be able to handle the remaining debt.” Continue reading »
Mind you, their numbers are still way off the mark, in the end it’s going to be easily double what they claim. Not even a Yanis Varoufakis haircut will do the trick.
But at least they now have preliminary numbers out. The reason why they have is inevitably linked to the press leak I wrote about earlier this week in Troika Documents Say Greece Needs Huge Debt Relief. If that hadn’t come out, I’m betting they would still not have said a thing.
It’s even been clear for many years to the IMF that debt restructuring for Greece is badly needed, but Lagarde and her troops have come to the Athens talks with an agenda, and stonewalled their own researchers.Continue reading »
European Parliament president Martin Schulz said his faith in the Greek government had reached “rock bottom,” and, as AFP reports, that he hopes it resigns after Sunday’s referendum. Luckily, he has an idea for a solution… the time between the departure of Tsipras’ hard-left Syriza party and new elections would have to “be bridged with a technocratic government, so that we can continue to negotiate.”
Schulz on Thursday told German Handelsblatt business daily that “new elections would be necessary if the Greek people vote for the reform programme and thus for remaining in the eurozone and Tsipras, as a logical consequence, resigns.”Continue reading »
“With banks shuttered and Greece’s economy hobbled by capital controls, Varoufakis said in a Bloomberg Television interview in Athens that he would “rather cut my arm off” than sign a deal that fails to restructure Greece’s debt.”
Earlier today we documented the “heartbreaking” plight of Greece’s retirees who have been reduced to lining up in front of Greek banks hoping for a chance to collect a portion of their pensions. Some went away empty handed (there were reports that only those whose last names began with “A” through “K” were paid on Wednesday) and those who did manage to leave with cash were only allowed to access a third of their usual payouts.
Just hours after Greece became the first developed country to default to the IMF, as a result being expelled from its existing bailout program, a little before 5am CET news hit that Greek PM Tsipras was willing to concede to virtually all creditor demands, with a few exceptions. As the FT first reported, “Greek prime minister Alexis Tsipras will accept most of the bailout creditors’ conditions offered last weekend, but is still insisting on a handful of changes that could thwart a deal according to a letter he sent late on Tuesday night.” Continue reading »
I have plenty to say on the topic of this essay. But the most important thing I think is that I know the EU is blowing up itself by trying to exert far too much influence on the very member nations that made its existence possible. Brussels is a blind city. To see it blowing itself to smithereens makes me very happy.
The flipside is that it will take a lot of pain, and probably even the very wars the EU was originally founded to prevent, to figuratively burn it to the ground. But that, if you’ll allow me, is for another day: Continue reading »
Yes we are fully aware that using the pejorative term ‘default’ makes us members of the ignorati, but what else do you call it when you fail to pay back a contracted debt in a timely fashion? (and don’t say ‘arrears’) Anything else is semantics.
*IMF SAYS GREECE FAILED TO MAKE PAYMENT DUE TUESDAY
*IMF TO CONSIDER GREEK REQUEST FOR PAYMENT DELAY IN DUE COURSE
*IMF BOARD INFORMED THAT GREECE IS NOW IN ARREARS
“I can also confirm that the IMF received a request today from the Greek authorities for an extension of Greece’s repayment obligation that fell due today, which will go to the IMF’s Executive Board in due course,” IMF spokesman Gerry Rice says in e-mailed statement.
This is the first time an advanced economy has defaulted to The IMF and is by far the largest default The IMF has ever faced.Continue reading »
Update 3: Merkel keeps pouring it in. Bloomberg reports tthat German Chancellor Angela Merkel says at event in Berlin that offer from Greek government over bailout program “cannot be clearly identified.”
“Greece has decided that the program will expire at midnight tonight. We have made clear today: There are new offers today which cannot be clearly identified, negotiations which we cannot specify. Before the planned referendum will be held, we will not discuss negotiate anything new.”
Update 2: The Greferendum cancellation calls have begun and Greece has now effectively applied for a DIP loan.
GREECE MUST CANCEL REFERENDUM TO ALLOW PROPOSAL AIRING: GABRIEL
GABRIEL: GREEK TALKS CAN RESUME QUICKLY IF REFERENDUM KILLED
GREECE REQUESTS LOAN EXCLUSIVELY FOR MEETING DEBT PAYMENTS: DOC
GREECE REQUESTS BAILOUT EXTENSION TO AVERT DEFAULT: DOCUMENT
Update: EU finance ministers will reportedly hold a teleconference shortly to decide on Greece’s bid for an ESM loan. “Group of euro-area finance ministers have responsibility to choose whether to approve Greece’s bid for two-year bailout program from European Stability Mechanism,” Bloomberg reports, citing an unnamed EU official.
In waht appears to be some level of German backing down, fiery FinMin Schaeuble has, reportedly said the following:
*SCHAEUBLE SAID TO SAY GREECE MAY BE ABLE TO TAP EU SUPPORT FUND *SCHAEUBLE SAID TO SEE GREECE STAYING IN EURO EVEN IF ‘NO’ VOTE
Thus spurring the probability of a consequence-less “no” vote on Sunday enabling the increased negotiating position that The Greek government had hoped for. Of course, desperate for any excuse, stocks and EUR are rallying on this and bonds are selling off.