http://www.zerohedge.com/news/2015-...dr-reserves-repay-fund-1-month-countdown-begi
The fork is halfway into Greece's belly. She's bankrupt and just about done.
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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.
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For the rest of this month, Greece should be able to cover daily cash deficits of around 100 million euros, government ministers say. Starting June 5, however, these shortfalls will rise sharply, to around 400 million euros as another I.M.F. obligation comes due. They will then double in size on June 8 and 9.
“At that point it is all over,” said a senior Greek finance official who spoke on the condition of anonymity.
On Sunday, the interior minister, Nikos Voutsis, said that there would not be enough money to pay the I.M.F. if there was no deal by June 5.
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Greece may have to default on its debts and impose curbs on bank withdrawals before reaching a deal with its creditors, according to Goldman Sachs, as a crucial payment deadline approaches.
Merkel calls in Draghi and Lagarde for Greek debt talks
The pressure on Athens increased on Monday as a senior German central banker warned that it was “five minutes to midnight” for a Greek financial system on the cusp of collapse.
Goldman Sachs broached the subject of a default in a note published on Monday, claiming that the country could be forced into drastic measures amid fears that it will miss a €305m (£220m) payment due on Friday to the International Monetary Fund.
It will be “very challenging” for Greece and its creditors to reach a deal to unlock the final €7.2bn of the country’s bailout aid, said the bank’s chief European economist, Huw Pill. Warning that Greek government cash reserves were nearly exhausted, Pill said new elections could be triggered in Greece, alongside a debt default and limits on removing cash from banks.
“Facing this reality, a new political mandate** and thus a new government, a referendum or new elections ** will be required in Greece,” he said. “Not only is it possible that we may need to see sovereign technical default and/or blocked Greek bank deposits in order to come to an accommodation between Greece and its official creditors, it may be necessary to do so in order to break the current impasse in negotiations.”
Greek banks, which have been surviving on emergency handouts from the European Central Bank, have seen massive outflows in the past week. Andreas Dombret, an executive board member of the German central bank, told the Bild newspaper: “The Greek government would be well advised to act quickly. For the Greeks banks, it is five minutes to midnight.”
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Greece is signing a memorandum of understanding with Russia for the gas pipeline. Check mate boyz!
In attempt to bridge the gap between a proposal submitted by Greek PM Alexis Tsipras last Monday and a draft agreement devised by creditors the following day, Athens has reportedly submitted a new three-page plan focused on fiscal sustainability.
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In sum, it looks as though the Greeks have essentially submitted the same proposal they submitted last week. That is, the "red lines" on VAT and pension cuts have not changed and as such, creditors won't likely budge. This was to be expected given that Athens has bought itself a bit more time by going the so-called "Zambian" route with its June IMF payments.
Political discussions are reportedly "ongoing" in Greece, which presumably means Tsipras is attempting to negotiate with Syriza party hardliners in an effort to determine if any further concessions to creditors would be acceptable in terms of passing an agreement through the Greek parliament. In other words, this latest "proposal" is likely nothing more than a token submission in lieu of a more serious effort later this month.
Greece has asked to bundle its four debt payments to the International Monetary Fund that fall due in June so that it can pay them in one batch at the end of the month, Greek newspaper Kathimerini reported on Thursday.
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If Greece defaults on its official-sector debt, Münchau calculates France and Germany stand to forfeit €160 billion.
And what about Spain? Portugal?
Münchau has numbers higher than my January 22, post Revised Greek Default Scenario: Liabilities Shifted to German and French Taxpayers; Bluff of the Day Revisited.
At that time, I had French exposure at €55 billion and German exposure at €73 billion (a total of €128 billion).
I also had Spain at €33 billion and Italy at €48 billion. Both of those numbers are likely way higher today. Even if my numbers are still accurate, where the hell is Spain going to come up with €33 billion? Where will Italy come up with €48 billion?
The answer to both questions is simple: they won't.
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this drama can't go on too much longer.
... Greece isn’t leaving the euro; there will be no Grexit.
Nobody’s going to get kicked out or quit.
Now that doesn’t mean everything’s fine in Greece. They could have bail-ins, nationalizations, bond defaults and a lot of economic disruption around the country. None of that is the same as Greece leaving the euro, however. I’m confident in my assessment because this isn’t solely an economic issue; it’s also political. ...
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Going back to game theory, assume Greece quits the euro. The country defaults on its debts. That means they go back to the drachma. What happens then?
Hyperinflation.
Nobody in the world wants drachma so their foreign direct investment’s going to dry up too. They’re not going to be able to finance anything. They will be able to print money. That’s all they’ll be able to do. That means hyperinflation, which destroys Greek pensions.
So, when the Greek government says they’ll play hardball with Europe to preserve Greek pensions, remember their alternative is: go back to the drachma and destroy the pensions anyway.
Greece wants to play hardball, but it knows if it leaves the euro it’s a disaster. Europe knows it will also be a disaster if the kick Greece out of the euro. It’s not that Europe cares about Greece or vice versa, but that they each care about themselves. That’s what drives a negotiation forward.
In a game theoretic space, this is what’s called a two party prisoner’s dilemma. A prisoner’s dilemma is a game theory approach where you have two people under interrogation.
If you rat out the other guy, you win. But if he rats you out, he wins. And if you both rat each other out, you both lose. But if you both keep your mouth shut, you both win. The caveat is, you don’t know what the other guy’s doing.
So, in a prisoner’s dilemma, you have to not only think about what you want to do, but about what is the other player is going to do. The way out of the dilemma is to assume that everybody’s rational.
Both sides respectively understand that a Grexit will cost them. It will cost them more if this doesn’t work out than if they go forward.
This will get resolved, in my view. But six months from now or a year from now, we could be at it again. I could be writing to you about the same dynamics at work. Any resolution is just buying time in hopes the economy grows. That’s a separate, bigger-term, structural issue that’s not going away.
But, in the short run, I do expect Greece and Europe to reach an agreement.
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Greece timeline: Key dates ahead
30 June: Troika bailout programme ends as Greek €1.6bn payment to IMF due
1 July: No bailout programme could mean no emergency liquidity from the ECB
5 July: Proposed Greek referendum
10 July: Treasury bills worth €2bn to be repaid
20 July: Bonds worth €3.5bn to be repaid to eurozone partners
20 August: Bonds worth €3.2bn to be repaid
The threats are flying fast and furious now.
Moments after the WSJ quoted a Greek official as saying that Greece will not make its IMF bond payment, the ECB struck back when Bloomberg reported that the ECB would review the legality of Greek aid should there not be a deal, i.e., on July 1 post an IMF default. According to Austrian central bank Governor and ECB member, Ewald Nowotny, on Wednesday’s governing council meeting the central bank will decide whether it can continue to provide emergency support for Greece once current bailout program expires June 30, as the Wiener Zeitung originally reported.
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The subtext of what Nowotny just said is that absent a deal, Greek banks will have no choice but to impose a massive haircut on existing deposits, since the entire ELA will be yanked, and the Cyprus scenario would follow, one that would see existing deposits of under €120 billion, chopped off in half or probably much, more depending on the true state of Greek bank collateral.
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......Greek Finance Minister Yanis Varoufakis confirmed that the country will not make its payment due later to the International Monetary Fund.
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... an Greece default in the Eurozone as Varoufakis has claimed all along, or will the collapse of the Greek banking system tomorrow after the ECB makes the ELA illegal topple the government? ...
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This is what the IMF said:Even with concessional financing through 2018, debt would remain very high for decades and highly vulnerable to shocks. Assuming official (concessional) financing through end–2018, the debt-to-GDP ratio is projected at about 150 percent in 2020, and close to 140 percent in 2022 (see Figure 4ii). Using the thresholds agreed in November 2012, a haircut that yields a reduction in debt of over 30 percent of GDP would be required to meet the November 2012 debt targets. With debt remaining very high, any further deterioration in growth rates or in the mediumterm primary surplus relative to the revised baseline scenario discussed here would result in significant increases in debt and gross financing needs (see robustness tests in the next section below). This points to the high vulnerability of the debt dynamics.
And the kicker:..."these new financing needs render the debt dynamics unsustainable."
Greece Roundup...
- A "yes" vote in favor of servitude has now reached a slight majority according to some Greece referendum polls. How accurate the polls are is an issue.
- Yanis Varoufakis, Greece’s finance minister, said he would resign if Greeks voted Yes in Sunday’s referendum on the country’s bailout. "I will not sign another extend and pretend agreement", said Varoufakis.
- Greece to run out of essential food and medicine within days and banks down to last €500 million.
- Daily allowance of cash from ATMs has dropped from €60 to €50.
- Three quarters of business leaders think Greece will be forced to leave the eurozone in the next 12 months.
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