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Three key takeaway items from this development:In simple terms, at this point things have become truly farcical: Greece threatens, begs, and even lies in order to receive bailout funds only to then turn around and complete renege on the terms of the agreement. Indeed, we now have evidence that Greece was hiring more Government workers at a time when it was supposed to be implementing austerity measures:
- Greek leaders, no matter what party they belong to, are unwilling to get Greece's fiscal house in order (how many debt repayments and deadlines have they missed now?)
- The current Greek Government is formed via a very loose coalition, which could very easily fall apart, resulting in yet another election.
- Greece already wants a third bailout (note the additional €16 billion needed to cover the country's financing needs).
Greece breached bailout rules with staff hirings: report
Greece breached the rules of its EU-IMF loan agreement by taking on some 70,000 public sector staff in two years, undermining efforts to reduce the state payroll, a report said on Sunday.
To Vima weekly said the hirings in 2010 and 2011 were highest in local administration, health, the police and culture, where the number of employees actually increased.
http://www.france24.com/en/20120624-greece-breached-bailout-rules-with-staff-hirings-report
This is extremely problematic for several reasons.
For one thing, this sends a clear message to the EU as well as the ECB and IMF that Greece is lying to their faces every time it promises to implement reforms. This doesn't make for much political goodwill (note the survey quoted in the article below).Greek PM cannot attend EU summit due to surgery
German Finance Minister Wolfgang Schaeuble repeated this view Sunday, in an interview to newspaper Bild am Sonntag.
"It must now be the most important task of Prime Minister Samaras' new government to swiftly and immediately implement the agreed program without hesitation or asking, yet again, what the others could do in addition for Greece," German Finance Minister Wolfgang Schaeuble was quoted as saying. "The ball is in Greece's field; it is in their hands to achieve that Europe's citizens can regain trust. But this will only be achieved through concrete measures and actions."
The Sunday tabloid published a survey on Greece that it had commissioned with Italy's Corriere della Sera, Spain's ABC and France's Le Journal Du Dimanche.
In it, 78 percent of the Germans polled, 65 percent of the French and about a half of the Italians said Greece should leave the Eurozone if it fails to pay its debt.
http://www.foxnews.com/world/2012/06/24/greek-pm-cannot-attend-eu-summit/#ixzz1yjbQVEOR
EU political leaders and their respective citizenry aren't the only ones realizing that Greek political leaders are a bunch of crooks; the Greek people are also beginning to realize that their political leaders are not looking out for their best interests or for Greece's: only 20% of the Greek bailout money went into the economy, the rest went towards paying off Greece's creditors (read EU banks) and the ECB.
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European leaders will be meeting this Thursday and Friday to discuss Greece and other issues. As the above articles headline reveals, neither Greece's new PM nor its Finance Minister (they no longer have one) will be in attendance.
However, we already know from the headlines this morning that Angela Merkel will not agree to Euro bonds or any kind of shared deposit insurance if it means "joint liability" (read: Germany being on the hook for other EU members' bank losses).
We also know that the ECB is not interested in buying more government bonds (it hasn't for 14 weeks now). And the ECB has stated point blank that Greek negotiations will not begin with Greece "wish[ing] for more time."
So, there is a relatively high probability that a Grexit will be coming sooner rather than later. It all boils down to one simple fact: the second the money spigot from the EU to Greece gets turned off, Greece leaves.
Consequently, the real question is: "when does Germany and the rest of the EU stop picking up the tab for Greece?" Judging from the above survey in which even the French and Italians now think Greece should leave the EU if it doesn't start paying its bills, it won't be long: Greece will need another €16 billion in financing if the EU accepts its request for another extension (yes, this would be the third bailout).
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"dzeeniuus, dzeeniuus, dzeeniuus"(...) Greece threatens, begs, and even lies in order to receive bailout funds only to then turn around and complete renege on the terms of the agreement(...)
The International Monetary Fund has signaled that it
will not contribute to further financial aid for Greece, raising a
greater risk of insolvency in September, the German weekly Der Spiegel
reported Sunday.
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The risk of Greece leaving the Eurozone is now seen as manageable,
Der Spiegel said. In order to avoid a contagion effect, Eurozone
governments want to wait until Europe’s permanent rescue fund ESM is in
operation. A first ruling by the German Constitutional Court on the ESM
is scheduled for September 12.
In the meantime, the ECB might bridge the gap, Der Spiegel wrote.
On August 20, Greece needs to pay back some E3.8 billion to the central
bank. Athens might sell that amount of T-bills to Greek banks, which
could then use the bonds as collateral with the ECB.
Meanwhile, German Economics Minister Philipp Roesler told German
ARD public television in an interview aired Sunday that Greece will most
likely not be able to meet the goals agreed with its international
lenders. “I want to say this here very clearly: if Greece does not meet
its obligations, there can be no further payments to Greece,” he
stressed.
In that case, Greece might come to the conclusion that it would be
better to leave the Eurozone, said Roesler, who is also vice chancellor
and head of the free market-orientated FDP, the junior partner in the
government coalition. “I think that for many experts, for the FDP, and
for me, a Greek exit from the Eurozone has long since lost its horror,”
he added.
On the inaugural day of the much-awaited holy grail of Europe - the ESM - DutchNews.nl reports that Dutch diplomats in Athens have been secretly planning for an eventual Greek exit from the eurozone ...
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As European Union leaders prepare for a summit next week devoted to saving the euro, Swedish Finance Minister Anders Borg said Greece may quit the common currency within the next six months.
“It’s most probable that they will leave,” Borg said today on a conference call from Tokyo, where global finance officials have gathered for the annual meetings of the International Monetary Fund. “We shouldn’t rule out this happening in the next half-year.”
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It doesn't cost TPTB anything to hang on to Greece; it costs us slaves. So why would they let anyone go?
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According to initial estimates, Greeks withdrew €3 billion from their bank accounts in December. €600 million of that total came on December 29, when Greece failed to elect a new president, thereby forcing national elections on January 25.
In comparison, November when net outflows totaled about €220 million.
The risk of bank runs in Greece is reactivated. In this sense, just remember that since 2010, when the crisis hit the euro, the Greek bank deposits dropped 37% but even after the rescue by the troika, deposits never recovered. This data demonstrates strong distrust by Greek depositors of the monetary union.
The Greek financial system is artificially sustained by the ECB, the lender of last resort. It survives because the ECB accepts junk debt (including Greek state bonds) as collateral. If the ECB were to cut support, the Greek banking simply would close and the government would set strict limits on the withdrawal of deposits.
On Thursday, the ECB said that its funding to the Greek banking system depends on the success of the current bailout program and a subsequent agreement in Athens with the EU and the International Monetary Fund (IMF).
The rating agency Moody's also warned Thursday that the growing political uncertainty in Greece is damaging the liquidity of Greek banks, causing an outflow of deposits.
Investor Fear
Fear not only grows among depositors. Investors also show their misgivings by their rejection of the Greek public debt. The yield on Greek ten-year bonds has just surpassed the threshold of 10% for the first time in 15 months, while the risk of sovereign default is increasing, as reflected in the price of credit default swaps of Greek debt, now exceeding 1,500 points.
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The Greek general election on Jan. 25 looks like a referendum on Greece's membership in the euro. If the Greeks vote for radical left-wing Syriza and its leader Alexis Tsipras, a new anti-austerity government could eventually take Greece out of the economic and monetary union. Alternatively, it could catalyze a series of anti-creditor steps that may lead to Germany and the main creditor countries leaving.
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Greece could split itself off from the rest of the euro area with fewer repercussions than three years ago – as the German government now seems to admit. Private bondholders and foreign banks have largely got their money out of Greece. Greek government debt (more than 170% of GDP) is now overwhelmingly in the hands of European public sector lenders, whether the European Central Bank, individual governments or the myriad European rescue funds.
"Grexit" would lead to political turbulence, exchange controls and a concerted effort by the creditors to make life difficult for the Greeks ("pour décourager les autres"). But it would not bring a run on the banks and a financial crisis. Let's be clear. Whether Greece is in or out, the Germans and the other big creditors within EU, led by the Netherlands, will not get their money back.
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The EU will either stay together as a northern coalition or come completely apart at the seams, with all nations reverting back to self rule and national currencies.
When Greece drops the euro the Germans will hold a celebration. That would save Berlin or Frankfurt a ton of cash in bailout money.:clap:
...and where exactly are the "bailouts" funds going, you think?When Greece drops the euro the Germans will hold a celebration. That would save Berlin or Frankfurt a ton of cash in bailout money.:clap:
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Partial election results suggest Syriza has secured 36.5% of the vote, compared to 27.7% for the New Democracy party.
This indicates the party would get 150 seats in the 300-seat parliament - one short of an overall majority.
...
In his victory speech, Mr Tsipras said: "The sovereign Greek people today have given a clear, strong, indisputable mandate.
"Greece leaves behinds catastrophic austerity, it leaves behind fear and authoritarianism, it leaves behind five years of humiliation and anguish.
"The verdict of our people means the Troika is finished.
"The new Greek government will be ready to cooperate and negotiate for the first time with our peers a just, mutually beneficial and viable solution."
Mr Syriza's refusal to continue meeting the austerity demands placed on Greece by its creditors has sparked fears the country may be unable to repay its debts, which could force the country's exit from the Eurozone.
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Tsipras meets with Russian ambassador and then visits WWII memorial where Nazis killed Greeks. Think that's just coincidence, or is a message being sent to Germany (and the EU)?
http://www.zerohedge.com/news/2015-...-germany-loud-and-clear-m-his-first-act
The west is trying to strangle Putin with stupid economic sanctions over a country that on a relative basis, produces very little and provides nothing for the EU except a buffer zone between west Europe and the Russian border.
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In 2010, the Greek state ceased to be able to service its debt. Unfortunately, European officials decided to pretend that this problem could be overcome by means of the largest loan in history on condition of fiscal austerity that would, with mathematical precision, shrink the national income from which both new and old loans must be paid. An insolvency problem was thus dealt with as if it were a case of illiquidity.
In other words, Europe adopted the tactics of the least reputable bankers who refuse to acknowledge bad loans, preferring to grant new ones to the insolvent entity so as to pretend that the original loan is performing while extending the bankruptcy into the future. Nothing more than common sense was required to see that the application of the 'extend and pretend' tactic would lead my country to a tragic state. That instead of Greece's stabilization, Europe was creating the circumstances for a self-reinforcing crisis that undermines the foundations of Europe itself.
My party, and I personally, disagreed fiercely with the May 2010 loan agreement not because you, the citizens of Germany, did not give us enough money but because you gave us much, much more than you should have and our government accepted far, far more than it had a right to. Money that would, in any case, neither help the people of Greece (as it was being thrown into the black hole of an unsustainable debt) nor prevent the ballooning of Greek government debt, at great expense to the Greek and German taxpayer.
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Germany, and in particular the hard-working German workers, have nothing to fear from a SYRIZA victory. The opposite holds. Our task is not to confront our partners. It is not to secure larger loans or, equivalently, the right to higher deficits. Our target is, rather, the country's stabilization, balanced budgets and, of course, the end of the grand squeeze of the weaker Greek taxpayers in the context of a loan agreement that is simply unenforceable. We are committed to end 'extend and pretend' logic not against German citizens but with a view to the mutual advantages for all Europeans.
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