As G-Pap Survives Another Day, Here Are The Next Steps: SocGen's Take

Tyler Durden's picture

Following a rather anticlimatic day in which Greece did precisely as the conventional wisdom expected it to, leading to a modest sell the news drop in the EURUSD (down to 1.4370 as of this writing), Greece is a long way from being out of the woods. Summarizing the immediate next steps is SocGen's Vladimir Pilonca.

George Papandreou’s PASOK government survived the confidence vote on Tuesday night. As expected, Papandreou obtained a relatively narrow majority, with 155 votes to 143 in the 300 seat Parliament (and two abstentions). The focus now shifts to next Tuesday’s Parliamentary vote of the Medium-Term Fiscal Plan (MTFS). The MTFS includes €28bn of additional austerity measures for 2011-2012 as well as an accelerated privatisation plan.

The formal Parliamentary approval of the MTFS is a necessary condition for the IMF’s quarterly disbursements, with the next €12bn tranche due in July.

The IMF will only disburse if the EU does

The IMF made it clear that the July tranche to Greece can only be disbursed if the EU provides concrete assurances that it will continue to provide funding to Greece as stipulated under the EU/IMF adjustment program.

Because of this conditionality, next Tuesday's Parliamentary passage of the MTFS remains a critical roadblock to provide Greece with a medium-term funding solution from the EU/IMF. Although not the most likely outcome, a failure to approve the MTFS could pave the way to anticipated elections.

Only the approval of the MTFS will remove the policy deadlock

Only after the MTFS is approved can the EU officially put forward a medium-term funding plan for Greece, through to 2014. And only once Greece is funded for at least the next twelve months will the IMF give its official consent to its share of the quarterly disbursement (€3.3bn).

Assuming a parliamentary majority is reached on the MTFS, a decision from the EU on Greece’s medium-term funding – at least in principle -- could be reached at the EU Meeting on 3 July, rather than 11 July as initially suggested by EU Commissioner Olli Rehn. That would then clear the way for the IMF to authorise its share of the quarterly disbursements, too.

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EscapeKey's picture

...meanwhile, here in the UK, the BoE is starting the ground work for more QE:


Speaking a day ahead of the release of minutes from the Bank of England Monetary Policy Committee’s June meeting, Mr Fisher said, "If we get stuck in a deflationary rut it's not clear we have sufficient ability to get out of that quickly.

"I've said in the past it [QE] is still very much on the table as one of our potential policy actions, and it's certainly not ruled out and people need to be aware of that."

Of course, running a 4.5% CPI rate doesn't mean you can't talk of the bogeyman, "deflation".

It's also worth considering that the BoE currently sit on a third of all British gilts, so hey, why not increase it to 100%? What could possible happen?

WonderDawg's picture

I've been thinking that we, the citizens, are being conditioned to get used to more QE. The TPTB are normalizing QE in the psyche of the populace. The MSM is the PR machine, as everyone that reads ZH knows, and they are effectively preparing the citizens for the new normal. I do my best to educate those within my realm of influence as to what is actually going on, but the ol' deer in the headlights look has grown tiresome.

I know the banksters want to keep the bubble inflated, and I think they'll pretty much try anything to do so, but I think the deflationary pressures will prove to be too strong. How this whole thing plays out, I don't know for sure, I don't think anyone really knows. But I lean toward deflation first, 2008 but worse, and then inflation/hyperinflation after deflation has done it's job of clearing the market of toxic debt and the inflationary policies finally gain traction. But what the fuck do I know? I'm just a country boy trying to find my way through the swamp of bankster fraud.

Herd Redirection Committee's picture

I don't know about deflation 'clearing the market of toxic debt',  the banks will pull a  Japan and sit on the debts for eternity sooner than recognize a loss.

So there will be deflationary pressures, for sure, the level of income disparity means the current system is untenable.  But it will result in loss of confidence in the US Dollar sooner than anyone can anticipate.  Once the ball starts rolling, any way.

Check out the latest from the Capital Research Institute "0% Interest Rates - Who Benefits?":

" If the Central Banks refuse to act (by exchanging US dollar reserves for physical gold) then eventually they will become obsolete, their fiat holdings worthless.

Now, if we see that we are on this road to currency destruction, then why is nothing done about it?  The solution is to raise interest rates, not to 1 or 2%, but to atleast 6%, the CRI’s rough estimate for inflation over the last 3 years.  Although the rationale can not be fully covered right here, right now, it is a human one.   The richest, most powerful people on the planet are also among the most highly leveraged.  Raising interest rates would significantly weaken the dollar value of their assets, as well as increase the ‘operating costs’ (interest on their debt) of their speculative activity.   To take it a step further, our analysis indicates that the crucial consideration may in fact be not the wealth of those at the very top of the pyramid, but the wealth of those immediately beneath them, the bureaucracy of the oligarchy, as it were.  The hands and feet of the ruling class, the ones who administer, supervise, and direct day-to-day operations at the world’s largest financial firms, energy companies, media firms, think tanks, military industrial complex, intelligence agencies and so on.  Their overlords promised them vast riches, and basically guaranteed them investment success by lending them money and telling them how to spend it (in a more honest time this was referred to as insider trading and was even considered a crime).  The overlords promised more than they could deliver  (that is, after all, what they are good at, and what keeps them in power) and now find themselves between a rock and a hard place.

The decision to sacrifice the US dollar was made, rather than financially ruining the ruling class’ bureaucracy.  Sorry America, and sorry savers!"

qussl3's picture

We will certainly have a devaluation of the USD to a level where the US can export and practice merchantilist policy, but its very unlikely the USD will die.

The reason is simple, the most powerful military force backs the USD, if the currency experiences a disorderly breakdown, no one wins.

It may not even be the Americans threatening force to keep the USD as the reserve, the Japs Germans and Chinese may be its proponents, at least till the Chinese can sufficiently hoodwink the ROW that the yuan should be the reserve.


Cole Younger's picture

At the rate that China is buying and producing gold, it would not surprise me if in the near future they don't move to a fractional based gold standard. That would pretty much sink most fiat currencies and surpress rising inflation in China. They are getting out of U.S. treasuries. When that is done, look out.

wanklord's picture

Accept the New World Order and enjoy a successful life. Patriotism and nationalism are obsolete doctrines and the ignorant masses living in the United States and Western Europe must realize once and for alll that the upcoming changes are irreversible. Ordo ab Chao.

Akrunner907's picture

Very true.  This evolution has been a long time coming, and its formation goes back to after the first world war.  It's always been the plan!  A catalyst, or in this case contagion, was needed to create an event that would bring everyone into the same lifeboat.   The only obstacle will be controlling the masses so they will full give up their right of independence.   Just accept it and let the energy take over.

AbbeBrel's picture

But of course, deflation, especially of housing assets, gums up the Banksters ability to generate profits by lending:

Indeed, the U.K. property bubble was more akin to that seen in Japan in the late 1980s. This is a comparison to chill British homeowners' blood, because Japanese property prices have slid for the best part of 20 years.


Australia house mortgage holders appear to need more clues about what is coming up.   As for the on-topic conversation - Greece - well they are toast.   This exercise is all about the Banksters and other bond-holders of the debt.   Greece never recovered from the Parthenon getting blown up by the Turks + Venetians in 1687, and it is likely that this round will be another chapter in their history book from which they will not recover.   They haven't even been able to secure the return of something that was stolen from them, with the approval of the Turks, in 200 years or so.   What makes you think that the Greeks will be able to recover any other stolen property???

In 1806, Thomas Bruce, 7th Earl of Elgin removed some of the surviving sculptures, with the Ottoman Turks' permission. These sculptures, now known as the Elgin Marbles or the Parthenon Marbles, were sold in 1816 to the British Museum in London, where they are now displayed. The Greek government is committed to the return of the sculptures to Greece, so far with no success. [wikipedia]

dcb's picture

yeah, unreal. they have missed their inflation target for so long. But more cheap money. I don't know how they get away with it. But, it's just as bad as the US. No idea why your comment was junked. it is accurate to say the least. It looks like the corproate stooges/ trolls are very active tonight. I am 100 percent certain. government or corporations are paying people to junk/ monitor comments on this site.

Caviar Emptor's picture


Like all Ponzis, it's a Confidence Game 

InconvenientCounterParty's picture

...and normalcy bias is often misinterpreted as confidence.

In any case, recognition occurs suddenly.

WonderDawg's picture

That's it, right there. A "confidence crisis" brings the whole system down. That's what leads me to believe we'll crash before we have inflation. When confidence is lost, it happens without warning, and then the SHTF.

NotApplicable's picture

So, two of the Parliamentarians either couldn't figure out who was holding the gun, or noticed there was now more than one?

Indecision will win you no friends in this space.

chump666's picture

Greece is gone. Short sell the EUR...indexes should play catch up on the meltup hysteria.

...and then there is a China

Lord Welligton's picture

 Short sell the EUR

Against what?

chump666's picture

bring up your EUR chart (USD) look at the 15min, or less.  we got a 1.43 below the 100ma.  That's it.  There is mostly likey bids on the 1.43 1.42 and below. 


IBelieveInMagic's picture

G-Pap is going to be successful with pushing thru the bankers program -- they announce a severe austerity measure and then G-Pap will be allowed to succeed in "negotiating" a less austere program and the deal will get done. Folks betting on Greece to turn back the bankers are going to lose their shirts.


Cole Younger's picture

I don't think its the politicians to be concerned about, they are puppets and pawns of the banks. It's the people that will take out the bankers by either voting out the politicians or over throw the current government. Nothing will prevent a Greek default. Going deeper in debt is not going to help and neither is pissing off the people further with austerity.

Lord Welligton's picture

This is as it always has been a binary bet.

Will the ECB monetize to the tune of €1,500,000,000,000?

Or will it not.

I think it will.

But not before all those in the know, know that they know.

topcallingtroll's picture

My lord,

The germans had this thingy called hyperinflation and it led to jewish confetti and a crazy vegetarian with an odd mustache. I dont think they will allow it.

disabledvet's picture

now you're reporting the news.  what is "Soc Gen"?  I've never heard of it?  Does it have a "President" or "CEO" thingy?  What is their relationship to the President of France?  Would you call it close?  Far?  "In-bed together"?  Let me guess:  "they all went to the same school."  Is this true in Germany?  In Spain?  In Russia?  Is there a military angle we should be considering other than "Greek attacks it own"?  Always felt like there was an actual reporter lurking around these parts...

topcallingtroll's picture

This is sarcasm right?

Cuz if you are serious there is this wonderful new invention called a search engine.

Type in socgen or soc gen and walla! Your answer appears by magic!

IdioTsincracY's picture

Privatization is the key word ....

Here come the Banksters!!

kennard's picture

This is actually bad news.

Markets only think of the next year, however.

cougar_w's picture

accelerated privatisation plan

All your acropolis are belong to us

GoinFawr's picture

Due to lack of funds for public transit the disrepair of diesel engines will soon facilitate the privatization of breathable air. Win-Win.

Yen Cross's picture

  +1 Yen . I watch! Grin-Smirk.

CrashisOptimistic's picture

The votes will all proceed to get money flowing from Germans to Greeks.  Why is this surprising?

Nothing is going to change until bullet holes appear in skulls.

Assetman's picture

The bigger perception problem is the flow of money from German taxpayers to the French banks that would benefit from unlimited Greek debt backstops.  That probably isn't going settle too well in much of Deutcheland...  especially when the ECB printing presses get fired up full bore.

The Greeks got approved EU membership on a series of appalling misrepresentations from the Greek goverment and Goldman Sachs.  To this day, it appears the Greece really hasn't come close to meeting debt to GDP requirements for legitimate EU membership.  But somehow, the ECB and the IMF are bending over backwards to add more debt to the kitty.  Whatever it takes to get the banksters paid, I gather.

The open issue is... who's going to provide the bullet holes, when one of the affected parties is already tied down and being skull-f%cked???

GeorgeHayduke's picture

Looks like the Bankers are going to have a little metaphorical Greek style sex with the Greeks.

Have no fear, this new craze will "spread" far and "wide" before it's all done.

Getting Greeked coming soon to YOUR part of the world.

Caviar Emptor's picture

The privatization issue is pure political play acting and totally irrelevant. It was done to make the new money printing appear sound, rational, austere.

It's only an attempt to keep up appearances, like many of the so called debates going on in the US, Japan, UK and elsewhere. 

You need everybody to open up their wallets big and wide to keep a Ponzi going. You don't encourage them to save, be smart, plan for the future. They're ultimately mutually exclusive, as we'll see shortly.The banksters got what they wanted. They want more but the demonstrators are pushing back.  

Yen Cross's picture

 Break it down. Yen.

     The fact that you took the time is the BEST step! Thank You!

Pure Evil's picture

So will those IMF dispersements consist of that brand spanking new, wang dang doodle, SDR?

What's the use of getting Euros if you can get SDR's?

SDR's, better than gold, accepted everywhere the IMF wants to be!

Lord Welligton's picture

Today the people died in Greece.

Today "Democracy" lives.

Shame about the "people" really.

But then they never really understood "Democracy".


Yen Cross's picture

 Rabbits chew through Plastic. Loonies everywhere!

tradebot's picture

Can't they just rinse and repeat over and over...everyone keeps writing on how the end is near...They just tak a vote...print more money or both...I wonder If I'll live to see the last currency standing...

cougar_w's picture

Can't they just rinse and repeat over and over

Good question. Maybe not. But if they can then I think it means the "market forces" of yore are toast.

If they can then we really do have a centrally-run economy. On a global scale, no less.

And the problem with that is ... well the USSR worked out really well. "Central planning" is a euphemism for "central plundering" and then you end up with Feudalism for the masses. For example, Putin and his heirs will rule Russia for a thousand years. Totally in the cards, starting in 1917.

And someone is going to get to rule the whole world too, same play book, making all others their retainer and vassal.

Imagine the day some smarmy fucker you never heard of comes on the TeeVee and says "Well folks I win, now let me tell you what all that was about back then. Oh and something about how you all dance going forward."

That is going to be some interesting shit, right there, when it happens. Reference my collected works.

GeorgeHayduke's picture

I'm astounded this entire economic Ponzi scheme has gone on this far, and the game is still grinding along. Each week, then month, year I keep expecting the wheels to fall off the cart, yet this turd still rolls along....

Maybe all of us who keep anticipating this collapse are the ones who are crazy in this bassackward, makes no sense at all anymore, world.

JR's picture

The main point: today Parliament had to decide whether it wanted to vote against Papandreou or not.

Tuesday, it has to decide whether it wants to vote against the Greek people or not.

And that’s a little different for Parliament members.  It doesn’t look as if G-Pap has votes to spare.

It’s my personal opinion he won’t get approval for the MTFS.

agrotera's picture

I hope you are right JR!!!


riley martini's picture

 The close vote was all for show just like the TARP vote . Pap and his fascist leaches aren't going to pass up a chance to skim more money . If the austerity was for the Fascict bankers and politicians it would fail . If Pap and the Banksters were investigated for financial fraud and they were forced to open up their books it would fail 300-0.

Yen Cross's picture

  Back from Vacation?

SheepDog-One's picture

E28 billion in austerity cuts for the peasantry, thats the real vote.

Caviar Emptor's picture

We may not seem very austere today, but read our lips: next time we're bailed out,  we're gonna be grim! We're gonna be like the angel of death!

The Profit Prophet's picture that Greece will be officially annexed by the Banksters through "accelerated privatization", I think it only appropriate that we come up with a new name for the birthplace of democracy formally known as Greece...

Vive la "Cleptonia"!

T.E.I.N. everyone!