Greece Rebels, Does Not Want IMF Participation In Bail Out; Fears IMF's "Intolerably Stringent Conditions"

Tyler Durden's picture

The soap opera that just refuses to die, is just getting better and more bizarre by the day. The latest lunacy out of Greece, as reported by Market News, is that the near-bankrupt country is now imposing its own conditions on the bailout, saying it wants to amend the deal struck recently by Eurozone lenders, and wants to bypass the IMF's financial contribution, and eliminate the role of the IMF entirely, as it is "concerned that intolerably stringent conditions would be imposed by the International Monetary Fund in exchange for aid." Did anyone over in Athens even bother to read the fine print of what austerity means? It is good of the nation to finally wake up before suckering in US taxpayer dollars that, of course, would have never been repaid. And with that America, and the IMF, should wash their hands off the whole offer, and throw the ticking time bomb squarely into Merkel and Sarkozy's court where it belongs, together with the $1.5 trillion in Club Med bank claims that the Eurozone is on the hook for if, and certainly when, things go sour.

More from Market News:

"The reason is that since the summit, [Greek] Prime Minister [George Papandreou] has been receiving information from the IMF about the possible measures and reforms it would be asking in exchange for  financial support," said one senior official. "The measures are tough and might cause social and political unrest. After that, various cabinet  members voiced their opposition to the IMF contribution."

Curious, what did Mr. G-Pap expect? That reducing a cash deficit of 16% to something like 3% was going to be as simple as downloading the latest Ricky Martin song to his iPad? Oops. Oh and guess, what, all that stuff about Greece not needing help (yes, yes, hold your laughter), was bullshit after all:

Several Greek officials have already voiced their concern that the agreement reached by Eurozone leaders requires a lot of time to be put into effect and that the procedure is bureaucratic. The sources said the Greek government will be seeking a clearer European mechanism, without the participation of the IMF, which will be speedier and will respond immediately to a country's official request for financial support.

"What the government wants is to improve the deal and iron out the details that have not been decided yet," the senior official said. "There is a strong chance that Greece might be forced to ask for financial support after all, despite official statements to the contrary, and it is essential that the terms and conditions be clear."

Oh, and remember when G-Pap said he welcomed the IMF's (aka US taxpayers') participation? Yeah... he was just kidding about that.

Greece's apparent aversion to IMF involvement represents a sharp reversal from just a month ago, when Papandreou said his government would go to the IMF on its own if European leaders couldn't agree on the details of an emergency package.

Also, once this news is fully digested by the market, we expect the GGB 10 Year yield (currently at 6.5%) to primptly go north of 7%, once the implicit guarantee of lower rates in the future is eliminated.

While the IMF might insist on tough fiscal conditions in exchange for funds, it would almost certainly charge lower interest rates on loans than Greece's fellow Eurozone members. The EMU deal struck at the summit states that bilateral loans from Euro area states are to contain "no subsidy element" -- in contrast to the IMF's traditional practice.

In a nutshell what Greece is doing is, simply said, lunacy. In its attempt to once again take the easy way out, and to prevent losing already non-existent political favor with the masses, the administration is literally risking a full out sovereign bankruptcy.

Since the contingency aid deal was announced late last month, some analysts have wondered why Greece would bother borrowing from its fellow Eurozone states when it could get money so much more cheaply at the IMF.

And some high profile officials at the European Central Bank warned that the conditions requested by the IMF would actually be more lenient than those already required by the European Union's Stability and Growth Pact.

ECB Executive Board member Lorenzo Bini Smaghi, for example, argued that the conditions imposed by the IMF "are generally not stronger but rather weaker than those that we in Europe have now agreed on." He warned that, in the event of IMF involvement, "these weaker conditions will become the new standard and replace the EU's Stability Pact."

Once again, Greece defines what shooting oneself in the foot truly means. At least, post bankruptcy, the Greeks will have a good climate, good music and drink. Now... where is that Sotheby's auction of Santorini?

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non-anon's picture

I don't blame them one bit, I hope Iceland holds out! Bring the banksters back to stand trial! As William Black pointed out in his Real News interview, not one high level indictment!

johngaltfla's picture

Tyler, here is what happens when you DO NOT have the capital controls you warned about earlier:


Greek banks hit by wealthy citizens moving their money offshore

Gee whiz, who COULD NOT have seen that coming? The UK Telegraph posted this tonight and it marries nicely with the previous article about the US implementation of capital controls. That is why they were implemented.

MarketTruth's picture

Capitol controls are for countries getting ready to default or leaders who will steal your wealth. And yes, am looking at the USA when i say that. Hope your 401k/etc are liquidated already.

The saying goes something like this:
The last action of a corrupt government/leadership is to steal the country's wealth.

Pat Shuff's picture

Stealing the country's wealth is the definition of government.

As Hayek noted, the great structures of the Edifice Complex are

not the hallmark of great civilizations at their pinnacle but rather

mark the end.

The last action looks more like this.

Buck Johnson's picture

The funny thing is that the Greek citizens who have money know that their countryis going to default.  They are moving money and will continue to move money until the govt. stops them with capital controls or worse.  This game that is being played out in europe and southern europe is sick to watch, it truly is.  Greece says they want the IMF and know they say they don't want the IMF because their austerity plans would be to rough.  Didn't Greece agree month before last that they would put forward strong austerity plans for a European loan.  And then we have the European heavyweights wanting but not wanting to bail them out.  One article that was put out back in 3/31/10 said that UK, France and Germany are politically playing that they don't want to bail them out but in reality their banks are in 1.5 trillion dollar into southern europe and can't afford to let them go under. 

I think the problem is that they know and should let Greece go under, but they can't.  But if they do support them, it just makes the problem even bigger, especially when they know (even now) that Greece govt. has no intentions of going through with those austerity plans even if they get the money.  And by bailing them out it also opens the door for the rest of the PIIGS to do the same thing and copy what Greece does.  In essence the other countries risk having headaches and problems and their economy for the sake of these countries.  One way or the other your going to take a beating, might as well get it over with and as soon as possible. 

Crime of the Century's picture

No kidding, when did they wake up to the fact that people have noticed they are gold rich? They will get the better rates after posting the better collateral.

Mr.Kowalski's picture

Whadda f'kin joke these people are. Just default and get it over with. Drachmas were actually kinda cool lookin as currencies go anyways. They apparently have absolutely no idea what a Depression is, but they will post haste.

DavidC's picture


Sorry, no offence meant to morons, they have a higher IQ than these idiots.

Sorry, no offence meant to idiots, they have a higher IQ than...

Etc, etc.

Assetman's picture

Now, now David C... just because you think the Greeks are idiots/morons, and the Germans think they are lazy and incompetent doesn't mean its a blanket truth.

Then again, the Greeks are probably off the mark if they claimed you (or the Germans for that matter) were  racist.  I'm there are stupid people just about everywhere... and chances are in most places, they are in positions of power.


truont's picture

It's funny when spoiled children start demanding things from adults--when they want it and how they want it.

Shameful's picture

I love the Greeks!  You have to admit it takes a lot of stones to say "No.  You know what, I'm going to dictate the terms how you bail me out.  After all I'm doing you a favor by taking your money"

What's next?  Are they going to ask for money at 1% to?

dark pools of soros's picture

debt is worth more than savings...  the IMF is just looking for a new pig to collar

THE DORK OF CORK's picture

Why not - if the wall street banks can ask for near zero interest rates to recapitalize - correction to extract more profits ,why not little sovereigns.

Do they have to collapse their money supply to provide much needed revenue to these servants of God and their fellow hedge fund true believers.

DavidC's picture

I didn't mention, nor did I mean, that I think Greeks as a people are morons (idiots, etc) - I lived in Cyprus (OK, not Greece itself) as a child and again in the late 90s. I met some wonderful Greek people (and lest anyone think I'm anti-Turkish, my closest friend is married to a wonderful Turkish woman).

In other words, I am NOT racist.

I AM, however, anti people-who-should-know-better. This includes Papandreou, Brown, Bernanke, Krugman et al.


Assetman's picture

DavidC... the statement was intended to be a little tongue in cheek, and related to the Greek-German spat thread where the Greeks were claiming racism amidst their financial crisis.

I'm sure there are German rascists out there, but I'm also pretty sure you're not one of them. ;)

sporb's picture

Oh they know better all right. It's not their money, after all.

Johnny Dangereaux's picture

Max Keiser....A New Greek God!

jSixPack's picture

Max Keiser’s anti-IMF/anti-Goldman rant has gone viral in Greece.

How much truth by reside in what he states is above my pay-grade but he does make an entertaining presentation. Assuming he is correct this looks like a win for the US taxpayer and a lost opportunity for Wall St.

AnAnonymous's picture

I dont think the IMF usual recipes are going to be used in Greece.

The only danger for Greece is they are going to expose double standards when it comes to the IMF.

Pat Shuff's picture

Keiser: And now a word from our sponsor.


There are a few things Max is unlikely to rant and rave about such as shutting down media dissent

in a certain political jurisdiction around election time and be taken off the air.

DavidC's picture

I was being slow in missing the reference to the spat - yes, I see what you meant!

To anyone else, FWIW, I'm not German, a German racist, or a racist (this isn't defensive, merely a statement!).


THE DORK OF CORK's picture

Whats 1.5 trillion between friends...........

Helmet did you not read the textbook - we are all Europeans now baby

RobotTrader's picture

Euro is crashing, dragging gold down with it.

I guess Bill Murphy will have to go back to the drawing board.

Kind of figured that something had to be done to crash risk assets to get a bid back into bonds.

THE DORK OF CORK's picture

Well the Euro may die but of all the western currencies it is the most likely to hold some value in the long run.

The Dollar has a older vintage but it should have been drunk years ago - maybe Bill can help to finish it off.

The only thing keeping the dollar going is its military - which I concede is thee most powerful asset of a reserve currency , but it can't defy gravity forever


trav7777's picture

Time to borrow euros and long gold?  lol

The predatory action has moved to the sovereign phase now.

I marvel that the "banks" think they're entitled to be paid back money they lent that they never actually had.  All because they are "special" by virtue of being "authorized" to engage in fractional lending scams.

Fractional lending is immoral when done by for-profit actors

williambanzai7's picture

This can only mean one thing. Buy Euros!

Start the bozoukis!

Lionhead's picture

I think TD should take a poll to see how many readers think: 1) Greece will default; 2) Greece will not default, but will be saved by the IMF and/or the EMU; 3) Greece will not default, but the debacle will continue indefinitely until they eventually/virtually default.  Let the games begin...

trav7777's picture

Just fuckin DEFAULT already?  JFC.

Greece is playing chicken with the Euro.  It's like bein in the wayback seat in the van and throwing shit at the driver.  Greece has some leverage to guide this over a cliff.


carbonmutant's picture

If the measures don't cause social and political unrest then they aren't tough enough.

Cabinet  members and senior officials may want to relocate until the smoke clears...

AnAnonymous's picture

US tax payers? Where? Those actions are funded on credit, not savings. Who knows what is going to happen to debt?

So far, the bail out is empowered by people who are still willing to accept the credit money.

Greece needs some resources to support its society. People providing these resources in exchange of the debt money are the ones doing the trick, the bail out.

Not US tax payers money...

Rick64's picture

The IMF are gangsters. I recommend the book "Confessions of an Economic Hitman" by John Perkins for insight into how they work.

Alethiometer's picture

+1 on that beauty.  However, people don't read anymore sadly.  You think people are going to create a new literary renissance with the advent of the Ipad?  Hahahaha.  The IMF/World Bank/Central Bank Cartels know this.  You think they're worried?  They'll slide the blame the same way they are doing it now: onto previous administrations, key figures in the adminstrations, poor ponzi scheme whipping boys (Madoff), etc.  The choo-choo chuggs on, having thrown off some "crook" for the people chasing it to rough up before they start chasing the smoke over the horizon.

Pat Shuff's picture

The Chastening: Inside the Crisis that Rocked the Global Financial System and Humbled the IMF
Author: Paul Blustein


Blustein details the events which led to the current IMF situation. For decades their word was law and their advice rarely, if at all, questioned. That was until the late 1990s when the currencies of several Asian countries drastically dropped in value, threatening to bring financial devastation to Asia's economies. The IMF sent a team of advisors to straighten out the problem using the methods which had worked fine for them for years, crisis after crisis: devalue the country's currency, restrict imports, and enforce strict budget cuts. Only something new had burst onto the scene by the end of the Twentieth Century, something the IMF hadn't counted on: The Electronic Herd (the nickname for the unorganized conglomerate of money managers, mutual funds, pension funds, and business planners who trade and do business electronically in today's markets) had risen in strength and power unheard of in the world financial markets. With the advent of electronic commerce it had become easier for individuals and corporations to trade with one another, taking fast advantage of situations such as an unfortunate country's devaluation of their currency or a dip in prices, therefore making themselves a quick fortune. This threatened to overturn everything the IMF had worked so hard to control. South Korea ended up losing control of the entire $9 billion loan they had received from the IMF in a matter of days, therefore requiring the IMF to bail them out yet once again.


If the IMF is the fire department it's Fahrenheit 451. They don't know if their tools are suppressants or accelerants, their PhDs argue each other both ways inconclusively, no fire is the same as the next, the apartment residents don't believe there is a fire and the apartment managers don't want the carpet ruined or water damage nor wish to displease the residents and it takes precious days as the fire spreads and consumes to convince the management that their will be no need to save the apartment building very shortly nor will they have to bother with managing anything. Then they pay attention. It is extremely difficult for management to get their minds around some things. Having known only the playing of politics for so long it takes a great leap of faith for the players to comprehend the playing first requires a politic.

Somewhere along the line they got the foolish notion in their head that a politic trumps finance. There is quite an epidemic of that absurdity and has been for quite some time. Public education hasn't been helpful. But then a pleasant reminder comes along, a fall of a wall, a chinese famine, a grecian formula for the hair turning gray and white overnite.

Alethiometer's picture

I like to listen to upbeat, but allegorical, music whilst reading zerohedge.  It makes the bleak funny.  The best thing I'm looking forward to is the look on these peoples' faces when SHTF.  Everyone is gonna want to be surf'n, surf'n the fuck outta here!  Too bad the borders will be locked down and the banks will be closed :( boo hoo.

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