It's Official - EU Agrees On Greece Bailout

Tyler Durden's picture

German opposition crumbles, as a Greek bailout plan is now official. We expect Portugal, Spain, Italy, Latvia, Ukraine, Bulgaria, Austria, and, finally, the UK, to line up next at the trough. And for all of you cynical bastards who thought that G-Pap was full of methane when we claimed he was not looking for aid... You were right. So now, under the wise tutelage of Goldman, make sure to plough all your money into the Euro. After all there are at least a few months before the next bailout has to be effected.

From The Guardian:

The eurozone has agreed a multibillion-euro bailout for Greece as part of a package to shore up the single currency after weeks of crisis, the Guardian has learnt.

Senior sources in Brussels said that Berlin had bowed to the bailout agreement despite huge resistance in Germany
and that the finance ministers of the "eurozone" – the 16 member states
including Greece who use the euro – are to finalise the rescue package
on Monday. The single currency's rulebook will also be rewritten to
enforce greater fiscal discipline among members.

After all bailing out worked miracles for the US financial system and Dubai, so why not again... and again... and again. Good thing the UK, which as UniCredit pointed out yesterday could be next in the bailout wagon, is not paying. Now that would be truuly ironic.

The member states have agreed on "co-ordinated bilateral
contributions" in the form of loans or loan guarantees to Greece if
Athens finds itself unable to refinance its soaring debt and requests
help from the EU, a senior European commission official said.

sources said the aid could rise to €25bn (£22.6bn), although it is
estimated in European capitals that Greece could need up to €55bn by
the end of the year.

Germany, the EU's traditional paymaster, but
the most reluctant to come to the rescue of a fiscal delinquent in the
current crisis, has played the pivotal role in organising the rescue
package, the sources added.

"There have been quite intensive
preparations under the eurogroup. We have the ways and means to do it,"
said the senior official, asking not to be named because of the
subject's sensitivity.

We expect Greek rioting to break out in Berlin relatively soon.


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WaterWings's picture

We expect Greek rioting to break out in Berlin relatively soon.

Just in case anybody wants to see what a real-life example of herd-mentality "looting" looks like as the flood gates open:

Just think, someday soon it will be US supermarkets...their precious little minds.

Gold...Bitches's picture

someday soon it will be US supermarkets...

already happens anytime the weather report shows the possibility of an inch or two of snow.

Cognitive Dissonance's picture

I already have my 6 cases of "don't squeeze the Charmin" toilet paper and 9 cases of Bubble Bee white albacore "packed in virgin spring water" tuna fish.  So I'm all set for the riots. :>)

Hulk's picture

Better stock up on Spam CD, not many calories
in Tuna...50 yr shelf life too

Mr Lennon Hendrix's picture

To think a year and a half ago I said there would be riots soon.  Let me correct that statement; "Ahem.  Attention shoppers, the revolution will NOT be televised.  Thank you."

gmak's picture

Ooops. Did GS factor this into their 1.45 target?  I guess the underlying assumption is that there will be a QE III or some such thing in the states, and that it will be the US taxpayer footing the bill indirectly through the GS / JPM conduit.


Lionhead's picture

Now the German taxpayers can feel just like the US taxpayers. Misery loves company as they work harder for less & less...

carbonmutant's picture

It looks like The ECB with the help of  Merkal and Sarkozy have manged to create a "European Monetary Fund" for endangered EU member states.

I wonder if the IMF will be used to bailout California?

10044's picture

Gold bitches...

Divided States of America's picture

who ever needs an eventual bailout better cry wolf now and get their bailout soon before the line-up gets crowded and the EU (or IMF) runs out of money

Hondo's picture

Someone needs to read the fine print of the agreement.  What does Greece have to accomplish from a budgetary perspective (if anything) and how/when will that be monitored.  And what happens if it is found that Greece instead of clamping down on its budget now relies solely on the guarantees.  After all screw the Germans I need my vactation and pension.

faustian bargain's picture

I'm sure the Greeks will do the honorable thing.

No really.

Stop laughing.

hedgeless_horseman's picture

The single currency's rulebook will also be rewritten to enforce greater fiscal discipline among members.

...and to allow for bailouts of members?

Anonymous's picture

I guess the Eurp 1.45 target is calculated on a time basis untill the next hedgey-GS crises induced. So that gives us a time frame of a couple of months before we start hearing of another soverign failure candidate...

THE DORK OF CORK's picture

Hey Wolfgang cough up those Euros now - we in Ireland are not a great fan of this austurity thingy.

And please please do not take the Piss out of us - we are all Europeans now baby

Anonymous's picture

whatever happened to the game Risk? Why can't a dozen hedge funds buy Greece, overthrow the current government and then offer an extremely competitive tax rate? What more do these guys want?

Orly's picture

The key to that game was the Ukraine.


Anonymous's picture was all about Kamchatka!

Get_to_the_choppa's picture

Just one step closer to a split in the eurozone and the currency itself.  It will happen.

Oso's picture

not sure how reliable the Guardian is, all of us need a second source to verify.


i do admit, GS' trading call on EUR seems remarkably coincidental with this, though. 

dumpster's picture

bailouts for all states .. QE to infinity ..


bend over grab ankles go ah

carbonmutant's picture

You gotta wonder how the Irish feel about this...

THE DORK OF CORK's picture

For a while I thought the Irish government had a plan of sorts - express to the Germans that we will take some pain and then when the situation becomes impossible the Teutonic Calvary could come in to clean up the mess but now I am not so sure - maybe the Greeks are just better poker players.

carbonmutant's picture

 I think the Greeks used the riots to sell the threat of economic collapse to the rest of the EU. It's interesting how quickly the EU was willing to violate their own rules.

It certainly provides a template for other countries that need financial support.

THE DORK OF CORK's picture

Yes the second Lisbon treaty was a wake up call for me - nothing gets in the way of the EU juggernaut , it just gets a bit messy for a while and they stumble on and invent new conventions.

The funny thing about the Lisbon treaty is that the whole economic thrust of that article is now obsolete - it will be hilarious to watch the bureaucrats in Brussels trying to salvage something from this bonfire of the vanities.

Gunther's picture

Strange that the bailout did not get any attention in German online newspapers.

Handelsblatt, Spiegel online and Financial Times Deutschland did not report any bailout plan.

The story closest to a bailout-report is in Handelsblatt and has a totally different spin. A bailout would include strict austerity measures and harsh sanctions if overspending continues. In the extreme a country could even get expelled from the monetary union while staying in the EU. (in German)

Anonymous's picture

The Austrian newspaper Der Kurier has quite detailed information leaked from the ongoing negotiations for a Greek bailout scenario.

AnonymousMonetarist's picture

A Euro version of a 'bazooka in my pocket'

By the way TD your blog is winking in and out of existence today ...

Must be all the MSM staff getting buggy-whipped and frantically trying to figure out where in that 2000+ page opus
your nuggets are coming from :)

Anonymous's picture

One day some Union Head will wake up and say, shyte, we should have a worlwide strike to break the backs of the banks...........not just one Greece Strike but 100 in 100 cities, cripes we got the inernet...........stop the bank looting u govt rejects or see how things work with zero sales growth

not saying it's a good or bad idea, just someone will try it on for size

AxiosAdv's picture

Greece will never be able to pay off these loans.  There is no will - the people are selfish and greedy only showing interest in their own pocket.  Their ability to tax is highly limited as most people of any financial consequence are self employed and report very little income.  The taxes are staggering and getting worse.  Benefits will be slashed hurting morale even more.  Strikes will continue slowing any potential growth and really damaging their tourism trade especially if it continues for another few months...May is almost here.  Bottom line - the economy is not big enough or strong enough and the people aren't committed enough to pull this off.  Greece will default, it's just a matter of when.  When it does happen, it wouldn't surprise me to see them forced to resign from the EMU in exchange for some debt forgiveness.  Who knows if they'll stay part of the EU for trade.  People who think this is over are whistling past the graveyard...kinda like the first stages of the subprime debacle.  Oh it's "contained".  Sure...

zenon's picture

Sure looks like they are buying some time & kicking the can down the road. Mind you, by then either we'll have more countries on the default-list (including some biggies) or the world economy will be improving.  Either way, it's the only viable option for Greece & the EU to take right now.

Stranger's picture

Why should you feel morally obliged to pay back a loan that the banker just printed into existence?

It's a scam. You're just sharing in the scam with the banker.


Anonymous's picture

get lost or change your nickname. its greek

Mark Beck's picture

Consider for the moment, that Greece will only need make a payment in perpetual debt peonage. Which, in its smallest installment, is servicing interest on the loans. So, can Greece pay interest on the loans?

One outstanding question is one of how to enforce or gauge Greece austerity from the EU? If indeed this is a real concern.  How does one do this?

Also, if more countries are going to default, or threaten to, it may be that getting the loans now is in Greece's favour. After all there is a possible play here in currancies if the EURO is under pressure in the near future.

Mark Beck

Anonymous's picture

funny how greece gets bailout while latvia and iceland get lasso'd round their necks and dragged along

Anonymous's picture

Man O Man I wish there was a stock symbol for economic embalming fluids.

The last wish of the Oligarchy is
"Kill the weak but save the dead!!!"

buzzsaw99's picture

Wrong thread, sorry.

chet's picture

You get backed into bailing out the first one (Bear Stearns), while offering stiff warnings to others that they need to clean up their act because you won't do it again.

The (German and French) public get really pissed off about paying the tab, so the next time, you don't blink and you let them go down (Lehman).

Everything goes to hell, panic ensues, and the (German and French) public bails out everyone with newly printed money.

How this all works when you've already been in a recession and pumping out stimulus programs for two years is an unknown....

BlackBeard's picture

I don't see how going down this path is bullish for the Euro....

Orly's picture

The Euro hasn't reacted one iota since the announcement.  That in itself is kind of strange.

reading's picture

I don't see how going down this path is bullish for the Euro....

Because Goldman said it is...

tenaciousj's picture

By the time they get around to telling everyone else what to do, aren't they usually starting to do the opposite?

hedgeless_horseman's picture

Yes.  It is called front running and is a clear conflict of interest, but not anything the wants to worry about.  Barry O'Potus has "free health care" to sell, and multi-tasking is not his strong suit.  So stop asking questions, and have a drink.  It's Friday.


Anonymous's picture

After a little probing, looks like Merkel found the G Spot.

SWRichmond's picture

I really thought the IMF would do it.

kevinearick's picture

so, we are now on global welfare, and all the nation/state systems are officially obsolete.

now, they all march toward the precipice together.

actually, it's progress. the precipice tends to clarify the thinking of individuals.