The IMF failures in Greece bring back vivid memories of the Asian Financial Crisis of 1997-98... As the Indonesian episode should teach us, the IMF’s management can be very political and often neither trustworthy nor competent. Greece offers yet another chapter.
One of the preconditions imposed on Greece for a deal is that it signs into law European rules that would put euro zone authorities at the ECB and in Brussels, rather than Athens, in charge of identifying and closing or breaking up sick banks. This in turn could lead to a shake-up of the sector that could see some banks close, with losses pushed onto bondholders and possibly even large depositors. In such circumstances, there would be little that Athens could do to prevent this.
The new Greek deal is "absolutely impossible, totally non-viable and toxic …[they were] the kind of proposals you present to another side when you don’t want an agreement." Speaking with The New Statesman, former Greek FinMin Yanis Varoufakis blasts Wolfgang Schaeuble's position which will lead to "a humanitarian crisis" for Greece and warns, regarding this latest creditors' proposal, "if anything it will be worse [for the Greeks]." His conclusion is succinct, "we were set up...," Merkel and Schäuble’s control over the Eurogroup is absolute, and that the group itself is beyond the law.
If it was Greece's intention to crush the Chinese stock market instead of Europe's, well - it succeeded. Because despite the PBOC and politburo throwing everything but QE at the stock market, China stocks closed down sharply on Thursday after another wild trading day as investors shrugged off regulators' intensified efforts to put a floor under the sliding market, by cutting trading fees and easing margin rules, which has now crashed 25% in about two weeks wiping out $2.5 trillion of the peak $10 trillion in Chinese stock market cap as of June 14. This ultimately resulted with the Shanghai Composite closing under 4000 for the first time since April.
While the path ahead suddenly just got very confusing for both Greece and Europe, one thing is clear: going forward the Greeks will only have themselves to blame for whatever the final outcome is. That, and the Greek trargicomedy which has now lasted for over 5 years, may finally be over.
Under pressure from all sides (and most importantly from Mario Draghi who holds the fate of the Greek banking sector in his hands) Greece looks to have folded and is now set to accept an extension of its current bailout program. PM Alexis Tsipras now faces an uphill battle to unite Syriza around what is likely to be an unpopular agreement. If he fails, the country could plunge into political and social turmoil.
What’s left for Greece in Brussels that is beneficial to the country? We don’t see it. It makes us think more of a Stockholm syndrome by the hour. Get out, get your own currency, negotiate a treaty with Italy and Spain, maybe France. But don’t stay in a ‘union’ with outsiders who think they can tell you, Greeks, how to run a democracy, or when to hold a referendum. That can only be a road to nowhere.
Germany throws its support behind a Greek referendum on euro membership while Putin invites Athens to join BRICS Bank. Meanwhile, Yanis Varoufakis has a plan for resolving Greece's debt problem — and he imagines the ECB chief is terrified of it.
With everyone's attention pegged on the Grexit, what everyone appears to be forgetting is a nuanced clause buried deep in the term sheet of the second Greek bailout: a bailout whose terms will be ultimately reneged upon if and when Greece defaults on its debt to the Troika (either in or out of the Eurozone). Recall that as per our report from February 2012, in addition to losing its sovereignty years ago, Greece also lost something far more important. It's gold: To wit: "Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal."
With The ECB banning Greek banks from continuing the GGB-buying ponzi scheme, the banking system in deposit outflow panic, cash running extremely dry, food shortages building, and bond/loan payments looming, Greek celebrations of Independence Day today are likely tempered by European officials coin-tossing over the nation's future (in or out of the EU). 196 years after winning their sovereignty from The Ottoman Empire, one wonders if The Greeks have the ability to fight their sovereignty back from "The Institutions." Perhaps, in the future, The Greeks will mourn "In Dependence" Day as opposed to celebrating "Independence" Day...
Fearing Grexit and an outright economic collapse, former Greek FinMin moved nearly €500,000 out of the country in 2012. Authorities in Athens suspect tax evasion was the motive.
It wasn't even a full 24 hours after Greece raided at least some of the funds of its pension and other public entities in order to make a €310 payment to the IMF, the first of four this month (the balance is 350 million on March 13, 580 million on March 16 and another 350 million on March 20), that the insolvent country resumed doing what it does best: dispensing hollow threats. This time it was its foreign minister and leader of the Independent Greeks party - Syriza's junion coalition partner - Nikos Kotzias, who showed how to bluff like the best of them, when he threatened that "there will be tens of millions of immigrants and thousands of jihadists, if you take out Greece" the minister said on before EU foreign ministers meeting in Riga.
While the ECB is responsible for determining the euro-zone's supply of bank notes, it doesn't actually print them; instead it outsources the work to central banks of a few euro-zone countries (one of which is Greece). As WSJ reports, the Greek central bank's bank-note printing facility is called IETA. Built in 1941, the Attica plant today is outfitted with "state-of-the-art machinery," and has been responsible for printing batches of €10 notes, according to the ECB. One wonders how tempted the Greeks will be to take matters into their own ink-stained hands, should the ECB/Germany/Eurogroup pull the plug without acquiescing to their non-ultimatum "take it or leave it" offer...