International Monetary Fund
Having been shamed what seems like numerous times now by the Eurogroup in recent weeks, Greece suffered its greatest humiliation today. First, the farcical renaming of 'Troika' to 'Institutions' was summarily dismissed as "semantics," as France played good cop (asking for the group not to call it Troika) while Germany's bad-cop Schaeuble used the T-word four times in one interview. And second, Eurogroup chairman Dijsselbloem stated that "technical teams will begin considering Greek reform plans on Wednesday," adding that some of the negotiations will have to take place "in situ in Athens." So instead of discussing reforms with institutions in Brussels, the Varoufakis-defined "cabal of technocrats" Troika will be back on Greek soil to straighten out the nation.
It was not all smiles and jokes as Mario Draghi's European QE officially launched in Europe, with Greece leaving the proverbial turd in the monetary punch bowl.
We need to look at the concept of a reserve currency differently, because it is important. We need to look at it as a privilege and a responsibility and not as a weapon we can use against the rest of the world. If we abolish, or even lessen, legal tender laws and allow the process of price discovery to reveal the best sound money, if we allow our US dollar to become the best money it can - a truly sound money - then the chances of our personal and collective prosperity are greatly enhanced. We all have the same interest. We all want to have the highest standard of living for ourselves and our families. A sound money reserve currency offers us the best chance of achieving our shared goal; therefore, we should rally around every effort to make it so.
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.
"...everybody knows there's something seriously wrong but they don’t know what is really happening."
This 'world order' may be coming to an end, he believes: "It's the collapse of that structure that was built in the 1940s that is behind all of these problems that are popping up in financial markets and economies around the world."
Despite Tsipras Complaining That "ECB Has Rope Around Our Neck" Greece Finds Enough Cash To Make IMF PaymentSubmitted by Tyler Durden on 03/06/2015 12:10 -0400
While the biggest economic event of the week was the US February jobs report, one of the lingering concerns following last week's report that Greece is in financial dire straits, is whether the Eurozone member nation would default on its IMF loan as soon as today when it had a scheduled €310 million payment due to the IMF. Earlier today, in the build up to the NFP report, it was reported that indeed Greece had managed to dig deep under the cushion and find just enough cash to make the required partial loan repayment thus avoiding a technical default. As Reuters reports, "struggling to scrape together cash and avoid possible default, Athens made a 310 million euro (223.37 million pounds) partial loan repayment to the International Monetary Fund, while Tsipras pleaded to be allowed to issue more short-term debt to plug a funding gap."
For the first time in public, though practically the entire world assumed it, an official from The IMF has admitted that the various Greek bailouts were not for The Greeks at all... "They gave money to save German and French banks, not Greece,” Paolo Batista, one of the Executive Directors of International Monetary Fund told Greek private Alpha TV on Tuesday. As KeepTalkingGreece reports, Batista then went on to strongly criticized not only the euro zone and the European Central Bank but also the IMF and the Fund’s managing Director Christine Lagarde for defending Europe much too much...
Just yesterday we warned that, among the 'solutions' the Greek government was exploring in its scramble for cash to pay back The IMF loan, was 'borrowing' from the nation's pension funds. Today we get the sad confirmation that indeed Greece will raid cash reserves in pension funds and other public sector entities to cover its funding needs. As Reuters reports, Greece will use short-term repo transactions to transfer the cash, but one government official said they could not be used to repay the IMF. As the radical left-wing government takes from the implictly wealthier Greeks (pension funders), it is giving free electricity, a rent allowance, and food stamps to the poor.
Ukraine's infamous pink Porsche-driving central bank governor, Valeriya Gontareva, raised the nation's refinancing rate from 19.5% to a stunning 30% (effective Wednesday) in order to "stabilize the situation in the money and lending markets," and imposed some 'capital controls' on exporters holding foreign cash. For now, the hink to the highest rate since 2000 is having a positive effect as UAH has rallied 2-3 handles back to one-month highs against the USD - having lost over 60% of its value in the last year (though we note these are the 'official' rates and may not represent actual UAH transactions in the real world). "The central bank is trying to send a strong signal that it is in charge," noted on analyst as the country desperately waits for its $17.5bn bailout from US taxpayers The IMF.
The aim of the Greek bailout was not to restore prosperity to the country's people, but to save the eurozone. Given this, the new Greek government is entirely justified in questioning the terms that the country was given. As negotiations continue (Tsipras "war" vs the initial lost "battle), the single worst outcome of the current negotiations would be Greece's submission to its creditors' demands, with few concessions in return. Default and exit from the eurozone would allow Greece to begin correcting past mistakes and putting its economy on the path to recovery and sustainable growth. At that point, the EU would be wise to follow suit, by unraveling the currency union and providing debt reduction for its most distressed economies. Only then can the EU's founding ideals be realized.
Now that the Greek topic is back to overall debt sustainability, a few hours ago Greece Kathimerini reported that the Euro Working Group "discussed Greece’s imminent funding problems on Thursday amid mounting concern about how the country will meet its obligations next months." This follows a suggestion earlier in the day by the Greek Minister of State for Coordinating Government Operations Alekos Flambouraris that "Greece might delay payment to the International Monetary Fund if it cannot find the necessary money." But wait, how does a country "delay" a debt payment? It doesn't: "According to officials familiar with the subject. such a move would constitute a “clear default,” with consequences for a large number of other loans Greece has received."
Ukraine Enters Hyperinflation: Currency Trading Halted, "Soon We Will Walk Around With Suitcases For Cash"Submitted by Tyler Durden on 02/25/2015 12:02 -0400
The Ukraine central bank tried to call a halt on Wednesday by banning banks from buying foreign currency on behalf of their clients for the rest of this week. Although banks could still trade with each other, by mid-morning there were no registered trades at any rate, leaving the currency in limbo. A construction worker exchanging dollars at a kiosk in a grocery shop in return for a bag filled with thousands of hryvnia, laughed and told shoppers: "Soon we will have to walk around with suitcases for cash, like in the 1990s."
- Invade Syria already, we know you will: Islamic State in Syria abducts at least 150 Christians (Reuters)
- Greece Struggles to Get Citizens to Pay Their Taxes (WSJ)
- Doubts Shadow Deal to Extend Greek Bailout (WSJ)
- In surprise result, Chicago's Mayor Emanuel faces election run-off (Reuters)
- Obama vetoes Keystone pipeline bill (Reuters)
- Another sign of the top: Cushman & Wakefield Going Up for Sale (WSJ)
- Lure of Wall Street Cash Said to Skew Credit Ratings (BBG) ... and threat of DOJ lawsuits also
- Oil rises to $59 as Saudis say demand growing (Reuters)
Former Ukraine Deputy PM Says "Another Coup Can Not Be Ruled Out" Among Currency Implosion, Central Bank ChargesSubmitted by Tyler Durden on 02/24/2015 13:52 -0400
A year or so on from the last coup in Ukraine, Ukraine’s former Prime Minister Sergey Arbuzov told TASS, with growing popular discontent, "another state coup can’t be ruled out in Ukraine." As the cease-fire deal hangs torn and tattered in the Debaltseve winds, the nation is a mess: a new gas dispute looms as Gazprom demands upfront payments; capital controls have been tightened as the $17.5bn IMF loan may not be enough; and the central bank governor faces prosecution as the economy craters. All of these factors have driven massive outflows from Ukraine and the Hryvnia has crashed to over 33 to the USD - a record high (and 70% devaluation from the last coup).
"Let us begin with what should be indisputable: the Eurogroup agreement that the Greek government was dragged into on Friday amounts to a headlong retreat. The memorandum regime is to be extended, the loan agreement and the totality of debt recognized, “supervision,” another word for troika rule, is to be continued under another name, and there is now little chance Syriza’s program can be implemented.... Greece will be receiving the tranche it had initially refused, but on the condition of sticking to the commitments of its predecessors.... How is it possible that, only a few weeks after the historic result of January 25, we have this countermanding of the popular mandate for the overthrow of the memorandum?"