Greece Calls Europe's Bluff Again, Gets More Money

Tyler Durden's picture

Five days ago the latest episode of the endless "Europe pays Greece to pay Europe" charade played out when the Eurozone gave Greece its latest three-day "ultimatum" to fix itself or else. Obviously, Greece did not fix itself, but since the three day ultimatum ran out two days ago, and since the BBG ticker for the Greek currency is still not XGD, one can assume that the latest European bluff, especially one coming 2 months before Merkel's reelection when nothing is allowed to disturb the precarious European house of insolvent cards, was just that: a bluff.

Indeed it was, and today we just got the details of how Greece, so aptly explained by Mr. Panos, once again fooled Europe into bailing it out: well into the 3rd year of what is now obviously an endless bailout cycle from which there is simply no escape. From Reuters: "Greece secured a 6.8 billion euro ($8.7 billion) lifeline from the euro zone on Monday, officials told Reuters, but was told it must keep its promises on cutting public sector jobs and other reforms in order to get all the cash."

The problem is that the latest bailout, like so many before it, will come in a staggered way to "assure" the angry German taxpayer that the Greek politicians are at least doing stuff in exchange for German (and in the case of IMF handouts, American) taxpayer money. So the details from Reuters:

Under the terms of the deal, euro zone finance ministers agreed to make staggered payments of aid to Greece starting with a 2.5 billion euro installment from euro zone countries in July, said officials close to the talks. The agreement foresees a further payment from euro zone countries of 500 million euros in October.

 

Central banks in the Eurosystem will contribute 1.5 billion euros in July and 500 million euros in October, the officials said. The International Monetary Fund will give 1.8 billion euros in August.

 

"That's the way it will be done," said one of the officials.

Spoken like a true Indian.

So here is the math: Greece has gotten €2.5 billion + €1.5 billion, from the Eurogroup and the ECB, to last it through October, or three months.  The IMF may or may not hand over another €1.8 billion, but if history is any indication, the IMF will delay its portion as it has in the past, because it will be mysteriously uncovered some time late in the summer that instead of "reforming", the Greek political elite spent what little money it got, to pay for summer vacations in the Cyclades.

Speaking of "what little money" there is, consider that there is €2.2 billion in Greek bond maturities in August. So netting that outflow, means Greece has really gotten €1.8 billion to last it until August, although realistically, through October. So three months. Which means a miserable €600 million per month.

And this is somehow supposed to lead to an improvement in the economic conditions of the country, of fill the "mysterious" €1.2 billion hole that recently materialized in the budget of the country's healthcare system?

That's ok though: we are confident that should the Greek money run out once again, as it will, then Europe will once again threaten to punish Greece, should it prove incapable of meeting its one condition which is to fog a mirror, with giving it even more bailouts.

Remember: the only thing that matters in Europe this summer is the smooth sailing into Merkel's September election.