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Greece Hints At Default, Russian Pivot:"Will Not Respect IMF Deadline" - What Happens Next
Update: GREECE GOVT DENIES PLAN TO DELAY APRIL 9 IMF PAYMENT: REUTERS
For now the algos can't decide if Greece is joking about making the payment or joking about not making the payment.
* * *
The hints are growing louder that the Troika-Greece standoff will not end well for either side. Spiegel is reporting that Greek Interior Minister Nikos Voutzis has stated:
"If no money is flowing to 9 April, we will first determine the salaries, pensions pay here in Greece and then ask our partners abroad to achieve consensus and understanding that we will pay 450 million euros to the IMF not on time,"
In other words...
- *GREECE DOESN'T WANT TO RESPECT IMF APRIL 9 DEADLINE: SPIEGEL
And adds:
As of June or July, Russia and China are "complementary to an agreement with the European partners" fixed part of a new Greek "Plan A are" as Voutzis calls him.
This plan close "with a debt reduction, the end of the austerity measures and a new agreement with a growth clause".
"We want Russia is helping us rebuild the Greek economy. Both trade agreements as well as through the purchase of government bonds in the primary bond market. "
The fact that Russia buys government bonds directly from the Greek State to the country's creditworthiness rise, credit spreads and spreads will automatically fall. Specifically, it should also go state-wide Russian investment projects, especially in the field of energy and transport.
Open Europe explains the consequences of not paying back The IMF...
It seems likely that Greece can make payments covering pensions and wages for public sector workers in March, but beyond today the picture is far less certain. Even if Greece manages the 9 April payment, it has to roll over €1.4bn of short-term debt (T-bills) on 14 April and a further €1bn on 17 April – a much tougher proposition given the recent ECB decision to legally limit the amount of T-bills that Greek banks can hold. This means they won’t be able to increase their share of the debt to cover for foreign owners who are unlikely to roll it over.
So what happens if Greece does not pay the IMF? How serious would this be?
Are countries often late in paying the IMF?
While it is well known that no country has defaulted on the IMF in its 70-year history, it is less well known that there have been a number of late payments. Furthermore, as the chart below shows, there continue to be a sizeable amount of arrears with the IMF outstanding (the chart is in Special Drawing Rights, 1 SDR = $1.38 currently).
That said, the large majority of these arrears are made up of countries such as Sudan, Zimbabwe and Somalia – not Greece. Furthermore, the total amounts are far below what would amass if Greece stopped making regular payments to the IMF – its total payments this year to the IMF are €9.7bn.
IMF internal reaction
The first step would be the IMF reaction. As detailed in the IMF’s ‘Strategy on Overdue Financial Obligations’, there would actually be little action until 1 month has passed. Before then, the Fund would continue to push the state for prompt payment. After a month, the IMF’s Managing Director Christine Lagarde notifies the IMF Board that an obligation is overdue. This is the point where the country is officially considered to be overdue on the payment, in the sense that this is where the knock-on effects would kick in.
Potential knock-on effects
The real problem may not actually be the IMF reaction – given its presence as senior creditor it is confident of getting paid back in full at some point – but the knock on effects of not making good on payments to the IMF.
IMF stops cooperating with Greece – One of the biggest problems for Greece is that it is still working with the Fund and relies on its sign off (as part of the ‘institutions’) to get its current review completed and therefore funding released. The response of the fund on the ground will therefore be important. Of course, the fund finds itself in a bit of a circular position. It is unlikely to get paid if it does not approve Greece’s review, but how can it approve the review if it is not getting paid?
Gap with creditors grows, reputation harmed – Linked to the above, given that not paying the IMF is usually a course of action reserved only for war torn countries or those on the fringes of the international system, not to mention severly underdeveloped economies, Greece could see its reputation severely dented. Furthermore, it is possible that Greece’s creditors will see that Greece has decided to pay wages and pensions first rather than meet its commitments to them. Whether or not this is a fair assessment, this could drive further animosity between the two sides.
Market funding becomes even harder - At this point in time this might be largely irrelevant given that Greece is locked out of the markets for the foreseeable future in any case, but not paying the IMF would likely be the final nail in the coffin, ending hopes of returning to the markets soon even if some agreement is found with Eurozone partners. Usually, the move would also be expected to raise the cost of short term debt, but given that these go almost entirely to Greek banks who have little choice but to buy them the impact could be limited.
Possible default on Eurozone loans – Greece’s Master Financial Assistance Facility Agreement with the European Financial Stability Facility (EFSF) notes that it could be considered to be in default on the loans from the Eurozone if it
has overdue charges on outstanding purchases and the Managing Director of the IMF has notified the Executive Board of IMF that such repurchases or such payment of charges have become overdue.
Essentially, after one month, when Lagarde notifies the IMF Board about the overdue payments Greece can be considered in default on its EFSF loans as well. However, this is all carefully worded and qualified – it explicitly says the EFSF is “not obliged to” take such action. In the end, it seems to ultimately depend on the decision of the EFSF. It seems unlikely that it would declare the full loan to be in default. That said, pressure would rise within certain member states and national parliaments for some decisive action. Eurozone partners could also use this to further extract concessions from the Greek government. (The original bilateral Eurozone loans also include similar clauses).
Potential cross default on private sector bonds – Under the 2012 debt restructuring, the new Greek bonds which investors were given were issued under English law and included both ‘cross default clauses’ (meaning if they are considered to have defaulted on other obligations they also default on these bonds) and ‘co-financing clauses’ (money for repayments is to an extent pooled between the bonds and the EFSF). However, these look to only apply to the EFSF loans rather than the IMF loans. As such, default would have to be triggered on the EFSF as well for these to be activated. It is worth noting that the rating agency Fitch said in a recent statement that arrears to the IMF alone “would not in and of themselves constitute a rating default” but would be “credit negative” and lead to a further downgrade.
Potential cross default on ECB – The exact terms of the bonds held by the ECB (purchased under its Securities Markets Programme) is less clear since the swap was done in a much more secretive way to ensure the bonds were not captured by the 2012 restructuring. The ECB was issued new bonds under exactly the same terms and maturities. Reports suggest that the bonds remained issued under Greek law. It’s not clear if they include cross default clauses at all and, if they do, whether they would be applicable to bonds issued under English law and/or the loans.
ECB limits or cuts off ELA – It is uncertain then whether default clauses on any loans or bonds would be triggered. Even if they are not, the ECB may reconsider its provision of Emergency Liquidity Assistance (ELA) to Greek banks and would likely refuse to raise the limit further. As noted before, this is likely because of the huge reliance of Greek banks on the state – which would clearly be struggling for cash. Given that the very public act of not paying the IMF may further increase uncertainty and deposit outflows, the impact of limiting ELA could be exacerbated and cause a serious funding crunch for Greek banks and indirectly the economy and the state.
Overall, the short term impact of not paying the IMF may not immediately be dire in economic and financial terms, though of course it would involve serious reputational damage and further widen the already mammoth gap between Greece and its creditors. It may take a month before cross default clauses could be triggered and even then it rests with decisions of highly political institutions such as the EFSF. Such decisions would likely be managed to achieve the least controversial ends, but equally could quickly spiral out of control. Less certain is the response of the ECB, which would once again be the key player.
In the end, it would still not be advisable for the Greek government to test this course of action. We still expect a deal to be found, and largely on Eurozone terms.
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The market appears less sure...
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checkmate
Que rolled eyes and uncontrollable laughter!! SUCKAS!!!
"understanding that we will pay 450 million euros to the IMF..."
OK, yes, very good...
"..... not on time"
Argh! Damn those blasted postpositive modifiers.
Israel to the last minute rescue on this one folks...
Stuxnet hit Turkey yesterday.
Who gets it next?
It was suggested by someone that the flashpoint for WW3 would be Greece invading someone since the only way to make money anymore is to take someone else's shit.
So who are they most likely to invade? Italy? Macedonia, or Albania? Turkey has been kind of an asshole lately. Army and Navy could get in on the fun hitting Istanbul.
how many damn deadlines have to be made before shit gets done?
I remember on Star Trek, Commander Data always struggled with humor.
They should just be ignored until 9th April. Actions speak louder than words.
Sounded like Boris wrote that shit...
Whatever becoming with Boris? Where he is now?
Last I heard he was getting to play with high powered weapons in Ukraine.
On a side note -
HOLY SHIT, its snowing. Again. In April. Thank God for global warming, else it would be really cold.
That's what happens when you use google translate.
"On Time vs. Not On Time" this is an example of EGO in operation.
EGO causes wars on the largest scale. Daily strife on the smallest.
<== Russia +1
<== EU +1
((Russia Backdooring Into Greece...))
And I thought you were just acting the part of fool for the days sake, my bad... Greece will be sold off to the Turks and Italians before russia takes them under thier wing. Oh yeah, and free Konigsberg before you start to make wild assed assessments like that putinites.
Back in the USSR!
Greece leaving the Euro is inevitable, GREXIT TIME BITCHEZ!
https://www.youtube.com/watch?v=Tta1K_is0ag
I'll believe it when I see it.
Russia shouldn't buy Greek debt. The Russians know they'll never get the cash back anyhow. Best thing they could do is;
"Here is a free $5 Billion you don't have to pay back, as a gift from one Orthodox group of peoples to another group of Orthodox peoples who need our help right now."
Talk about a massive public policy shift. Or, better yet just drop 500€ in each Greek bank account as a gift from the Russian government and skip the Greek government all together, on the condition the cash is tax free. Greek people would love the Russians and it would just piss off the TROIKA.
Russians get another port.
Another bank.
Which will end up in another proxy civil war.
Great.
I don't think they will be buying Greek debt. They will have the Greeks move to the drachma or the ruble. Reagan destroyed the USSR financially in the arms race. Russia can destabilize the European Union in the sovereign debt race. Buying Greek debt would stabilize the EU.
Yeah, but then again, this isn't the first time the ResFed has done stuff to support the EU.
See the extended gas discount, or lending $17.5 Million to Ukraine via the IMF.
Yes, Greece follows Novorossiya. That is to say a system of
One Country, two currencies.
Rubles handed out at Greek Post Offices in payment of pensions. Shops are required to show two prices, Euros and Rubles.
"Reagan destroyed the USSR financially in the arms race."
Well now, that is the popular story. I believed it for some time too. But the popular story is always the planted and nurtured story.
http://www.realussr.com/ussr/why-did-the-soviet-union-collapse/
http://www.arcaneknowledge.org/histpoli/soviet.htm
No one wins an arms race except for the manufacturers who make the arms. The citizens of the "protected" countries win nothing but their (in the USA) responsibility as tax payers to fund deficits and (in the USSR) living and getting by in an economy with badly mis-allocated resources.
Nuclear alert baby! Nothing like some missile porn to get people in line.
Imagine Italy Spain and Portugal ready to jump off Euro too walking right out the diving board. Interesting times.
Wow, that was a stick save. Low beta EIX up 2% in 20 minutes as mysterious money floods into SPY in the opening minutes. Was someone desperate to stop the plunge or did everyone see this as an incredible bargain? Who can tell? /s
...
blah, blah, blah, Greece, blah, blah, blah, default, blah, blah, blah...... bullshit.
You had me at blah.
April fool mutherfckers
Let's face the facts: The Greeks and Euro's are Grand Masters at Can Kicking. At this rate we will be reading these same headlines about Greece for another 10 to 20 years.
So please just remove them from the news until a real decision is made. Until then I predict moar' Can Kicking.
Will Germany join the EU Army?
Will Germany fund an EU Army?
Germany is being pushed hard by east and west.
Will soon have to choose sides.
That's checkmate, mate.
They already have months ago but just haven't made it public yet. Eastward they will go.
Then France goes as well.
France owes Germany a lot of money too.
If FN wins excpet France to have a marked Eastward push.
That being said, if either one of these countries goes "East" (which I am not really sure either of them will) -- I think the designation will no longer be East v West, but more Anglo-American vs Everyone Else.
< Will it end in tragedy? (aka default?)
< Will it be another nail biting drama till the last day? - with the same result as always....someone will save the Greek ass (be it Russia or China or the German God)
"someone will save the Greek ass again"
I know it sounds crazy...but, like, what about the Greeks saving their own ass?
this is what happens at the end of a 'debt super cycle'........cant blame the greeks for debt-money..........
fuck the banks and their interest (USURY) payment
Goldman turned them into invalids with their black magic wand. No "physical" assault necessary.
It’s easy to say, “I won’t pay that bill.”
What’s the counter-party have to say about collecting anyway?
Will someone just make it happen already. It's like 90s internet porn. Sure being teased by the slow reveal is fun for the first few minutes, but after waiting for the nipples to load in for half an hour all the allure is gone and you're just sitting there waiting for someone to invent DSL.
That's the funniest God damn post Ive read in a while????
Thx for that one!
Anyone still get a Pavlov-like boner whenever they hear a modem sound off?
Serious question; what percentage of the SDR does the FRN represent again?
~49%
So, once again, the American taxpayer gets the bill. Fucking stupid.
Audit and end the motherfucking Fed already.
market sells off acting like THIS is the cause rather than ongoing global depression, collapse in trade, and corporate earnings collapse. LOL
As the Great Bird of Blame circles the battlefield, looking for whom to land on!
Who has Vlad's suicide watch tonight?
Soap opera, as the Goyim turns.
Das Rayciss! Soap is made from cattle renderings.
HATE!
duplicate post
"no country has defaulted on the IMF in its 70-year history"
1. I didn't know that.
2. Sounds like a dare to me.
I believe that Zimbabwe is nearly 10 years overdue on some loans but the IMF keeps rolling them over. In the real world that's a default.
Please, would someone do an Andrew Getty on the IMF.
"no country has defaulted on the IMF in its 70-year history"
Thats because Christine Lagarde threatens to sit on your face if you don't pay.
It's easy, just keep the printers turned on. Print Euros, Drachma and Rubles at maximum speed and see which party wins. The "winning" party loans the fiat to Greece. The losing parties can then take their newly created fiat and use it to short precious metals. Every banker wins!
Greece is starting to look and sound like the Kardashians -- hungry for attention and drama.
"Take our loans and become our debt slaves or die" - IMF motto
IMF stops cooperating with Greece – Bad for IMF good for Greece. Greeks could not care less
Market funding becomes even harder - If Greece can live within its means they do not really need any funding
Possible default on Eurozone loans – Bad for Eurozone, good for Greece - more money stay at home for inner needs
Potential cross default on private sector bonds – Greek companies should sell assets they own abroad because they will get confiscated. If you have done that you could not care less
Potential cross default on ECB – kiss my ass goodbye confiscating whatever (not much) you can find me owning abroad
ECB limits or cuts off ELA – Greece stops contributing to ELA, more saved money for greeks
P.S. Any attempt by creditors to confiscate any assets in Greece should be met with declaration of war
Germany calls its Mykonos collateral, which then applies to become the 18th Bundesstaat (with Majorca being #17)
If Greece can live within its means they do not really need any funding
IF.
Because it was their inability to do so that got them into this mess in the first place. Sure, the GS psychopaths gave them a giant kick over the fiscal cliff, but they walked up to the edge of that cliff themselves, by basing their social justice welfare state on the Hegelian synthesis that 1+1=3.
TANSTAAFL.
Breaking news: Ukraine invaded Russia!
http://www.rferl.org/content/how-to-guide-russian-trolling-trolls/269199...
I'd galdly pay you Tuesday for a hamburger today.
Champagne bottles to the fridge... it's coming !
IMF- Interfering Mother Fuckers- The PONZI is almost up; Lending out money that doesn't even Exist- Two can play that Game- The Muppeteers have been muppeted. FUCK YOU Scheauble you CUNT. Happy Easter Bunnies.
IMF is now a blood sucking asset stripper used by the US. Its fate is like the USD.
Here's exactly what happens next, the same circle-jerk next week.
In nature the parasite is normaly smaller than the host, not in this case!
#PrintDrachmasAlready
When the ' Lynch Mob ' is after you the ONLY SAFE HAVEN is under Vlad's Tunic.
Happy Easter Edward Snowden, wont be too long before you take your rightful place on the World Stage.
Must watch:
https://www.youtube.com/watch?v=qNItYoJhgmk
Sick April foolsday joke.
" it has to roll over €1.4bn of short-term debt (T-bills) on 14 April and a further €1bn on 17 April"
Really, we humans actually say things like this without blinking - we accept it blindly. How hypnotized are we?
When you roll over debt, the usury on the first debt instrument becomes principle in the second. At that point, debt instrument claims on credit money supply go exponential.
The math is simple, if some economist would HAVE A FUCKING CLUE, and do the math. Really, we should fire all economists and let some engineers have a crack at it.
When debt instruments go exponential, they may claim two or three times from money supply. In other words, the original debt that spawned credit no longer mirrors, and debt to credit ratio departs from 1:1.
Anything other than 1:1 is usurious. Vectoring credit or debt instruments away from each other, hence not allowing them to merge later is also usurious. This vectoring action also happens quite often, thus collapsing exchange rates and destroying econmies and livelyhoods. This type of manipulation is extremely predatory.
How stupid are we? We have delivered ourselves into an obvious slavery system run by predators.
JUST PRINT DEBT FREE MONEY, and keep it volume controlled. Channel it into households or the commons . It won't disappear and it will pay down debts over time, thus avoiding war.
It looks as if Iceland is going to do exactly as you suggest and then, hopefully, others will follow suit and we can all screw these robber barons at last.
It looks as if Iceland is going to do exactly as you suggest (see 110 page report) and then, hopefully, others will follow suit and we can all screw these bastard robber barons at last.
Aber das ist noch nicht alles: "Und dann hätte Griechenland gern wenigstens eine minimale Teilhabe an den Geldern aus dem QE-Programm von Mario Draghi", sagte Voutsis. Der EZB-Präsident hatte entschieden, jeden Monat für 60 Milliarden Euro Staatsanleihen aus den Euro-Staaten aufzukaufen. Von dieser Anti-Krisen-Maßnahme - im Fachjargon quantitative Lockerung oder "QE" genannt - profitiert Griechenland derzeit nicht, denn die Staatsanleihen aus Athen sind davon ausgeschlossen.
But that's not all: "Greece would also like - at least - some partial income from the new Mario Draghi QE-Program " said Voutsis. The ECB President had decided to buy 60 billion Euros (per month) worth of Eurobonds from various Euro member-states. But Greece is presently excluded from this 'QE anti-crisis-strategy' because the ECB does not buy any Greek Bonds from the Athens Central Bank.
http://www.spiegel.de/wirtschaft/soziales/griechenland-will-sich-nicht-a...
WR;)
It is time for these asset stripping, parasitic, criminal central bankers to get what's coming to them. Who the hell do they think they are? The decision to set up the EU was a criminal act by corrupt politicians who knew that they were effectively signing away their countries' sovereignty. It is time for the people to revoke that decision, and to take back their sovereignty. These people are nothing more than Mafiamen in suits.
“Patriotism is usually stronger than class hatred; and always stronger than internationalism”.
George Orwell
It is hardly a sensible proposition to attempt a Union of these British Isles with Germans and French, unlikely compatriots of the recent past, who only some seventy years ago were tearing each other to pieces. However within every society one finds a tiny elite of treacherous, unpatriotic rulers who command the destiny of a nation with only their selfish, personal gains their goal. And so it was that Britain, having joined what first was understood to be a ‘Common Market’, suddenly found itself enmeshed in a ‘European Union’ whose final objective is a united company of countries under the banner of a ‘Fourth Reich’. A short history of how this momentous plot came to pass should be enlightening to say the least; let the evidence speak for itself. Few people understand how seriously the British nation was misled and swindled into a European Union (EU) which is sure to collapse eventually under its own weight of obscene bureaucracy, corruption and graft.
HAHAHAHA
Every day is a kneeslapper with Greece.
We defaulted on some IMF folks.
1. Default
2. Declare all sanctions versus Russia null and void
3. Appeal to BRICS or AIIB for emergency bridge loan
4. new Drachma backed by gold
See how easy that was