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Greek Blame Game: At Whom Will History Point The Finger?

Tyler Durden's picture




 

Will they default or will they not? Are they out of cash or can they scrape together another half billion by tapping some heretofore untouched pocket of the public purse? Did they just institute capital controls? Because that’s what it looks like. What was Varoufakis thinking? Is an advance from Gazprom on the way?

These are just of few of the many questions which seem to get asked and re-asked on an almost daily basis as the crisis in Greece plays out like a slow motion car crash that no one can take their eyes off of even though everyone (the market, the creditors, Athens … everyone) is exhausted, exasperated (“Gratigue” maybe?), and ready for some manner of resolution. Unfortunately, as Citi noted last week, the most scenario will be a kind of euro purgatory characterized by capital controls, defaults, and prolonged pain and suffering for the populace. This state of affairs is known as “Grimbo,” and as Reuters notes, no one involved in the ordeal wants history to remember them as the villain. Here’s more:

The game of chicken between Greece and its international creditors is turning into a vicious blame game as Athens lurches closer to bankruptcy with no cash-for-reform agreement in sight.


Europe's political leaders and central bankers and Greek politicians agree on only one thing: if Greece goes down, they don't want their fingerprints on the murder weapon…


Greece's leftist government has already identified its culprit of choice - Germany, Europe's main paymaster, accused of having inflicted toxic austerity policies on Greeks, causing a "humanitarian crisis".


Euro zone governments are preparing the ground to blame the novice government of Prime Minister Alexis Tsipras for having blustered, obstructed, failed to meet commitments and evaded hard choices while Athens burned.


"We are doing everything we can to save Greece from itself, but in the end, it's up to them," is the message pouring out of Berlin, Brussels and IMF headquarters in Washington.

And then there’s FinMin Yanis Varoufakis who, over the past three months, has put together a SportsCenter-like highlight reel of what he would likely call “kerfuffles” including a speech wherein he references “sticking the finger” to Germany, a very unaustere ParisMatch photoshoot, and a performance at the negotiating table in Riga on Friday that led his peers to describe him as an amateurish time-wasting gambler. 

In Varoufakis' narrative, euro zone countries did not lend all that money to save Greece in the first place but to protect their own banks, which had imprudently lent Athens billions.

 

Varoufakis has widened the circle of blame to the ECB, accusing it of "asphyxiating"Greece by starving its banks of liquidity and severely limiting their short-term lending to the government.

 

That prompted an indignant response from ECB President Mario Draghi, who told the European Parliament the central bank's support for Greece amounted to some 110 billion euros, but it was barred by treaty from monetary funding of governments.

It now appears that everyone — including Athens — has grown weary of the Varoufakis narrative because as we reported earlier today, Tsipras looks to have replaced the outspoken FinMin as lead negotiator amid pleas from eurozone officials and complaints about Varoufakis’ tendency to “lecture” his EU counterparts rather than engage in serious discussions about reforms. 

Relations between Varoufakis and Mario Draghi are reportedly so icey that the two avoided eye contact at the breakfast buffet in Latvia last week which sets up an interesting situation going forward, because as Mohamed El-Erian observes, the worse the cash situation gets in Greece, the more critical the ECB’s ELA determinations become: 

The most potentially decisive discussions will be taking place in a different venue: Decision makers at the European Central Bank’s will hold their weekly consideration of how much “emergency liquidity” they should extend to Greek banks and on what terms.

 

At its weekly meeting, on April 29, the ECB will be under tremendous pressure to keep Greece on its life support system. But without progress elsewhere, this powerful monetary institution is at risk of joining other actors in the Greek drama that are unintentionally transitioning from being a major part of the solution to a big part of the problem now and in the future…

El-Erian outlines three alternative scenarios, noting that the existing arrangement whereby the central bank strings Greek banks along even as they become ever more dependent on ELA for their very survival is nothing more than an exercise in can-kicking while pulling the proverbial plug would, in short order lead to capital controls and perhaps to “even more draconian steps to gain control of any idle cash balances” (such as freezing small debtors’ accounts perhaps?). 

1. Pretend and extend. The ECB, through the Emergency Liquidity Assistance operated by its network of national central banks, would continue to extend exceptional funding to Greece. This would be done under the pretense that it is helping Greece deal with a liquidity problem instead of acknowledging the country's true predicament, deep economic and solvency deficiencies…

 

2. Pull the plug. Under this scenario, the ECB … would limit any further financing to Greece, raising not only the legitimate burden-sharing issues but also rightly noting that liquidity support would continue to prove ineffective without accompanying measures to improve growth and financial solvency... If such conditions failed to be met, the ECB decision would likely lead to even greater capital and deposit flight from Greece. And this, under most realistic scenarios, would prompt the Greek government to impose capital controls, default on payments and take even more draconian steps to gain control of any idle cash balances in the country…

 

3. Pull the plug as part of a comprehensive Plan B. In this case, the ECB’s refusal to extend additional liquidity support would be part of an attempt (albeit a risky one) at an orderly pivot for both the euro zone and Greece. The ECB would seek to minimize the risk of Greekcontagion and disorderly spillovers to other economies (such as Cyprus, Italy, Portugal and Spain) by expanding its funding windows for both governments and financial institutions. It would also step up its large-scale program of security purchases (known as quantitative easing). 

And finally, El-Erian echoes Reuters’, noting that at the end of the day, no one wants to take them blame for a disaster:

One of the big lessons of the last few years is that, regardless of the facts on the ground, no one -- whether on the Greek side or among its official national, regional and international creditors -- wishes to go down in history as the cause of the first exit from the single currency. 

*  *  *

And speaking of the ECB, ELA, and capital controls, consider the following from HSBC:

“Hard deadline” is July 20, when bond held by ECB comes up for redemption.

 

If payment isn’t made, ECB would likely have little choice but to declare Greek debt ineligible for ELA as collateral.

 

Capital controls would then be almost inevitable, while solvency of Greek banks could be called into question.

 

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Mon, 04/27/2015 - 10:55 | 6033907 Headbanger
Headbanger's picture

Oh let's see.

Could it beeeee.

SATAN!?

https://www.youtube.com/watch?v=62Qfbrc1jdo

 

Mon, 04/27/2015 - 11:14 | 6033961 Oh regional Indian
Oh regional Indian's picture

Actually could we be watching the final destruction of Greece by Rome?

Not Italy. Rome....

Sure feels that way when one understand how power moves in Europa, Europa rides on a???

Bull.

The pope rules by?

Bulls!

Anyways, Greece's "gift", more like a canker sore, to the world, demoncracy needs to die for sure.

May the Greeks live in peace and plenty...

https://www.youtube.com/watch?v=DcuIThFpV6E

Mon, 04/27/2015 - 11:34 | 6034028 Pinto Currency
Pinto Currency's picture

 

 

Greece entered the Euro by fraud and ran up 350 billion euros in debt.

That it is exiting seems unavoidable given what has happened.  No finger to point.

Mon, 04/27/2015 - 12:10 | 6034157 CuttingEdge
CuttingEdge's picture

Other than the bloody big finger at Goldman Sachs for enabling that fraud...

Mon, 04/27/2015 - 11:52 | 6034074 MonetaryApostate
MonetaryApostate's picture

No, we are watching the corrupt oligarchy fall, and as the old saying goes...  "A house diivided against itself cannot stand!"

Of course the House of Cards are going to fall because, well, money (i.e. power) corrupts, and corruption has a very exacting price!

http://galeinnes.blogspot.com/2015/04/the-aftermath-of-corruption.html

Mon, 04/27/2015 - 11:55 | 6034088 Kirk2NCC1701
Kirk2NCC1701's picture

I blame exactly TWO parties: The Lender and the Borrower.

Mon, 04/27/2015 - 10:54 | 6033913 q99x2
q99x2's picture

IceLand

Mon, 04/27/2015 - 11:06 | 6033935 tsuki
tsuki's picture

Austria.

Mon, 04/27/2015 - 11:21 | 6033982 indygo55
indygo55's picture

"Capital controls would then be almost inevitable, while solvency of Greek banks could be called into question."

That last line shows the typical European attitude for these things. Head in the sand. They don't like Varafaoukus because he tells them its a solvency problem, not a liquidity problem. He had said that from the beginning. It is obvious. But it'll take several more months for anyone at the table to admit that. The theatre is designed to exhaust us. It is part of the master plan. Creating these stupid debates and extending them for what seems like forever. And the people just obediently carry on like sheep playing their part.


Mon, 04/27/2015 - 11:32 | 6034020 KnuckleDragger-X
KnuckleDragger-X's picture

We need an all-pointing, universal finger that points to everybody, al at once. The Greek problem is that Sparta disappeared but Athens didn't.....

Mon, 04/27/2015 - 10:56 | 6033917 NoWayJose
NoWayJose's picture

Didn't the 'accident' that plunged Greece into social unrest and economic misery already happen - a few years ago??  Leaving the Euro and defaulting is the ANSWER to FIX the social unrest and economic misery!

Mon, 04/27/2015 - 10:56 | 6033919 LawsofPhysics
LawsofPhysics's picture

With respect to Greece and the E.U., you need to look at who or what entity profited from getting Greece into the E.U. in the first place...

tick tock motherfuckers...

Mon, 04/27/2015 - 11:06 | 6033933 Winston of Oceania
Winston of Oceania's picture

So uh, how often do you have to wind that clock? It's been tick tocking for the entire three years I've been here...

Mon, 04/27/2015 - 11:15 | 6033963 LawsofPhysics
LawsofPhysics's picture

You are free to play the game any way you want, for now...  ...three years is not a very significant amount of time and it has been very clear from the begining that the Fed and it's owners/political puppets were going to buy up everything so long as the world accepted the FRN.

Now do you have anything intelligent to add or not?

Mon, 04/27/2015 - 11:22 | 6033985 Winston of Oceania
Winston of Oceania's picture

Like I told you before, with any luck you live in the way...

Mon, 04/27/2015 - 11:31 | 6034016 LawsofPhysics
LawsofPhysics's picture

SO, the answer to my question would be no.  Thanks.

Mon, 04/27/2015 - 11:00 | 6033923 Jonesy
Jonesy's picture

We will never know who was to blame, but it definitey was NOT the Jew bankers.

Mon, 04/27/2015 - 11:04 | 6033928 Reaper
Reaper's picture

The central planners forgot to create a State bankruptcy mechanism.

Mon, 04/27/2015 - 15:08 | 6034938 Mountainview
Mountainview's picture

The mechanism will autodeclare himself. Paralell currency or Grexit or both are imminent.

Mon, 04/27/2015 - 11:06 | 6033937 teslaberry
teslaberry's picture

this isn't about lending money to greece, its' about when europe wants to start fucking over bondholders.

greece will suffer itself one way or another into a civil chaos of one sort of another, with or without a grexit-------and when things finally break with massive looting and chaos, the european army will brought in to handle greece.

Mon, 04/27/2015 - 15:10 | 6034954 Mountainview
Mountainview's picture

Screwing their bondholders is the last thing they will dare. But the Greek will impose it by fooling the Brussel bureaucrats.

Mon, 04/27/2015 - 11:15 | 6033941 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Conflating financial default with actual murder talk about intellectual dishonesty and fear mongering or as someone else coined kafkatrapping of the variant C variety. Propaganda matrix working through abstraction here.

http://esr.ibiblio.org/?p=2122

...
Sometimes the kafkatrap is presented in less direct forms. A common variant, which I’ll call the Model C, is to assert something like this: “Even if you do not feel yourself to be guilty of {sin,racism,sexism, homophobia,oppression…}, you are guilty because you have benefited from the {sinful,racist,sexist,homophobic,oppressive,…} behavior of others in the system.” The aim of the Model C is to induce the subject to self-condemnation not on the basis of anything the individual subject has actually done, but on the basis of choices by others which the subject typically had no power to affect. The subject must at all costs be prevented from noticing that it is not ultimately possible to be responsible for the behavior of other free human beings.
...

Whether you like Syriza or the current crop of unelected appointed by faux democratic decree EU technotwats, they weren't responsible for the initial setup that both are stuck in now. The only individual you can point the finger at that definitely was is one Mario Draghi.

If I didn't know any better sounds like Reuters is amplifying Model C in a directed fashion at both Greece and the EU at the same time.

Maybe the mouthpiece behind the amplification since they have the most to lose here, even more than the ECB is

N.A.T.O. = No Action, Talk Only

Mon, 04/27/2015 - 11:22 | 6033980 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

As a reminder as to which individual and financial institution should be blamed for the disintegration of the Euro and why if it happens because of Greece.

http://www.zerohedge.com/news/just-what-mario-draghi-hiding-ecb-declines...

If Reuters, or anyone else wants to start pointing fingers start here....

Greece has to accept responsibility for it's actions but victim blaming them while give the debt drug dealer a pass for preying on that weakness is not acceptable either.

Mon, 04/27/2015 - 11:28 | 6034007 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

As someone else once said, if they are trying to scare you, they are trying to control you. Simple as that.

If you are afraid of the truth, the problem isn't truth, facts, etc. the problem is you.

Mon, 04/27/2015 - 11:10 | 6033947 HenryHall
HenryHall's picture

Of course Greece will default. Default is truly inescapable.

The only question is - will they default sooner or will they default later?

Gazprombank money will not be advanced if it is proposed to be used to pay off loans. It will only be advanced after default to meet current expenses - not to meet prior incurred debt.

Mon, 04/27/2015 - 11:17 | 6033968 Chuck Knoblauch
Chuck Knoblauch's picture

greece again?

yawn.

Does Tyler know that these greek updates are irrelevant and pointless?

Mon, 04/27/2015 - 11:19 | 6033973 Dead Canary
Dead Canary's picture

Ok! I admit it! I killed Greece.

(Yes I'm a very bad person, moving on...)

Mon, 04/27/2015 - 11:21 | 6033983 world_debt_slave
world_debt_slave's picture

light the torches, let the games begin

Mon, 04/27/2015 - 11:21 | 6033984 Iam Yue2
Iam Yue2's picture
What Henry Kissinger said about Greece in 1974   "The Greek people are anarchic and difficult to tame. For this reason we must strike deep into their cultural roots: Perhaps then we can force them to conform. I mean, of course, to strike at their language, their religion, their cultural and historical reserves, so that we can neutralize their ability to develop, to distinguish themselves, or to prevail; thereby removing them as an obstacle to our strategically vital plans in the Balkans, the Mediterranean, and the Middle East."

(As reported in the popular Greek magazine, Oikonomikos Tachydromos on 14 Aug. l997, Henry Kissinger, while addressing a group of Washington, D.C. businessmen in Sept.1974)

Mon, 04/27/2015 - 11:26 | 6034004 Madcow
Madcow's picture

Nuremberg. 

 

Mon, 04/27/2015 - 11:27 | 6034005 Platypus
Platypus's picture

This Greek  governmnt  is a JOKE. Kids trying to show off as adults. Varoufakis is the worst of them all, showing off for the cameras and blogs, but when it is time to do something right behaving like a kid. Greece is going to hell.

Mon, 04/27/2015 - 11:44 | 6034050 johnjkiii
johnjkiii's picture

A default, on average, every 14 years going back to 1832 makes it an odds on bet that they will default. The real twist might be that the EC let's them stay in the union anyway.

Mon, 04/27/2015 - 11:46 | 6034058 g'kar
g'kar's picture

It's Bush's fault.

Mon, 04/27/2015 - 11:56 | 6034092 wmbz
wmbz's picture

1. "Pretend and extend. The ECB, through the Emergency Liquidity Assistance operated by its network of national central banks, would continue to extend exceptional funding to Greece".

 

~ It's what the whole world does and has been doing for a long, long time. The Greeks just happen to be in the spotlight right now.

Next up? 

Mon, 04/27/2015 - 12:05 | 6034121 Gohigher
Gohigher's picture

GREEZZzzzzzzzzz (snoring).... The thrill of vicarious anticipation is all but gone.

NOW pivot to Groundskeeper Willie-ville.

 

SNP you're so RIGHT !

Future prosperity ! FIGHT FIGHT FIGHT !!

GooooOOOO  EU Referendum !!!

PS: Don't let the British Citizens in residency vote this time you porridge wogs .......

 

Mon, 04/27/2015 - 12:20 | 6034199 Joebloinvestor
Joebloinvestor's picture

Will bluster and indignation get Greece funding?

Stay tuned for another exciting episode of "As the Greeks Perish".

Mon, 04/27/2015 - 12:27 | 6034238 WTFUD
WTFUD's picture

Brilliant MSM coverage. It's Yanis who's been in power 10 minutes fault and NOT Mario who has fucked us all up the ass in favour of BankCorp for what seems like decades.

Amazing how mucky uprick Murdoch and co attempt to cast Yanis as the villain in this Horror Show.

Not until that noose tightens around Draghi's, Lagarde's neck will i feel we are adopting sound policies.

Mon, 04/27/2015 - 12:46 | 6034324 Smiley
Smiley's picture

History favors those who write the history books.

Mon, 04/27/2015 - 12:47 | 6034328 Irishcyclist
Irishcyclist's picture

Due Dillingers who reported that "yep, Greece has passed all the entry requirements necessary to fulfi the entrance criteria to join the Eurozone" are to blame.

 

And if I were the EZ, I'd be rechecking what the Due Dillingers reported for the other East European Acession nations too.

 

Mon, 04/27/2015 - 12:58 | 6034368 dag
dag's picture

The Greek governments are petty hustlers.
They thought they could hustle the Mafia.
Bad idea.
The Mafia (ECB, IMF, EC) now will cut off their legs.
Greeks should sell a few islands and airports.
If not, they will be in wheel chairs.

Mon, 04/27/2015 - 13:32 | 6034485 Batman11
Batman11's picture

Historians have the benefit of hindsight and will be fully aware of the big picture consequences.

The world is full of unsustainable debt the US, UK, Japan ..... and Greece is a little further down the road.

Greece may default first but that there always had to be someone in a world loaded up with debt.

Historians will probably marvel at the stupidity of our age.

Finance was supposed to provide a solution but bankers only have one product, debt (loans/mortgages).

What is the world supposed to look like after a financial/banking boom?

Everyone is loaded up with the bankers only product, debt.

The bankers product, debt, allows you to borrow your own money from the future to spend today with the repayments due in the future plus interest.

The loans are spent immediately and the repayments come in the future.

Boom today, bust tomorrow,

Once the credit spigot starts turning off the repayments over-whelm the system,

After a financial/banking/debt boom come the defaults.

It is the inherent nature of finance/banking/debt, but no one could see the inevitable.

The end of the age of stupidity and the beginning of the age of reality.

Oh yeah, I remember how the bankers product, debt, works now ........ doh!

 

Mon, 04/27/2015 - 13:42 | 6034607 libertysghost
libertysghost's picture

Lots of "?"s in ZH headlines today...luckily, I have a lot of easy answers.

My guess here is....

 

Gavrilo Princip http://en.wikipedia.org/wiki/Gavrilo_Princip

Tue, 04/28/2015 - 00:00 | 6036758 bid the soldier...
bid the soldiers shoot's picture

even bigger deadline

“Hard deadline” is July 20, when bond held by ECB comes up for redemption.

 There will be an even more important vote in July 2015 and that will be to renew the sanctions against Russia.

 

 

 Whether or not Greece will be around to veto sanctions or whether Hungry, Slovokia, or some of the other big names (Germany, France) will blackball sanctions, we're just going to have to wait and see. 

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