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Greece Effectively Defaults To IMF Using SDR Reserves To "Repay" Fund; 1 Month Countdown Begins
When Monday’s Eurogroup meeting concluded without an agreement between Greece and its creditors, it should have been game over for Athens. With pensioners at their breaking point and with local governments reluctant to comply with a decree mandating a sweep of excess cash reserves, the idea that Greece would somehow be able to scrape together €750 million euros to make a scheduled payment to the IMF today seemed far-fetched at best which is why we asked the following question Monday afternoon:
Where, if not from local governments who have been extremely reluctant to comply with Athens' cash sweep decree, and if not from the IMF which will apparently not be paying itself tomorrow after all, is Greece going to get three quarters of a billion euros in the next 12 hours?
We now know the answer to that question. As Bloomberg reports, citing Kathimerini, Greece tapped IMF reserves to pay .. well, to pay the IMF:
Greece used up ~EU650m reserves from its SDR IMF holdings account to meet loan payment of ~EU750m due to Fund today, Kathimerini newspaper reports, without citing anyone.
Reserves kept in IMF holdings account need to be replenished within one month
IMF agreed over weekend for their use, given Greece’s liquidity situation; without use of those reserves, payment due today wouldn’t be possible.
Reuters has a bit more color:
Greece tapped emergency reserves in its holding account at the International Monetary Fund to make a crucial 750 million euro (539 million pounds) debt payment to the Fund on Monday, two government officials said on Tuesday.
With Athens close to running out of cash and a deal with its international creditors still elusive, there had been doubts whether the leftist-led government would pay the IMF or opt to save cash to pay salaries and pensions later this month.
Member countries of the IMF have two accounts at the fund - one where their annual quotas are deposited and a holding account which may be used for emergencies.
One official told Reuters that Athens used about 650 million euros from the holding account to make the payment.
"We made use of money in our holding account in the fund," the official said, declining to be named. "The government also used about 100 million of its cash reserves."
This explains why Yanis Varoufakis was so confident that the payment would be made and also why the language around the payment confirmation was so bizarre (recall that the heading was "Greece said to have given order for IMF repayment"). It also underscores the degree to which this entire ordeal has now careened into sheer absurdity because disbursing bailout funds that you know will immediately be sent right back where they came from in the form of an interest payment is one thing, but literally paying yourself is another, and the IMF seems to have done the latter on Monday.
Given this, it’s certainly not surprising that Christine Lagarde and company are not thrilled about the prospect of participating further in what has become an outright farce and as El Mundo reports, the fund has now told the ECB and the European Commission that it does not wish to be a part of a new program for Greece.
Via El Mundo (Google translated):
The International Monetary Fund (IMF) has shown the Eurogroup their desire not to be part of a possible third bailout of Greece, which would amount to 50,000 million and would be vital for the survival of the Hellenic country. The absence of really emotional action by the executive with whom Tsipras contain spending and tackle the deficit, as well as the challenges it has done in recent weeks, as the readmission of public employees has caused the agency wants let all the weight of aid to Greece in the hands of the Eurozone and the ECB.
The fact that the IMF wants to stop being part of the bailout of a country is particularly serious, not in vain this institution is always the last resort of economies whose situation is more complicated. Therefore, the IMF has priority over other creditors in the order for recovery and, in all history, only Zimbabwe, Somalia and Sudan have failed to fulfill their obligations to it. However, given the difficulties to unlock a new rescue aid tranche that matures on June 30, the Washington-based organization fears that Greece will become the first economy in a developed nation it incurs a default, as They have confirmed to THE WORLD sources familiar with the process.
For Germany (where lawmakers are already pressuring Angela Merkel to cut the Greeks loose) this may be the final straw.
- SCHAEUBLE SAYS IMF MUST STAY INVOLVED IN GREECE AID PROGRAM
Greece is now reliant on a similarly ridiculous circular funding scheme to pay public sector employees whereby pensioners will only receive payments if the government is successful at tapping pension funds for cash.
Via Bloomberg:
Greece may be able to meet end-May salaries and pensions payments, if pension funds, municipalities commit more of their cash reserves.
And because all of the above isn't preposterous enough, Greece will depend on the disbursment of the €7.2 billion left in its current program (about half of which is set to come from the IMF) to replenish the funds it raided from its SDR holdings:
Greece assumes that an agreement will be reached by end-May for disbursement of bailout funds, so that it can replenish holdings account reserves.
In sum: the IMF paid itself on behalf of Greece and will now be forced to pay itself back for paying itself later this month. Or, put differently, Greece has prepaid the IMF with IMF money it doesnt have.
Meanwhile, Greek pensioners are set to adopt a similarly ridiculous self-payment scheme in a matter of weeks even if they don't entirely appreciate the sheer insanity that's taken hold in Athens.
And just to prove how dire the situation now is, Market News just reported the following shocker:
- GREECE CASH RESERVES STAND AT APPROXIMATELY EUR 90 MILLION - EUROSYSTEM SOURCES
The Greek endgame is now upon us.
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The whole farce about this whole situation is that Greece has been borrowing from Europe to repay....Europe. Borrowing from the IMF to pay the IMF is an extension of that same dynamic.
The fat lady sings ... step by step https://www.youtube.com/watch?v=0vHSBD4s6fE
GREECE - WE CAN DO THE MATH NOW, GREEK DEFAULT BY EARLY JUNE/LATE JULY!GREEK LIST
08 May 2015 €1,400 million Greek T-Bill redemption
11 May 2015 Eurogroup meeting (final deadline for reforms - Last change to release €7,000 million/€7 billion from ECB)
12 May 2015 €0,774 million IMF
15 May 2015 €1,400 million Greece T-Bill redemption
31 May 2015 €2,500 million Greek pensions/wages bill
05 June 2015 €0,312 million IMF
12 June 2015 €0,351 million IMF
12 June 2015 €3,600 Greek T-Bill redemption
16 June 2015 €0,581 million IMF
18 June 2015 Eurogroup meeting
19 June 2015 €0,348 million IMF
30 June 2015 €2,900 million IMF
30 June 2015 A four-month extension on bailout agreement expires.
12 July 2015 €2,400 million in Greek bills matures
13 July 2015 €0,465 million IMF
19 July 2015 €0,199 million ECB Maturity Gov't Bonds
20 July 2015 €3,500 million ECB Maturity Gov't Bonds
25 June 2015 EU leaders summit
20 Aug 2015 €3,200 million ECB Maturity Gov't Bonds
Sources:
https://pbs.twimg.com/media/CETnPt7WIAAAlTV.jpg
http://www.bloomberg.com/news/articles/2015-04-23/greece-s-scary-calenda...
Your choice bitchez! https://youtu.be/0smEgK5OFoc?t=1m27s
that surely is a big can, but the troika has a bigger boot
...the fund has now told the ECB and the European Commission that it does not wish to be a part of a new program for Greece...
the troika has a bigger boot...
Does this mean the troika will become the bohica? Those three legged races were fun to watch and the shell game was much more effective when three were used, but it seems the IMF is content to be out of the game at this point as the music stopped and only 2 chairs, soon to be one are left.
It'll be funny when the IMF and Greece show up together at the pivot party being held in the east.
just a thought
Besides the usual accounting tricks being played here are SDR's and IMF bailout financing tied to derivative contracts also? I would imagine they took out derivative insurance on this along with deviate gambling behavior that goes along with the financial world. We are talking about addicts here on all sides of this coin.
If they did then this is a scramble to keep margin calls from happening.
So DC has no money left for Greece. Oddly enough they'll have plenty for another Balkan war.
"The Greek endgame is now upon us."
hahaha how many times have I read this tosh here and elsewhere around the MSM. Greece is going nowhere, will probably join the BRICS bank and will also carry on using the EURO.
P:S Don't even mention the Greek gold they have stashed for a rainy day.
Stroll on.
In other words, the Greeks just told the Eurozone, “If we’re going down, we’re going to do everything possible to take you down with us.”
And Hillary said, “Damn it! That money was earmarked for the Clinton Foundation”.
What's next? IMF risks defaulting against itself but manages to negotiate a last minute extension.
It's like a theatre production in a mental hospital!!!!
Time honored tradition of all well educated college graduates:
Cash Advance Lady Visa to pay the Master-of-the-Card.
Buy Big TV(and beer) with MasterCard, return TV for cash to pay Visa next month. Drink the beer(excellent source of probiotics).
Wash, Rinse, repeat.
What we need is more college graduates to spur the economy.
duh.
Well some if not most college grads use credit cards to pay off their student loans, so I wouldn't count on them to help out with the credit bubble.
Actually, that'd be a pretty clever strategy assuming the student borrower has a large enough line of credit w/the CC company. Use cash advances to "pay off" the student loan (student loans not dischargeable in bankruptcy--the only loans that are so classified courtesy of the 2005 rewrite of the bankruptcy laws). Then declare bankruptcy and have the CC advances cleared.
Well solved the student loan crisis, we can all now be relieved and drink a lot. Your Welcome college debtors.
I was thinking this last night..that the IMF would just ask Greece to say they paid the money..and the IMF would wink wink and say you paid it too....and the world would go on....and it sounds like that is pretty much what happened...the IMF paid itself.....you have to love that accounting trick
so that's the "one weird trick to pay off your mortgage early"
This is how fiat currencies die - when governments (and IMFs) create more fiat to pay off debt and obligations - up to the point where people that produce things or sell services decide to no longer accept such fiat.
Meanwhile good collateral takes another step into the shadows and the ugly ass know as QE becomes fatter and more stinky.... How soon will we see another run on the European banks like last Thursday and sooner or later it becomes every country for themselves. Kum ba yah gets a bit tenuous after the 100th chorus.
Anyone with half a brain can see this has hit full Ponzi and while we have grown jaundiced at the 11th hour stick saves virtually on a weekly basis the deck is getting mighty creaky. The bilge pumps bearings are burning out.....
The printers will save them
BTFD!
You know the endgame is nigh when Lagarde swallows a funny-money dump with a smile on her face.
We all know there's one thing she's never ever swallowed in her life.
"The end of the world's most drawn out tragicomedy is finally nigh."
I'll take that bet. My money is on this shit continuing for at least 2 more years.
The Tspiras-Anel Govt is caving in on just about every demand. Reality meets theory, as Tspiras told Krugman. The louder they holler and complain, the closer a deal is; it's for domestic consumption. They'll give in to the Troika/ECB, just watch. No default. Debt stretch and more cash.
The greeks could be the world's economic and financial power elite
IF they used their cunning to actually produce their own wealth
RATHER than use their cunning to defraud others out of their wealth under deceit of "borrowing", which greeks have been transforming into simple theft for hundreds of years.
Athens has been forced to tap into an emergency account with the International Monetary Fund (IMF) to make a multi-million-euro debt payment, highlighting its desperate need for cash rather than soothing default fears....
One official told Reuters that Athens used about 650 million euros from the holding account to make the payment. "We made use of money in our holding account in the fund," the official said, declining to be named. "The government also used about 100 million of its cash reserves."
A second Greek official told Reuters on Tuesday that the reserves the government tapped must be replenished in the IMF account within "several weeks."
No cash-for-reforms deal yet
Made a day early, the payment calmed immediate fears of a Greek default. But Greek Finance Minister Yannis Varoufakis said on Monday the liquidity situation was "terribly urgent" and a deal to release further funds from Greece's bailout lenders was needed in the next couple of weeks.
Looming deadlines
Over the next three months, Athens needs to repay more than 11.5 billion euros in bonds and refinance another 10.6 billion in treasury bills. Before their statement following Monday's Eurogroup meeting, eurozone officials dashed hopes of the ECB raising the limit on short-term treasury bills that Greek banks can buy, a move that would lower the chances of a Greek default.
Dijsselbloem also stressed on Monday that a four-month deadline set on February 20 was still the foundation for negotiations and any disbursement of funds for Greece was predicated on this deadline being met.
uhe/ng (AFP, Reuters)
http://www.dw.de/greece-draws-on-imf-emergency-fund-to-repay-debt/a-1844...
WR;)
In other news..the IMF just increased Greeces SDR to a new record amount...enough to cover any emergency..all is good in playland
Actually yelled out loud "Just default you fucking faggots!"
Girlfriend is less than impressed.
There is NEVER going to be a Greek endgame.
If Greece is willing to pay the IMF, even with the IMF reserve, such gesture means there will be NO DEFAULT.
Or else, why even bother to pay using the reserve?
Or else, why even bother to delay?
If you have a car loan and you have already decided to default, will you even pay the current instalment?
Of course not.
You wouldn't even fucking bother.
You would just fucking run away, having already made up your mind to default.
THIS IS ALL JUST A DRAMA.
Hey Greece, do you really wanna default? Do you really wanna? Then I FUCKING DARE YOU!
Yanis the political asshole should read this.
"Or else, why even bother to pay using the reserve?"
One possible explanation: the Greeks are simply returning their original capital contributions to the IMF; in effect, the Greeks may be saying, "we're outta here. If this (capital return) doesn't cover what we owe, it's now your problem, IMFers."
I think the same way. The IMF etc. keep lending Greece the exact amout of money they owe when payment becomes due. It's a form of musical chairs but it does avoid a formal default. In theory it could go on indefinitely.
What will happen in Greece when the air-money-dream-world collapses?
A mercenary named Sean McFate coined a term to describe the emerging world: neo-medievalism. He explores the possiblities in a book "The Modern Mercenary".
Here's McFate talking about his book:
http://www.c-span.org/video/?324623-1/sean-mcfate-modern-mercenary
Are we talking ISIL, the enforcer?
Interesting, if you look at central bank reserves here you'll see as of end March 2015, they had just over $6B, which included $764M of SDR reserves and ....wait for it......$4.293B in 'gold (including gold deposits and, if appropriate, gold swapped'...HaHaHaHa!
Dat gold, is going to be getting... lighter.
To be fair to the Greek government, they've done everything possible (short of shouting it out) to get their citizens to withdraw cash and/or convert currency to hard assets so that when default occurs, it's less painful for them.
Actually, that's probably what really is happening
It is probably just a matter of time until Obama will make himself a hero and decide to bail out this stupidity.....after all there is no limit to how much the US tax payers will tolerate......
"It also underscores the degree to which this entire ordeal has now careened into sheer absurdity because disbursing bailout funds that you know will immediately be sent right back where they came from in the form of an interest payment is one thing, but literally paying yourself is another, and the IMF seems to have done the latter on Monday. "
That's exactly what these banks do, pay themselves! Who do you think those haircuts went to? Don't tell me you believe that *gasp* the banks kept those monies "just in case"? Nah, Daddy needs his check. Do you know what real estate is in New York City is, gotta keep up with the Jones's.
Fuck you, PAY ME!
Hallelujah
Wait a minute. Is an effective default a real default?
I will gladly blow you for a hamburger today.
All those retired pensioners and non working government workers and basically lazy bums get IOUs end of the month.
And yet when those same bankers commit every crime known to man, what happens?
Homeless tours in Athens offered:
http://www.bloomberg.com/news/videos/2015-05-12/second-hand-drugs-homele...
"the IMF paid itself on behalf of Greece and will now be forced to pay itself back for paying itself later this month. Or, put differently, Greece has prepaid the IMF with IMF money it doesnt have."
THIS IS TRULY FUCKED UP!!!
You guys should relax a little bit. Varoufakis told the eurorats that Greece has 2 weeks of liquidity, so wait two weeks, then make your judgement.
RU has invited GR to join the BRICS bank
http://rt.com/business/
lol, the game is afoot.
https://youtu.be/m7ty2rPqvwA
The plot thickens.
Time to take your money out of the Greek banks, right ?
Greek people will start selling farts to tourists.
Robbing Peter to pay Paul. Onwards comrades!
Drain the IMF SDR allocation before defaulting.
Korn- Earache My Eye | hidden trackhttp://m.youtube.com/watch?v=edCQxYzQqhU
Timing is everything. Varoufakis maintained all along that they would make this IMF payment. If they don't replenish their deposits with the IMF, they get kicked out. But behind door "number 2" is the offer to join the BRICS bank.
This is starting to make sense now. It is a carefully crafted transition from the Euro to a Drachma which is backed by the value of the BRICS basket. The Petro Dollar is losing of course and so is the Euro.
IMF Lagarde was saying last year that she "hopes" to have a seat at the table of this new bank (months before this bank was created - she knew) and she also spoke about the G7 (weeks before Russia annexed Crimea and got booted from the former G8). She knew that but she's not sure if IMF will be part of the BRICS development.
Now this is the real kicker. This is going to be for the history books. The Yids are not part of the next generation of currencies and that is just the type of development which might put all our lives at risk again. Alliances to support the Yid's favorite monetary tool are going up in smoke literally all over the place. They're fighting everywhere to keep the Petro Dollar alive but in the end all they've got is HOPE.
They still manipulate and control gold and silver just like they manipulated Fx. How much longer are they able to control the prices of metals in paper?
Country FICO needs to be tied to IQ, clearly