This page has been archived and commenting is disabled.
Shape Of Greek Endgame Emerges: IMF Discussed "Cyprus-Like" Plan After Tsipras Warned Of Looming Default
As we said over the weekend, it’s all about Riga again for Greece. EU leaders will meet on Thursday and Friday in Latvia where PM Alexis Tsipras will try to secure a more favorable outcome than did FinMin Yanis Varoufakis who, last month in Riga, reportedly did more chiding and lecturing than negotiating, a performance that may ultimately cost him his job once all is said and done. The situation is far more urgent this time around, with Greece having tapped its IMF SDR account to make a payment to the Fund and with the banking sector running dangerously low on collateral that can be pledged for emergency liquidity.
A bit more color from Deutsche Bank:
One thing that is starting to come to a head is Greece. With an EU leaders summit in Riga scheduled for Thursday and Friday, we should have a good idea of where current negotiations stand by the end of the week. Talks may well pick up in pace over the next few days with a spokesman for the Syriza party saying on Greek TV (Mega) that ‘we’re striving for a mutually beneficial agreement by Friday’ while pushing the party line that ‘our mandate from the Greek people is to reach an agreement where we stay in the euro area without harsh austerity measures’...
One other factor that will likely add pressure to accelerate negotiations this week is the news over the weekend that Greece came close to being unable to pay the May 12th IMF repayment. According to Greek press Ekathimerini, PM Tsipras sent a letter on May 8th to the IMF’s Lagarde saying that the Greek government would not be able to repay the €750m unless the ECB allowed for Greece to issue more T-Bills. In the end, the government decided that it would only be able to repay after it emerged that Greece could use €650m of Special Drawing Rights issued by the IMF (and in turn exhaust their reserves). Since this, another memo sent by the IMF and reported by the UK’s Channel 4 on Saturday has suggested that Greece will be unable to make the IMF payment due June 5th unless a release of funds is achieved (this marks the next significant payment date).
More details have indeed emerged about Tsipras’ recent dealings with the IMF. As it turns out, Tsipras sent a letter to Christine Legarde early this month warning her that no payment would be forthcoming on May 12 without some manner of lifeline from EU creditors. Here’s more via FT:
Greece came so close to defaulting on last week’s €750m International Monetary Fund repayment that the prime minister warned IMF chief Christine Lagarde he could not pay it without EU aid.
Athens ultimately made the payment without financial assistance from the bloc but only by tapping a rarely used emergency account Greece holds at the fund — an unorthodox transaction that amounted to borrowing IMF funds to pay the IMF.
Alexis Tsipras wrote to Ms Lagarde, warning that the IMF repayment would be missed unless the European Central Bank immediately raised its curbs on Greece’s ability to issue short-term debt.
The letter, first reported by the Greek daily Kathimerini but independently confirmed by the Financial Times, raises questions about how close Athens is to bankruptcy. In addition to payments due to the IMF next month totalling €1.5bn, the Greek government has struggled to meet its wage and pension bills, which must be paid at the end of the month…
Varoufakis, Bloomberg reports, was tipped about the SDR option on a trip to Washington last month:
Greek Finance Minister Yanis Varoufakis had been told about possibility of using IMF SDR holding account on visit to Washington in April, govt still needed permission from IMF before could use it to make May 12 IMF payment, Greek govt spokesman Gabriel Sakellaridis tells reporters.
As far as pensions are concerned, Greece says it will pay government employees in May.
- GREECE WILL PAY SALARIES, PENSIONS AT END OF MONTH: SPOKESMAN
Assuming the government makes good on that promise, it will quickly run up against another IMF payment on June 5 and as noted above, Athens will default if no deal has been struck by then. The following graphs show government revenues, government spending, and the payment schedule and demonstrate quite clearly why the situation is so urgent:
Here’s Bloomberg’s assessment of the fiscal situation:
How long can Greece carry on? With revenues just about covering the pay and pensions bill, there’s not much left over to make even the small(ish) payments due to the IMF in June. If Greece and its banking sector can limp a little further, the state should get a boost from income tax receipts that usually flow in July. Unfortunately, that might come too late to pay the ECB 3.5 billion euros due on July 20, and the repayment that follows in August looks like an impossible challenge without a disbursement of Eurogroup funds…
Should Greece’s citizens begin to lose faith in a positive outcome to negotiations, it’s quite possible that receipts could falter as more of the usual tax payments are held back and taxable activity is curtailed. Still, some boost to the Treasury’s bank balance is likely in July. General government revenues could be lifted by about 3.8 billion euros compared with the average for the other months of the year. That would get some way towards the figure needed to pay the ECB, though it might not come soon enough to avoid a missed payment…
Of course, making it as far as July depends on how long the Greek banking sector can survive. Absent a change to the haircut imposed by the ECB on Greek banks’ collateral, limitations on emergency liquidity assistance are unlikely to pose serious constraints before mid-July. Greek banks have enough collateral to access 93 billion euros in liquidity. That's 13 billion euros above the current cap. The four-week average of increases by the ECB stands at 1.5 billion. At the current pace of increase, Greek banks could keep borrowing more for about eight weeks to offset deposit flight.
But the idea that the ECB will continue to prop up the Greek banking sector is becoming more tenuous as Mario Draghi recently came under fire from Bundesbank chief Jens Weidmann who openly accused the central bank of breaking the monetary financing taboo. Rumors that the ECB will soon begin to tighten the screws by raising the haircut on collateral pledged for cash have been making the rounds for weeks and as Bloomberg warns, the move could come at anytime:
A crunch will come if the ECB increases the haircut on Greek collateral to levels not seen since last year. That could be prompted by anything from a complete breakdown in talks to a missed debt payment, the official said. A continuation of the current impasse could even be all that’s needed, the official said.
While talks are centering on whether to give Greece more money, the ECB could raise the stakes if it increases the discount on the collateral Greek banks pledge in exchange for cash under its Emergency Liquidity Assistance program. That could happen as soon as this week, after the Governing Council next meets in Frankfurt on May 20.
Meanwhile, Commerzbank doesn’t seem to buy the idea that the equivalent of a DIP loan would be sufficient to keep Greece from collapsing in the event Grexit becomes a reality:
Greece probably has no choice but to leave the euro if it defaults as it would likely be unable to source the funds needed to recapitalize its banks, Commerzbank chief economist Joerg Kraemer writes in client note.
If the country were to default, the banks’ claims on the state would be essentially worthless and they wouldn’t be allowed access to new money through the ELA.
Only a fraction of the equity capital needed could be gained from Greek bank bond creditors.
A recourse to bank deposits may also yield little as most accounts are probably under the threshold of EU100k per person which would be spared in any restructuring.
As you can see, the bail-in hints are starting to be dropped, suggesting that in the final analysis, some Greeks may be Cyprus’d. Indeed, the IMF has already discussed this possibility behind closed doors. Here’s FT again:
According to two officials briefed on the talks, at least one board member raised the possibility of presenting a “take it or leave it proposal” to Greece…
The idea of a “Cyprus-like” presentation to Greek authorities has gained traction among some eurozone finance ministers, according to one official involved in the talks.
As for Greek officials, they’ve become quite adept at wholesale denials:
There should be a solution in May so we can resolve our liquidity issues," Gabriel Sakellaridis told a news conference.
He ruled out a levy on bank deposits to raise cash and said the government would not sign a third bailout program.
* * *
Touch Capital Markets’ Andreas Koutras summed up the situation nicely when he gave Bloomberg his best Schaeuble impression:
“There were too many people crying wolf before. But as Hemingway wrote: How did you go bankrupt? Two ways: Gradually, then suddenly.”
»
- 51492 reads
- Printer-friendly version
- Send to friend
- advertisements -
Troika idiots playing chicken are about to get hit head on by a rock sitting still.
I really hope so, the idea that you can just keep shafting people again and again and again and expect no comback is beginning to grate.
IMF, I think I just spotted the problem.
Pretty pictures, freakin doom.
Yes, seems the IMF is planning a takeover of Greek banks and a Cyprus style bail-in... I wonder how that will work out with Greeks in the streets burning the banks?
Don't worry, they saved a backup of the Greek banks on a hard drive in Brussels.
At this point, any Greeks who still have substantial cash in the bank really have no excuse.
It is not as if they did not have enough warning.
Oh another bail in? Not exactly shocking. Is there any wonder that banker economists are pushing to ban cash forcing people to stay in the banking system.
how long until we starting hearing about two "barbarous relics": cash and gold?
Throw those pathetic Greeks out of Europe already.
The key here is obviously to do a national default BEFORE you sign over control of all your national assets, ports, roads, industries, etc etc.
Or just seize them for non-payment of (outrageously increased) taxes after default.
its not private money per se, its corporate money of people who run businesses and have to keep some of their revenues there to operate (payroll, suppliers, taxes, hookers)...and the smaller pension fund owners stuck with their money in local paper held by local banks (the bigger ones are off shored).
Its the corporates and banks/insurances which get bailed in, not the rich oligarchs; aka its taking the blood of the real economy. That is the bad part of bail-ins. But bail-out is worse as its aiding the bankers and the oligarchs to save their past rip offs and to do even moar rip offs thru cheap money thrown down by helicopter!
Thats been the story of this incredible inequality spike POST LEHMAN belly up thanks to first GWB/PAulson and then helicopter Ben and Geithner (and Obammy).
Lets hope Hillary Clinton isn't the one entrusted with their safety and security.
cyprus bailins are the model that will be used globally. once as much money is stolen as possible through bail ins and outs the IMF will step in and from there it's SDR to the rescue.
are bail-ins more or less honest then bail-outs?
id say bailouts are more insidious because it doesnt equate to theft in the sheeples mind as do bail ins. id gander that the overwhelming majority of americans still dont really understand the bailouts, whereas if you wake up and check your bank account and it's not as big as the day before, not to mention that you cant withdraw any money, at least you know who to get pissed off at
so bail-ins are less dishonest then bailouts, but include a worse... PR impact?
the following fall under theft and differentiating them, in my mind, detracts from the main point that they are theft
private control of the printing press
debt based money
fractional reserve banking
bail ins
bailouts
usurious loans (espescially IMF loans to the 3rd world)
gold rehypothecation
interest rate manipulation
market manipulation in general
naked short selling
intentional credit expansion/contraction
all are tools of the banksters for control
That's a good list, if I think on it a bit I might come up with some more, but yes they are all theft. But PR is critically important. A bail-in represents one of the worst options for the banks/government because it is the worst option from a PR perspective, and is thus representative of exactly how desperate things are when they get to that point. The only next step from a PR point of view is using the military to go house to house confiscating wealth.
then how is it that eurozone governements seem to prefer bail-ins to bail-outs? are they bad at PR or is there a different reason for this preference?
The standard talking point in support of bail-ins is that they do not come at the expense of the taxpayer the way a bailout does.
you/they are just that much closer to the endgame.
Americans have been trained since the great depression that Government is the solution to any problem. Keynes, academics, FDR, and the media all agreed that someone MUST do something.
FDR said "One thing is sure. We have to do something. We have to do the best we know how at the moment... If it doesn't turn out right, we can modify it as we go along".
So bailout is accepted, because government is obligated to act to in a crisis. The taxpayers hope that Government will get the taxpayer money back later. In the mean time the bankers know they have no risk. private profit, public losses.
If the problems become big enough the people will get a government which will try to do something about it, one way or the other. FDR just preferred it was the sitting one rather than getting replaced like was happening in Europe.
That's why they're more honest.
If you steal moeny from my bank account I know you did it. If you print money and give it to your friends my bank account is still being ripped off but only 1 man in a million can figure it out.
More honest than either bail-in or bail-out is simply to let the banks go bust.
And start again with new banks. It happened a lot in Britain 200 years ago.
Burn the fucking IMF instead
Haircuts all around, don't worry the IMF is buying.
the troika msm elite nwo want all to believe: the greek debt is sooooo complex, solutions are impossible.
no the problem they have is how do we maintain control of greek assets for the elite but most important how do we avoid the elite banksters (IMF &EU)taking a loss.
to the dumb it seems easy: you lent in bad faith- You take the loss. the banksters think they never lose. that is why this greek problem becomes so complex and unsolvable.
it's only unsolvable in the current debt money paradigm. they, being the banksters, will do everything they can to keep the system intact. you're right that it's simple, simple as in the euro system was set up to make all europeans debt slaves which it has been doing astoundingly well. greek could solve their problems tomorrow by defaulting, reintroducing the drachma printed by the govenrment debt free, not by a foreign and privately owned central bank.
"a foreign and privately owned central bank". is the Bank of Greece (the Greek central bank) a foreign and privately owned central bank?
or are you writing about the monetary club of which it's a member? just asking
the "current debt money paradigm" was more unsolvable when bailouts were the only option. add defaults and bail-ins (itself a form of default) and suddently the "unsolvable" part... vanishes. only saying
im starting from the assumption that all nearly all central banks are, in reality, privately owned by a small collection of individuals who pledge allegience to no country. but, to your point, since greece cant issue bonds in its own currency and has no control over the printing press for the currency in which it issues thsoe bonds, it is beholden to what amounts to a foreign central bank, despite its monetary club membership.
adding bailins and defaults does not "vanish" the unsolvable problem, it delays the inevitable and achieves the goal which i mentioned, enslaving the eu citizenry, starting with greece, through debt while stealing their assets for cents on the euro.
The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.”
– David Rockefeller, Memoirs
“We will have a world government whether you like it or not. The only question is whether that government will be achieved by conquest or consent.”
- James (son of Paul) Warburg ( Banker, Shareholder, Founder, US Federal Reserve, Founder Council on Foreign Relations 1896-1969 ) while speaking before the United States Senate, February 17, 1950
Imagine Rockefeller's face when he finds out the world government doesn't actually include him. What I mean to say is that every power structure ever built by man has eventually been overthrown by man - "The king is dead. Long live the king!" Supposing they actually pull off this global takeover there will come someone who decides they want all that power and it will be off with their heads for the old elite. Hell, it might even be the rise of the machines so at least we have that going for us.
and why do you (and others) hold such an assuption so dear? or your detour on Greek bonds, which is something that are issued by the Hellenic Republic, not the Bank of Greece directly?
that's not such an irrelevant question, imho. you are talking about the ECB as being "privately held and foreign"
if Greece exits the monetary club, it has to use the Bank of Greece (more), doesn't it? now, is the Bank of Greece foreign? is it privately held? what about that allegiance?
If the ECB calls a bank holiday in Greece and the Greek government does not, which way does the BoG swing? That's right, holidays and haircuts in the sun.
Who controls the ECB, a body elected by the people or a private group of self appointed elites?
Stop believing what they say and start watching what they do and how they do it.
haircut>shaved head>scalp, ha..
The central banking rats want riots at this point, no other explanation for such tone deaf behavior.
Business opportunity: selling riot gear to the citizens! Torches, pitchforks, gas masks, rocks--a good selection with lots of pointy bits--slings, plywood shields. Molotovs are behind the counter. Old tires to burn are stacked out back.
At least the Greek people have enough olive oil (lub up the brown eye) for whats coming!
Q: What's the first thing that goes through a bugs mind when it hits your windshield?
A: His asshole.
( Don't know what made me think of that. )
Actually that is the last thing that goes thru a bugs mind. Otherwise, I am fond of that joke.
No default - Greece has a plan - only few know it
I think it's called begging.
If that doesn't work, crying is a real option.
The financial institutions that own Greek debt cannot allow Greece to defaout or else they default. It's all a house of cards.
Yeah, they are going to use the Von Schlieffen Plan and pivot to the East.....
Raiding accounts is the solution.
They all think like Jon Corzine.
Varoufakis having proven to the world that the Troika runs the theatre of the absurd in Ponzi banksta collusion to pilfer what is left of Greece's remains of the day; we now have Tipsy who will have to declare to both EU and IMF sometime in June : our public and private coffers are EMpty.
So if the Troika then says "we shaft you to the hilt Greek oligarchy like we did to Cyprus"; it'll mean :
1° Either Syriza defaults and prints new paper and leaves EU/ECB/IMF to carry the bag on no moar Greek rape for past misdemeanours. And the shock waves hit the world bond and asset markets...
2° Or else EU/ECB, without IMF, kicks the Greek and EU can in a protracted bail-out of its state expenditure after having raped its oligarchy of whats left in private banking locally (not much if those guys have any sense).
The decision will then be Mutti's and those TBTF bankers of FED/ECB cabal sitting in their ivory tower in Basel.
But it looks like its gonna either be Grexit or EU does a patch-up job thanks to Draghi QE shenanigans and back door plays that will leave Portugal/Spain/Italy/Ireland start licking their chops for the same; and DAT....may gain them two years moar!
The Western Oligarchy is now a drunken sailor on a short leash !
The EU has been cooking the books for a while now and will soon face the 'audit'. After all they learned from the best, our own FED. Our reckoning will take a bit longer but don't hold your breath. Anywho, as much as I detest the Greeks for having lied and deceived just to get in the club I almost like the possible result for the ahole bankers that caused the mess to lose their moolah. But alas, I dream, because the taxpayer will have to come up with their losses one way or another. After all, most western governments are in the pocket of the banksters.
the picture delivered by this article is much, much better in any sense then that of previous ZH articles, nonewithstanding the rethoric
note the "Greek banks have enough collateral to access 93 billion euros in liquidity. That's 13 billion euros above the current cap. The four-week average of increases by the ECB stands at 1.5 billion. At the current pace of increase, Greek banks could keep borrowing more for about eight weeks to offset deposit flight."
what is missing here to complete a bit the picture is how much the Bank of Greece is using it's quota of the Q€. it's not huge, but it is relevant
note the revenue and spending patterns. the Hellenic Republic is not that far from a solid primary surplus, something it would to have to achieve in any case, exit or not, but even more in the case of an exit
up to now, the biggest rock in the path was always the June IMF payment. itself a testament of the will of the Greek gov to keep it's membership in the IMF, which again is even more important in the case of an exit. the ECB "repayments" (strange that IMF "payments" and ECB "repayments") are less cut in stone, and depend much more from the goodwill of the ECB Council, i.e. the national governors of the member countries of the EuroSystem
ho hum. we'll see what happens. the biggest item in the "game" is still the Greek Banking System, way more then the financial situation of the republic
but it is relevant
Yeah, but can you deliever it in 50 thousand words or less?
Good luck Amigo.
math is usually a good solution for that. it was practically invented for this exact reason
Show me the Common Core math.
I predict a riot.
As much as I'm rooting for the peasants, the smart money is going on the storm-troopers wearing kevlar and loaded with hollow-points...
BMG .50 versus AR500 steel plate. Good bye stormtrooper.
https://www.youtube.com/watch?v=chZZp-ALV6o
Recent events made me agree with the opinions moices at The Saker Oceania blog: Syriza was allowed to win for they performed and Airbag function, stopping the mobilisation of the Greek people.
http://www.vineyardsaker.co.nz/2015/02/01/conversation-greece-in-the-big...
I like Saker's take on many things like this. However it still bugs me that he thinks all of this is capitalism.
http://www.bibliotecapleyades.net/sociopolitica/sociopol_globalbanking207.htm
any small business man who has gone thru BK could see solutions to the greek debt. go bk and default.
the problem for world banksters is it impacts other loans to nations (bonds) in a negative way.
for geece this problem is opportunity: establish greece as neutral country, let russia and china rent military bases for one, have a banking system that protects identity of deposits from .govs (irs), welcome capital, and base greece as a travel destination of low cost and high value..but no the world banksters must bleed greece dry.
The first rule of screwing over the populace via a Cypress-like event is to say that "certainly there is no thought or need for a Cypress-like event". That way when they actually do the Cypress swindle, they can say "I'm on record as being against it and have been saying so for quite some time". Then they take the money. It's all very Obama-esqe.
and Nobel Peace Prizes all around...
"...an unorthodox transaction that amounted to borrowing IMF funds to pay the IMF"
No problem. This is how the Irish deal with it: Irish Bailout Solution
Someone is about to get Cypressed apo piso!
"A recourse to bank deposits may also yield little as most accounts are probably under the threshold of EU100k per person which would be spared in any restructuring..."
I would have little or no confidence in the EUR 100k threshold being honored if bail-ins are carried out. They might aggregate all bank accounts in a person's name or skim at a slightly lower rate, but they'll go for as much as they can steal.
To the EU 'regulator', the motto will be 'Take as much as you can, as fast as you want'. Regulators, indeed!
https://www.youtube.com/watch?v=1plPyJdXKIY
Agree. They will pretty much say "you can keep the 100k limit or keep the hospitals open post-default. You can always fly to Italy for that emergency appendectomy. Your choice."
Greece goes bankrupt endlessly not yet.
That can is getting pretty dented and lopsided from being kicked down the road so much. It's not rolling as far as it used to any more.
The IMF has a plan for Greece ?
Poor Greece.
the IMF plan for Greece is to get back it's money
..."to get back the money it stole from the world's peoples."
There, fixed that for ya!
All song, all dance.
The Greek government prefers to pay its tribe of government hangers-on, over paying merely the interest, the Greek government owes, to French banks and to German banks.
The German government prefers to keep the donations flowing from said banks.
Kabuki.
dup
If any Greek has money in a bank still then they deserve to lose it. They should have taken it out, or converted it to some asset or other. They have had a long long warning.... and they know they can never trust their govts.
I have a notion we in the USA should be stockpiling our monopoly money too. For all the good it'll do us.
Too late for white knights.
As I see it from afar (very afar) is that the Greek problem is meeting payroll and pension obligtions. The ECB (and EU to a lesser extent) is avoiding derivative default and the mess that follows.
Neither party acknowledges or cares much about the other's problem. Printing more money will solve both problems temporarily, so I think that is what they will do.
Start paying in Yuan and Ruble.
Take it or leave it, eh?
Well, the spineless Greeks will take it.
Motto of all Euro nations: Better to die on your knees in the comfort of the Socialist Utopia than live free of debt.
No worries, the troika is going to carry on paying. It is either that or seeing the end of the EU.
They'll pay.
Endgame emerges: perpetuity!
Will Greek bank deposits reach zero before the bail-in?
I wish we'd get this collapse started already. I ain't getting any younger.
The EU blinked.
http://translate.google.nl/translate?hl=uen&sl=el&u=http://www.tovima.gr...
and denied so it must be true.
https://twitter.com/nstamouli/status/600301910336348160
As one poster mentioned, have banks that will not allow .gov to go snooping through records, like Switzerland used to be, and the money will start flowing in as will the tourism.
It would do Greece well to be independent.
NATO and the Eurozone are not much different that the biker gangs in Texas. One person shoots another. It no longer matters to his fellow gang members who was right or wrong in the shooting, they are there to back him regardless, then more are killed or injured.
Countries are no different. We don't need this kind of BS which forces poverty and hopelessness on those who have no say in the situation.
Back in the day, one of my Greek friends used to say "you know the best thing about a blow job from an Ethiopian chick? Guaranteed she's gonna swallow."
In this case you pretty much know that schauble is going to swallow whether he likes it or not. But he's also going to pick up the drinks tab for greece as well. Unless of course the fed steps in to lend money it doesn't have to save to the EU. In which case schauble will have to give yellen a blow job. Either way I wouldn't want to be in that miserable old cunt's wheelchair.
Washington creates immense pressure to find a solution to keep Greece in the Euro so that it remains an outpost for the Nato - HOWEVER a surprising visit of John Kerry and his diplomatic delegation at Putin in Sotschi last Wednesday may have changed the US strategy.
I wouldn't be surprised if they let Grexit happening as this would also kill/weaken the Euro - which was always the goal of those who make the global politics
Right..greece defaulted and an accounting trick was used to paper it over. how much is there in greece left to steal? Greece will be exiting this abusive relationship and cozying up to Russia and China...or would.. question is what dirty tricks, or even military force/coup will be used to prevent what would be in their own best interest.
Amerika : Instead of sending your fiat dollars to Israhell, buy up the Greek port Piraeus before the Chinese do. It would show your fraternal european solitarity in the 21st century.
Greeks are trapped in an EU run Banker Hell! The losses and bank failures would ripple through the EU and cascade through the leveraged and insolvent institutions like the Black Deat in the 1300's. Thus, Greece must be kept inside the system to allow extend and pretend to continue. Austerity and Asset stripping will continue. The Greeks did not meet the financial and fiscal requirements to enter the EU by law! Yet, Goldman came in an financially engineered Greece's entry into a low interest rate EU. Then the borrowing costs for Greeks crashed, and business, government and individuals leveraged to the hilt. The rest is history.
The fascination with EU membership escapes me. Free trade can continue without a one European government. Just all sign a free trade bill and trade.
I see, so whilst we consider default, let us eviserate depositors accounts to remove that money we have been loaned. Let us default on the public (we bank for them), before they default on us.
Letter to Alexis Tsipras from Hugo Salinas Price, Dated July 25, 2012