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Greece May Need To Issue IOUs Schaeuble Says After Latest Failure To Reach A Deal
In many ways, four months of negotiations between Greece and its creditors can be summed up with the following two headlines from this morning:
- GREECE VERY CLOSE TO SEALING DEAL WITH CREDITORS: SPOKESMAN
- GREECE WON'T COMPROMISE ON LABOR REFORMS, PENSIONS: SPOKESMAN
Those came back-to-back believe it or not, which underscores the whole problem: the Greek government wants money but doesn’t want the conditions which come with the money because those conditions entail the wholesale abandonment of the mandate that got them elected in January.
Despite it all, PM Alexis Tsipras still thought he could effectively secure a deal in Latvia this week by whispering to Angela Merkel on the sidelines of a Eurogroup meeting, a tactic he’s tried before to no avail. Unsurprisingly, these “sideline” talks produced exactly nothing after Tsipras kept Merkel and French President Francois Hollande up until 1 in the morning in Riga, proving that, to quote Jean-Claude Juncker, “Riga just isn’t the place” for eleventh hour bailout negotiations. Here’s more from Bloomberg:
With time running out for a deal to free up the remaining 7.2 billion-euro ($8 billion) tranche of aid, Merkel’s discussions in Latvia with Tsipras and French President Francois Hollande broke up in the early hours of Friday with an agreement only to keep talking. Tsipras talked of a resolution “soon,” whereas Merkel said there’s “a whole lot to do.”
“It was a very friendly, constructive discussion,” the chancellor told reporters on Friday as she arrived for the second day of a two-day European Union summit in the Latvian capital, Riga. “But it was very clear that further work has to be done with the three institutions.”
The meeting marked another rejection by Merkel of the latest Tsipras attempt to bypass finance ministers and strike a political deal at the level of government leaders, highlighting German insistence that Greece’s budget numbers must add up before aid can be released.
A short statement released separately by the French and German governments after more than two hours of talks with Tsipras was devoid of earlier optimism expressed by Hollande at paving the way for an accord as soon as the end of the month. In its place, the governments of the two biggest euro-area economies talked of agreement “to stay in close contact.”
A government official, in a debriefing after the talks broke up about 1 a.m., signaled Greek frustration by saying that a main obstacle is that the International Monetary Fund needs to be on board. The IMF is one of Greece’s creditors along with the European Central Bank and euro-area governments. “Open issues” remain with creditors, including pensions, sales-tax rates and targets for a primary budget surplus, the official told reporters.
The French and German statements lacked Hollande’s upbeat tone as he arrived in Riga, when he had opened the prospect of striking a political deal that could help lead to an accord by finance ministers at the end of May or early June. Without an agreement, Greece risks a default that would put in question its future in the 19-nation euro region.
Absent too from the final statements was any reference to an extraordinary finance ministers’ meeting on Greece. Hollande had said that the discussion with Tsipras would “help prepare for the expected deadline, especially the eurogroup” meeting of euro-area finance ministers “at the end of May or in early June.” That suggested a special meeting since the next regular gathering isn’t due until June 18.
France and Germany offered to provide assistance to Greece and Tsipras whenever questions come up, Merkel said. “But the accord must be reached with the three institutions and very, very intensive work has to be done.”
As for Germany — where Christian Democratic lawmakers have for weeks been pressuring Merkel to call it quits on Greece — the Finance Ministry and the central bank are out questioning the utility of continuing to negotiate with Syriza.
First there’s Bundesbank chief Jens Weidmann...
“The prospect of a sustainable stabilization of Greece is decisive, that requires an improvement in competitiveness, solid state finances and better administrative structures. The IMF has also rightly advised this. Hence, the ball is clearly in the court of the Greek government.”
...and then the German finance ministry...
“International Monetary Fund participation in negotiations on Greece’s aid program is mandatory
requirement.”
...and finally, the Schaeuble was unleashed…
German Finance Minister Wolfgang Schaeuble conceded the possibility that Greece may need a parallel currency alongside the euro if the country’s talks with creditors fail, people familiar with his views said.
Yes, “conceded the possibility,” and while those who actually witnessed the German FinMin’s comments claim he “didn’t endorse the idea”, we imagine his feelings wouldn’t be hurt if it came to pass because as we’ve seen, Schaeuble is no fan of radical socialist shenanigans.
Meanwhile, Commerzbank says the country’s economy (which, as a reminder, is losing €22.3 million a day) not to mention its citizens, simply can’t take the pain any longer and when comparing Greece to other historical instances of EM “turmoil”, the country doesn’t come out so well.
Via Bloomberg:
As another round of aid talks between the Mediterranean nation and its creditors ends without a deal, its economy is faring even worse than a string of developing countries which suffered traumas in the last two decades. That leaves Commerzbank AG declaring the country is in little position to pare its debt and that default or a restructuring may loom.
“Just as with emerging markets in the past there is a point in time where you need to move on to the next stage rather than being paralyzed,” Simon Quijano-Evans, head of emerging market research at Commerzbank in London, said in a telephone interview. “In Greece, we need to think of next steps and be innovative.”
To illustrate Greece’s pain, he published a report this month comparing how the economic fallout from its five-year-old crisis compared with the bouts of turmoil suffered in the last two decades by Turkey, Argentina, Latvia and Thailand. The result illustrates why Commerzbank sees a 50 percent chance of Greece ultimately leaving the euro area.
“Comparing Greece’s experience so far with that of EM crisis countries shows very simply that the country’s already stressed economy and electorate are unable to cope with more pain,” said the Commerzbank economist.
While Athens has imposed the tightest fiscal squeeze of the five and pushed its budget balance excluding interest payments into surplus from a deficit of about 10 percent of gross domestic product in 2009, Turkey and Argentina were doing better at the same stage.
Yeah… about that budget balance…
- GREEK MARCH CURRENT ACCOUNT DEFICIT WIDENS TO EU404M
* * *
We’ll close with the following comments from Jacob Funk Kirkegaard, senior fellow at the Peterson Institute for International Economics in Washington who spoke to Bloomberg today by phone:
“[Germany is ready] to take this brinkmanship very far [with Schaeuble as] attack dog. We’re in this game of chicken. The problem is that Alexis Tsipras is riding a scooter and Wolfgang Schaeuble is driving an armored BMW.”
* * *
Summing up all of the above in two pictures...

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Issue all you want, but what Goy is dumb enough to accept them?
What are you talking about? Those IOU's are good as gold. Better even because unlike gold they earn interest.
<Retirement income bitches.>
Any Greek that takes an IOU has just taken the position of an unsecured and uninsured creditor. E.g., it would be better to have your money in Greek banks than a Greek IOU.
Greece May Need To Issue IOUsNot happening.
Cash, ass, or grass.
We also take gold.
I thought issuing IOU's was what got Greece into this mess.
What's the difference between an IOU and a currency?
An IOU is a promise to pay.
good question, easily answered, though
an EUR is an IOU of the ECB, which is backed by 19 National Banks, which are each backed by one of the 19 Sovereigns
a Greek Government IOU is backed by... the Greek Government (and not even necessarily by the one Sovereign, Greece - debatable)
(see the difference between the Californian Government IOU and the current United States Dollar, aka FRN)
so the difference is... subtle, and yet relevant
Precisely. If Greece issues an IOU they're promising to pay you something of value at a later date when they actually have it.
A Euro claims to be something of value in itself, with no promise to hand over something of value in exchange for it at any point in the future.
If history is any guide (and I like to think it is), then the Euro is a promise that, at some point in the future, no-one will hand over anything of value for it ever gain.
Throw those pathetic Greeks out of Europe already,
precisely, too. nevertheless, the spoiler is that "some point in the future"
further, note that every fiat currency could, in theory, get backed, eventually, making that future even more uncertain
example: the British Pound was backed, then unbacked, then backed again, then unbacked again, in the 20th Century alone
if you would have betted on the GBP going to zero soon, after the first unbacking... you would have lost, big time
If you held your GBPs in shillings and pence they totally went to zero ;)
A Brief Step-By-Step Summary of the Greek Gutting Process (Taken from Deer Quartering Instructions)..
1. Clear your working area (Check)
2. Bleed the animal out. (Reduce their money supply to Zero.. Check)
3. Prepatory Skin Cuts, Throad to Anus (Bring Severe Divison to Greek Society - Check)
4. Break the Breastbone.. (Governmental Breakdown, and anarchy - Soon)
5. Sever the Wind Pipe and Gullet from the Head (Remove any last vestiges of Power from the country)...
Same Recipe for Ukraine being cooked up for Greece How *dare* those Pesky Greecians resist the EU or even worse!!! Host a meeting with Putin. Quick!! Call the CIA we need some destabilizing ISIS !!
Cue up the Putin pipeline article.
It's way beyond fucking ridiculous now
When are all these ass clowns on both sides going to get sick of their own crap and let it collapse as it should?
Just let it go and get it over with so the recovery process can start sooner than later for Greece and Europe.
complex negotiations with great and intense public interest are often way beyond fucking ridiculous
particularly if you inject intense personalities like our dear Schauble or our dear Varoufakis
complex negotiations
We call that BS in flyover country.
never been in "flyover country", can't judge. I understand it's not the place where people get for hours into negotiations, or even like "whatever complex"
neither Athens nor Berlin nor Brussels are in "flyover country", and all three love "complex"
THE BANKS WILL NOT ACCEPT AN IOU YOU FUCKING RETARD.
It's way beyond fucking ridiculous now
Spock informs me we've just entered the Ludicrous Nebula.
Keep a sharp eye out for Kahn!
Yes we Kahn!!
First they have to sit in a circle and hold hands, while at the same time looking to the sky.At least they tried.
"What is this? Wheres all the money?"
"Thats as good as money sir. Those are IOU's. Go ahead and add it up. Every cent is accounted for. Look, that's a car, $275 thou, might want to hang on to that one." -Lloyd, Dumb and Dumber
"German Finance Minister Wolfgang Schaeuble conceded the possibility that Greece may need a parallel currency alongside the euro if the country’s talks with creditors fail, people familiar with his views said. "
Exactly as I have surmised and written about here on ZH and elsewhere.
Greece WILL issue IOUs/parallel currency.
The script WILL be decreed de-facto legal tender by .GOV fiat and used for payments of .GOV employees, pensioners, government contracts, for social services payemtns, etc... Greece can issue all it likes and there is absolutely nothing anyone in Brussels can do about it.
The ECB may even favor this option as it is likely to weaken the EURO and crush the already depressed/negative rates on EU core Bonds.
This should come as no surprise to anyone: California did exactly this just a few years ago.
The big questions now are: how fast and far will the Greek Drachma/IOUs fall in value against the EURO -and how soon until this manuover be replicated by other beleaguered EURO members such as Portugal and Spain...
The ultimate would be for Putin to be standing behind Tsipras, in front of a sign that reads "Come and take it"...
Let them eat cake- or starve.
During wwII while the great fight for freedom raged, cough, Britain starved to death 3.5 Bengali Indians. A year after the war ended the US was in Guatamela giving poor people syphillis so they could study how they died.
When will humanity wake up?
What like an IOU 3 submarines?
Germany should just repurchase them back for pocket change. When the US goes tits up, it'll be interesting to have UBoots around the globe again.
No they should sell them to North Korea. They will pay big bucks for them. Phony but hey what difference does it make now?
So what? fuck em.
Hah ha ha ha ha
Well we, the reigning princes of the EU will not give them any more money with which to pay us back and since they don't have any of their own money to pay us, they'll just have to print up some new sort of money that we'll take and pretend that everything's sooper dooper in Brussels and Athens.
I'll gladly pay you Tuesday for a hamburger today.
-Whimponomics
AAaaww Ka Mon! enough of this side show.
Now show us the 8.30 hammer time!!
This is actually worse than a Chinese water torture.
DavidC
isn;t an IOU just more debt?
All your debts are belong to us.
Just goes to show the old adage about owing the bank $100, the bank owns you.
Owing the bank Uncountable Bazillions, you own the bank.
From a games theory perspective, this is the EU/Germany's/etc's surrender so as not to have to write off the bad debts.
Officially Now the Admission, All Charades and Kabuki Theater.
Good news, I just found a blank check book.
We're rich!
"That's as good as money, sir. Those are IOUs." https://www.youtube.com/watch?v=7GSXbgfKFWg
Mr Tsipras, slip the corrupt old bastard Schaueble a brown envelope stuffed with cash and all your troubles will disappear.
http://www.newsweek.com/scandal-sinks-schauble-162255
https://duckduckgo.com/?q=schaueble+scandal+&t=ffcm
the new tmz of money gossip. lol. just printed faith of a moar indebted day. owned tools bent over thinking the next ream will feel better...
Jens Weidmann should be dragged into the street and executed by outraged Bundesbank shareholders...
You cannot achieve solid future financial footing by asset stripping the balance sheet and sacrificing future revenue streams in either public or private institutions.
This asshat shouldn't be running a watermelon stand, much less a national bank.
(or the Junker rule may apply... in which case he should dragged into the street and executed by the citizens of Germany)
Bundesbank doesn't have shareholders other then Germany itself.
No Shit.
the solution to debt is moar debt..ask any politician they are all using magic fiat and it really is a wonderful wonderful world (oh but approved debt fiat is moar better than a drachma too bad greece)
let me be clear: greece has immense wealth-lands seas buildings farms -infrastructure, turism, the fact some bankster says no no that is not wealth a piece of pretty paper is wealth so we go round and round saying greece is broke..few on ZH understand you have been conned from the get go. greece's true worth cannot be measured by bankster fiat.
State pensions will be doing this shortly ...........
I say an IOU issued by the Greek government, at 0% interest, that circulates to pay debts, is a Drachma.
all your bank accounts will be converted to IOUs
Schaeuble can certainly talk the talk, not sure about .... Oops. sorry.
IOU's??? Oh you mean like federal reserve notes..... got it.
Nothing like friendly positive banter to help the negotiations along. After all, we are one big happy EU family, right?
Wolfgang SchAUEble .... a "Triplethong" .... rarer than a Dipthong ! Dipthongs are for swimming ! LOL
Wonder what kind of grandpa Schaeuble is?
Give his grandchildren red hot pfennigs, beats them until they get happy? And no, I'm not going there.....
https://pbs.twimg.com/media/B-EASFyIIAABdwm.jpg
No mercy to the Bolshevik lunatics!
Actually, Schäuble's riding a wheelchair, though I'm sure that baby does 185. German engineering and such as.
All fooling aside, only civvies will get paid in funny money. The army will get euros by the armoured truckload. Priorities, you know.
No Grexit ever.
Soon the corrupt degenerate thieving socialist parasite greek vermin will get the misery they deserve - YIPPPEEEEE!!!!
Greece already wants 330 billion IOUs forgiveness.
IO u and u and IO u some moar.
The pictures are cute! I like the huge antenna protruding out of Holland's head. Probably an advanced NSA device.
Wolfgang to Alexis in the dentist chair..
"Is is safe?"
https://www.youtube.com/watch?v=7GSXbgfKFWg
Nuff said.
German Finance Minister Wolfgang Schaeuble conceded the possibility that Greece may need a parallel currency alongside the euro if the country’s talks with creditors fail, people familiar with his views said.
Notice Mr. Frumpy face won't come straight out and say Drachma. What else are they going to use, bitcoin?
What is an FRN or any piece of paper not backed by any tangible asset, they are all IOU's including the Euro.
Humorless fucking Krauts. All business all the time. Party Poopers!
Of course they are correct, the only sensible people in Europe. The party will end in disaster.
But they will lose once again, and rebuild on their own rubble. They never learned to play aggressive defence to consolidate and hold their gains.
Logic, sanity and competence won't stop the wild party of self-indulgent, self-destructive behavior engulfing the rest of Europe and the world. Bad money drives out good.
pfffft, THEY WISH THEY'RE GETTING IOUs! no no no, Greece has made it very clear THEY AINT GOTS NO MONEY AND THEY AINT PAYING SQUAT! If you made an unsecured loan to Greece, you're getting nothing! And if by some miracle you did get something secured- you better repo it and flip it because that's the only cash you're ever gonna get.
“[Germany is ready] to take this brinkmanship very far [with Schaeuble as] attack dog. We’re in this game of chicken. The problem is that Alexis Tsipras is riding a scooter and Wolfgang Schaeuble is driving an armored BMW.”
But with a nuclear bomb on the back of the scooter.
I want somebody to accept my I.O.U.s from Q99X2 damnit.
Germany will pay. The EU will pay. End of the story.
I atill think Greece has the stronger position. They are totally fucked every way you look at it. It is just a matter of time.
Play the game now, or down the track with twice the debt and half the economy.
Not as though they don't have practice and memory of defaulting. Just go look at the manual from last time guys.
This is brilliant and a perfect test run for what might be the model for the entire world based on the IMF vision with SDRs. One fiat currency serves as a "store of value" (i.e., the reserve currency), while the other is intended as a medium of exchange for the masses. The latter is the currency for the masses, and it gets inflated away aggressively. The former is the currency for the elites, which allows them to retain their wealth. This is the way the SDR is set up to work by the IMF, and a new Euro/Drachma situation in Greece would be no different. Gold and silver used to be reserve currencies (and still seem to be money despite the efforts to suppress their prices), but they aren't desirable because they cannot be created from nothing by the central banker/government. So... it looks like we might be headed for a three-tier currency system: (1) gold, (2) SDR, and (3) local currency. The true power in the world (Saudia Arabia, China, Russia, US, etc) will own the gold. Their most senior banking arms (IMF, BIS, etc) will keep all countries in line with a global fiat currency that is intended as a store of value and a huge stick for punishing those who don't cooperate. The rest of us will be forced to use local currencies (dollars, euros, drachmas, yuan, rubles, etc) that will not be legally redeemable for any store of value outside their local currency. Requirements for digital bank accounts would lock everything down. What could go wrong?
hollande didn't like the olives.
Didn't California issue IOU's a while back for tax refunds when things got tight? Yawn ... /s
Why does the song,"The Gambler" come to mind?
Why does the song,"The Gambler" come to mind?