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Greece Refuses To Blink; EU Says Noncompliance "Not An Option"
Months of tense negotiations between Athens and creditors came to a head on Thursday when the IMF (which at this point is just going through the motions after telling the EU it would not participate in a third Greek program) sent its lead negotiators back to Washington.
EU officials, who have long contended that without IMF participation there can be no solution for Greece, followed the Fund’s lead, stepping up the pressure on Athens and telling Greek PM Alexis Tsipras that his government has 24 hours to submit a proposal that includes pension reform and VAT hikes.
To be clear, that’s tantamount to saying Tsipras has one day to abandon Syriza’s electoral mandate and will come as no surprise to those who frequent these pages, as we’ve said for months now that come hell, high water, or "Grimbo," the EU is going to extract its pension cuts and VAT hikes from Tsipras, and not because anyone seriously thinks it will make a difference in terms of putting the country on a 'sustainable' path, but because the EU simply cannot afford for Syriza sympathizers in more economically consequential countries like Spain to get any ideas about rolling back austerity (of 'fauxsterity' as it were) and using EMU membership as a bargaining chip. Here’s a bit of color on the pension issue from Bloomberg:
For creditors, the pension system is still too generous. For the Greek government, it’s a system struggling to cope after five years of recession and dwindling contributions in a nation with the European Union’s highest unemployment. In the first quarter, the rate was 26.6 percent overall and 30.6 percent for women.
Creditors are asking Tsipras to implement reforms agreed to and deliver savings of as much as 0.5 percent of gross domestic product this year and 1 percent next year in part by immediately clamping down on early retirees. They also want supplementary pension funds — lowered about 5 percent last year — to be financed by contributions, not the state budget.
In parliament on June 5, Tsipras called the proposals from creditors “unrealistic” and said no lawmaker could agree to demands such as removing a stipend from the lowest-paid pensioners. Tsipras has agreed to merge funds to cut costs and close loopholes that allow early retirement.
He blamed five years of austerity for weakening the system, saying fund reserves fell by 25 billion euros through the 2012 debt swap and high unemployment. In the last five years, pensions fell as much as 48 percent, Tsipras said, while 45 percent of recipients get pensions that are below the poverty threshold.
In 2012, Greece spent more relative to GDP on pensions than any other EU nation. The 17.5 percent of GDP it spent compared with the EU average of 13.2 percent, according to the most recent Eurostat figures.
A wave of reforms begun in 2010, in the months after Greece agreed the terms of its first bailout with the European Commission, International Monetary Fund and European Central Bank, scaled back payments, introduced means-testing, raised the statutory retirement age and calculated pensions over the entire working career.
The result was Greece was able to move from having the weakest pension system in the world in 2011, according to Allianz Asset Management’s pension sustainability index, to cede that place to Thailand, Brazil and Japan in 2014.
Greece chased employers and employees to pay contributions. Bank of Greece Governor Yannis Stournaras said on June 2 that public pension expenditure is set to decline by about 1.9 percent of GDP by 2060, the fifth best performance in the EU,
Still, the recession, with rising unemployment and a wave of company closures, has hit contributions.
(Greece CDS overlaid on the Greek public's bargaining stance preference)
“The program applied caused greater problems in terms of loss in contributions than the sum of money collected through the program itself,” said George Simeonides, a board member at the Hellenic Actuarial Authority, which monitors the pension system. “In some cases the cure was worse than the disease.”
Greece’s debt restructuring cut the nominal value of the bonds held by pension funds by 8.3 billion euros, Simeonides estimates. The funds may take further real hits when they’re forced to sell their holdings to pay pensioners, he said.
As you can see, further pension cuts will indeed be quite painful and there certainly seems to be something to the argument that calculating how “generous” a program is as a percentage of GDP can be somewhat misleading when GDP has contracted by a quarter over the course of just five years.
But again, that doesn’t matter.
This is more about making a point than it is about an honest assessment of economic realities and as we discussed late on Thursday, EU creditors may now be concerned that Tsipras’ recent behavior — including a scathing op-ed and impassioned speech to parliament — may indicate he’s leaning towards siding with Syriza party hardliners, and that is simply unacceptable to Brussels and also to Germany, where economy minister Sigmar Gabriel has given up all pretenses that this is about Greece and not about Spain:
If Greece should leave the euro it may spark a wave of political separatism in the EU, German Economy Minister Sigmar Gabriel says today in speech in Munich at Ifo institute.
“As before, I hope that in these somewhat final days common sense prevails. If it comes to it that Greece can’t be kept in the euro that would be something of a disaster -- for Europe too:” Gabriel
An exit “wouldn’t just be much more expensive than many realize today -- not just financially -- for it would change Europe’s aggregate structure.” “Grexit today, Brexit tomorrow -- the debate about Catalonia and others:” Gabriel
EU officials are also beginning to be a bit more transparent about the fact that this was never really up to Tsipras in the first place. That is, even using the term “negotiations” might have been a bit disingenuous from the start. There are two options for the embattled PM: 1) become a technocrat puppet, or 2) attempt to stick an impossible dismount from the EMU balance beam knowing that the slightest slip-up could trigger political and social instability and risks plunging the country into chaos. For anyone still not convinced that this is the case, just ask Eurogroup President Jeroen Dijsselbloem:
- GREECE REJECTING PROPOSALS `NOT AN OPTION': DIJSSELBLOEM
For her part, Angela Merkel is doing what she can to rally support behind the Greek cause. Why? Because she, perhaps more than any other EU official, fears the geopolitical fallout from a Greek exit. Unfortunately for the Chancellor, the political will is quickly fading in Berlin, thanks in no small part to FinMin Wolfgang Schaeuble who was finished with the Greeks long ago and who has now managed to rally the support of German lawmakers who are increasingly frustrated with Merkel’s bargaining stance.
And it’s not just German MPs. The public, although largely ambivalent to whether Greece stays or goes, is overwhelmingly opposed to further concessions:
Poll finds 51% of Germans want Greece out of the euro area, compared with 55% in favor of keeping Greece in the euro in similar poll at the start of the year, German broadcaster ZDF says.
41% want Greece to stay in euro in poll published today
70% oppose further concessions to Greece by the European Union.
65% expect limited or no economic harm to Germany from a Greek exit.
- GREEK GOVT WON'T ACCEPT ANY PENSION, WAGE CUTS: GOVT OFFICIAL
“I really don’t believe they have either the political or technical capability of starting their own currency. Money needs to be a commodity of trust, and I don’t think they have the trust in the population. I’ve never seen anything so completely ridiculous, frankly speaking, from a debtor country in the way they approach it.”
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Anytime now...rumor has it a deal has been made.
Wait for it...
This seems a lot like professional wrestling.
Memo to Tsipras -
Go talk with Iceland. You'll figure out what to do.
Hotel EU
You can check out, but never leave
I think I've reached that point. The point where my distain for articles about Greece has surpassed my distain for those articles about Ebola last year.
That was a nothingburger and this is a nothingburger.
"GREXIT Can Only Be Postposed, Not Prevented"Greece: The Achilles’ Heal That Will Bring Down The European Union
Unless Germany throws in the towel and says, the Greek people will forever be a parasite in the name of Euro preservation. In the US, we have forever parasitic group....but, they can't leave, and the hosts don't vote separately...so the parasites are more readily maintained in america.
Like will children...at all times you are teaching them something. It's just not always what you want. So what is this fiasco teaching the other weak EU countries? They are all watching.
The single mothers will always be with us.
Like any game it's about timing. Doesn't matter if you are playing hockey, football or team fortress 2. If one team's timing is off by the clock being run, then it opens other opportunites later. They've just got to stretch it until August.
What happens in August? Everyone in the governments in Europe go on strike and typically go to the south of France, Ibiza or the Greek Islands to watch topless sunbathers. Europe pretty much shuts down to go drink for a month. As has been standard practice for the past 100 years. Then it takes about three weeks for the governments once they are back to actually function again when everyone is back in September. Tsipras and his team just have to run the clock on the EU by using the facilities at their disposal.
Now to run the clock they need to use the loudest and most stubborn of social features on the political landscape to ask questions and push their agenda for fair practice in pension obligations. That entity is called a Union.
https://eiopa.europa.eu/Pages/SearchResults.aspx?k=filename:EIOPA-Regula...
This is the EIOPA, it's 36 pages of ass scratch to replace a phone book of union pension obligations. If they hand it to the union stewarts, the union stewarts will have a complete fit on what's missing. Because all of this stuff was supposed to match ALL the union regulations in the attempt to harmonize union practices throughout europe. Well guess what, it doesn't. If they give the unions air time at the table and they'll bark all day long to help run the clock.
What happens in Sept? Couple of really nasty derivatives chains go off like a string of firecrackers and Greece keeps their gold bankroll because the ECB will be left holding the bag of financial fuckery.
If playing the game of triage on a clock, the focus isn't to win, it's to still be standing once it does pop so things can be rebuilt. Again no one was going to get to keep their fiat credit/money, no one is going to stay rich in the circumstances available between the math and the actors. Forget about it, that line was crossed in 2007. Now all that can be done is plan for failure and put the mats out to cushion the fall. Unfortunately the way the financial system has been constructed, the only thing that can be done is acknowledging that it's built to fail so future planning happens properly.
In this case Tsipras gets the unions involved to place their requirements on the table to the ECB. The ECB ends up being the foil to provide that information. Afterwards he and his team have a better idea who those players are to rebuild and what is feasible. As dysfunctional as it sounds, Tsipras has to involve the people that are going to help the Elected governments re-build Greece by involving them to help highlight the mess he's dealing with given by the lenders. In turn future partnerships are built between the elected cabinet and the unions that make things work because everyone is on the same page of what can be done that carries over to the services that can be delivered back to the public. As ugly as the situation is, when involving the people that are going to get hosed, optics given will properly frame the situation and in turn that type of transparency offers more opportunity for partnerships to help rebuild.
Won't be perfect, then again what is. It is far better that everyone understands what is possible given the resources available.
They just need to decide on the name when Germany and Greece both throw in the towels and decide to get married. What should they call the newly combined country, Greecany or Germance? Maybe the towel embordiary will have Ger and Gree, eternally bonded on Jun 12, 2015?
I sense things are racheting up, though. And it's clear that despite all the huff and puffery about the ball being in Greece's court, the EU is the one feeling the pressure - Especially when Greece is being told they have no options. Like Mish said on his site the other day, the EU is scared shitless that Greece might actually be successful if they went their own way. It may be the only way for Greece to make the actual reforms it needs either way. But doing so without 330 Billion Euros in debt hanging around your neck would be easier in any case.
It's interesting. The chances of Greece being successful, with or without the EU look slim regardless, however what is making the EU shit their pants is the small possibility that Greece will be successful... as a member/protegeé of BRICS. Now that would truly spell the end for whatever project the EU stooges have in mind for the continent.
"The point where my distain for articles about Greece has surpassed my distain for those articles about Ebola last year."
And a distain like that sure is hard to remoove.:-)
Except that Iceland has a positive balance of trade and their economic problems were for VERY different reasons. They tried to expand too aggressivesly.
Greece has had a negative balance of trade for decades and their entire internal system is very broken. Public sector spending accounts for 40% to 60% of their entire economy.
Point taken - understand there are significant differences in the economy and circumstances.
My point - do the "right" thing by your people for the long term, take the pain, reconstitute national sovereignty, emerge healthier and move on.
Aside - one other big difference, leaving the Euro will result in a lot of vindictive reactions from Germany and others.
"Give me control of a nation's money and I care not who makes her laws"
Amstel Rothschild
Greece should hire Goldman who got them in this mess in the first place by "creative financing" and fudging the country books to gain entry into EU.
...minus the entertainment
Erik Nielsen is a fucking moron. I could start my own currency tomorrow if I wanted. No one would use it, but it would be possible.
Shit, Chucky Cheese has its own currency, those stupid tickets you redeem for Made in PRC garbage, but it is technically still a currency. If a petaphile dressed as a 8 foot tall rat can start a currency, Greece most certainly can.
Fuck the status quo and the lies they spew.
+1k Hous
Get this shit over already... This feels like a cheap hooker tease dragging on, and on, and on, and on! Enough! Just dump the Euro, implement Drachma and re-build your economy Greeks! Take your country BACK!!! NOW!!!
{{ RANT OFF }}
"If a petaphile dressed as a 8 foot tall rat can start a currency, Greece most certainly can."
Amen.
I think Tsipiris has correctly judged that Greece is in a favorable position either way this goes. Either:
1. He gets to keep spending EU money without really paying it back.
or
2. He gets to discharge his debt through effectively declaring bankruptcy.
The EU, in essence, gave Greece an unsecured credit card, with interest rates that did not account for the risk profile.
Here , let me do it.
"I heard the Greeks have agreed to troika", now get out there and buy, buyt, buy!
"Molon labe" Greece; the EU needs you more than you need them.
Deal or no deal...oh well I'm sure Stawks win either way.
Copy paste to get up to the top. I don't normally do this, but I just wanted to today. Deal with it.
Perhaps the 'can' has reached the end of the road, and can be kicked no more.
the can is so big kicking might not be an option. there it sits as big as refinery holding tank full of debt. kick that mutha fucker, kick it fuckers, keep this shit show going, come you can do it...lol.
I still think the Greek Central bank should just grab a big pule of paper and crank up their printing presses - then deliver a truck load of paper fiat to pay off their debt! After all, printed paper has the same long term value as the Euro and Confederate Dollar.
Have the US Treasury mint a platinum coin, with a nominal value of all Greek debt outstanding. Table it at the next meeting. Throw in Spiderman towels for all the Troika members, as a gesture of good will, no hard feelings, and have everyone retire for drinks at the nearest stripper bar. Easy-peasy.
"Bank of Greece Governor Yannis Stournaras said on June 2 that public pension expenditure is set to decline by about 1.9 percent of GDP by 2060"
You know these people are screwed when an ex-politician and now Governor of the Bank of Greece can make a prediction about the year 2060.
As I always say, I have two balls but neither of them are crystal. This man is a gem.....2060!!!???
"Bank of Greece Governor Yannis Stournaras said on June 2 that public pension expenditure is set to decline TO about 1.9 percent of GDP by 2060"
FTFY.
"GREECE REJECTING PROPOSALS `NOT AN OPTION': DIJSSELBLOEM"
Not an option, because the plan was to overwhelm Greece with excessive debt, then asset-strip the country when Greece became bankrupt. Oligarchs are happy, off-balance-sheet derivative time bombs don't obliterate northern european banks, win-win.
The plan was NOT to have a Greek government that has the balls to say fuck off to the bankers. You see, Greek voters, you got the election wrong. You didn't vote in the bankers' interest.
In the US, it is not possible to vote against Wall Street or the Fed. It is not an option. So you see, Greek voters, it should not be an option for you either - be fair now.
That Dij guy is quite a tool ! Telling somebody to "Fuck-Off" is always an option. Even Pelosi managed to tell Obozo to fuck-off. EU can suck a collective rock...
If the dealer in a poker game ( remember that the dealer is a player in the game itself too ) is found to have rigged the deck , what happens?
Watch Rounders.
The market will soar. Gold and VIX will be hammered.
Just keep your eye on the end game and reality. The hammerings and the beatings are the signs of desperate men and the opportunity for the prudent man to buy more.
The current Greek government was elected on the promise of not doing what the EU is demanding of them, but while still remaining in the EU. What else are they going to do but wait for the EU to throw up their hands? If they agree to more austerity, they've broken their campaign promise. If the EU throws them out, they've broken their campaign promise. Best to wait and see and if they're out of the EU, they still have a couple of years to manage the ugly aftermath.
Let Greece go .... follow the Russian example .... of good sportsmanship .... a la the Ukrainian Crimean .... crime scene .... it's as easy .... as shooting civilian airliners .... in a barrel !
What can be added to the Happiness of a man who is in health, out of debt, and has a clear conscience.
- Adam Smith
The best and only thing the Greeks can do is walk. With their refusal to pay the debts racked up by a combination of Corrupt Bankers (take a bow, Goldman Sachs) and previous Governments.
The next thing to do is arrest as many Eurotrash as he can find and charge them with extortion, torture and corruption and hang them and a few bankers.
Bankruptcy stared me in the face, but one thought kept me calm; soon I'd be too poor to need an anti-theft alarm.
- Gina Rothfels
Greece is the opening act of what working people in other EU countries can expect. Continuing high unemployment (made worse by US-imposed Russian sanctions), cuts to pensions, health care, increasing poverty, etc. As the EU economy continues declining, expect more Greece’s in Spain, Italy, Portugal and France.
I had a debt on a VHS player and T.V. combo when I was 19 that I couldn't pay (read; didn't want to pay) and I just moved house - Voila! No more letters through the door, no more burly men in vans turning up banging on my door. I NEVER heard a thing about it ever again.
Go on Greeks....move.
The Can is now officially so big that any politician attempting to kick it down the road would break his foot.
I heard a rumor that Syriza may have links to terror...let the arrests commence
EU base of power is BANKS and free money, Tsiras's base of power is Greek people.
Neal Sedaka knew it.
"Breaking up is hard to do"
https://www.youtube.com/watch?v=XQD3At3E7TA
Well, if Syriza and the EU were using common sense, they both know that there is no way for Greece to pay off its debts. If Syriza were using common sense, they would already be planning for leaving the euro. But it seems that the closer one gets to Brussels, the more the brain atrophies.
Greek government officals have repeatedly stated that Greece can not repay its debt and that a substantial debt forgiveness is inevitable. The EU financial ministers consider this truth "a sinn" because it exposes their own lies. Without much doubt the spend time thinking about getting rid of the two bad boys from Athens.
Greek government officals have repeatedly stated that Greece can not repay its debt and that a substantial debt forgiveness is inevitable. The EU financial ministers consider this truth "a sinn" because it exposes their own lies. Without much doubt the spend time thinking about getting rid of the two bad boys from Athens.
Job promisses by Brussels are"
"Do you want to rule over a country or a continent".
The bankster bullies mouthpiece saying non compliance not an option...
Translation - Your people can starve, but we still want our money
In Russia they get propaganda, here we get "the news".
In Greece they get Syriza, here we get the "Tea Party".
yeah, good comparison - tea party and communists. early to be imbibing isn't it?
Screw the lapdog EU and its Fuhrer Deutschland (uber alles). If people want to be free and not slaves then they need to start thinking for themselves and not let the criminally insane rule them.
And yes, it really is the banker bullies who are pulling the strings... the pasty-faced psychopaths hiding behind the cover of countries.
Maybe the king should come out from under the (Swiss) mountain... surrounded by his "Gnomes of Zurich" (hat tip to JFK).
Ah yes, some German politicians dearly wishing to put the German boot on the Greek throat.
How about a picture of a German politician in soldiers uniform stomping on the neck of Tsipras and the words pensions and VAT coming out of Tsipras mouth.
Mafia loan sharks will lend you too much with too many strings, so latter you are owned and have to do as told or else. They know you cannot repay the amount given, that is not their purpose.
The prupose of allowing Greece into the fold and buried in debt in the first place is simply to control them. The Tsipras government was an accident.
Could it be that dragi is trying to drive investors out of bonds?
Suggest Tspiras should require up-front money to make it worth his while. DB and Germany are so screwed.
Tsipras to Disselbjoom: F U malaka!
The EU is getting more and more scared every day. From Tspiras standpoint he had better not listen to these "final offer" requests. At this point it's go big or go home. At this point I don't see how in the world EU creditors could possibly believe that greece will go along with pension cuts.
I think all of the posturing of the inevitable is more about sending Spain and Italy a clear message. The EU can't possibly cave to the demands of Greece and more than greece caving to the demands of its creditors.
The message could also be read as "If you want the EU just default and exit but do it quick".
Negotiations have no use.
just say it - 'f*ck the eu'
Is this the point where the IMF and ECB replace Tsipras with corrupt officials who will "play ball"? Will the Greeks fight this government coup attempt? Will Russia and China rush to the Greeks aid?
"Go Fuck Yourself" is the Ultimate Option!
Greece needs to walk-out of the EU NOW! Russia has offered them a financial resolution.
"...submit a proposal that includes pension reform and VAT hikes."
Weird how nobody ever demands "reduce the number of government employees" as a part of austerity.
That demand was and is on the table but any dismissals would increase the unemployment above 30% and if serious action were taken it could reach 50% which is not considered feasable.
It has been alleged that Greek pensions are "generous" and that it is unfair to expect other EU countries with less generous schemes to continuously provide additional debt to Greece. I wonder what Tsipras's take on this allegation might be. It is known that the hardship for the Greek population is significant and that social misery is omnipresent with unemployment at about 30%. Why is there so much misery and hardship despite such generous pension schemes? It is known that Greece has not much of an industry, that agricultural exports were reduced because of the Russian counter sanctions and that the tourists complain about the price level (wait until the VAT is increased to see what happens). For a balance Greece has a lot of civil servants (compared to other EU countries) and they are the main beneficiary from the state pension programmes. It seems conceivable that the pensions are the main lifeline for many family members without employment and that any further cuts into the system are plainly unacceptable and shall ultimately destroy the social fabric. Maybe this is why the two bad boys from Athens are so stubborn and do not agree to pension cuts. I can only speculate but Schäuble will know, for sure.
Because the ones getting pensions are the ones that have/had jobs. To hell with the rest.
If necessary, Germany and France will pay the Greek debt, usuing smoke and mirrors. Most probable is that they will buy off creditors at around 60%, then remark the debt internally to be around 30%, then kick it into the long grass.
The solution to all of this lies in the markdown initial creditors will accept...
We are the Bund, resistance is futile...
Carroll Quigley said the elites used the Communists to implement their globalization plan, but not participate in it. Kind of nice to see Socialism blow up in their faces.
Good thing for Greece the EU doesn't have a large military...yet. They'd end up burn't to the ground like the South in the Land of the Free.
"Bank of Greece Governor Yannis Stournaras said on June 2 that public pension expenditure is set to decline by about 1.9 percent of GDP by 2060, the fifth best performance in the EU"
Said with a straight face and all the conviction of a liar on steroids.... He won't even be alive in that year.
GREECE IS UKRAINE.
THEY WILL ACCEPT PENSION CUTS AND MORE BUT IT WILL HAPPEN BY WAY OF A PUNISHING RUTHLESS INCREASE IN INFLATION WHEN GERMANY BEGINS TO OPEN THE FLOODED TORRENT GATES OF MONEY.
oh yea, bank bail-ins and all that bullshit tooo....
Greece will agree to anything and implement nothing.
Greece will agree to anything and implement nothing.
Note to Greece: Go all neo-con on their ass...Fuck the EU
"Non-compliance, not an option!" HaHaHa Watch us bitchez!!!!!!!!!!!!!!!!!!!!!!!!!!!
Well, if noncompliance is not an option, then what will enforcement look like? ;-)
Hey Djizzumbomb, non-compliance is ALWAYS an option.
Were I Greek, I'd tell you to go fuck yourself and jam your loans up your ass. I'd take my lumps as a nation so we could recover like Iceland. Shortly thereafter we'd start imprisoning all the top level bankers for trial with no bail until final result.
If found guilty, it'd be life in prison for crimes against humanity.
Syriza and Varoufakis are the real deal, despite what the cynics say. They're the equivalent of Ron Paul in terms of principles, and it's a rare sight to see. When America's debt bubble pops, we'll see a similar movement in the States.