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Europe Warns Of "State Of Emergency" As Greek Stalemate Drags On
Talks between Greece and creditors collapsed on Sunday after Athens once again refused to compromise on the pension cuts and VAT hike the troika insists are necessary if the country is to receive the final tranche of aid from its second bailout program.
We noted yesterday that the charade is hardly over as Greek PM Alexis Tsipras knows he can continue to bluff for a few more weeks. Even in the event Greece misses its June 30 payment to the IMF, Christine Lagarde would need to muster the political will to send a failure to pay notice to the IMF board, at which point Athens would be formally in default and cross acceleration rights for the country’s other creditors would trigger. But Lagarde has considerable discretion on the default notice and can delay it for at least 30 days. Between this and the fact that a critical payment to the ECB is still more than a month away, we suggested that the brinksmanship was far from over and that the new ‘deadline’ would be Thursday’s meeting of EU finance ministers in Luxembourg.
On Monday the usual back-and-forth between the IMF, Greece, and EU officials continued with IMF chief economist Olivier Blanchard insisting that Greece must implement changes to pensions and the VAT in order to hit (reduced) budget surplus targets while EU creditors should reshuffle Greece’s payment schedule, reduce interest rates on the country’s debt, and, if push comes to shove, writedown Greek bonds:
On the one hand, the Greek government has to offer truly credible measures to reach the lower target budget surplus, and it has to show its commitment to the more limited set of reforms. We believe that even the lower new target cannot be credibly achieved without a comprehensive reform of the VAT – involving a widening of its base – and a further adjustment of pensions. Why insist on pensions? Pensions and wages account for about 75% of primary spending; the other 25% have already been cut to the bone. Pension expenditures account for over 16% of GDP, and transfers from the budget to the pension system are close to 10% of GDP. We believe a reduction of pension expenditures of 1% of GDP (out of 16%) is needed, and that it can be done while protecting the poorest pensioners. We are open to alternative ways for designing both the VAT and the pension reforms, but these alternatives have to add up and deliver the required fiscal adjustment.
On the other hand, the European creditors would have to agree to significant additional financing, and to debt relief sufficient to maintain debt sustainability.We believe that, under the existing proposal, debt relief can be achieved through a long rescheduling of debt payments at low interest rates. Any further decrease in the primary surplus target, now or later, would probably require, however, haircuts.
As for Greece’s European creditors, the focus continues to be on Greece’s perceived unwillingness to accept economic realities. Here’s Valdis Dombrovskis, European Commission vice president for euro policy:
"In the end, this is not the kind of situation where you can have a mechanical agreement for some kind of numbers, where you meet in the middle or something similar. In this event, it’s most important to have a clear exit strategy, how Greece will renew financial stability and how renewed financial stability will return to economic growth.”
In Germany, where Chancellor Angela Merkel is fighting to preserve the last vestiges of patience among lawmakers in the face of staunch opposition from FinMin Wolfgang Schaeuble, the mood is becoming increasingly hostile with Merkel’s party whip Michael Grosse-Broemer saying “a Grexit must be factored in if the Greek government doesn’t do what it’s long been called upon to do,” and Vice Chancellor and Economy Minister Sigmar Gabriel accusing Greece’s “game theorists” of “gambling” with Europe’s future and noting that “repeated apparently final attempts to reach a deal are starting to make the whole process look ridiculous.”
For his part, Greek FinMin Yanis Varoufakis reiterated that Athens would not compromise on pension reforms and a VAT hike. In an interview with Bild, Varoufakis flatly rejected a VAT increase, claiming that “the higher these taxes, the less people will pay them. They would then feel justified not paying.”
As for Tsipras himself, the PM is taking a cue from these pages, hinting at the troika's use of the Greek talks as a way of sending a political message to Podemos and other sympathetic parties and reminding the world that Greece, more so perhaps than any other country, has a commitment to defending democracy because after all, it is the birthplace of Western democratic ideals:
One can only suspect political motives behind the institutions’insistence that new cuts be made to pensions despite five years of pillaging by the memoranda. The Greek government is negotiating with a plan, andhas presented nuanced counterproposals. We will patiently waitfor the institutions adhere to realism. Those who perceive our sincere wish for a solution and our attempts to bridge the differences as a sign of weakness, should consider the following: We are not simply shouldering a history laden with struggles. We are shouldering the dignity of our people,as well as the hopes of the people of Europe. We cannot ignore this responsibility. This is not a matter of ideological stubbornness. This is about democracy. We do not have the right to bury European democracy in the place where it was born.
The risk now is that by the time the shouting, bluffing, and finger-pointing finally gives way to realpolitik, Greeks may be living in what is effectively a third world country. As documented here extensively, the Greek economy is teetering on outright collapse, and irrespective of how long politicians on both sides are willing to redefine their own, self-imposed deadlines, a crisis of confidence on the ground in Greece could plunge the country into a state of emergency before EU officials have time to intervene. On that point, we'll close with the following from Reuters which suggests that there are at least some people in Europe who understand the meaning of the word "urgent":
The European Commission needs to make plans for a 'state of emergency' in Greece from July 1 if Athens does not reach an agreement with its creditors, Germany's EU Commissioner Guenther Oettinger said on Monday in Berlin.
"We should work out an emergency plan because Greece would fall into a state of emergency," Oettinger, who is also a senior member of Chancellor Angela Merkel's Christian Democrats said, citing the need to ensure access to energy and medicine.
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Deutsche Bank's derivative portolio of $54 trillion about to implode? Germany's GDP is only $3.64 trillion by comparison.
That would be an emergency.
Even a fraction of a percentage (e.g., less than 1%) of that exposure being directly tied to Greek debt could be the nail in the coffin for DB.
We'll see.
Greece is to Lehman as Deutsche Bank is to ______________ ?
a live clucking chicken.
Just default already. Let go of all this drama.
+1 Agree.
Blah, blah, blah, blah, and blah blah, blah blah, therefore blah blah, unless blah blah blah blah. As indicated blah blah blah, will cause blah blah blah, providing blah blah blah...
Pundit commentary.
Greece: The Achilles’ Heal That Will Bring Down The European Union
"The risk now is that by the time the shouting, bluffing, and finger-pointing finally gives way to realpolitik, Greeks may be living in what is effectively a third world country. " ... All this panic over poor Greece "bluffing' tells me its the fact they may NOT be bluffing that really has the EU freaked out.
Bliderberg attendees are all back home, save and sound in their bunkers. Let the party begin.
This whole scenario is quite deliberate. Here is the full globalist plan for Greece: http://redefininggod.com/2015/02/globalist-agenda-watch-2015-update-19a-...
SEPTEMBER, 2015: The ‘BIGGEST’ Month Of The Millennium
"Everything is being set up for this September ."
https://www.youtube.com/watch?v=q0VZmiFkp7k
First Haus peace, if you taught me one thing about fight club it's don't come in as a lightweight drunk and take on a heavyweight.
Secondly your comments have given me a much better understanding along with other usual suspects of this shitfight going on.
>>>
Even a fraction of a percentage...nail in the coffin for DB.
<<<
True, but would the Bundesbank allow them exposure that could wipe them out?
Personally, I think the Bundesbank told them to get both direct (on bal sheet debt, etc) and indirect (via off-bal stuff, like CDS) exposure down to small amounts long ago.
BTW >>> nail in the coffin <<< surely only means German state becomes proud owner of a large number of new DB shares.
Hard to see Merkel ever allowing a true DB failure.
Watson
Fuck the Germans. They're a bunch of dumb-asses too. They should have jettesoned Merkel years ago.
Zee Germans should have jettesoned all EUR based countries where their language is Latin based years ago.
Would have solved the problem.
A Germanic-Scandinavian Monetary Union on one side, and a Latin Monetary Union on the other.
Problem solved.
There was a Latin Monetary Union in the 19th century. It didn't last. They all had gold coins with the same denomination and weights, such as 20 lira, 20 FF, 20 SF, containing 0.1867 troy ounce of gold.
The term I use is "blockheads"
They were stupid believing other nations in the EU were just like them.
Did you Fly Vipers? If so, where?
Europe Warns Of "State Of Emergency"
This sounds like a job for Eurogirl.
Tsipras has pledged to defend democracy "in the place where it was born."
When he's done over there...send him to the US. Cause we could use a little help ourselves. Freakin Paul Ryan....what an asshole. Eat that secret trade bill bitch.
Austin Powers will fix it.
Yeah baby! :D
Long live Zeus
Yeah but where is that slacker deity?
Meh.
Y'all are boring me. This has to be one of the slowest most drawn out games of chicken ever.
The EU needs to fold, or let Grexit commence.
In a make believe world of extend and pretend, there is no comfort for those of little patience.
<read the above again in the movie trailer voiceover guy's voice>
Tsipras you Dumb Fuck; Putin/Russia have offered you an escape route. Either take it or bow down to your EU/Unelected Puppet Masters. You're starting to really Piss Me Off!!!
Tsipras doesn't want to get killed by the CIA. Playing games with debt is one thing, messing with real bullets is another.
Put a fork in this Euro turkey... This bird is done!
So this could stretch out through July? Wonder if the rules will be changed in July and be extended another month or two? Damn! Does the kicked can even resemble a can anymore?
Alarm!
We will confiscate your cash, gold, identity, pension and savings! In order to save you...sorry, us.
If you think stealing my stuff will save us from your ineptitude....by all means please take it.
Six months from now the headline will be 'Greece Near Deal With EU'...blah fucking blah.
FUCK! I'm in a rotten mood today. This whole European Union thing has my skirt in a knot...
You could always just come to America via the Mexican border. Everyone else is doing it.
All of this Palava would Pan Out if they refrained from Sunday Meetings. Nothing good ever happens on a Sunday.
palaver
Depending which part of the country you're from. I'm Urban.
Sunday should be a day of Rest and relaxation. Oh yeah, go to church too. America needs to Shut-Down on Sundays and force family bonding and spirtual uplifting. Like the way it was not so long ago.
Baklava i says
Raising VAT is cheeky because the EU itself is funded by a levy on VAT which used to be 1% VAT revenues raised in each member state.
Greece is a failed state. It has budget items for maintenance of F-16s which does not take place. They have less and less room to balance their economy as it implodes - it is catching a falling knife
"As documented here extensively, the Greek economy is teetering on outright collapse"
That would be, "as documented extensively, the euro scam is teetering on outright collapse."
Fixed it for you.
Why do you think there have been so many "last chance" meetings?
"We can ignore reality, but we cannot ignore the consequences of ignoring reality." - Ayn Rand
The longer this dog and pony show drags out, the harder it will be for both parties as the end nears to save face and work together. And so, the more messy the clusterfuck will be at the end. I'm thinking there will be some nice fireworks come July.
In this bizarre and pathetic game of chicken my money is on the Greeks. I am pretty darn sure Merkl will blink, as she is personifies the new Europe: Risk averse, confrontation averse, spineless.
Merkel would of course like to do whatever is necessary to keep Greece as a member of the EZ, that much we already know. The problem she faces is that "blinking" would probably destroy her political career. If on the other hand a Grexit happens and it has terrible consequences for Europe and indeed the world, she would also be destroyed.
The Greeks really have nothing left to lose now.
Merkel may blink, but will she get it past zee people.If Wolferei is typical,NFW.
"i ll huff and i ll puff and i ll blow your house in"
Says one of the little PIIGS.
This is a question of political will...always has been...and hence so will the seperation.
Everyone knows the end game here..."identity politics" so to speak as respect for national identities will be heard and realized.
What happens economically speaking is what happens. Simple as that.
Certainly Putin is watching...
In 5 years or less the Euro, EU and NATO will all be gone. The EU will implode and unravel and Europe will be reborn as individual states able to form their own policies domestic and foreign.
Nothing can ever be resolved until the last banker is HUNG.
With the entrails of the last politician.
until the last banker is HUNG.
We could just start with one of them.....see where it goes.
THEATER.
Greece is a distraction.
So is this....
https://www.facebook.com/NGONewsLive/photos/a.186913554684780.39084.104622279580575/899448620097933/?type=1&theater
I don't think so. Greece could be the planned reason the world goes into a dirivitive nuclear meldown. After the ashes fall people will beg for a OWO.
Douchebank Oil Derivative positions is the causal agent of meltdown.
Has not much anything to do with Greece.
A single wrong comment from any official could bring down DB, Germany and the majority of western c/b's. Push comin to shove and Greeks control it all.
Saudi Oil Dump collapsed World Price by 60% at one point.
Douchebunk had lots of exposure and levered at that.
Nothing can be done.
Greeks control nothing.
Neither does Berlin or Brussels.
Operation Jade Greek.
Germany's EU Commissioner warns that a "state of emergency" could leave Greeks without energy and medicine.
Just like municipalities that warn if their bond issue isn't passed they have to cut police, fire, and librarians. Matters not that the real waste is in the consultants they hire, conventions they attend, trade trips they take, and myriad wasteful projects that don't serve the people one bit.
German and French banks lent money without the required degree of due diligence. MISTAKE
Greek governments borrowed like crazy. MISTAKE
Greek governments cannot pay back the loans. REALITY.
Germany and France bail out their banks.MISTAKE
Greece now on the hook, not to the banks but to the EU. MISTAKE.
SOLUTION: Everyone should pull the flush and let the cleansing process take its course.
What about the CDS DB bought from Citi or JP?
Why do you think Obamba pressed the EU Idiots to bail Greece?
When When they default DBs death will trigger the CDS and America will be no more.
Contrary to poular belief, "democracy" is actually a luxury. Not a "right". Not an inalienable "right". Not something that's "free".
Something to be desired, certainly. Something to be striven for - sure. Something to be defended, absolutely...
Trouble is, too many people think of it as a right - never for a moment considering that it comes at a price - and are too idle or dumb to defend and improve it (since it is far from perfect in the first place)
Democracy is only as good as you can keep it...
Democracy is first and foremost an obligation. Unfortunately though it's seen as a free ticket by an increasing number of citizens.
Democracy must be strictly regulated for it to work.
Its good Greece is not bucking so far, give these aspiring tyrants a run for their money, literally.
More defiance is needed, from more countries. Talks should focus on exit mechanisms and post-Euro scenarios.
I'm afraid that Germany and the EU actually want a state of emergency in Greece (that's why they're quick to call it), so that Greece leaves the euro in the most painful way possible, and so that Podemos etc will not be tempted to go down that route. They dare contest our rule? Make them pay!
Now that the EU is backing away from "negotiations", Greece had better get its plan B into action quick so that its enemies (the EU is now an enemy) won't sabotage it. Tsipras would be weak to wait too much longer, unexpected nasty stuff could happen in the Greek economy out of his control. He's well-placed to understand that this is a colonial struggle against EU imperialism -- he'd better watch his back.
<<He's well-placed to understand that this is a colonial struggle against EU imperialism -- he'd better watch his back.>>
Literally -- considering that some of the parties he's dealing with are experienced war criminals.
I think Tsipras has been playing this the only way he could, all through. Exiting immediately would have earned him a lost political mandate (the population did not want to exit the euro when he was elected) and probably a bullet in his brain.
The only way an exit was feasible was after as much preparation as possible, both for the ECB and for the Greek population. Nobody can say Syriza hasn't made every effort at this point. An exit now (well, within the next few months) has at least given everyone time to get used to the idea, as prepared as possible, and given the Greek population a chance to figure out what the REAL cost of staying in the euro is for them.
Mish has been following this story very astutely, since Syriza was elected. His is consistently the best analysis I have read to date, mostly b/c he seems to be the only commentator who grasped right from the start that it is impossible for Greece (and Portugal... and Spain... and Italy... and...) to remain in the euro under these debtor conditions. Since the impossible by definition is not going to happen, by far the likeliest scenario is a euro shakeup or breakup. It's only a question of When, not If.
http://globaleconomicanalysis.blogspot.ca/2015/06/last-try-in-greece-bef...
http://globaleconomicanalysis.blogspot.ca/2015/06/greece-walks-out-after...
Personally, I think the euro was deliberately designed to fail. Any partnership without an exit mechanism is doomed, something the euro designers must surely have known.
"Greeks may be living in what is effectively a third world country."
cut the rhetoric, your opinion is opiniated
there are a lot of 3rd world countries out there including the ussa.
The writings on the wall alright, No Default, there isn't even a disagreement, its just theatre for the masses, no one in these talks has any interest in risk, maybe FinanceMinister in Germany, Dont get your hopes up, the system must break on its own, people are all bull shit at this level
The German vice chancellor Mr. Gabriel warned that “if agreement is not reached quickly, the patience of many in Europe could snap” and that “we won't let German workers and their families pay for the exaggerated election promises of a partly communist government”.
Oh? But it is ok to let these same German workers, their families and people in other EU countries pay for the bailout of German banks that made bad investments in Greece? Cause that is what happened.
If Greece defaulting is enough for the EU to declare an emergency then the EU is in a deeper shit hole than they have admitted too. Greece is only 1.3% (in good times) of the EU GDP. Fuck these bankers. Time to hang every damn one of them!!!
"Three charts that show Iceland's economy recovered after it imprisoned bankers and let banks go bust - instead of bailing them out" http://www.independent.co.uk/news/business/news/three-charts-that-show-icelands-economy-recovered-after-it-imprisoned-bankers-and-let-banks-go-bust--instead-of-bailing-them-out-10309503.html
If the talks fail over a 2 billion Euro gap in the budget, when the total loans exceed 200 billion Euro, this will be viewed as the dumbest negotiating by the EU in the history of negotiations. EU really going to risk contagion, russain pivot etc. over 2 billion Euros? Crazy!!!!
Once, when I was a kid, I was walking down a country road and started kicking a can I found on the roadside. I made it a point to kick that can all the way to my friends house 3 miles away. By the time I got there, the can was little more than a lump of metal. I can only imagine what Greece and the EU will look like.
They forget greeks are good poker players being ready to loose anything except greek people faith.
One must say one day this debt system is satanic.
No bailout but gobs of "humanitarian aid, ie CHARITY" if Greece goes BK.
It has been CHARITY all along.