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European FinMins Douse Market's Rabid Greek Optimism
The usual mix of generalized confusion, cautiously optimistic rhetoric, and German skepticism is at play on what was supposed to be an all or nothing day for negotiations between Greece and creditors.
According to FT, Greek officials e-mailed the wrong proposal to Brussels just after midnight (something Athens later denied) then sent a revised version just after 9:30 Monday morning. Whatever the case, the version that ended up in front of Europe’s top brass has been billed as a “step in the right direction” despite the fact that it doesn't look to contain any of the concessions previously demanded by the IMF and the EU. As a reminder, the new Greek proposal reportedly calls for the following (via Bloomberg):
- Greek plan to unlock bailout funds includes proposal to eliminate early retirement options starting from Jan. 1, 2016, a Greek government official says, asking not to be named.
- Plan includes levy on companies with more than €500,000 in annual profits
- Plan includes increase in “solidarity levy” for individuals earning more than €30,000/yr
- Creditors ask permanent fiscal measures equal to 2.5% of GDP, Greece proposes measures equal to 2%/GDP; proposes to cover difference of 0.5%/GDP with “administrative measures”
- Greek govt would agree to target demanded by creditors for 1%/GDP primary budget surplus
- Greek govt insists on 3 bands for VAT rates; creditors want 2 bands; Greek govt proposes to move more products to higher band of 23%, in order to cover fiscal gap
- Greek govt has proposed zero deficit clause, debt break for Greek budget; clause would include automatic spending cuts in case threshold is breached
- Greek govt would be willing to adopt additional fiscal measures, if agreement with creditors includes commitment to debt relief
And as EU officials convene for today’s emergency summit (where it now appears everyone will once again agree to meet again in the coming days to ‘finalize’ things), money continues to flow out of Greek banks with Reuters reporting that pre-orders for withdrawals topped €1 billion over the weekend. Of course, Greek banks are out of cash, so meeting today’s withdrawals necessitated yet another ELA cap increase from the ECB. That makes three ELA hikes in four trading days. Estimates vary, but it’s not at all clear how much longer this can go on, given Greek banks’ pledgeable collateral. Depending on how one views the ECB’s stance on allowing the banks to pledge government guaranteed, unsecured debt, the banking sector may have anywhere between €30 billion (haircut inclusive) and zero in collateral remaining on the books. Even in the best case scenario, banks have but a few weeks left given the current run rate. Here’s Goldman:
The ECB continues to keep a close check on its provision of liquidity to the Greek banks via Emergency Liquidity Assistance (as collateral under standard refinancing operations has been exhausted). Over past weeks, the progressive increase in ELA matched the rapid outflow of deposits. If no progress is achieved today, it is likely that the ECB will put a cap on further liquidity assistance, possibly as early as tomorrow, Tuesday. This would force the Greek central bank to ask the Greek government to impose controls over withdrawals, de facto halting the creation of EUR ‘base money’ in Greece.
Germany, likely aware that each euro banknote dispensed at a Greek ATM effectively raises Greece’s liability to Berlin, is calling for the ECB to stop raising the ELA cap. Here’s more via Bloomberg:
Christian Social Union finance committee member Hans Michelbach and Social Democrat deputy parliamentary head Carsten Schneider are among German lawmakers who want to stop Emergency Liquidity Assistance for Greek banks, Spiegel reports, citing interviews with the politicians.
ELA gives Greece more leeway to negotiate, politicians say
ELA creates a “fiction of Greek banks’ solvency”
Meanwhile, the German and Finnish finance ministries have been quick to dismiss the notion that today's summit will bring any sort of breakthrough. In fact, German FinMin Wolfgang Schaeuble sees virtually nothing new in the 'revised' Greek proposal and Austrian FinMin Alexander Stubb says the entire idea of a Monday deal has been blown out of proportion and everyone in attendance has "wasted" their frequent flier miles:
“It’s not possible to prepare a statement for the euro summit, the status is unchanged since last Thursday. We don’t have anything new except that over the weekend many have tried to publicly raise expectations, which however aren’t backed up by facts. Without substantial proposals that can be seriously reviewed, we can’t reliably prepare a summit,” Schaeuble says.
“I don’t think there will be any form of a breakthrough today because there’s no official paper on the table. Negotiations or discussions will actually be quite short,” Stubb says to reporters in Brussels before meeting of euro-area finance ministers. “I have low expectations of an outcome and I think those expectations have been raised way too high.” Stubb says he fears “a lot of air miles have been wasted” today.
#Eurogroup about to begin. Do not expect a breakthrough.
— Alexander Stubb (@alexstubb) June 22, 2015
Schelling: "there are no new proposals, all things we had proposed earlier, shows problem of communication within Gr govt"#Greece #eurogroup
— Famke Krumbmüller (@FKrumbmuller) June 22, 2015
So, while the politicians do what politicians will do (i.e. lie when it "becomes serious"), those who have a predisposition towards pragmatism are indicating that Monday's 'emergency' summit is nothing but a media spectacle that will produce nothing in the way of concrete results and is likely only good for giving the algos a few headlines to chase. That's bad news for Greek banks because with the ECB now deciding on a daily basis whether they want to keep the doors open and the ATMs plugged in, can kicking (Merkel now says officials will likely need a few more days to make a decision) is a dangerous game to play:
- ECB NOWOTNY: TO REVISIT ELA DECISION IN LIGHT OF TODAY'S TALKS
- NOWOTNY SAYS SITUATION ‘DIFFICULT’ IF NO GREECE DECISION TODAY
"ELA runs precisely for one day because there is a summit meeting (of leaders) to deal with the Greek question."
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As has been the case at many a 'final', 'last ditch', 'emergency' Grexit summit, all of the rheotric and ridiculous back-and-forth can be summed up in just two pictures:
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Was just thinking the same thing.
Optimism over what?
All I'm seeing right now is one hell of a lot of irrational exuberance.
Throw those pathetic Greek deadbeats out of Europe already.
bitchez (long overdue), ha...
Can we just get this over with already?! Seriously. Fuck.
I have better shit to do with my time then watch the Greeks play "just the tip" for the next few months.
Cut the cord, take the cash from the Russians and be done with it.
Amen to that
this movie is getting very old
Looks like "leaders" "summit" in Brussels is goign to get cancelled today, because apparently the Greeks did not bring a "serious enough" proposal.
eh oh el.
And the lube supply is running out.
Bahahah u think the Greeks are the problem. They are simply the first country to face the inevitable: bankruptcy. Its coming to everybody else, sooner or later.
The biggest problem for Europe is the flawed design of the EZ itself.
The only thing consistent here is Wolfie's interminable battle cry. You know when it stops screaming for them t be thrown out the game is really on.
This has been a foregone conclusion for five years.
Nothing happening here should move markets, but it does. That only tells us how close to the cliff we are.
Even a stopped clock is right twice a day, this place is , well you know.
Most of the commentator's economic analysis here is 100% spot on. What we here keep missing is;
1) We all fundamentally underestimate the political fanaticism of those running the show have for the status quo.
2) Their creativity in postponing the inevitable. For example, the Cyprus CDS' exposure should have blown up the entire system in 2013, but various organizations just voided all outstanding CDS' and wa-la the show kept on the road.
So take your snarky comment back. In an environment where criminals are not running the show and changing the rules to fit their needs -- this show would have ended in 2007 -- maybe 2008 at the latest. Some could even argue 2000, but that I think would have been premature.
Anyways, economically ZH and many of its commentators are correct. Its why so many of us are so confident. We don't know how/what will blow up the system, but when it does, absent the criminals running the show changing the rules again, it will be a bad deal.
Death to the EMZ.
They all know this shitshow is going to end with the Great Reset, they just don´t want it to happen on their watch.
Just more can-kicking...which is what every "solution" will be in perpetuity, until there's a complete breakdown in confidence.
The banksters and pol's would be hiding in their TEOTWAWKI bunkers if/when that happens.
fucking bankster, modern day robber barron, ha...
Imagine negotiating with him backin the 1940's...
Blah blah blah... pull the fucking trigger on Greece or shut the fuck up already.
Greece - is - toast
no matter what happens gs & jpm want you to panic
I still have trouble deciding whose avatar I like better -yours or Robot Trader's Mom. I DO prefer your moniker though.
That politicians of the SDP are now also criticizing further ELA extensions is telling. If it were only CDU politicians, this would not be noteworthy.
As an aside, Alexander Stubb is the finance minister of Finland, not Austria.
This is how screwed up this all is. Why is this a story again? Why is not a single fact presented in this so called story? And while reading total bullshit on total meaninglessness is there in fact a point?
https://youtu.be/vdAynVBCsmo
Have the Comex Gold Manipulators Been Revealed?
http://winteractionables.com/?p=21952
The Fed contracts out gold manipulators.....when one falls or becomes useless....they just find another one.
I would just say this about that.....watch China.
Goose the markets Monday, the bullshit is so thick its blinding.
The Greek banks are not the Greek government, nor are they the Greek people.
Since when did Berlin become the EU? Oh, right when Satan's minions created the banking system and corrupted, then conquered Europe without firing a shot.
I bet the Germans knew about the Goldman Sachs con job on the Greek numbers before they entered the EZ. They probably didn't care, Greece was just another export market to them.
Poor choices have consequences.
US will not give up their Nato aircraft carrier "Greece" and everyone knows this!
So move along, nothing to be seen here.
Really? So i guess the US ought to pay for it alone.
No, they are smart enough with Merkel to let the Germans pay.
When you see how the "Zonenwachtel" behaves then you know that the EU will (still) behave what the US dictates. The NATO will never give up this strategic NATO asset in the East.
So all EU members will meet to finilise any "deal" with Greece. Sounds wonderfull but do you think Spain, Portugal and Italy will agree if they don't gat the same "deal".
It's all a fraud. When Troika goes up against a member whos politicians will not accept bribes to enslave populations they just don't understand the situation they are in. Momentum in pigs is building every day.
If the Greek people, represented by their duly elected represntatives, want to continue to be under the control of a money issuing power, then a "deal" will be announced. If those people don't want to be under the thumbs of an outside issuing power, then there will not be a "deal" - that would take courage. Lord Acton's belief that sooner or later the fight will be the people v. the banks has been dodged and dodged and dodged and dodged...... ad infinitum.
Greece won't keep any promises anyway. They got bailed out on promises they broke prior. Why should it be any diffrerent now? To make matters worse, the Greeks and the ECB now understand Obama is worried about Greece falling into a trade pact with Russia, and Obama ready to bail out Greece. Even if Greece and the ECB manage this bailout, there will be another one down the road and these two parties will test Obama's willingness to pay off Greece with whatever they want. I suppose we don't have enough welfare recipients in the US already.
And how many thousands and thousands have been spent on all these meetings!