The Unspoken Tragedy In The Upcoming Greek Bailout

Tyler Durden's picture

A day after Tsipras stunned both his peers at the Eurogroup summit, and not to mention his fellow parliamentarians, many of which already voiced their opposition to what has been dubbed a "capitulation" by the Greek prime minister over threats of a financial system collapse if there is no deal within the week, many questions remain:

  • will the Troika come back with even more demands such as boosting the hotel and restaurant VAT even higher (economic suicide for a nation where tourism is the only viable industry)?
  • will the IMF concede that the Greek proposal will ever be sufficient if it does not incorporate the demanded pension cuts?
  • will the deal pass Greek parliament; will a deal come too late to save the insolvent Greek banks?
  • will Greece get a debt haircut (paradoxically as demanded by the same IMF which is also demanding spending cuts instead of tax hikes, over the objections of the ECB which holds the vast majority of Greek debt and is leery of impairments)?
  • will the German parliament agree to validate any deal that may end up splitting Syriza in two or more factions?

While stock markets are convinced a deal is inevitable, after all the can must be kicked as it has been for the past five years...

 

 

... that may be more problematic than the algos expect. Here are some quotes showing that despite Tsipras' capitulation, few if any are ready to follow in his footsteps:

For example Austria:

Austria's finance minister said on Tuesday there would be no agreement on new Greek budget proposals unless there was a concrete plan showing how they would be carried out. But he added: "If there is no programme for actions that says what measure will be implemented when , we will not agree to it." "It should not, cannot, must not happen that a third (bailout) programme is started so to speak through the back door," he said. (Source)

or Germany:

 Members of Chancellor Angela Merkel’s coalition said the International Monetary Fund’s backing for a financing plan for Greece is key to German parliamentary support for a deal.  “If there’s to be a payout, we need a detailed calculation by the IMF,” Antje Tillmann, the ranking Finance Committee member from Merkel’s Christian Democratic bloc, said by phone. “It has to add up to something sustainable.”

 

“For us, the IMF’s verdict is the benchmark for a credible, acceptable solution,” said Joachim Poss, deputy caucus leader in the lower house for the Social Democrats, Merkel’s junior coalition partner. (Source)

Or the IMF:

The IMF is still unhappy with key aspects of Greece’s new economic proposals and German officials were irritated by the speed with which the commission welcomed them, warning that much work needs to be done... IMF representatives have told European officials that they are also not satisfied yet by Greece’s broader economic overhaul plans beyond its budgetary promises. The IMF sees a wider, business-friendly shake-up of Greece’s economy as essential if the country is to improve its long-term economic growth. (Source)

Or impartial third parties:

“Very large problems remain for a solution,” said Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington. “The Greek government -- somewhat surprising for a self-professed reform and anti- austerity government -- seems to have merely agreed to impose a lot more austerity through higher taxes, but offers relatively little commitment to genuine economic reform.” (Source)

And certainly Greece:

“Personally, I cannot support such an agreement that is contrary to our election promises,” Dimitris Kodelas, a Syriza lawmaker associated with former Maoists, said in an interview. “I do not care about the consequences of my decision.” (Source)

The litany continues, and yet, somehow, we expect that in the next 48 hours, the machinery will be again in motion to kick the can once again for third time.

What happens then is basically a precursor to a third bailout package, one which according to previous reports, will be about €35 billion if and when a deal gets done.

At which point, assuming the funds are wired to Greece, the Athens government can congraulate itself on a job well done, even though, as some critics above pointed out, it "merely agreed to impose a lot more austerity through higher taxes, but offers relatively little commitment to genuine economic reform."

One can ask: why didn't any of the previous government impose higher taxes in the past 5 years? The answer is they did, and nobody paid them. And this is why this latest pre-bailout will also be a failure, followed perhaps by bailout #4, #5 and so on.

All of this is known to everyone.

What isn't, or perhaps merely needs refreshing, is that assuming all of the above is resolved in a satisfactory matter, what will be the use of funds of this latest and greatest bailout of Greece.

Sadly, the answer is also well known. We showed it first back in 2011 when we asked, rhetorically, "where does the Greek bailout money go?"

So for those who don't recall, here is a refresher from Macropolis, which a few months ago showed that of the €226.7 billion euros disbursed to Greece since the first Greek bailout, an equivalent to almost 125% of Greece 2014 GDP, "the combined allocation to the Greek state’s operating needs was just 11 percent of the total funding, at circa 27 billion euros."

 

That's right: hundreds of billions "spent" to rescue Greece... with the vast amount of proceeds used to promptly repay the very sources of these funds: the IMF and the ECB.

So will this time be any different, and will the Greeks receive anything extra? Alas no, because here are the near-term Greek debt interest and maturity payments...

 

... and the longer term.

So to emphasize, just in case there is any confusion: whatever money Greece receives as part of its third pre-bailout, followed by another full-scale bailout which according to SocGen will amount to another €60-80 billion or more, followed by another... until all Greek collateral - including its gold - finally runs out, will be used first and foremost to satisfy Troika, pardon, creditor claims.

Which means that of this widely touted €35 billion, Greece will be lucky to pocket a little over €3 billion. However, considering that is how much the Greek government has already extracted out of various public pensions and municipalities as part of its quasi-capital controls unrolled previously to preserve the illusion of solvency, after the hard fought "deal" finally is inked, the Greek population will be left with...

€0.

And that, sadly, is the unspoken tragedy in the upcoming Greek bailout. Because while it is one thing to bend over backwards to Troika interests if one at least gets something out of the deal, we completely fail to see why the Syriza government is risking its entire reputation, and doing what it is doing when in the end the Greek population which elected the "radical leftist" party with such wild hope and optimism has absolutely nothing to show for it.

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Hitlery_4_Dictator's picture

The Grexit - part 1: The never ending story
The Grexit part 2: It's Happening This Weekend.... For Reals This Time
The Grexit - part 3: The epic saga continues
The Grexit part 4: Germany Strikes Back
The Grexit - part 5: Greece pivots
The Grexit - part 6: Enter the IMF Dragon
The Gexit - part 7: Loan sharknado
The Grexit - part 8: the bankers dozen
The Grexit - part 9: the bailout begins
The Grexit - part 10: atms the new frontier
The Grexit - part 11: Drachma fever
The Grexit - part 12: fiat wallpaper blues
The Grexit - part 13: drackma park
The Grexit - part 14: terminator euro II
The Grexit Returns: Raiders of the lost bailout
The Grexit - part 15: pretty in pink slips
The Grexit - part 16: grumpy old bankers

John Law Lives's picture

The Grexit - part 17: Breaking the Plebs 2: Electric Boogaloo

pods's picture

Can somebody please start bleeding out of their ears, eyes, or ass?  

Need something, anything to stop these Greece stories.

They are like clowns coming out of a Volkswagen.

pods

Philo Beddoe's picture

Pretty sure Budd Dwyer covered Greece a few years ago. 

One more story....just one more...and I swear..... 

The Steaksmith's picture
The Steaksmith (not verified) Philo Beddoe Jun 23, 2015 1:12 PM

@pods

http://www.zerohedge.com/news/2015-06-23/visual-timeline-economists-gree...

 

From my humble POV, there has been very little 'unspoken' about this, more than 4 years in service. FFS - The Greece story has more lives than killing Bin Laden for the "nth" time, & both stories initiated during the same timeframe.

pods's picture

Lol, so many Greek Tragedies, so little page views.

Or something like that.

Each and every one of them, at one point, says basically "Greece is fucked" or "Greece is unfucked."

Like watching the old school tennis matches where they volley for a half hour for a single point.

pods

NoDecaf's picture

Why don't they make an annual holiday of this? Merry bailout day! Ho ho ho!

The Steaksmith's picture
The Steaksmith (not verified) NoDecaf Jun 23, 2015 2:09 PM

@pods - I was thinking along the lines of a 5 day cricket test match (that ends in a draw) lol

TahoeBilly2012's picture

I actually just had a flash back and couldn't remember what year it was....not kidding. That was weird. If I was Greek, I think I would have self immoliated by now, but marking time here at home....it's like a hall full of mirrors.

Haus-Targaryen's picture

If the Parliment goes along with it -- they deserve all the austerity that Schäuble can muster for them. 

Philo Beddoe's picture

Budd, turns out I found Don! He is fighting crime with a negro in Florida. 

https://www.youtube.com/watch?v=cNA3OA7cY5U

Sages wife's picture

  < Greek "issue" resolved

  < Fed raises rates

 

"...and they're neck and neck..."

Theosebes Goodfellow's picture

Ain't that no shit, Sage's wife. I'll wager dimes to donuts we'll see the real live Santa Claus before either one of those two happening. Ol' Saint Nick is much more plausible.

John Law Lives's picture

It is a way of goosing the "markets" ever higher. 

1. Crisis = sell-off

2. Crisis resolved = "markets" goosed higher than before the sell-off

3. Go to step 1

FUBAR.

greenskeeper carl's picture

the bailouts will continue because its really just a backdoor bank bailout of all those big commercial banks that loaded up on greek debt due to its higher yield. And we all know those banks are going to get bailed out, one way or another. Thats all that matters. Sorry greeks, until you elect a government that looks out for your interests instead of politics(or just get rid of government all together, since it is the source of most of your problems) this will be your life.

Bobbo's picture

It would appear that this word, "Bailouts," is as Orwellian as any.  I do not think I would like having my boat bailed out that way if my life depended on it.  Then again, we do strange things when we combine denial with stress.

KnuckleDragger-X's picture

Yeah, its getting to the point that it has become pure farce. Of course, no matter what, the tragedy will arrive and everyone will be blamed but the guilty.....

ANestIOS's picture

...answers to all these questions - and more - at the next episode of SOAP

Ultimate_Warrior's picture
Ultimate_Warrior (not verified) Hitlery_4_Dictator Jun 23, 2015 4:39 PM

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Protector_Romeo's picture
Protector_Romeo (not verified) Hitlery_4_Dictator Jun 23, 2015 10:15 PM

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OrangeJews's picture
OrangeJews (not verified) Jun 23, 2015 12:33 PM

OT but I'm currently using Euros... I have coins in the two gaps of my desk to keep it from squeeking.  Works pretty well.

Abitdodgie's picture

Stop with this Greek stuff nothing is going to happen.

walküre's picture

Germany WILL NOT PASS a 3rd bailout.

Winston Churchill's picture

So you're saying German politicos are not blackmailable ?

NSA mean anything to you ?

Tall Tom's picture

Does OIL mean anything to you?

 

Douchebunk is dead. It is currently a Zombie and insolvent.

 

Bundesbunk cannot bail it out. Where in the hell is Frankfurt going to shit tens of TRILLIONS of Euros?

 

Greece is a sideshow distraction from the main event.

 

The Germans are totally fucked.

 

How do you spell DERIVATIVES MELTDOWN?

 

It is easy...D-O-U-C-H-E-B-U-N-K.

 

Back in June, 2008, if I told you that Lehman Brothers wuld not exist in October, 2008 you'd have called me a nut...as you do now.

 

You had no clue about their MBS exposures.

 

What is it that I am telling you?

 

Sometimes what is NOT REPORTED is much more important than what is reported.

 

 

Tall Tom's picture

It will be really difficult to Bail Out Greece when the Germans will be Bailing In Douchebunk.

 

Impossible, I'd imagine...IMPOSSIBLE. And Brussels will be powerless to do anything about it. Even the IMF will go down...along with the implosion of the entire Western Banking System.

 

Credit Freeze II anybody?

 

Got CASH?

Got Gold and Silver?

Got Guns and Copper Jacketed Lead with Smokeless Powder encased in Brass Casings?

 

Got FOOD? Water? Stocked up on TOLIET PAPER (a must)?

 

Are you prepared?

 

We are running out of time.

walküre's picture

Most Germans are in a slumber. They don't realize that when the elites discuss Capital Controls, that includes all EU citizens.

 

Philo Beddoe's picture

I have noticed your posted taking on a certain truthiness lately. Your name wouldn't happen to be Porter? 

https://www.youtube.com/watch?v=BKHoMi-U8g4

Tall Tom's picture

Payback is a beeyatch!!!

 

Let it all burn down. Burn it down to ashes.

 

(They should not have stolen from me. Now I work to collapse them...to crush them...to expose them for the vultures which they are. Mother was right about that...One day I would grow up. And I did.)

walküre's picture

Depends. Germany's Gabriel says "We are not blackmailable" just today. The rhetoric is getting hotter.

There won't be a 3rd bailout. They may or may not complete the last tranche of the 2nd bailout but unless there are tanks in the streets and we have a complete market meltdown this fall, there will never be a 3rd bailout.

Tyler's changed the headline after my comment re. 3rd bailout.

angel_of_joy's picture

Then the Euro will die of a slow and painful death (as rightly deserved) !

nomofiat's picture

how naieve, only germans still believe in the empty rethoric of their politicians.

Do you even have a serious party opposing the Euro? oh yeah, AfD mwoehahaha

 

walküre's picture

What does that have to do with anything? Greeks were naive enough to vote Syriza and think the unicorns would return shitting skittles.

angel_of_joy's picture

Of course it will ! There is no EU and Euro without permanent bailouts (or should we call them subsidies ?!) More importantly, here come some new bailouts for the following countries (in no particular order): Portugal, Ireland, Italy, Spain, Slovakia. At some point you will be expected to bailout FRANCE ! My suggestion would be to re-occupy it... /s

Kaervek's picture

I don't get why anyone thinks the Euro is dependent on the Greeks using it. Yes, some banks might get into problems if Greece defaults on them, there will be bail-outs and bail-ins, the people will get fleeced properly, there might be a devaluation against the dollar, but even the dollar isn't going to be that strong forever.

 

I think the whole bailout process is basically a money transfer from the european people to the IMF. They lent money to the wrong people (they knew greece wouldn't be able to pay them back) and now instead of taking the loss they want the europeans to bail them out (including interest). The whole "we need greece to stay" rhetoric is just a farce to keep everyone paying for risk they didn't take, kicking the can down the road is way more profitable than taking those losses.

Oh regional Indian's picture

Now thta is just plain wrong. Sad that we are descended into such a pit on the herding of money men.

A pox on all vile money men. To the few good ones in there, leak stuff, anonymously if you have to...

My contribution to whirled peas... real meditation muzzik....

https://www.youtube.com/watch?v=Gnvvj6EO3Y4

skipjack's picture

Tsipras capitulated because the NSA got him on camera fucking a goat. If he'd only fucked a boy the LGBT community would have gone to bat for him.

Stumpy4516's picture

Step back and look under the covers.  You will Tsipras and Yanis have been and always were in bed with the bankers and the EU.  Everyone focuses on the piece meal supplements to Greece but pay little attention to the raiding of the pensions, and other pools of funds, and the attempt to raid the local govt funds (which local govt's refused).  And most importantly pay attention to how loans go to banks to repay the EU (little help to the Greek people) but with new collateral stipulations.  Watch the collateral game, on any default they plan to own the physical assets of Greece through the collateral, they plan to own Greece itself.

Everyone thinks Tsipras and Yanis are playing the EU but they are really playing the Greek people and are truely traitors. 

NotApplicable's picture

Yup, this whole story is nothing but the creation of THE mandate to "Save the EU!" from the fiscal insanity of its member states.

Because as we all know, without a fiscal union, there really is no "union" to speak of, long-term.

The original compromise which led to the creation of a faux union set the gears in motion for what we're seeing today. It was obvious back then, just as it's obvious now.

But hey, at least GS helped the EU by bringing in a nice, prepackaged scapegoat to distract attention away from the failure that is known as the rest of the EU not known as Germany.

eforce's picture

Since when do socialists have principles?

lawyer4anarchists's picture

We can't know what is real and what is not. Everything they spew is lies.  Intentional lies.  Something is "released" so that any position can be "justified".  The whole thing is a scam. WE know that.  It matters not which way it actually tilts.  Those running the money scam with the gov't guns always win, because the people allow them to.  The people are confused and lazy.  It doesn't look to be ending anytime soon. http://www.thetruthaboutthelaw.com/they-promote-every-side-to-constantly...

Racer's picture

Like going to one loan shark to pay off another loan shark. In the end all it leads to is bankruptcy

CPL's picture

HA...no they usually "erase" the debtor with a pig farm after being put through a wood chipper.

Almost Solvent's picture

And some broken kneecaps.

CPL's picture

Jazz Hands!  Ta da!  The final answer is zero.  nothing.  zlitch.  nada.  vapour.  squat.  zip. bupkis.  Now that the presidence has been set, the same people will start doing the same thing to the rest of the NATO coalition.

Dragon HAwk's picture

No Way is Greece worth Zero.. why that's almost a positive number... 

CPL's picture

They are all up to the eyeballs in debt.  Not a single one of them has been solvent in Europe for a 1000 years.  At this point Germany has been loaning money to them they won't have for 400 years by asking the IMF (that doesn't have any money) to give them money (that doesn't exist) from the coffers of the ECB which is a trade union based on interstate trade (again they don't have any money).  In the meanwhile the greek government is printing money under the table to fund pensions, to empty them in order to give back to people that aren't giving them anything.

It's the old three card monte scam with a ponzi twist, except the house nor the mark has any money.  Except the Bozobux they are all printing under each other noses, which aren't backed with anything.  Which pretty much makes them worthless as a form of payment.