Why The IMF Will Reject The Latest Greek Proposal In Just Two Numbers

Tyler Durden's picture

As we summarized earlier, the latest "final" Greek proposal is in trouble: it may very well not pass the Greek parliament due to mounting objections among all parties not least in Tsipras' own Syriza. But a Greek parliament vote on the decision may be moot: according to Bloomberg, Tsipras will fly to Brussels on Wednesday, where he will meet the heads of the Troika: Draghi, Juncker and, of course, Christine Lagarde.

It is the IMF's head that will tell Greece to go back to the drawing board.

Recall that as the WSJ reported, "the Washington-based IMF has said Greece’s economy is already too heavily taxed and that too many additional tax increases would hurt economic growth, making it harder to pay down Greece’s debt."

Also recall that as IMF's Olivier Blanchard explicitly demanded, Greece needs to cut spending, not hike taxes - which it has patently demonstrated it is incapable of collecting - and especially 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."

So why will the IMF throw up all over the latest Greek proposal in just two numbers? Here is the answer, courtesy of Kathimerini:

The proposals contain 7.9 billion euros of measures, of which 7.3 are from increases to tax and social security contributions.

The IMF demands no tax hikes and pension cuts. Instead it will get almost exclusively tax hikes, amounting to 92% of the proposed measures, and just a few cuts, few of which actually impact Greek pensions. In short: the proposal is not only unsustainable, it is also unenforceable, something which the Germans - already facing a third Greek bailout - will be quick to point out.

Which is why tomorrow, after Tsipras is finished with the meeting with the Troika, he will have a new homework assignment: revise the "final final" proposal and come up with much less in tax hikes, much more in spending cuts: something which the already furious hard-line elements within Syriza will have a field day with.

Then again, we already knew all of that:


And all this takes place just 7 days before the Greek payment to the IMF is officially due, at which point Greece may or may not be declared in default, but when the ECB will no longer be able to say Greece is compliant with the terms of its bailout program and will have no choice but to yank the ELA.

Full Greek proposal below (pdf link).

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HonkyShogun's picture
HonkyShogun (not verified) Jun 23, 2015 2:32 PM

Tsipras = Pivot Man

PartysOver's picture

I am thinking he his Center Man in the Great EU Circle Jerk.  And he likes it!

The Limerick King's picture
An ode to the latest Greek deal/  Lagarde will now likely repeal/  Alexis has tried/  But she's unsatisfied/  Perhaps if he gave her a feel...
Vampyroteuthis infernalis's picture

I am telling you, it is a distraction for Greece to get temporary access to the ELA. Default day has already been determined. Dog and pony show to the core.

espirit's picture

Which Monday?

Place yer bets.






MonetaryApostate's picture

The Greece Diaries.....

It's time to turn the page Tyler...


Enough Greek Drama already, thanks.

Tall Tom's picture

You do not have to read it, do you?


Are you paying the bills for Tyler?


Who are you to tell Tyler what is enough?


I cannot believe your arrogance.


YOU, as well as I, are GUESTS at this forum.


You are as free to come and go as you please, as well as I am.


At least I know where I stand and do not demand anything from my HOST.


Tyler does NOT OWE ME.


Does Tyler owe you anything?

Soul Glow's picture

A new study reports that when cash is handed out it makes someone happy.  Oxitocyn is released when someone receieves money and it has a lasting jolt.  

But let us ask ourselves - what is money?  Is cash money?  It sure doesn't invest well without a savings rate, so it burns up with inflation.  This isn't a lasting thing.

So what does, and what money gives that jolt?  Well I submit gold does.  It is real, physically demanding, and pretty too.


The Study - http://theweek.com/speedreads/562197/shopping-doesnt-make-happy-but-cash...

pretty bird's picture

You guys make me laugh.  Greece ain't going anywhere.  Deals will be made.  And the rich will get richer.

Luc X. Ifer's picture

And this happened - just in time to change minds :)

*US 'spied on French presidents' - Wikileaks*

wiser's picture

Tsipras's game is to expose the predatory nature of institutions.... What country in the world can grow by hiking taxes in the stratosphere?? Tsipras proposed outrageaous measures just to expose the institutions... IMF didnt buy into it... EU did...


So, either we in this together or we steal from each other together

aVileRat's picture

The greek story remains relevant if not for the loan exposure then for following through on the ECB's promise after Cypress defaulted that EU Parl. would have the markets back. I believe their ECB agent's words were: 'whatever it takes'. Which is a fundamental underpinning of the entire Keynsian plot that markets have followed (with marginal success) since 2008.

What ZH posts argue is: "At what point is the backstop destroying the ecosystem?" And the answer, at this point, is that Greece is drowning out secular and company specific asset selection, as proven by your rant 1 tranch above Tall Tom.

If the greek tragedy (lower case g) were to resolve, then ZH has a second ed. to show that ECB 'fire walls' created to prevent a liquidity shortage are largely insufficent. After 5 years, this is finally being 'priced in' by mainstream investors/analysts and ZH deserves to ride this one down, until the Michael Lewis book. Or Becky Quick cover. Either or.

But I've got an axe on this one, so I'll refrain from speaking on how this Troika will end.


acetinker's picture

Tom I agree w/you, Tyler(s) do not owe me anything.

That said, I see only two options for Greece (and Portugal and Spain and Italy- and for that matter, Germany and the high and mighty US):

1) Repudiation

2) Subjugation

One choice leads to war.  The other does, too.  It'll just take longer to materialize.

My head hurts.

John_Coltrane's picture

Bravo Tom.  My sentiments exactly. 

This is the only forum where I bother to regularly read and contribute.  Thanks to the Tylers on the behalf of all the long time ZHers.

boogerbently's picture

....you got a little brown something on your nose.


I only resent the increase of advertising which interrupts the flow of my reading.

Proofreder's picture

Adblock +

Haven't seen a single ad since installed

Kinda miss the Ukranian Cuties tho ...  Mature Russians wern't bad either. Do NOT miss the auto-start audio shit.

realmoney2015's picture

Don't read it then. I thought all of us here are smart enough to understand the free market and how it works. Not only did you 'read' the article, you also commented on it, thus increasing its popularity.

I actually am watching this Greece situation. What happens there could soon happen on our shores. I am watching how the banks, the governments and the people are reacting to the situation. The greeks are preparing for capital controls and begining to hoard cash. I also think it would be smart for Americans to take note and prepare themselves. After the first dominos fall, the later ones fall much quicker.

Get out of the banks! Keep a few months expenses in cash. I also think silver will become extremely valuable for trade in my lifetime (perhaps within the next decade). I make candles with silver coin prizes (www.etsy.com/shop/ScentSavers) and give them as gifts to my friends and family. They have led to great discussions with my cousins, aunts, and even my grandparents. Some have even started making regular trips to their coin store to exchange their FRNs for real money!

acetinker's picture

You're way early and way too serious for this time.  Yeah, you know that this whole system is based on confidence, and that credit-money is a sham.  Good for you!

Now consider, for a moment that you are a tiny minority of one, and that as long as your fellow travelers believe the con, it will continue.

Never mind Silver.

Never mind Gold.

What can you do that has actual value in a world that is very different than the one you currently inhabit?

etsy my ass!

prefan4200's picture

@espirit - I see what you did there.  No designation of year for any of the 5 dates.  Clever.....

Proofreder's picture

Not so

Those Mondays give a clue as to the year - suggest you consult a calendar.

Another Vapid Comment ...

prefan4200's picture

2015 isn't the only year that those days fall on a Monday.  Why don't YOU consult a calendar, moron.

holdbuysell's picture

espirt: "Which Monday?"


Monday, September 14, 2015. The day after the Shemitah year ends. A perfect set-up.

And I do believe there is a payment due on the previous Friday, setting up the fireworks perfectly for the actual Shemitah end and main Sunday night event.

Anyway, all pure conjecture, notwithstanding that the Shemitah years have resulted in some serious fireworks in the Fall time period.

boogerbently's picture

No Monday.

these things always happen after market hours on Fri/Sat.

IG's picture

I think everyone is shooting from the hip.

HardlyZero's picture



Greek PM Tsipras to meet IMF, EU and ECB heads Wednesday

Greek Prime Minister Alexis Tsipras will meet European Central Bank President Mario Draghi, IMF head Christine Lagarde and European Commission President Jean-Claude Juncker on Wednesday, a statement from his office said.


The meeting would take place in Brussels at noon, hours before a meeting of the eurogroup of finance ministers to discuss proposals on how to end a logjam in debt negotiatons with Greece.

Show or No ?   Pucker up.

keremetski's picture

Is Turkey still willing to join EU?

Megas Napoleon's picture

The EU joining Turkey is more likely.

falconflight's picture

Too bad DoucheButtBoy isn't here to catch it...

knukles's picture

Shhhhh....  Be still .....
The NWO has already won.

                                                            Quit fighting
                                                You're already been assimilated

                                         Take your soporifics and close your eyes
                                                    You won't feel anything

Ultimate_Warrior's picture
Ultimate_Warrior (not verified) HonkyShogun Jun 23, 2015 4:28 PM

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espirit's picture

Is that $Dong or $Zimbabwe?

TheGreatRecovery's picture


Only a fool would give his personal information to someone using a fake name on the internet.

I bet you haven't made a single penny from ads posted here using fake names.

HardlyZero's picture

Greek banking collapse quickens in 20 hours.

rosiescenario's picture

Good to see our Nigerian friends are posting here...........

zorba THE GREEK's picture

you can say that again

zenon's picture

Bullshit. The IMF has been pressing for a VAT increase all along. Now they say that they are interested in pro-growth policies and that the Greek proposal relies too much on tax increases. Since when?

ATM's picture

Wait a second. We were told by the Democrats in the US that economic activity picks up when you increase taxes. Is he IMF not "Progressive" or is it that the party line is not immutable but flows with the winds?

Stanley Kubrick's picture

Grexshit:  The NeverEnding Story

I'm over it, can we finally turn the channel and watch the next shit-show?

Tall Tom's picture

Nobody is twisting your arm to read about this or comment about this.


Perhaps someone else is paying you to do so on the other hand?


If that is the case then somene may be compelling you to do it...for compensation of course.


But they are still not twisting your arm. You can terminate your employ if that is the case.

Tall Tom's picture

I get junked for letting somene know that they are free, that they have Liberty, that they are not FORCED OR COMPELLED TO READ OR WRITE?


Well that is okay...They are certainly free to do that.


But isn't that what ZH is about?  Freedom? Liberty?


I guess not. The Socialist Stateists trolls will quash the idea of Freedom and Liberty everytime that they have a chance.

Parsecs Taxi's picture
Parsecs Taxi (not verified) Tall Tom Jun 23, 2015 5:54 PM

It's about the butthurt.

falconflight's picture

I gave you an up arrow, even though you smeared as a "Socialist" on another article.

Dindu Nuffins's picture

Relax. If people want to vent their frustration a little, that's also their liberty. This is not about socialist statists with agendas, it's about the ennui of regular people watching a drawn-out theatre. Today we yawn a bit, and tomorrow maybe we'll have renewed interest, but we're also free to make a few bored remarks.

Stanley Kubrick's picture

Nope, no one's paying me to read about this or comment on the shit-show.

I'm just oh-so-tired of the world holding it's collective breath on Grex-shit, only to watch the can getting kicked over 'n over to infinity being propped up by the usuual suspects and thier bullshit n' bailing wire.

Until this thing breaks and normalacy is allowed to return to all markets, will I be satisfied... mo better when consequences are distributed to those that most deserve 'em.