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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walküre's picture

Powerball, man. That's where the action is!

Clesthenes's picture

“Pensions and wages account for about 75% of primary spending; the other 25% have already been cut to the bone.”

Of course, by “pensions and wages” is meant those of government employees.

It’s the same problem we have, or will have, in the US.

For decades, the SSAdmin collected more taxes than were necessary for paying benefits; the surpluses were “invested” in non-marketable US Treasury securities.  The total loaned to the UST now stands at $2.7-trillion.

And we’re told SS taxes are no longer sufficient to pay SS expenditures… that the SSAdmin will have to get extra cash from… somewhere.

Current options are to raise this needed cash by cutting benefits, raising taxes or more Treasury debt.

Funny… isn’t it?  No one suggests RECOVERING the $2.7 trillion that was loaned to, or stolen by, the US Treasury.

Normally, when Congress votes to spend money on various projects, it is necessary to also vote a new tax to raise the needed money.  The SSAdmin taxes bypassed this necessity, and allowed Congress and special interest groups to plunder the cash without a whimper from taxpayers… those living and, of course, those yet to be born.

Along with the options provided by professors, bureaucrats, politicians and special interest groups (those that stole the $2.7 trillion), I SUGGEST that a group of private citizens organize and investigate and collect the booty that was illegally spent and return it to those from whom it was stolen.

Why private citizens?  Really, who would expect those guilty of theft would punish themselves for it?

Now, the question is, “How is it to be done?

falconflight's picture

Pensions and wages account for about 75% of primary spending...therein lies the rub.   

Who can justify a society that collectivizes that much taxpayer money for that purpose?

The Ingenious Gentleman's picture

The pensions are a lovely idea from the pensioner's perspective, but completely unsustainable, as the working members of Greek society have shown their disdain for the program by refusing to pay taxes. 

The pensions will have to be cut again. The only alternative is no pension at all if there is no deal and Greece exits the EU. Sad but true.

falconflight's picture

JMO, but Greece and the Greeks are a great manifestation of what Bastiate described in The Law.  Legal plunder...

Crocodile's picture

That is what happens when their is no "Treasure" in a so-called "Treasury"; like everything else that comes out of D.C.; you need to use the antithesis to get to the truth...For example, "The Dept. of the Treasury" is really "The Dept. of Debt".  "Affordable Healthcare" is actually "Unaffordable Healthcare" and the "Patriot Act" is really the Treason Act" and on it goes..Cheers!!

dreadnaught's picture

you forget The Department of Pepetual War

youngman's picture

Someone today in Greece said there are more employees for the Greek train system than there are people that ride it.....that my friends is a government nightmare....to many employees doing nothing but draining the coffers

shovelhead's picture

In America we, call it Amtrak.

Crocodile's picture

Laughing hard...thank you very much. 


Any more talk on the infrastructure bill...hope not..the false flag events always happen right before the debate is taken up.  Another example was the NSA's hacking the Federal Employees before the Cyber-security debate took place.  Now the taxpayer is being billed for all the employees and former employees to get 18 months of ID theft protection..CSID is the Texas Based company that got the contract.  The problem is they give it to the individual employee; yet the data stolen would have included spouses and their children as well, which are not covered...a scam and it was not China. I digress.

Crocodile's picture

In America we spend a dime to make a penny.

Megas Napoleon's picture

Not surprised at all, Greece's public sector needs carpet bombing,

but on the other hand the rest of the fellow europeans were very upset that the goverment parties "New Democracy" and "PASOK" that were rulling Greece for the last 40 years and were responsible for such monstrosities, lost the elections. They openly prefered the corrupted old guard as interlocutors than syriza party. We must also consider the highly corruptive role of european giant companies such as siemens in the Greek public sector and the harboring of wanted bail jumbers by Germany.

Truly Inspiration's picture

Greece want to save 1.05% of GDP by 2016?

I'll have a solution - cut the military expenditures of Greece by 1.05% from 2.5% to 1.45% of GDP

And Greece will still be one of the leading countries of military spendings in Europe (% of GDP).  But no forget it .... that's toooo easy

John_Coltrane's picture

If you study 20th century Greek history, you'll realize they need a bloated military to pay for the upcoming expensive military coup that will follow the collaspe of Greek society due to too much debt and not enough work.

The Ingenious Gentleman's picture

The IMF already vetoed such a proposal because it is prohibited in its rules from requiring military cuts as part of a bailout programme.

With a warped enough sense of humor you could find that amusing.

Megas Napoleon's picture

That would be nice, but not every country is blessed with neighbors like switcherland, some have to deal with criminal troublemakers like Turkey that threatens constantly with casus beli for the last decades and the EU looks the other way.

Atomizer's picture

Call the IMF EU suicide Hotline 800.548.5384. Let them know you will not undertake new country club fee increase to fix a broken fence. 

jubber's picture

So much for that !


IMF Chief Lagarde Said To Tell IMF Board She's Optimistic On Greece Deal -- BBG

tttan's picture

The troika is with the government of EU and cannot allow the Greek to win because politically it will be bad for all other incumbent european government that will have election soon, as all opposition parties will campaign for anti-austeirty platform and kick the current government out. So greek will be sacrificed

kevinearick's picture

Drive by Religion

Drive-by christianity has run its course, and is now on par with orthodox christianity, catholicism, islam, and all the other bait and swap religions that majorities have chosen to employ, to imprison themselves in the past. Maintaining the status quo is the majority’s focus, so you may as well set your own priorities, and learn for yourself.

Albert Einstein identified a small part in a very large circuit, and didn’t understand the connections. Archimedes identified many pieces and connections, far more than anyone else, in History, and yet there are far more pieces being made, to be identified yet. On this planet, humanity will never catch up to the intelligence of the planet, and the universe is a far bigger place.

From the perspective of the universe, humanity is artificial intelligence, coding AI to implement automation, making itself ever more redundant. If you listen, the corporate politicians simply employ language created by others, as an echo chamber, trying out words and repeating the ones that resonate, with the crowd, which wants to talk, do nothing, and be paid for the privilege, and to pretend to work, to assuage what passes for a conscience.

American ideology is bankrupt, like all other nation/states, and Donald has the most experience with bankruptcy, beating the banks at their own game, which says a lot about the US Constitution and nothing about labor. Capital and the middle class employ bankruptcy in an artificial war to draw you in, and arbitrarily assign debt to your children. The middle class says it is aiming at capital, its aspiration, and shoots you.

When your children come home to complain about their spouses, send them back. If your parents complain about your spouse, send them packing. Like the man said, “never marry an American,” the most ignorant collection of petty tyrannical landlords ever assembled. Consumption is 75% of the economy, so subsidize it some more, on the backs of aborted children, with accrual accounting and revolving immigration, brilliant.

In case you didn’t know, the majority of cheap labor is plowing in through visas, for free money, to drive the university complex on the margin, not from Mexico. Even the least skilled can find better places to go. Putin can take one step into Ukraine and incapacitate Europe, again, because America wants what every other nation/state wants, something for nothing, and that lasts only so long as slaves are multiplying to increase rent/wage at the abutment, always on a bridge to nowhere, in a city, always under construction.

Funny, the critters skip right by Genesis, and head straight to Revelations, where they go no further, missing God all together, always wanting to know the end before beginning, seeking external security for internal insecurity, which is why labor works for its children, rather than the moneychangers, and why the majority seeks them out, for extortion. Prepare your children by encouraging them to be themselves, at the required distance, to employ the gravity.

Arguing with a reflection in a mirror, created for the purpose, is a waste of time. Life is about how you educate yourself, not how well you know the empire. Having lived next door to hedge fund managers, they are the least of my concerns. Anyone can take advantage of stupid with a few lines of code. You have two feet for a purpose. Pivot.

Expect the majority to attack your marriage, because that is all they know – spiritual, intellectual and physical poverty, a false choice chasing its own tail. Wannabe landlords complaining about landlords, passive investment, is not an economy. Money, an accounting token, doesn’t work; only you can do that. That steering wheel at the Fed is just for show, to give capital something to do, manage busy work.

Let the majority think that you are an island, until it finds out otherwise for itself, when it’s far too late. Most of global trade is a waste of time, along with the infrastructure supporting it, a game all politicians play, manufacturing and distributing shoddy merchandise, with a premium for advertizing content, brand control, a game in which the one with the most toys wins, what they don’t know.

From the perspective of labor, there is no difference between any of the religions; capitalism, socialism or communism; feminism or chauvinism. They are all a means to an end, something for nothing, which doesn’t work, except as a counterweight. Politics and religion, representing themselves as science, scaring the ignorant, made ignorant for the purpose, is the cause of climate variability, and why finance is running the country, into the ground. You don’t need a degree from Wharton to bypass a bridge to nowhere.

Only the followers of American leadership are unaware of the magnitude of its incompetence, and they have no intention of waking up. Churchill had it wrong, and Churchill had it right. It is not American leadership, which is only incrementally more efficient at language than its replicas, that is restraining Putin. It is not America that will do the right thing, after America has tried everything else. Some gangs are legal and some aren’t, but in no case is their intention to work.

The critters mimic nature, with the intention of shorting it out, so they don’t have to think or do for themselves, calling the result intelligence, and sit around complaining about discomfort because walking is beneath their dignity, but they consider themselves an authority on how your children must be educated, the United States, a force for good, versus evil, like every other dictator, but with more scapegoats in more levels.

What more do you need to see?

Farmer Joe in Brooklyn's picture

Cliff's Notes..?

And did I miss something? What the fuck does all that rambling have to do with the topic of Greece? 

Crocodile's picture

Stupid is as stupid writes...referring not to you, but the one you responded to...Kevin-Ear-Rick

shovelhead's picture

Let it go.

Be happy it keeps him busy and not rummaging through your garbage cans at night.

walküre's picture

I've seen you post this now a number of times. Finally had a chance to actually read the document from start to finish. Not a waste of time as some would probably argue.

Do you have children? If so, how do you pour into them and mold them so that your wealth of wisdom is not lost when you die but instead lives on in your children? Furthermore, how do you equip your children properly so they can teach their children the wealth of your wisdom and keep the legacy going?

This baffles me. I don't think anything else really matters. As a man, you take a wife and as a couple you create life. Then you and your wife raise this young life and stick together through thick and thin and hope that your offspring comes out ahead despite all the challengens that life throws at you.

Very difficult to say the least. As guys we don't spend nearly enough time to be the best we can be in this quest. Instead so many guys wasting time on themselves without a proper game plan.

Zgangsta's picture

Continue sucking on Europe's teat in exchange for taxes that nobody will ever pay or collect? Sounds like a big win for Greece.

Atomizer's picture

SDR hors d'oeuvres and sparkling donkey piss punch bowl. 

joker2thethief's picture

....and the clocks were striking thirteen but there is no Grexit.

Dre4dwolf's picture

Let me put it this way.

No Greek is paying Vat Taxes.

There is no way the Greek govt can enforce any of its "taxes". . . its embeded in the culture to avoid taxation , Greece is not America where people rat eachother out to govt and if you dont pay taxes they come and take your shit, no Greek police officer will drag an elderly man out of his home because of passed due taxes . . . and no customer will rat out a hotel because by paying cash you get a discount . . .

All this "Vat" Tax will do is make it harder for Greeks to get medicine from abroad because it will be priced out of reach for the average Greek citizen . . . 


This entire "deal" is not a "deal for Greece" its a Deal for Athens. . .  this is about keeping Athens afloat at the expense of the rest of the country.


And let me translate that document (from Greek to Greek) reading between the lines so to speak.

That is the biggest pile of bullshit I have ever seen, the wording is vague, meaningless its "fluff" its Greek bullshit, Tsipras is lying through his teeth , perhaps just to get another check in the mail at which point he will not make the next payment, if Germany is dumb enough to fall for that . . . well thats on them.


I just want to share with you how disfunctional the Greek govt is. . . . my cousin in Greece is getting "tax bills" in the mail from 6 years ago for cars he doesn't even own.

The Greek govt has no idea whats going on, what they are doing, who owes what, and they cant enforce any of it they simply do not have the man-power or the organization or capability to track transactions to do so.

Collecting taxes in Greece is almost impossible, only the idiots are paying.

walküre's picture

The status quo is that we're keeping Athens afloat at the expense of the rest of Europe...

at the expense of the rest of the country.

Time to switch it up a bit, you know? Have their country pay for their infrastructure and the bloated layers of bureaucracy. They've got so many layers of fakelaki, it makes a mille-feuille cake blush!

jmcwala's picture

Had to look up fakelaki- baksheesh just to the east of Greece.

jmcwala's picture

Eye opening. Thanks for the ground level view.

HardlyZero's picture

Unlike living on an island (Cyprus) I'd expect a Greek landowner Exit strategy would involve expensive off-road vehicles, loaded up, speeding away north.  To return occasionally to camp in one's home.  Like in Japan where many homes are 'vacant' with missing homeowners owing property taxes and income taxes.  Ghost towns.

kchrisc's picture

Zion needs their Greek farm to pay, or "pay."

Liberty is a demand. Tyranny  is submission.


Zion needs the pipeline route as well, the people, and goy, be damned.

Niall Of The Nine Hostages's picture

Israel is probably mostly grateful right now she was never invited to join the EU or the euro, and still has control over her own money and own borders.

If Greece really was ruled by the Jews with an iron scepter, they wouldn't have let this happen. The Gentiles did this to themselves.

Anti-semitism is the oldest disinformation campaign the banksters and Bolsheviks have going. I'm amazed anyone with the sense to know better still falls for it.

falconflight's picture

Israel is just as tied to the debt financing scheme as any other country.  

steveo77's picture
Animated GIF Showing Fukushima Ocean Effects

This is great for the average person with attention span less than that of a goldfish.


shovelhead's picture


I can see why you like it.

Jack Burton's picture

You must factor in that the radiation is only begining to enter the seas. There are no technologies that exist, or even on the drawing boards that can tackle the melted cores, thus the cores will radiate and decay and flow into the ground water, the sea and the water flushed over cores to maintain shut down. Over the next 50 years at least, the radiation will flow at this or even higher rates. I know the Pacific is big, I've sailed across it, but, currents can concentrate things like this and deliver concentrations of it at great distances. If it is no problem now, maybe in 2 decades of non stop core dispersal.

Crocodile's picture

Dear ZeroHedge,

  Please discontinue articles on Greece and just send a "memo" when something actually happens.



Jack Burton's picture

I feel your pain. The subject is almost played out. Imagine the Troika and Greece, those fuckers do this every day, over and over again. Ground Hog Day!

HL Shancken's picture

??? 10 000 ?? ??????: "???? ?????? ??????? ?????? ???????!"

10000 already on the streets: "our Government has sold the country to the Russians!" 


Jack Burton's picture

 1,000 in Odessa? It has a large population of all ethnic groups. A broad based protest seems not yet to have broken out there. Get back to me ten times that many come out.

Besides, in what way has the Kiev government sold Odessa to the Russians?

HL Shancken's picture

Would you also like to be informed when the crowd grows larger than 10,000 in Armenia?


Crocodile's picture

Tsipras will be suicided or commit suicide before this is all done.  Sometimes getting what you hoped for (elected) isn't the best outcome in hindsight...I hope he knows the Lord.

HardlyZero's picture

High Noon tomorrow.

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, Noon in Brussels.

... in 8 hours.


TheAntiProgressive's picture

Can't wait to hear the knashing of teeth when the USA shows up there hat in hand, look only 340 Billion for our pensions and bonuses and we can get back to work and forget all about this unseemly conversation over just money...... 

Jack Burton's picture

" the Washington-based IMF"

Some people in Europe are wondering why a soverign European country can not do anything without the Washington DC dictatorship approving. Greece is being ruled by proxy from Washington DC and the Banks on Wall-Street and the City of London. Never in history have people been so caught in the web of empire. Greece is not a nation, not a democracy, not anything, but a few people deeply in debt to loan sharks who are about to pick it's bones clean.