What It All Comes Down To On Sunday

Tyler Durden's picture

As expected (and as tipped here on Thursday immediately after news broke that an IMF study conducted prior to the imposition of capital controls in Greece suggests debt relief for Athens is necessary if anyone hopes to create some semblance of sustainability), Greek PM Alexis Tsipras is now leaning hard on voters to carefully consider the fact that one-third of the troika has effectively validated the Greek government’s position on creditor writedowns. 

“This position was never proposed to the Greek government over the five months of negotiations, wasn’t included in final offer tabled by creditor institutions, on which people are going to vote on July 5,” Tsipras said in a televised address, making it clear to Greeks that the proposals they are voting on effectively do not reflect the views of the institution that is perhaps the country’s most influential creditor. 

“This IMF report justifies our choice not to accept an agreement which ignores the fundamental issue of debt,” he added, driving the point home. 

Clearly, this puts Europe, and especially Germany, in a rather unpalatable position. Many EU officials have for months insisted that IMF participation is critical if the Greeks hope to secure a third bailout. The IMF meanwhile, has stuck to a position first adopted years ago (something we’ve noted in these pages multiple times of late); namely that official sector writedowns will ultimately be necessary if Brussels hopes to finally put the Greek tragicomedy to bed. This means Brussels (and Berlin) will now be forced to choose between IMF involvement (which the EU says is a precondition for a deal) and haircuts (which the EU says aren’t possible).

Here’s Barclays - a major investment bank - with its own confirmation that the IMF may have assured a No vote over the weekend.

The document basically argues that OSI is a necessary condition in order to secure sovereign solvency with a high probability. This means that before the IMF re-engages in any lending activities with Greece, OSI will be required in the form of NPV debt relief.


The timing of the publication of this report it is very important. Debt relief is something that the Greek authorities have repeatedly demanded; therefore, in a way this report can be interpreted as the IMF backing the Greek government's demands. By extension, it could also be interpreted as supportive of a 'No' vote, which is what the Greek government is campaigning for. 


We agree broadly with the analytical content of the report and the need for further OSI. This is in fact hardly new news. Europe has recognized since November 2012 that Greece needs further OSI to make debt dynamics sustainable with high probability. The IMF advice of an NPV haircut via a debt maturity extension (to 40 years) is in line with expectations.


However, the critical point is that the IMF now requires debt-relief before it engages in a new programme, which confronts Europeans with a tough political decision. Many in Europe, including Germany, considered OSI as a future carrot in exchange for reforms today following good programme execution. Debt relief was conceived as a part of a third programme to be negotiated possibly with a new Greek government.


At the same time, Germany has been adamant about the importance of IMF involvement in any financial support programme for Greece. Thus, Germany will now be confronted with a tough choice: to deliver on the IMF's demand, ie to engage in OSI negotiations in the form of NPV debt relief, or give up on IMF involvement. We believe that there is mounting support across other member states for the OSI discussion, therefore, we believe that Germany may not be able to resist such discussions any longer.

"I am guessing that this is a negotiating tactic ahead of the negotiations for a new programme for Greece. The IMF very well knows that a debt write-off is out of the question," one unnamed EU official told MNI. 

“The numbers are quite high, not in line with our assessment and our baseline scenario. We are examining different scenarios for the day after the referendum and provided the vote is Yes, we are ready to come up with solutions. But it is not going to be easy to agree. Certainly this report does not make it any easier," another source said.

It's easy to see why Europe is reluctant to accept the IMF's assessment. As discussed at length on Thursday, were Europe to go down the OMI road, Brussels would be opening Pandora's Box. Here's why:

By now it should be clear to all that the only reason why Germany has been so steadfast in its negotiating stance with Greece is because it knows very well that if it concedes to a public debt reduction (as opposed to haircut on debt held mostly by private entities such as hedge funds which already happened in 2012), then the rest of the PIIGS will come pouring in: first Italy, then Spain, then Portugal, then Ireland.


The problem is that while it took Europe some 5 years to transfer a little over €200 billion in Greek private debt exposure to the public balance sheet (by way of the ECB, EFSF, ESM and countless other ad hoc acronyms) at a cost of countless summits and endless negotiations, which may or may not result with the first casualty of the common currency which may prove to be reversible as soon as next week, nobody in Europe harbors any doubt that the same exercise can be repeated with Italy, or Spain, or even Portugal. They are just too big (and their nonperforming loans are in the hundreds of billions).


As for the IMF's position, Barclays notes that a permanent default by Greece would not be a trivial event, thus providing further incentive for the Fund to push for EU writedowns:

With the IMF’s total resources being roughly USD760bn – USD420bn of which are considered the ‘forward commitment capacity’ – the IMF has the firepower to ‘survive’ a permanent default of Greece while maintaining sufficient resources to be able to lend out fresh credit for countries in need. However, it would make a significant dent in the ongoing IMF finances – eg, the interest paid on IMF loans is used to cover IMF’s operational cost – and would very likely create intense debate about Europe’s relationship with the IMF and the balance of power between DM and EM members. One question could also be whether or not the euro area IMF members should not in some way be liable for the outstanding Greek debts. In turn, this would also intensify a debate about the sharing of liabilities/solidarity within the euro area and the EU.



So, thanks to a well-timed IMF report, Tsipras can now frame Sunday's plebiscite as a simple Yes/No vote on Greece's debt pile, which makes it far easier to vote "no." 

"Do you think Europe should forgive your debt, check box 'Yes' or 'No'." 

That should be an easy choice, although it depends upon the Greek public understanding the significance of the IMF's position which, as indicated above, Tsipras is doing his very best to facilitate. The bottom line: Sunday's vote is about whether Greece will agree to remain a debt colony of Germany, pardon Europe, even as the IMF (and, paradoxically, Germany) agrees with Athens that the country's debt is unsustainable.

"No" means a lot of pain now and recovery later.

"Yes" means less pain now but no hope of recovery ever. 

*  *  *

Choose wisely...

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CaptainAmerika's picture
CaptainAmerika (not verified) Jul 3, 2015 9:56 AM

I must study politics and war that my sons may have liberty to study mathematics and philosophy   http://www.philiacband.com/propaganda.html

90's Child's picture

If this vote is anything like the Scotland independence referendum then the outcome will be the same and the elites win.

PrayingMantis's picture



...  I’d like to save Greece, but where would I put it?

two hoots's picture

Sunday?   Just another page in history where bad corrupt governments and their counterpart, money lenders, destroy a people.  And yes, history will be repeated and soon.

hedgeless_horseman's picture




    Yet here, Laertes! aboard, aboard, for shame!
    The wind sits in the shoulder of your sail,
    And you are stay'd for. There; my blessing with thee!
    And these few precepts in thy memory
    See thou character. Give thy thoughts no tongue,
    Nor any unproportioned thought his act.
    Be thou familiar, but by no means vulgar.
    Those friends thou hast, and their adoption tried,
    Grapple them to thy soul with hoops of steel;
    But do not dull thy palm with entertainment
    Of each new-hatch'd, unfledged comrade. Beware
    Of entrance to a quarrel, but being in,
    Bear't that the opposed may beware of thee.
    Give every man thy ear, but few thy voice;
    Take each man's censure, but reserve thy judgment.
    Costly thy habit as thy purse can buy,
    But not express'd in fancy; rich, not gaudy;
    For the apparel oft proclaims the man,
    And they in France of the best rank and station
    Are of a most select and generous chief in that.
    Neither a borrower nor a lender be;
    For loan oft loses both itself and friend,
    And borrowing dulls the edge of husbandry.
    This above all: to thine ownself be true,
    And it must follow, as the night the day,
    Thou canst not then be false to any man.
    Farewell: my blessing season this in thee!

AlaricBalth's picture
Greece Enslaved by Lord Byron   FAIR Greece! sad relic of departed worth!   Immortal, though no more; though fallen, great!   Who now shall lead thy scattered children forth,   And long-accustomed bondage uncreate?   Not such thy sons who whilom did await,        5   The hopeless warriors of a willing doom,   In bleak Thermopylæ’s sepulchral strait,—   O, who that gallant spirit shall resume, Leap from Eurotas’ banks, and call thee from the tomb?     Spirit of Freedom! when on Phyle’s brow        10   Thou sat’st with Thrasybulus and his train,   Couldst thou forebode the dismal hour which now   Dims the green beauties of thine Attic plain?   Not thirty tyrants now enforce the chain,   But every carle can lord it o’er thy land;        15   Nor rise thy sons, but idly rail in vain,   Trembling beneath the scourge of Turkish hand, From birth till death enslaved; in word, in deed, unmanned.     In all save form alone, how changed! and who   That marks the fire still sparkling in each eye,        20   Who but would deem their bosoms burned anew   With thy unquenchèd beam, lost Liberty!   And many dream withal the hour is nigh   That gives them back their fathers’ heritage;   For foreign arms and aid they fondly sigh,        25   Nor solely dare encounter hostile rage, Or tear their name defiled from Slavery’s mournful page.     Hereditary bondsmen! know ye not,   Who would be free themselves must strike the blow?   By their right arms the conquest must be wrought?        30   Will Gaul or Muscovite redress ye? No!   True, they may lay your proud despoilers low,   But not for you will Freedom’s altars flame.   Shades of the Helots! triumph o’er your foe!   Greece! change thy lords, thy state is still the same;        35 Thy glorious day is o’er, but not thy years of shame!
disabledvet's picture

And so it is said.

And well spoken too.

Hear, hear!

That we all may be free of such bondage!

Save_America1st's picture

Time for a new 4th of July holiday Golden Jackass interview on TFMR

Turd and the Jackass for 1.5 hours...what could possibly go wrong?  haha :-)

It's on the house, so if ya wanna kill some time and hear Jim Willie's thoughts on the geo-political and economic collapse underway as we speak, there here's the link:


Enjoy this 4th of July, folks.  Think about what it means and what it stands for.  The future of freedom not just in America but the rest of the world hasn't been in this much jeopardy since WWII.  The new threats to freedom and liberty are hitting us from all angles.  Get prepared.  By this time next year the scumbags in charge will be banning the 4th of July just as they're banning everything else and driving us into another world war situation. 

Doña K's picture

"Greece is the strongest believer of justice."

"Greece is being tested again and again but its inner soul is eternal"

Nikos Kazandjakis 

"The world should act accordingly" my take.

Headbanger's picture



Other than it changing Greek government, this vote doesn't mean shit for ever paying back the Troika.

This is just more stupid drama so all the blame goes to the poor Greeks for voting one way or the other when they've been slaughtered already

It's so fucking stupid now.

TeamDepends's picture

Percy Bysshe Shelley (1792-1822)

I MET a Traveler from an antique land,
Who said, "Two vast and trunkless legs of stone
Stand in the desart. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read,
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed:
And on the pedestal these words appear:
"My name is OZYMANDIAS, King of Kings."
Look on my works ye Mighty, and despair!
No thing beside remains. Round the decay
Of that Colossal Wreck, boundless and bare,
The lone and level sands stretch far away.

invisible touch's picture
invisible touch (not verified) TeamDepends Jul 3, 2015 12:32 PM

reintroducing PARTYBOY !!!!!!!!!!!!!!







COSMOS's picture

A good comment I came across...

From a pure corporate finance price modelling perspective, the most prudent thing Greece can do right now is to default on its debt - completely, in full and without recourse. As simple as that. One things some big economists and EU politicians do not know, is that "opportunity to default" is in fact a function that has to be taken into account alongside interest rate to determine the true costs of borrowing of an entity. It is a pure science, all referrals to morality and other krap are also well addressed in modern scientific research - it is called Game Theory. In this respect - Greece had a great run. Not her fault some idiots with CFA and MBA certifications in Northern Europe decided to land her all that money. 

It does not make sense to try to repay all those truckloads of money and compromise on lifestyle of three generations of the Greek people. It puts Greek people onto some form of depravation for somewhat 50 years. For God's sake Germany burned the whole Europe about as long time ago and nobody would recall that the owe them after 50 years post WW2! 

Just default, dear Greece. You did enough for those EU morons - invented their civilisation, protected it from Persia, invented gay culture as main stream 2,500 years ago and many more thing which you can't put a value on. Nobody will kick you out of EU. Don't worry. In ten years everyone will be queuing to give you more money! Just do it already! You were supposed to do it in 2009! This show becomes longer than Mexican soap operas.

new game's picture

cosmos, repeat your comment for another ten countries(and years). the transfere of responsibity of the bad loans (fees, fees, and moar ill motivated profits-cue goldman sak of shit) and the lack of chaining back to these culprits and a consequence. and of course the leaders that profited from these loans(too). so what we have is treason. leaders taking oaths and betraying the peoples they represented, and once again, no consequences. kinda what i see every day in merica, parents that allows kids to run the show, actions with no consequences. a society becoming moar and moar corrupt and without moral compass will not sustain, but that could be true of most(given enuf tyme).

freedom is all corrupting, because given enough time human virtues destroy freedom.

not enough wagon pullers and too many FSAers...

my rant for lack of independence day

rccalhoun's picture

my dad is a staunch liberal.  everything is for 'the children'.  but i stymied him when i pointed out the debt and the portion due by each of his grandkids. and i dare not point out he is leaving no inheritance, because he withdrew his funds at a rapid pace and produced no income for way too many years.  (he could easily have left all surviving him money to cover their portion of the debt, but he spent it on himself).  his new 'wife' will get the balance.  his financial existence is exactly where greece is at.

my dad's credo:  trayvon, barry, hillary, the children, and blindly passing on debt....blaming it on the rich (of where he once was a fringe member)

i have money......im pointing out the hypocrisy of the debt builders.

fattail's picture

Moral hazard has a price and that price is EU membership.  How do you keep italy spain and portugal from doing the same thing.  Revoke the privilege of unfettered EU travel and trade.  That is the price for default and not playing ball.  40% unemployment, depositor bail ins (make the Greeks pay for it), and worthless pensions.  Followed by civil unrest and then...... civil war.

Antifaschistische's picture

The whole thing makes me mad....if a bond holder wants collateral, then it should be defined at issuance. Otherwise....too damn bad!!

OC Sure's picture

You are very close to the first principle.

Shad_ow's picture

"Principle."  WTH is that, a relic of the past?

invisible touch's picture
invisible touch (not verified) Shad_ow Jul 3, 2015 12:35 PM







( jeez i laught so hard my belly gimme pain )

N2OJoe's picture


"Do you think Europe should forgive your debt, check box 'Yes' or 'No'."

"No" means a lot of pain now and recovery later.

"Yes" means less pain now but no hope of recovery ever.

Am I reading this right? Tsipras wants people to vote for not having debt forgiven? Or is it supposed to mean that they default if the debt is not forgiven?

ajax's picture




The Greek people are asked to decide with their vote whether to accept the outline of the agreement submitted by the European Union, the European Central Bank and the International Monetary Fund at the Eurogroup of 25/06/15 and is made up of two parts which constitute their unified proposal:

The first document is entitled: Reforms for the completion of the current program and beyond and the second is Preliminary Debt Sustainability Analysis.

Whichever citizens reject the proposal by the three institutions vote: Not Approved / NO

Whichever citizens agree with the proposal by the three institutions vote: Approved / YES




ajax's picture



Principle? Principles? What fucking principles?

Do a "Google" search: "german price-fixing scandals".

Go ahead and do it before you talk/write about the "hard-working German" vs "the lazy Greek worker".

Here in CH, 20 Bayer 500mg aspirin cost $10.--, that's right: $10.--

20 500 mg Swiss generic aspirin cost: $4.--

The pharmacies don't 'feature' the generic brand but the German Bayer are on view at the cash register.

FUCK GERMANY and its lies and bullshit.

ajax's picture



I upvote myself 100 times

RichardParker's picture

The one thing that's actually cheap in the US for healthcare. 

20 500 mg aspirin runs about $2-3.



shovelhead's picture

German asprins $10

Teva aspirins (Israeli Co.) $ 3


Dem Jews bleeding you dry.

Maybe those Germans got expenses...

Attack of the Dindus:


Looks like an unauthorized run to The Isle of Greener Pastures Inc.

remain calm's picture

It will all depend on how the media frames this the next two days. People are stupid and will believe and do what the media says. Who owns or controls the media???

disabledvet's picture

But we have said it so here.




Urban Roman's picture

I just keep it in a jar on the back of the stove. When it fills up, I throw it away and start with a new empty peanut butter jar.

The Wizard's picture

If it is hot Greece, don't put it into a plastic conainer. Glass is best.

remain calm's picture

What does George Soros want? I would put my money on what that sick cocksucker wants because he is a propaganda whore.

disabledvet's picture

"Because aslong as I crush your currncy for profit it's okay...

Kirk2NCC1701's picture

If I wanted to front-run the outcome of the vote, I'd simply look at the price of Gold charts.

$1165/oz?  Ouch!  So much for being the go-to asset in times of Risk, or a Store of Value.  It's behaving like a Commodity, where Timing is EVERYTHING. 

Too bad Greeks don't have the cash to buy Gold now, at these bargain -basement prices. 

silvermail's picture

Too bad Greeks don't have the cash to buy Gold now, at these bargain -basement prices?!


You are not right. Our  coin shop in Cyprus - "KDG Gold", does not have time to restore every day gold in our stock. We have never had such a huge demand for gold, including demand from our Greek customers.

disabledvet's picture

Talk about "in need of King Midas."

Looks like the proverbial Maze with the Minotar now...

mkkby's picture

Gold does no good for the greek people.  What they need are cash euros they can spend on daily living.  They needed to cash out their bank accounts, or move it to another country before the bank closures this week.

They had 7 years to do that, and the example of depositor haircuts in cyprus.  Anybody getting screwed now has only themselves to blame.

silvermail's picture

Gold does no good for the greek people?

Except for one thing:

Gold does not allow any government or banks to rob you.

agstacks's picture

You need both. Cash for expenses. Gold for cash you won't need for more than a decade.

Jtrillian's picture

Most folks are making the assumption that the Greek people have a choice when they may only have the illusion of a choice.  We certainly live under that illusion in the USA. 

The ECB's policy of "whatever it takes" may very well extend into rigging elections.  I wouldn't put it past these criminals to do just that.  And if they can't rig an election they can certainly manufacture a coup as has been done time and again in the history of tyrannical governments (including our own). 

Lets Buy The Dip's picture

I think GREECE overseering and PTB already have a yes or no vote chosen. They just have to keep the greek people busy so they do not have time to see the bullshit. 

Reverendum, is just a diverter tool. You know it. 


Also Gold looks to be in trouble.... GOLD CHART here.   ==> http://bit.ly/1fMcakI    UH OH!!!

Maybe that is telling us something. Normally people move to gold, when things get back, but have a look at the chart, GOLD is in serious trouble. 

So it looks like this GREECe crisis, will be resolved. Heck in two weeks from now, I bet no one will give a damn about greece and what happened, they are only 1.4% of all of europe. Not big enough to WORRY or CARE. 

ZH Snob's picture

putting this up to a referendum is shirking his duties.  tsipras was elected to do a difficult job, not throw it back on the people who are largely unqualified to understand the perpetual debt they would commit themselves to and would be voting out of fear.

Pure Evil's picture

Greece, in all reality, has only two choices. Either stick with the current slave master as nauseating as that seems, or get cast aside in the hopes of finding a new benefactor that will loan them the money to live beyond their means once again.

Greece is like the college student that borrowed heavily to fund their college lifestyle while also using ten different credit cards to pay for all the drugs, clothes and good times.

Now that the student has graduated only to find the job market cubbard bare and the easy credit card offers have dried up while Uncle Sugar and the ten nasty credit card companies want their money back with interest.

They do have a third option and that is just to suck it up and stop living beyond their means. But, they're like the pretty sorority girl that was the life of the party and had plenty of suitors lined up willing to pay her freight through life. But, now that she's long in the tooth and has lost her looks she's consigned to standing by the side of the road and selling herself like a toothless crack whore.

N2OJoe's picture

I WISH my "representatives" would ask for, or give a shit about my opnion on important decisions

slimycorporatedickhead's picture

Option #4 Silver backed drachma, currency of the common man

Dollarmedes's picture

I disagree. The Greek citizens have put their leadership in an impossible position. 80% of Greeks want to stay in the Euro, but 80% of them don't want cuts to their pensions. Those two positions cannot coexist. If Tsipras makes any choice, he'll be blamed as the scapegoat. Better to put the decision back on those who have the power.