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IMF May Walk Away From Greek Bailout
Earlier today, a "secret" IMF paper surfaced in which the Fund reiterates the need for EU creditors to writedown their holdings of Greek debt.
According to Reuters, who broke the story after reviewing the document, "the updated debt sustainability analysis was sent to euro zone governments late on Monday, and argues that 'the dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date - and what has been proposed by the ESM.'" The IMF goes on to say that Greece’s debt will likely hit 200% of GDP over the next two years and will sit at a still-elevated 170% of output in 2022.
As a refresher, here's a (very) brief recap of the IMFs position on haircuts for Greece:
A divide between the IMF and Europe (read: Germany), regarding writedowns on Greece’s debt to the EU has been brewing for quite some time and recently returned to the international spotlight when, a few months back, the Fund indicated debt relief was a precondition for its participation in any further aid for Athens. More recently, the IMF released a report on Greece’s debt sustainability just prior to the referendum. The timing appeared to be strategic and may have helped secure the "no" vote for Tsipras. Today, another "secret" IMF document on the sustainability of Greece’s debt burden has surfaced and not surprisingly, the Fund is once again pounding the table on a haircut.
Although Tsipras had resisted IMF involvement in the country's third program, Germany made it clear that the Fund's participation was mandatory. Now, FT says Chrsitine Lagarge may consider pulling out of the deal in light of the fact that Athens' debt is not seen as sustainable. Here's more:
The International Monetary Fund has sent its strongest signal that it may walk away from Greece’s new bailout programme, arguing in a confidential analysis that the country’s debt is skyrocketing and budget surplus targets set by Athens cannot be achieved.
"Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far," the memo reads. Under its rules, the IMF is not allowed to participate in a bailout if a country’s debt is deemed unsustainable and there is no prospect of it returning to private bond markets for financing. The IMF has bent its rules to participate in previous Greek bailouts, but the memo suggests it can no longer do so.
IMF involvement in Greece’s rescue has been critical to a German-led group of eurozone hardliners who believe the European Commission, one of the other Greek bailout monitors, is not sufficiently rigorous in its evaluations.
The issue became one of the major sticking points during all-night negotiations between Alexis Tsipras, the Greek prime minister, and Angela Merkel, his German counterpart, at the weekend, with Mr Tsipras repeatedly refusing to accept IMF participation in a new bailout.
According to EU officials, Ms Merkel stood firm on the issue, telling the Greek premier there would be no bailout — and therefore "Grexit" from the eurozone — without a formal request made to the IMF for participation in a new programme. The final bailout deal states that "Greece will request continued IMF support" once its current IMF programme expires.
What happens if the IMF walks away you ask? Well, the entire "deal" could fall apart, as the Fund is expected to put up a not insignificant portion of the bailout money, and in the absence of that funding, the gap would have to be filled with "privitization proceeds" which the IMF itself has projected will come to just €2 billion over the next three years. Furthermore, German lawmakers, already exasperated with the protracted negotiations, would likely pull their support altogether. Here's FT again:
If the IMF were to walk away from the Greek programme, it could cause significant political and financial problems for Berlin and other eurozone creditors. Without the IMF’s imprimatur, German officials have said they would struggle to win approval for any new bailout funding in the Bundestag. German MPs must approve both the reopening of new talks and the final terms of the third bailout.
In addition, an EU official said that of the €86bn in Greek financing requirements, the European Stability Mechanism — the eurozone’s €500bn bailout fund — was expected to put up only €40bn-€50bn.
The current IMF programme, which still has €16.4bn in undisbursed funds and runs through March 2016, is expected to make up some of the difference, and eurozone officials had been assuming a follow-on IMF programme would contribute as well.
Any shortfall would have to be made up through Greek privatisation proceeds, which have repeatedly fallen short of expectations, or through Greek borrowing on the bond market, which has dried up since the Syriza-led government took power in Athens in January — and which the IMF memo said was highly unlikely to materialise.
“Greece cannot return to markets anytime soon at interest rates that it can afford from a medium-term perspective,” the IMF wrote.
So in addition to a parliamentary revolt and uncertainty surround urgently needed bridge financing, Greece also faces the possibility that the IMF may walk away, throwing the entire "deal" into question. Here's The Telegraph's Ambrose Evans-Pritchard summing up the ramifications of the IMF's analysis and reinforcing our contention that the US (and its IMF veto power) are pulling the strings behind the scenes and orchestrating "leaks" at opportune times.
The findings are explosive. The document amounts to a warning that the IMF will not take part in any EMU-led rescue package for Greece unless Germany and the EMU creditor powers finally agree to sweeping debt relief.
This vastly complicates the rescue deal agreed by eurozone leaders in marathon talks over the weekend since Germany insists that the bail-out cannot go ahead unless the IMF is involved.
It claimed that capital controls and the shutdown of the Greek banking system had entirely changed the picture for debt dynamics, an implicit criticism of both the Greek government and the eurozone authorities for letting the political dispute get out of hand.
Debt forgiveness alone would not be enough. There would also have to be “new assistance”, and perhaps “explicit annual transfers to the Greek budget”.
This is the worst nightmare of the northern creditor states. The term "Transfer Union" has been dirty in the German political debate ever since the debt crisis erupted in 2010.
The backdrop to this sudden shift in position is almost certainly political. It follows an intense push for debt relief over recent days by the US Treasury, the dominant voice on the IMF Board in Washington.
Should the Fund threaten to pull its support, Germany would face a tough decision: remain belligerent in the face of pressure from IMF (and tacitly from the US), or concede to writedowns which could open the door for Italy, Spain, and Portugal to demand debt relief.
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Haha once again Tylers love the pic!
"Nobody move or the Tangerine Twat gets it!"
It is over. Hard default is on the way. The rest is all political posturing.
It is kind of strange that the IMF really gets it. They used to be the main ones bankrupting countries. Did they learn from the past?
The orange peel is right. The Germans have to accept some responsiblity for loaning money to the dead beats, and taking their unborn children is not acceptable to the IMF. Germans needs to cut off a digit or two if the greeks are to loose their frontal lobes for awhile.
Fuck Berlin.
(there's a new one!)
Uh.........Ukraine?
Looks like all of Europe will be under IMF "Supervision" actually.
Looks like Germany cut a deal for the US, er I mean the IMF to bail out Greece? Which island do I get?
This isn't about Greece (the IMF threat to pull out) ... there is some serious shit going on behind closed doors ... Ukraine? UN? Russia?
Regards,
Cooter
As I said before:
The Solution:
Greece first needs to declare war on the EU and the USA. Send a team of commandos to blow up a tree somewhere deep in the black forest of Germany and praise them as having led the first strike. Greek then capitulates and surrenders. NOW they can get free shit in the form of aid, not loans.
The IMF could take the first step and forgive their portion of the Greek debt, to show their faith in the process....
yeah, waiting on that...
EDIT - i had an epiphany... if the IMF debt to Greece is denominated in SDR, and not dischargeable or able to be written down, maybe the end game is to collapse the Euro union (and subsequent other currency markets) then huzzah, bring forth the new global world currency under the SDR, ushering in the NWO...
You people are all over the hating the "free stuff" crowd here, but support Greece if it gives you a chance to hate on Germany. Get over it. Greece IS the free stuff crowd, over there, and doesn't deserve another dime until they give up their Socialist dreams.
It is over. Hard default is on the way. The rest is all political posturing.
...then what....? dept again because drachma worth nothing ?
I guess Tsipras call to Obama makes sense now.
"no prospect of it returning to private bond markets for financing" but bond rates are still ok, ok?
Yeah, no shot!
"Crying poverty" over there?
PAY UP EUROLANDER!
Yeah screwthe Germans cause Jack Lew cares so much about Greece?? You kiddin' me? This is a Putin play, pure and simple, try to punish the Greeks and Putin steps in. Germany will toe the American foreign policy line or pay many prices. I wonder how much of germany's gold is used for this little adventure..
"The Germans have to accept some responsiblity for loaning money to the dead beats"
More precisely, they need to accept responsibility for bailing out their banks by buying unpayable and odious debt. They should lose that "investment". All of it.
Banks don't follow rules. They just make new ones. Reserve ratios, gold standards, bailouts, bailinss. If the rules/laws say they can't do something they either do it anyway or change the rule/law. Pretty simple really.
Just keep in mind that though imf is currently fronted by a kindly old french lady at this moment and a fat french rapist previous, always true: imf = USA
They are just Concern Trolling the world. They know that Germany is going to ruin "this good thing we have going"
"It is kind of strange that the IMF really gets it. They used to be the main ones bankrupting countries. Did they learn from the past?"
This is probably more about keeping a NATO country afloat.
Keeping Greece afloat by jamming up another bigger, more important NATO country (Germany)?
Eh.... who knows with Obama. Maybe. I think doesn't even enter his thought process. He just wants to spread the poverty around a little.
Come on, man; he doesn't have any "thought process"; he just does what he's told. He's just a house nigger for the Oligarchy.
Jpm is positioned for a bailout, Goldman wants disruption. Who will win. Place your bets. This has nothing to do with the IMF. gs and jpm are pulling the strings
"It is kind of strange that the IMF really gets it. They used to be the main ones bankrupting countries. Did they learn from the past?"
You bet they didn't.There is a power play between the USA and Germany. Basically, what it comes down to is that the USA wants to keep Greece in the EU, Nato and all that US-led thingy meant to scare Russia, but on Germany's money.
Add that to the sanctions that are hurting Germany (but not the USA). Germany has probably had enough paying for the USA's whims and fancies.
Hence, the IMF attacks.
Not strange at all, they are shitting themselves over Mme Lagarde's home country. La belle France has been cosying up to the US lately in desperate hope that Washington's weight will push Europe/Germany into a retreat and change of policy, because the French know what an undisclosed horreur they are hiding. When Greece goes, as it must, they all go and the benighted Euro with it (unlamented).
Those poor sods in the boats from north Africa don't realise that what they think is the promised land is likely to become one huge pogrom shortly.
Once again, I repeat the least bad loser will be the winner. Winner will be a relative term.
Bring Back Prgroms !! Makes a nice bumper sticker. Make the world safe for White People. Works for me.
Now they're trying to save France. It's no coincidence Lagarde is in charge there.
Christine LaGarde to be declared persona non grata by EU in 3 ... 2 ... 1 ...
Merkel gave Obozo the finger. What else did you expect from the narcissist in chief ?
Only the USA is allowed to play this game.
Yes, German interests and US interests seem to be diverging, and the insanity coming out of Washington DC is helping erode our position of power in the world faster than it would go away on its own. Hopefully we go down before we start a real war that gets some mushroom cloud laying motherfuckers involved.
It took "she of the orange skin" to show Tsipras how it's done. When a French person, woman no less, shows more courage than you... it's a problem.
...0
This just in; IMF Head Christine LeGarde was arrested hours ago in what a New York Vice Detective Lonny Gruber say's is one of the strangest cases he has been involved in.
Around 12:00 noon today in what hotel staff say appeared to be a tall gangly male dressed in only a pair of crotchless Roman Greko wrestling tights with a large latex penis strapped onto "his" waist was running through the fitness center chasing one of the hotels chamber maids. A hotel security guard on duty gave chase and tackled the man, in the ensuing tussle the man grabbed the rubber penis and started schwinging wildly at the security guard and screaming "en garde knave, I cannot be arrested"
It turned out that the man was in fact IMF Head Christine LeGarde.
Detective Gruber had no further comments but did say that his wife had called shortly after Ms. Legarde' booking saying that their bank account had been swept clean by officials at Chase without giving any reasons.
What's condom in french? LaGarde
Although I actually have a hard time saying it, because its seemed to happen and then not happen so many times before; I don't believe this "deal" is going to go through. Grexit and contagion.
Nice foto of Christine; one of my favorite people.
Translation: "We're Broke"
No ! The correct translation is: "Uncle Sam has lost his patience with Schaulbe. Behave, or be lost !" This is the strongest signal that US has sent to Merkel so far...
Yeah, exactly.
"Having fun? Now it's our turn...
Please do. Now that money creation requires no real collateral and only a printer/computer, let the greeks print their own currency and fix themselves!!!
Brussels....bring out your dead
What we have been witnessing is the previously discussed "Schrodinger's Cat" default.
Just don't open the box.
Yeah we're tricky that way.
That's a knee slapper...the IMF will trigger the default!?!?!?
hardee har har
They do 100 twists and turns to kick every can down the road.
IMF pulls out, Greece defaults, leads to euro collapse, leads to major currency crisis, leads to introduction of basket currency lead by......imf. brilliant. Real world game of thrones. I'm the king of the north!
Collapsing the EZ was probably in the works for 10 years. Only way to manage the Germans is to gut them. Again. At least this time Dresden was spared.
I admire your hope-i-ness but I don't know as I'd take anything off the table just yet.
Is this possible...the IMF looks at the data and comes to a different conclusion from the eurozone finance ministers...are they reading the same playbook... oh... I see now...the eurozone still wants to play "kick the can" but the IMF says "the can" has been flattened and no longer usable...
Hahaha you stupid cow, their debt was already unsustainable long ago and you says you just figured it out now lol ;)). But no hard feelings because they did not want your "help" in the first place.
It would appear the IMF has different standards for different countries. Ukraine has high debt levels that it will never be capable of paying off. Apparently, a haircut on Ukrainian debt is likely and the IMF is positioning itself to provide the government in Kiev with more loans. Quite a contrast to the treatment of Greece. See: www.bloomberg.com/news/articles/2015-06-22/imf-staff-said-to-view-ukrain...
There's no mystery if you remember that IMF is a political institution... Then, you'll only have to remember who's controlling it !
"They've got Ukraine on a short leash too."
Would appear "turn over all the gold and we'll show you how to do a REAL austerity!"
Sincerely,
South Korea
Germany had best just plug the $2bln hole and move the deal along.
It will be much cheaper than the bank bailouts required when the CDS bomb goes off at DB and/or other European banks...
One theory: The IMF's against this only until they can offload the risk (i.e., USSA taxpayer, Greek depositor, etc.).
Anything's possible when you're making up/breaking up the rules as you go.....this thing'sgot more twists & turns than most reality shows...
http://albainternazionale.blogspot.it/2015/07/decapitazione-isis-fake.html
Decapitazion, Islamic State, Fake ?
This video purporting to prove that the Islamic State decapitation videos are fake is a fake! Or maybe the Islamic State made this fake video to make us think that their decapitation videos are fakes! Or maybe someone made this fake decapitation video to make us think that the Islamic State wants us to think that their decapitation videos are fakes! In any case, I'm buying the dip...
all the players are playing so nicely. it is hard to tell which is the bad actor. IMF just said they are not the bad guys. Merkel says, she is not. Then Who?
Enter THE FED
Sorry but Old Yeller might be INDICTED soon...
Congress will be disbanded before Yellen is indicted.
IMF chief Lagarde, June 13, 2015:
Christine Lagarde has reassured Ukraine that funds can still be made available even if the country fails to repay its private creditors.
http://www.dw.com/en/imf-says-it-will-continue-to-back-ukraine/a-18514951
Let me guess: stocks surge higher, gold slammed lower?
Yes.
LaGarde save the Greeks, when they cannot save themselves? Un believable!
this is not gonna end well for merkel/schauble
Bla bla bla.
Everyone and their kids in EU know it's not about economy and jobs - it's about land.
If you take all collateral and stuff and infrastructure and islands - the Greeks will no longer live in Greece and they will have to leave.
That's what this is all about ultimately.This stupid guy agreed to it and their parliament is going to vote on it.
Stupid people don't deserve their kingdom.
This is how the IMF explained their involvement with Greece in 2010 -
"With regard to Fund involvement, the view expressed was that it would have been better if the crisis could have been resolved within the EU/euro zone, but neither the authorities nor the EC or ECB had the required program experience. The Fund’s experience in crisis resolution made it a necessary for it to be part of the process."
And so, by way of logic, when they feel that there is no resolution to the crisis, they do not believe that there is a role for them to play.I'm sure Lagarde will be safe driving home in the evenings...
Wow.. where did that come from.. I thought all those bankers where totally crazed and couldn't recognize risk and the real reality of the lender being a willing participant in loan failure.
The German's are totally nuts, clearly demonstrating where that 1934 mentality came from... So Germany, what's next for Greece?
You are starting to get the picture.
Say what you want about the French, Germany has been their private little backyard problem for a thousand years. The EU and the currency union were supposed to permanently solve that so they could retire to a quiet life in the country managing their Muslims. Too bad it didn't work out.
"Germany has been their [French] private little backyard problem for a thousand years. The EU and the currency union were supposed to permanently solve that..."
Quite so.
And before that, according to one of its creators, NATO was created to: keep the American IN, the Russians OUT and the Germans DOWN.
Way to go...
Yeah I've heard that one before. Everyone forgets how complicated things really are. You don't need any personal experience all you have to do is read your history.
It's funny that the Germans would be so freaked about Wiemar-style inflation ... and yet give not a thought to having twice already been bombed and shelled back into the stoneage. Does a single currency that maybe (big maybe) saves them the former do them any good if it encourages them to pursue the latter? Seriously what is wrong with them. And everyone expected them to toe the line. Well that's looking now like a big nope to the nope.
Understanding the Germans is easier when one realises that they like to run everything in their way. This leads to dogmatism. But the problem that arises so often is they are right more often than not. People get pissed with it and want to do something not in the German way, even if it's wrong, just so it ain't being done the German way.
I have mixed feelings towards them. On the one hand I admire German manufactured goods (cars, robots etc), on the other I get pissed with their dogmatism and tendency towards creating a Fourth Reich.....
Like Germans, the Americans also like to do things their own way. Conflict between the two is inevitable... especially when the Americans (still) have the upper hand.
Good points. I'm glad the two peoples are getting along at the moment. It would be a great loss if the bankers managed to fuck that up.
Hey Christine, any news on getting that lump Shauble left in your throat out.
Walking away sounds like the smartest move under such conditions.
Christine 'the sphincter' Lagarde is merely playing Good Cop/Bad Cop with the functionally retarded Greeks so that they will feel like they actually have options, or a say in their future where they have none.
Christine 'the sphincter' Lagarde is an old anal-retentive whore from way back and she really knows how to put prophylactics on economic erections if you know what I mean. Right now she is giving everyone a handjob, and she is hoping no one notices before she gets the contracts signed. And don't forget Glengary Glen Ross, ABC, always be closing. That's Christine 'the sphincter' Lagarde's modus operandi, and always will be because she is not benevolent when it comes to her own anal hoarding ways, or the banks' ways.
what part of "fuck the eu" did germany not understand?
Well Tyler, you managed that whole article without once mentioning the name of one of the mindless morons who has been at the centre of driving the hard line against Greece: Dieselboom, the Dutch fascist.
And Mutti was lurking in the shadows giving orders to the wheelchair.
As a general rule, the lackeys are, more often than not, worse than their masters...
Enter Asia development bank, as intended?
Maybe Obama and the Dems are starting to get worried about the public attraction of Trump's policies. Using Ukraine as an instance, he has said Germany and Europe should sort out European problems and bear the costs. As soon as someone with a public megaphone criticizes giving away US funds to support European failures, it is going to be indefensible.
Manange a Troika.
Busted.
No Chrisine. Just Angela and Mario!
The IMF will do whatever the US, the FED and the EU want it to do. End of story, lets not have any more BS on the this subject.
LOL...Fucking perfect. As pissed off as the Germans are about our N.S.A. shit. Now they have to loose money because we say so....NIEN,.NIEN,. NIEN. Pull up the Putin & Popcorn shot.....
They obey no laws or rules.
That LaGarde dude doesn't follow no rules
The US contolled IMF is walking away from the Gr bail-out ... right.
Need to fill some space here?
Breaking....
IMF Chief Christine LaGarde arrested on charges of raping a maid during recent stay at 5 star Davos hotel.
I believe he/she/it booked the room as Christian LaGarde
Don't be fooled by leakage of secret papers. Has anyone read two or three good books about political, enterprise, business strategy? Of course IMF is saying that will step down from a bailout. This is a way of pressure, UE on the side lines, ECB and creditors doing pressure, Germany saying they want austerity, France saying that Greece muyst be on UE whatever it takes. This is all strategy, one doing pressure, another neutral, another being friend and solidary, and the evil one. But at the end they all want the same end. Dont believe in this stuff. The only thing here that matters is Tsipras has to be sharply intelligent, he is must be even more. Hes being played by strategies and he just noted the tip of the iceberg. The rest he is some how confused with all the parties. This is all strategy, applied by the book, written in good strategy books. The france position is to make him soft. IMF is 60% United States. ECB is Goldman and North Europe creditors and etc. Poker, strategies, bluffs, you name it. The parties are confusing Tsipras, keeping him interested and worried so he doesnt have time to remember the R card, his 4 aces.
The EU, US, IMF ,and even Schauble have Merkel in such a vice, her head must be ready to explode. Would be the greatest irony in history if it was Germany that said enough of this shitshow and leave the EU first.
Why can't the world opinion come clean and admit that this fiat debt currency is a farce. It is paper issued against the labor and sweat of people not even born yet. The game must stop. It seems like the world has come to a complete stop and can't seem to get on with its business until we get past this world wide collapse. EVERYBODY, please start talking about how rediculous all this is. When I hear people talk about whether it's Greece's fault or the fault of the ECB it drives me mad because fault cannot exist when real money is not involved in the first place.
The IMF has lost all hope in continuing it's role as a loansharking enterprise.
Making Public Investment More Efficient
Of course there will be writedowns. Nobody believes any of the debt will ever be paid. What the bankers are after now are the physical assets.
This tragedy/comedy will be playing in your neighborhood soon.
https://youtu.be/r2kvpHcHOnM
Looks like she is trying to point a nail gun?
Meh. Make up your mind, IMF: it's time for you to act or submit, just as it was for Greece.
(s)he conceals that adams apple pretty good some days...
"not that there's anything wrong with that"
Is this why Tsipras was smiling with the other negotiators during photo ops? Some of the IMF report was out last weekend.
Heaven is where the police are British, the cooks are French, the
mechanics German, the lovers Italian and it's all organised by the
Swiss.
Hell is where the chefs are British, the mechanics French, the
lover's Swiss, the police German and it's all organised by the Italians.
Briliant!
When has any Mafia done anything good for anybody.
I give you the International Madia Foundation.
To the average John Nickalopoplopulous this has to be a good thing.
So, they came to this conclusion NOW? After they put them under billions in debt? It should have been obvious when they were trying to get into the Euro.
"Those are my principles, and if you don't like them... well, I have others." - Groucho Lagarde.
If the 'lender of last resort' says that then it is pretty bad. But why did they agree to the first bailout? It must have been clear to them that that bailout of GER, FR and NL banks would burden GR with unsustainable debt. The IMF did well on that bailout; they made a couple of billions on that but now it seems they need to write off some of these debt. So their participation to the first bailout was purely political. If they walk out of this bailout it will be an economical decision. Or perhaps also political?
she or that "she" has hair like a marlon brando wig from superman. a bad one, trampled on by fat roadies. the face looks like a melted bunch of old mexican candy in those shitty wrappers. is 500 deaths worth that benz, i could get benzezs all day, but my cars all get hit.
I know these little vignettes go nowhere, like a message in a bottle, keep her black mascara tears, i wouldnt even throat bust this bag of bones. Id give her a fat dude i know who will fuck anything. greeks need guns, and shoot anything with a suit or salmon colored collared shirt on.
Women are becoming some serious counterparts contrary to the laws of anything, real witches, eating fetuses, im waiting to be proved wrong. like suspiria.
Largarde = Ric Flair...lol
http://dunk360.com/media/2014/10/Ric_Flair.jpg
What happens post debt relief? Greece goes right back to living above their means on borrowed money? Or should they simply be given the money without having to pretend they might one day pay it back?