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Greece May Not Get Bailout, Grexit "The Better Way", Schaeuble Says
Last Saturday, the EU finance ministers who gathered in Brussels in a last ditch effort to keep Greece in the eurozone were forced to confront a rather inconvenient truth. A bailout for Athens would likely cost nearly €80 billion, far more than the €53 billion figure mentioned in the draft proposal submitted by Alexis Tsipras two days earlier. The revised figure included a €25 billion provision for the recapitalization of Greece’s ailing banking sector. A day earlier, we warned that the banks would need at least €10 billion and likely more - “don’t tell Merkel”, we warned.
Judging by the date on a document that began to circulate once the finance ministers began to voice their consternation at the larger figure, Germany had already assessed the possibility that the cost of a potential third program for the Greeks was likely to climb prompting the finance ministry to prepare a document outlining two alternative options for Athens. One of these options was a 5-year Greek “time-out” from the eurozone. Initially (and by “initially” we mean for perhaps a few hours after the document was first distributed) the “time-out” idea was written off as simply another manifestation of Wolfgang Schaeuble’s frustration, but by Sunday it was clear that the idea was no laughing matter - indeed, had the bloc’s sleep deprived leaders not inked a ludicrous agreement at 6am in the morning, the "soft" Grexit scenario might already be well underway.
Now that reports from both the IMF and the European Commission on Greece’s debt sustainability are public, the world is well aware that no one, anywhere, truly believes the Greeks will ever be able to return to economic prosperity if they are forced to labor under their current debt load. In short: a "re-profiling" is necessary. And while the Germans might be compelled to consider some manner of rescheduling, both Merkel and Schaeuble have made it clear that an outright "haircut" is out of the question - unless of course the Greeks would agree to, as we put it earlier this week, "get the hell out." Here’s Reuters:
German Finance Minister Wolfgang Schaeuble questioned whether Greece will ever get a third bailout programme on Thursday, a day after the Greek parliament passed a package of stringent measures required to open negotiations on financial aid.
He said he would submit a request to Germany's parliament to vote on opening the talks and said passing the reforms was an "important step", but it would be hard to make Greece's debt sustainable without writing some of it off, an idea Berlin considers to be illegal.
Greece is seeking up to 86 billion euros in a third rescue package in return for tougher austerity measures and structural reforms.
"We will now see in the negotiations whether there is even a way to get to a new programme taking into account (Greece's) financing needs, which have risen incredibly," he told Deutschlandfunk radio on Thursday.
The International Monetary Fund is leading calls for a deep reduction in Greece's debt but Germany, the biggest contributor to the euro zone's bailout funds, has ruled one out.
Schaeuble, a member of the centre-right Christian Democrats, the party of Chancellor Angela Merkel where there is strong resistance to a new bailout for Greece, said such a step would not be compatible with membership of the currency union.
And more from Bloomberg:
German Finance Minister Wolfgang Schaeuble says on Deutschlandfunk German radio it’s unclear how sustainability of Greek public debt can be achieved without debt forgiveness, which is banned as long as the country is a euro member.
"Many economists, including in Greece, doubt that Greece’s problems -- listen to what the International Monetary Fund is saying -- can be solved without a real haircut."
"A real haircut, that’s undisputed, is incompatible with membership in the currency union."
Temporary Greek exit from euro region may be “the better way” because it would allow haircut, provided Greece agrees to such a step
Given Greek financing needs, "we’ll see in the negotiations if there’s even a way to arrive at a program"
"I don’t know, nobody knows, at the moment how this is supposed to work without a haircut and everybody knows that a haircut is incompatible with euro membership. That’s the situation."
Yes, "that's the situation." Greece's debt is completely unsustainable and "nobody knows" how the proposed third program is "supposed to work" without an upfront haircut, which is flat out illegal. But one way it could work, Schaeuble suggests, is for Greece to pursue the "time-out" option which the FinMin apparently believes is still feasible even after Wednesday's Greek parliament vote.
Meanwhile, it's still possible the IMF walks away from the deal if Germany doesn't agree to restructure Greece's debt. Consider for instance the following comments from Christine Lagarde (via WSJ):
"What I very much hope is that we can all keep to a very tight timetable and we can respond to a challenge that is colossal. I have some hope, as… I understand that there were some more positive noises toward that principle of debt restructuring out of Germany in the past few hours."
And from another “senior” IMF official:
"[The EU’s commitment to restructuring] is not very concrete [and is] somewhat weak. We have made it very clear that before we go to the board, we need a concrete and ambitious solution to this debt problem."
The irony of course is that if the IMF walks, Germany would likely walk as well, as Europe has long maintained that IMF participation is a prerequisite for a third program and the Fund is expected to contribute heavily to the new package. So in short: if Germany balks on debt relief the IMF walks, and if the IMF walks, Germany walks, which for Schaeuble means that perhaps Greece should just spare everyone the walking and walk first. "This would perhaps be the better way for Greece," the FinMin said Thursday.
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Yeah, ok.
The Bailout is coming. You can bet on it. The theatrics are all about sending a message: "Play the game our way, and we'll take care of you...screw with us, and we'll cast you down into Hell".
Reminds me of the old joke...."How do you keep a moron in suspense?"
Exactly what I said would happen.
OK Germany... Be the bad guy and throw Greece out and be done with it.
The Grexit already occured - the exit of capital and citizens over the past two years.
jb
So just where the fuck are we at now? Oh, nowhere! Good. That's comforting.
What is wrong with these people.
People ..... Lemme see now. Maybe Reptiles is indeed a more accurate description. Dr Strangelove and the Reptile Queen
They are making it up as they go along.
That guy's hemorrhoids must be getting to him
A golum-like creature, yes... but he is right. Greece would be better off outside the monetary union, as it's a kleptocracy at every level of gov't. The big businesses in shipping and energy simply don't pay taxes, that's just a fact. The richest Greeks who run those businesses... do not pay taxes.
I'm not sure what's more repulsive, Germans lecturing about paying debts, or Greek politicians promising change that they have no intent on implementing.
The extra funds needed will be scoffed at publicly for spin, but then those extra funds will very quietly be declared in play and then removed from their right pocket and then inserted into their left pocket where on paper their real purpose is to help make some banks balance sheets look cleaner. And Greece gets to keep the lights on longer.
As far as I know, the Greek banks are still closed. Soon enough, the Greek population will assume they will be closed forever and they'll find another way to do business. Think through what happens next.
Because it is all they can do. Over the past 20 years, no one, especially the bankster/politician class can actually make a decision. Same in most corporations these days. Decision by committee <lol>.
Standard Disclaimer: No one wants to be held responsible if things go bad.
The Germans act as though the money loaned to Greece came from the savings of widows and their pensions. The simple fact of the matter is that the money was created as it was lent to Greece.
It is a fraud and one that must be maintained at all costs. That the system is unsustainable or contrary to the well being of nations and their people is irrelevant.
As I have said before....credit based money is the foundation upon which all power of the establishment rests.
When Greece goes under it will take the entire global financial order with them should other nations follow. The only option aside from endlessly increasing Greek debt is to force them into default and have them issue their own debt based currency (drachma). Greece will then become a graphic example of misery to ensure that other indebted Euro nations continue to tow the line.
The ECB will ensure that Greece demonstrates that the consequences of default are too terrible for others to consider.
We can say all we want about Greek profligacy but it was only made possible through fractional reserve banking. That is the reality the rest of the world can never be allowed to understand.
Apparently EUR isn't cheap enough yet, so we need some more rounds of melodrama to weaken it before they make a killing (also literally).
WELL??????
Uh-huh.
Anything else?
Dup
Are you still here?
They're in...they're out...in and out, in and out...
Where have I done this before.
hokey cokey
Regardless, Schaueble is a malicious, vindictive piece of shit. What is wrong with that man?
DavidC
He's the result of anal sex.
well, he is not the first fiscal conservative to be portrayed as "malicious, vindictive piece of shit", is he? regardless of his other points and their validity or not
I actually agree with you (and Shoible) on this one - he's talking sense and he's the only one I'd trust to keep to his pronouncements at this point.
Ghordius- All I can say to you is: "See? SEE?? Do you get it now??" NEITHER side can get their act together. This whole grand experiment is going to fail or at least walk away with a severe limp. And this is just ONE tiny little country. Imagine if they had TWO similar events happening at the same time. it would be game over.
I don't mean to pick on you but you're one of the few socialists around these parts I can spar with. A socialist with a brain, but a socialist nonetheless.
NoDebt, thank you for the compliments, and yes, "getting their act together" would be welcome, but why do you see me as... socialist?
I am many things, and more in the middle of the political spectrum, with great skepsis for extremes and radicalism
further, I am an Austrian School fan, a fiscal conservative and I am on the record here for many comments against the leftist and neo-leftist mantras which I regard as false, as much as those from the neo-conservative war parties and the neo-liberal neo-feudalist parties
yes, I sympathize with some of the reasons that socialist have for their struggles, but that sympathy does not extend to their usual policies
further, if I would mind people picking at me I would have chosen a different avatar. I care for opinions, and even more for facts
fact or opinon: this mess in Greece would have been similar if that debt was in gold instead of in EUR
Sick fuck.
Schaeuble "walks away with a severe limp"
Dr Strangelove and His Bride, the Reptile Queen are Assimilating Your Soul
Oh ye of Black Auras
Give Schauble a break. He had no knowledge that Greece's books were cooked with the help of Goldman and honestly thought that little Greece would be able to pay back those huge sums of money that they used to buy finely made German products. Yes, German business benefited greatly, but it was an honest transaction between European brother. Completely surprised, how this happened... I'm with Schauble. /SARC
Yep! Stunning how this gets missed. Every time they open their fucking mouths, we should keep in mind the original crimes. But folks want to blame Greece, alone, for this mess-- banker mess.
Get it in our thick skulls, every time Schaeuble opens his mouth, acts all high and mighty like Germany has discipline and the Greeks are just lazy and incompetent, Germany was in on the Ponzi trying to get something for nothing. Greece had to buy German military hardware as a precondition for the last bail out.
Folks have been one-sided and hateful around here as of late.
This is the state of the world. Not just Greece, not just Germany. Yet we want to blame one or the other. All of them and all of us are hypocrites. We can't fix this until we get that into our heads and pull our focus out of that particular micro situation. PIIS/F are being held together by I don't know what. The US can pull it off for the moment because we have the Fed buying treasuries and issuing 0s and 1s on computer screens to plug up the holes.
Meanwhile, I'd like to push that lying, hypocritical, authoritarian, self righteous, asshole out of his wheelchair and onto his face. I'd like that. Maybe step on him.
But I would be wrong. We are all in it.
And perhaps we should all blame each other. The game is rigged yet everyone continues to borrow. The system preys on a human condition. I'm not in any way defending it nor am I excusing what's happening. What I'm saying is it will stop when people finally get off the hamster wheel.
He earned his hatred of the FSA honestly. One of them tried to assassinate him 25 years ago. That's why he's in a wheelchair.
German Finance Minister Wolfgang Schaeuble says on Deutschlandfunk German radio it’s unclear how sustainability of Greek public debt can be achieved without debt forgiveness, which is banned as long as the country is a euro member.
Schaeuble is talking more sense than the Greek Government...............he may just save the Greeks by pushing them to get thier act together
There is no "getting their act together." They don't have the money to repay it. Many of the assets they had that might make money have already been taken from them. Capital controls on the banks mean that business has slowed down or halted all together. Slow business means even less tax collected than before.
There is nothing they can do to pay this off. Greece needs to walk away. The Trioka needs to stop lending them money. This is what normal borrowers and lenders do.
Maybe not, remember that Goldman Grexit conspiracy? Maybe Schaeuble crafted that ridiculous offer thinking that the Greeks had enough pride to reject it and get themselves Grexit'd
He must feel silly if that's true.
It matters not the reasoning for Schaeuble's Greek exit
It's what they need to do ..........................and Man Up
At least we tried to make it easy for the free shitters to opt out...
Well, maybe. They could throw some billions in another round of extend and pretend, but it seems the maths are out of the bag, numbers are known, and payback impossible without restructuring/default. iMF/US seems amazingly to be souring on the EU "project" (techno-tyranny). There are no anwers from venal politicians, sheeple, and an evil banking cartel; only pain. The Archons are gorging on it.
Stocks up? Flip the script to bad news. Stocks down? "We saved the world!" It is pretty clear right now that this Greek thing is a money making trade machine for the people who are making the decisions. The height of corruption.
Greece should say fuck you we ain't paying, and then promptly stay right where they are.
Gonna be rough and any plan is going to have to have the Greek government spend only what it collects in taxes.
This way, the Greeks can at least fuck the EU, to borrow a phrase from a real amerikan.
pods
You daft twit if Greece could spend only what they take in they wouldn't be in this muck in the first place. Politicians are to blame buying votes with borrowed money, money borrowed from banksters no less.
I understand HOW they got in here.
How they get out is the issue.
Either they kick the debt can (go along with the Troika's plans) and only spend what they get in taxes, or they default and only spend what they do in taxes.
Either way they are going to be balancing the budgets. Why not do it while still using a Euro with less debt? If they go Drachma, they will immediately blow it up.
pods
I hate it when I give a "don't want it " price, and they accept it.
All the insults and humiliation bestowed upon Tsipras by Ironside and just because he refused to wear a tie.
Even as a kid i always thought that the David & Goliath fairytale was just that.
Oh fuck off already with this market moving drama bullshit...
in other times, the IMF walking out, particularly after all those "helpful" comments, would have been seen as Washington walking out
and indeed, it could be seen as the first of many... retreats
to bad that many ZH writers often prefer to conform to the mantras of some US blogs that like to portray the IMF as an icon of foreign control, largely dismissing the fact that Lew and Yellen control on behalf of the US the 17% veto/blocking packet of shares of this Washington-based "institution"
just to keep it straight: the SDR is the child of the IMF, but China is setting up a rival IMF after years of lobbying for more SDR, and Washington blocking anything that might disturb "King Dollar". I don't think I can put it more simply, sadly I don't have the skills for simplicity
I don't have the skills for simplicity
Not exactly what any of us was wanting to hear. There needs to be a grownup around to yell STOP!
do grown ups fantasize about great balls of fire and huge explosions? corruption is incremental, and fighting corruption too. the road to both hell and paradise is made of one small step after the other
The road to hell is made up of bombastic words....with lots of people cheering....really not knowing exactly they're cheering for.
+1
Nuland hasn't visited yet then
If you mean it, then do it. You already know if there's a sane basis for any agreement (hint: no there isn't). So do it. Do the greeks and the rest of the world a favor and make the move. then leave them the fuck alone to recover and find new, better allies.
You may do the first part but you sure as shit wont do the second.
He gave them unacceptable terms(to him) fully expecting them to reject them and leave.
Now he's fucked because they caved and won't..
Look, Greeks the only bailout you're gonna get is if you jump out of a Heinkel bomber of the Luftwaffe."
--schaubel
And greeks need to take their country back by force now. Every civilized mechanism has failed them.
So its Golden Dawn or your own pitchforks. Take your fuckin pick or stay silent and lose the right to complain about the poverty you are accepting through inaction.
Greece is being overun by refugees and because of membership in the EU cannot do what any sane and non suicidal nation would do in such situation.
Soon enough there will not be Greece to be saved.
It will turn into another 3rd world shithole
You can bet that before he trap-door's the Greek arrangement, Schauble is checking, double-chciking and triple-chekcing the anticipated fallout not only in German banking, but other EU members as well. Problem is, he almost certainly doens't trust any of the numebrs he's being given by Italy, Portuga or Spain, even France -- that's the hard part, antcipating some spontaneuos combustion by an entity that either didn't fully disclose or wasn't completely aware of the implications of their exposure to Greek debt risk.
You can bet that before he trap-door's the Greek arrangement, Schauble is checking, double-chciking and triple-chekcing the anticipated fallout not only in German banking, but other EU members as well. Problem is, he almost certainly doens't trust any of the numebrs he's being given by Italy, Portuga or Spain, even France -- that's the hard part, antcipating some spontaneuos combustion by an entity that either didn't fully disclose or wasn't completely aware of the implications of their exposure to Greek debt risk.
If borrowing/bailing must be done it is better to be done with people who lie less than the Greeks.
Exactlly why Germany should leave the shitshow EU first--but won't.
If one assumes, yeah I know, that neither Tsipras or Schaeuble are complete morons, then the only way this recent "display" makes any sense is that initially Tsipiras wanted to take Greece out of the Euro to freedom and be the big hero at home. However, once he realized that A) that is exactly what Schaeuble wanted him to do, and B) the way things were going down he would quite possible end up being regarded as a goat rather than a hero, he flipped his position and suddenly wanted to play nice with the Troika. This has a number of potentially beneficial effects/outcomes for Tsipras. For one, he won't be the bad, bad man that destroyed the EU......that would be the evil bastard Schaeuble's fault for kicking Greece out. Also, if the Troika ends up forking over some more cash to Greece, well gosh, that would be just swell. Also, it makes Tsipras look like he did his best to work out a deal, but the Germans were just stone hearted pricks. The end result will be disaster for Greece, and the EU, regardless of how the theatrics end. We will just have to wait to see who ends up with the part of the evil heartless villain. For the villainous role, my money is on Schaeuble. He seems to relish being an asshole.
THisis the first time I agree with Wolfgang Sch.
It is better for Greece to walk away from the negotiations.
He knows Greece will never be able to pay this back and will eventually default - so better now than after pumping another 60 billion into Bailouts.
https://www.youtube.com/watch?v=5D0VhS8qXT0
It's clear the Greeks will never vote for Grexit---only Golden Dawn stands to gain from it. They'll have to be pushed out.
The IMF have given Schäuble the excuse he needs. You know what to do, Wolf. History will thank you.
Where can we pick up a copy of the Goldmann Sachs Cookbook?
I understand it now. This is an argument of whether Greece is pushed or jumps.
Will you, won't you, will you, won't you? Won't you join the dance?
Even though both parties may want the same thing, how to get there is the issue. A hard exit by Tsipiras triggers derivatives, Schaueble wants to avoid that outcome. Greece needed to be crushed so that Germany could control the dialogue in a way that benefits the financial overlords by buying time for more can kicking. A poster called the following a nazi-stasi stasis box.
http://www.zerohedge.com/news/2015-07-12/leaked-eurogroup-statement-dema...
By expanding the bounds of theoretical lexicography with technological advancements in financial engineering, there exists a space that can temporarily split Greece into a sovereign nation of "good" and "bad" financial entities. Stuck between "in the EU" and "on temporary suspension from the EU", there is the ability to keep the debt in stasis without a default that would trigger derivatives. Just don't open the box ala Schrodinger.
Any debt write off would trigger default and derivitives, the preferred method is for Greece to agree to austerity (even fake austerity) to keep the ponzi alive.
Greece is a political problem whose goal is to prevent losses the EU financial overlords.
Si, you are absolutely correct. However, there is a shelf life to the ponzi, its just that no one knows precisely what that is. And the 'financial lords' are loathe to give up their rents, so there will never be any 'fake austerity'. The problem for the Greeks is that they have been selected to be the example for the rest of the world, of 'we will do whatever it takes to prevent you from upending this applecart'. And so, in the process they must endure evermore penury and loss of self-determination, indeed a modern version of enslavement. The problem for the Germans/Nordics is that the longer their politicians protect these "lords" as the world watches the total lack of inhumanity of grinding a nation into dust, the more vicious the blowback will eventually be. The inevitable collapse wiil be epic.
While I am not religious, there is something to be pondered about greed and the lust for wealth and power. Perhaps these things are by nature just cyclic, and we will someday temporarily enter a more benign aspect of the cycle. But for now, I fear, the vast majority of mankind will eventully become Greeked.
All of a sudden they give a fuck if it's legal or not.
Greece is only the beginning. The other Greece’s in the EU- Portugal, Italy, Spain and France are all faced with similar problems- stagnant/ declining economies, high unemployment and increasing indebtedness, which will never be paid off. Working people in the EU and US can look to Greece as a model for what is in store for them- high unemployment, austerity and collapsing living standards.
Gums flapping.... blah blah, blah. His job is to be the bad cop, but we now know it doesn't mean anything.
Just create a new European entity holding toxic debt, dump all the debt, let Super Mario manage it. They can start debt free and work their way up to 100% debt/gdp ratio. Repeat it every ten years or so.
Simple solution to a complex problem:
- Greek government stops payouts in Euros
- Greek government pays pensions, salaries, and other payments in Drachma
- Greek government accepts payments in Euros or Drachma
- No forced conversions from Euro to Drachma of existing bank accounts or cash holdings
- Businesses permitted to transact in Euro or Drachma
In the current system, business is dead in the water, since the banks are closed and no one can get to their existing money. Tax payments, mortgage payments etc. are simply halted. With the above points, internal business in Greece can be transacted in Drachma, while the government works out the debt problems.
The major flaw in other proposals is that they assume exiting the Euro means everyone in Greece must give up their Euros and be forced to convert to Drachma. But this is not necessary, since the Euro will continue to exist, in fact, Greece introducing the Drachma makes little difference to the overall amount of Euros in use. It's a false analogy to conversion from a national currency, in which case the national currency ceases to exist, thus a conversion is needed.
Far from over.
Why on Earth would you make a rule forbidding debt-restructuring? What purpose does that even serve? If a country can't pay, it can't pay, rules or not. So why argue with reality?
Again, what purpose does it serve? You can't get blood from a turnip, no matter how hard you squeeze, and bankruptcy is part of a system so dependent on debt...it's not a luxury, or an indulgence, it is a NECESSITY!
You MUST have a process for the indebted to get relief if needed. That is just basic common sense.
What do these idiots think, that if they make a rule that says you can't get debt relief, that money will just magically appear?
I can't believe I'm stuck on this planet with such a bunch of morons...If we ever get invaded by extra-terrestrials, I'm selling this species out. If there's any species that deserves to be taken over by superior forces, it's this one. I'd rather serve a new set of overlords who make sense than keep running around "free" here in the insane asylum.
The idiot in this case is the electorate, the majority of which is in favour of the rescue package and believes that the money will one day be repaid. Our politicians stage the circus because if they tell the people the money has been already lost the support for the rescue package will vanish.
Much ink has been wasted over the current crisis in Athens which is on its way of becoming a protectorate of Bruxelles. However in the myriads of paper I did not find one reasonable analysis of the advantages and disadvantages of a Drachme2 for Greece. The Drachme2 is dismissed with the argument that this would impoverish the population. Well, according to numerous reports the economic situation in Greece is dire and many people are already poor. To the extend that the argument should be that the Drachme2 prices of Volkswagen and Mercedes will be too expensive for the Greeks I would respond that this is apparently a non-issue. The prices for basic supplies would be in Drachme2 but most basic supplies are of domestic production. With the interest rates everywhere close to zero the Greece central bank could easily harden the value of Drachm2 by lifting the interest rate. I find it super strange that these issues are not discussed.
There is considerable advantage provided they peg the Drachma2 at par to a BRICS currency, and so do not peg to the Euro.
Then (for example) Russian Ruble (or Yuan etc) banknotes can circulate alongside both Drachma2 and the Drachma2 will not depreciate it provided it is supported with a currency swap.
The Euro can circulate at the same time in Greece too, but at a floating exchange rate.
LOL, bailout a country that cannot pay.
Should have never been allowed into the EU.
Should have never been allowed into NATO either.
Let us all take a "5 year time-out" from the EU and see how many countries come back after that.
How can there still be problems in Greece? The stock market tells me everything is fixed.
Gosh, those markets are wunderbar! I cannot wait to invest!!
"Ve haff plans by ze Luftwaffe to carpet-bomb ze Greek Banks.
All Greeks should stay away from zeir banks for a while.
Ze new program iss code-named Marita II."
Anyone else think Schaeubel is personally the main impediment to a reasonable union in Europe?
Maybe that that is the point. When Schaeubel goes, then everyone will settle down to a new normal.
In the days of old without computers, Google and PhD's, they knew how to solve this problem - Debt Jubilee...
I listen to Grand Funk Radio...
Canada (somehow) ranked most admired country in the world:
http://www.ctvnews.ca/canada/canada-ranked-as-most-admired-country-in-th...
See what happens when you're not part of the EU? People start admiring you. We need to avoid that at all cost.