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"We Should Admit This Isn’t Going To Work": One Country's Grim Assessment Of Greece's Future

Tyler Durden's picture




 

On Saturday, Frankfurter Allgemeine Sonntagszeitung reported that Greece’s creditors - the “quadriga” as it were - had agreed on the terms to be imposed on Athens in return for an ESM rescue package worth some €86 billion. The 27-page draft MOU is "substantial and far reaching," and includes cuts to defense spending and subsidies for farmers, Bloomberg says, summarizing the FAZ report. 

Greece desperately needs to close the deal next week. If the new program isn’t formally in place by August 20, a €3.2 billion payment to the ECB won’t be possible - a default to the central bank would likely be catastrophic, as Greece’s banking sector would collapse entirely in the absence of the ELA liquidity drip.

Once Greek officials agree to the conditions, the draft will be circulated to EMU member countries for approval and Alexis Tsipras will need to go once more to parliament where he hopes the Syriza rebellion which imperiled the first two votes on bailout prior actions will have died down in the wake of a dramatic party meeting late last month in which the Greek Premier insisted that for the time being, "opposing voices must stop." Here’s Reuters:

Greece is on track to complete a draft deal on a third bailout by Tuesday and possibly get a first disbursement by Aug. 20 to meet a key payment, sources familiar with a conference call of senior EU finance officials late on Friday said.

 

Greek Prime Minister Alexis Tsipras has tried to force the pace of the talks, keen to wrap up agreement on sensitive economic reforms by mid-August, while many Greeks are on holiday, and receive an initial aid disbursement by Aug. 20 in time to make a bond payment to the European Central Bank.

 

If a draft memorandum of understanding and an updated debt sustainability analysis are ready as planned on Tuesday, the Greek government and parliament would be expected to approve them by Thursday.

And more from Kathimerini:

Greece will aim to finalize an agreement with lenders next week in the hope of being in a position to pass the deal through Parliament by next Thursday.

 

There are a number of issues that need to be ironed out in the next couple of days if the government is to be able to keep to a timetable that would allow the European Stability Mechanism to disburse money before Greece has to repay 3.2 billion euros to the European Central Bank on August 20.

 

Some of the issues on which there is yet to be agreement include changes to farmers’ taxation, scrapping nuisance taxes, further product market liberalization, deregulating some professions and allowing Sunday trading.

 

The other issues that must be settled are which prior actions have to be approved now and how much fresh funding Greece will receive on approval of the third bailout.

 

If the new agreement is approved by the Greek Parliament on Thursday, eurozone finance ministers are likely to convene the next day to give their green light as well. 

Of course not every EMU finance minister is convinced that the ad hoc, rushed effort to disburse aid to Greece is prudent. As Reuters goes on to note, German FinMin Wolfgang Schaeuble (who, you're reminded, would much prefer that Greece simply leaves the currency bloc so that Berlin can send a message to Rome and, more importantly, to Paris) favors a second bridge loan from the EFSM so as to allow for futher deliberation:

Some countries, led by Germany, were keen to nail down more specific long-term reform commitments in addition to the immediate actions to be implemented, the source added.

 

Germany, keen on fiscal discipline and far-reaching economic reforms, is sceptical of any early deal and doubts a multi-billion-euro bailout can be agreed by mid-August.

 

"It remains completely open," said one politician from the ruling coalition government, adding that Finance Minister Wolfgang Schaeuble was taking a cautious view of comments by commission chief Jean-Claude Juncker on the chances of a deal.

 

Greece would not get a free ticket to new aid, the coalition politician added.

 

The Sueddeutsche Zeitung said the German Finance Ministry favoured another bridge loan to give Greece and its creditors time to negotiate a comprehensive reform programme.

 

The ministry says a range of issues remain to be settled.

Yes, a "range of issues" are still up for debate, the most pressing of which is the simple question of whether the entire effort is ultimately for naught, something the IMF has suggested on a number of occasions. One person who thinks the new bailout is an exercise in futility is Finnish Foreign Minister Timo Soini who, as Bloomberg reports, thinks Europe should simply admit "that this isn’t going to work."

A third Greek bailout won’t work and will only prolong the difficulties plaguing the euro area, according to Finnish Foreign Minister Timo Soini.

 

But his party, the euro-skeptic the Finns, is ready to discuss another rescue package because allowing Greece to fail would only add to Europe’s costs, he said.

 

The Finns party, which in April became part of a ruling coalition for the first time, has no choice but to support a bailout since not doing so would cause the three-party government to collapse. That would only open the door for the left-wing opposition, Soini said.

 

"I kept my party in the opposition for four years because of this subject," he said. "But with this government structure we can’t block the program alone and we’d be replaced."

 


 

While Finland drove a hard bargain during Greece’s second bailout, it may no longer have the clout to block a deal. Finland has already made its 1.44 billion-euro contribution to the permanent European Stability Mechanism. Should Europe decide that the future of the euro zone is at stake, a bailout won’t require unanimous backing from members; 85 percent is enough.

 

Even without an imminent bailout agreement, a European fund deployed in July to help Greece clear arrears contains about 5 billion euros and could be tapped again for a bridge loan.

 

According to Soini, bridge financing will do little to solve the long-term fiscal plight Greece faces.

 

"This bridge funding isn’t going to be final solution," he said. "There’s no solution for this particular problem that doesn’t cost Finnish taxpayers." 

Unfortunately, Soini's assessment applies to a number of EMU governments and in the end, the paradox of the Greek tragicomedy may well be that no one (including Greece) wants to keep Greece in the EMU but everyone will endeavor to preserve the status quo because changing things is simply too painful. With that in mind, we'll leave you with the following quote from Soini:

"If Greece collapsed and Grexit would be tomorrow’s reality, we would lose 3-4 billion euros more or less at once. So I hope that the EU and euro zone, that in due course, we can face the facts and say enough is enough and that we must do something else."

 

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Sun, 08/09/2015 - 14:02 | 6407246 Budnacho
Budnacho's picture

Greece!...where have you BEEN old son!....we've missed you!....

Sun, 08/09/2015 - 14:07 | 6407255 junction
junction's picture
"We Should Admit This Isn’t Going To Work"

2017 - The Troika/NWO will use the same words to describe the economic situation in the United States.

Sun, 08/09/2015 - 16:18 | 6407503 TBT or not TBT
TBT or not TBT's picture

Marking assets to realistic valuation is so heretical that it might actually work.  

Sun, 08/09/2015 - 16:21 | 6407515 Publicus
Publicus's picture

Greece will rise again and conquer Germany.

Sun, 08/09/2015 - 14:56 | 6407339 Jumbotron
Jumbotron's picture

Of course it's working.  The MIC are still getting rent.  They will ALWAYS get the rent.  Even in default they will get the rent.  Either in hard assets or a complete takeover of Greece by a Technocratic government.

 

"The Greeks have taken BILLIONS of Euros out of Brussels and now they must put it BACK !! " 

Network - 1976  - "The world is a business"

https://www.youtube.com/watch?v=NKkRDMil0bw

Sun, 08/09/2015 - 15:15 | 6407370 glenlloyd
glenlloyd's picture

Of course it's not going to work, but what choice do they have. The most important thing to the EU is perpetuating the lie and if that means colonizing Greece so be it. Right now they're spending other peoples money to preserve their powerful positions. This is not for Greece and not for the citizens of of any EU country.

A rational person wouldn't bailout any person three times with more loans, common sense tells you that it's just going to be repeated again, but here the whole slide down the toilet for greece, and exit from the EMU would cause catastrophic ripples throughout their precious system.

It will happen anyway eventually, but in the meantime by spending more money the powerful can 1) perserve their power structure and 2) plan their next move into another power position once the failure is inevitable.

Sun, 08/09/2015 - 17:25 | 6407718 ajax
ajax's picture

 

 

Sorry for the sarcasm but why doesn't Germany and her closest Northern 'friends' just leave the Eurozone altogether, abandon the fucking Euro and re-establish The Hanseatic League?

Hansa! Hansa! Hansa! Go on Germany, be truthful and just get it over with...

Sun, 08/09/2015 - 14:06 | 6407249 PrimalScream
PrimalScream's picture

THE ABSURD situation of giving more loans to a debtor who is bankrupt and can NEVER pay them back.  Oh yes, we will not call them loans.  We will call them "rescue bailouts".  Ridiculous.

This does NOT work out.  Accept reality, or lose the whole of Europe.

There is NOT a single responsible Banker, or a single realistic Politician, left in the world today.  "Fear of failure" dominates all thinking. 

Sun, 08/09/2015 - 14:19 | 6407291 indygo55
indygo55's picture

They want the assets. The collateral. The ports and power stations and water systems and train systems. That's what this is about. Why didn't this story include mention of how the Troika has set up a fund (basically) to take control of these things? And Shoulble or whatever the fuck his name is, the German FinMin, is a stake holder. Personally a stake holder. Total bullshit!! The Greeks should revolt. What is wrong with them? 

Sun, 08/09/2015 - 16:15 | 6407495 dizzyfingers
dizzyfingers's picture

"Greeks should revolt"

 

demographic wake-up call: http://www.businessinsider.com/the-greek-crisis-is-about-demographics-2010-5

Sun, 08/09/2015 - 16:22 | 6407520 TBT or not TBT
TBT or not TBT's picture

Whats wrong with them?    For starters they're not quite europeans, culturally.  What you get out of them is the result you see, illusions created by the cheap borrowing of the last decade notwithstanding.  

Sun, 08/09/2015 - 21:15 | 6408381 assistedliving
assistedliving's picture

Primal, you just described Trump and Paul's appeal in USSA

Sun, 08/09/2015 - 14:06 | 6407250 Joebloinvestor
Joebloinvestor's picture

Another DEBT that will never be repaid.

They ought to call it what it is:

CHARITY

Sun, 08/09/2015 - 14:07 | 6407253 KnuckleDragger-X
KnuckleDragger-X's picture

All they are doing now is determining the size of the eventual disaster. Greece is fucked, but so is the EU and this will have some really peachy effects on the world economy......

Sun, 08/09/2015 - 14:09 | 6407260 NoWayJose
NoWayJose's picture

Just waiting for the 'Final Solution' - where all Greek assets are sold off to bankers for pennies on the dollar, and all Greek debt is transferred from bankers and hedge funds onto the ECB and Fed balance sheets at full value.

Sun, 08/09/2015 - 15:30 | 6407398 The central planners
The central planners's picture

This reforms will alllow Greece to repay its debt plus interest. And everyone will be forever happy.

Sun, 08/09/2015 - 14:09 | 6407261 Vegetius
Vegetius's picture

 

What a tangled web we weave, when first we practice to deceive.

 

This EU lie fest continues onwards towards its doom.

When this carnival of fools will end it is hard to say so we must paraphrase Churchill

"Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."

Sun, 08/09/2015 - 14:12 | 6407271 Sudden Debt
Sudden Debt's picture

That guy doesn't know how and why cankicking was invented.

Sun, 08/09/2015 - 14:21 | 6407298 Handful of Dust
Handful of Dust's picture

... or his foot is sore from can-kicking. He needs to be quiet or downsized out of the organization, quick!

Sun, 08/09/2015 - 14:18 | 6407288 Never One Roach
Never One Roach's picture

This guy evidently didn't get the message: "Everything is Awesome!"

Sun, 08/09/2015 - 14:21 | 6407295 talisman
talisman's picture

 

MIRABILE DICTU ! !--a European politician who can think ! ! !

"A third Greek bailout won’t work and will only prolong the difficulties
plaguing the euro area, according to Finnish Foreign Minister Timo Soini."

 

 

Sun, 08/09/2015 - 14:27 | 6407304 yogibear
yogibear's picture

Here in the US many public workers around the big cities retire with pensions of $100,000 to $500,000/year. Driving around in top-shelf BMWs, Mercedes while their states are bankrupt due to these outrageous pensions.

No wonder there are hundreds applying for  a public sector jobs when someone retires.

 

Sun, 08/09/2015 - 17:29 | 6407731 junction
junction's picture

Outside of police and firefighter pensions, most public pensions (90 to 95%) are under $40,000 a year after 30 years of continuous employment.  The big advantage of public pansions is that they are near theft-proof, unlike private pensions which can be and are looted by the private employer.

Sun, 08/09/2015 - 14:30 | 6407307 chunga
chunga's picture

What Soini needs to admit is they'll never be allowed to "do something different" as long as Europe remains under the heel of USSA/NATO. The Empire needs to choke out Russia and will sacrfice/impoverish/kill every last one of you in this effort.

"Fuck the EU" ~ Victoria Nudelman

Sun, 08/09/2015 - 14:31 | 6407308 Hugh G. Rection
Hugh G. Rection's picture

Time to trot out another "Greece is done" article, this time quoting an obscure Finnish minister saying what we all know, yet the can shall continue to be kicked.

Clickbait

 

Sun, 08/09/2015 - 14:32 | 6407310 RMolineaux
RMolineaux's picture

Why not put a levy on Goldman Sachs for their fraudulant behavior when Greece was admitted to the euro?

Sun, 08/09/2015 - 14:39 | 6407319 Troy Ounce
Troy Ounce's picture

 

The "battered wife syndrome" comes to mind

 

 

Sun, 08/09/2015 - 14:47 | 6407330 NorthernPike
NorthernPike's picture

Until numeric systems run out of characters and placeholders or stakeholders give up, there is room for an infinate number of bail outs.

Sun, 08/09/2015 - 14:48 | 6407331 NorthernPike
NorthernPike's picture

Del Duplicate

Sun, 08/09/2015 - 15:36 | 6407411 atlasRocked
atlasRocked's picture

Yes, we are following in Greece's communist voters' path, let's examine the Democrat voters EXACTLY mimmicking Greece's voters:

The Greeks voted "no" to the recent ECB loans, then their leaders accepted the loans anyway, right? 

Well, did the same thing just happen here in the USA?   Well, yes, it did.

The left's voters cheered and exalted "end the Bush Tax Cuts" in 2008, but Obama didn't raise taxes.  And the left went silent. 

Are taxes really higher under Obama?  HOG WASH.  Obama and Democrats RE-ENACTED the Bush tax rates twice while they had the power AND THE MANDATE OF THEIR VOTERS to END THEM.   But they didn't.  Let's examine why.

Ask a Democrat, OK?  It's THEIR story.   Why weren't democrats enraged when Obama and Pelosi and Reid all voted to re-enact the hated, rich folks' "Bush tax cuts"?  Watch how they squirm and evade.   They RE-ENACTED the Bush tax rates twice!!! After Obama SWORE he would end them because they were evil. Liberals crowds cheered when he said he'd end the Bush tax rates, then went quiet when he re-enacted them. See the duplicity?

Next, show them the 4 straight years of Bush tax INCREASES that raised revenue burden to levels Obama HAS NOT reached yet!!! Obama is actually a lower tax guy than Bush!!

Bonus question: Why would Obama do the opposite of what he said he'd do - raise taxes? Hint: It helps democrats get re-elected.  Here I'll make it easy:  Democrat leaders KNOW lower taxes _____________ votes.  Just like Republicans. 

 

Yes, the left's voters and leaders exhibited the same "no account" behavior as the Greek Communists.

Sun, 08/09/2015 - 15:41 | 6407424 Soul Glow
Soul Glow's picture

That dude looks like Al Franken.

Sun, 08/09/2015 - 15:43 | 6407427 foxmuldar
foxmuldar's picture

Greece cant even depend on tourism now that thousands of Muslim migrants are flooding onto their shores.

Sun, 08/09/2015 - 15:53 | 6407440 tsuki
tsuki's picture

According to the DWN, many were packed on trains heading through Macedonia to Bavaria.  Bavaria was not happy. 

Sun, 08/09/2015 - 16:12 | 6407484 bluez
bluez's picture

People who seem to know say that even in total default, Greece cannot be kicked out of the EU.

That means all the Greeks, as EU citizens, have the right to move to, say, Bavaria.

Then the Muslim refugees will presumably take over this EU country.

Problem solved?

Sun, 08/09/2015 - 16:21 | 6407514 Peter Pan
Peter Pan's picture

The whole of the Euro experiment pivots around the strength of one nation only......Germany. If that doesn't tell you how fragile the Euro experiment is, then keep believing in tooth fairies.

Sun, 08/09/2015 - 16:36 | 6407568 honestann
honestann's picture

EXIT.
DEFAULT.
CLOSE GOVERNMENT.

Then, enjoy the good life.

Sun, 08/09/2015 - 17:12 | 6407671 Jstanley011
Jstanley011's picture

Long Euro, short Dollar.

Sun, 08/09/2015 - 19:24 | 6408061 monad
monad's picture

Mr. Soini isn't going to work out. He's not a team player.

Sun, 08/09/2015 - 23:55 | 6408730 John Wilmot
John Wilmot's picture

What's needed in Greece is very simple: a reduction in the size and scope of government. Trouble is, the Greeks simply won't have it; they like their freeshit and they don't understand economics. I don't see how any Greek government can pass the needed reforms (even if it wanted to, unlike the socialist fucks currently in Athens) without getting voted out of office. Realistically, I think we're either going to see Greece linger on as a zombie-appendage of the EU indefinitely (endless rounds of minor and inadequate reforms in exchange for new loans) or exit (voluntarily or otherwise) and go Zimbabwe. 

Mon, 08/10/2015 - 00:35 | 6408791 fowlerja
fowlerja's picture

Time for Tsipras to look east...like towards Russia or China..make a deal to provide naval facilities and airstrips for their military...hey maybe they can lend Greece some money

Mon, 08/10/2015 - 00:59 | 6408823 Al Tinfoil
Al Tinfoil's picture

Admitting that "this isn't going to work" destroys the whole Extend and Pretend strategy that lets the Eurocrats keep kicking the problem down the road.  

The Finnish Foreign Minister's statement is factual, but unwelcome.  The Eurocrats have no solution to their mess that is not unacceptable to EU voters and EU bankers.  So, the continuing strategy will be to Extend and Pretend and Distract.

Mon, 08/10/2015 - 02:21 | 6408939 sagitarius
sagitarius's picture

They will never pay it back.
The shots have been called by USA. USA instigated the crisis in Greece 6 years ago.
Then left it EUropeans to clean up the mess.
But Germans do not want to pay the american bill and shovel € to US via Greece.

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