Pure Troika Idiocy - The Greek Debt Slavery Regime Through 2059

Tyler Durden's picture

Submitted by Michael Shedlock via MishTalk.com,

 

 

Irreconcilable Positions

Greece owes the Troika over €11 billion in bailout repayments through the end of July. Greece is unable make those payments unless the Troika releases the funds.

Position 1: “We need a big debt restructuring, no more kicking the can,” says Greece’s Minister of State.

Position 2: Germany offers a possibility of unspecified debt relief, at a future point in time, only if necessary. First, Greece must make another round of budget cuts on top of the pension cuts its just made.

Greece has caved in every time, and in the most humiliating ways. Greece even caved in on pension cuts last week.

Why should anyone believe Greek demands now?

 

Please consider Greek Bailout Deal Must Have Concrete Debt Relief, State Minister Says.

Greece will not accept a bailout deal without a concrete agreement for debt relief from the country’s European creditors, a top aide to Prime Minister Alexis Tsipras said.

 

“We want real solutions, not interim solutions,” Nikos Pappas, Greece’s Minister of State, said in an interview Friday after several days of talks with senior U.S. officials. “No more kicking the can down the road.”

 

Without fresh bailout funds, Greece faces bankruptcy in July at the latest. That could revive risks across the eurozone, which is already grappling with a migration crisis, a movement in the U.K. to leave the European Union and the rise of populist parties across the continent.

 

European powerhouse Germany is pushing Greece and the IMF to accept another bailout agreement based on possible debt relief in the future. The fund, trying to regain credibility it lost in the first two failed Greek bailouts, is taking a firm stand on debt restructuring.

 

“There are disagreements between the IMF and our European partners,” Mr. Pappas said. “But we have made our position clear that we need a big debt restructuring.…There should be no delay.”

 

U.S. Treasury Secretary Jacob Lew said Friday he’s pushing Germany to accept some form of restructuring. “I have very much communicated to all the parties that debt relief is necessary,” he said.

 

But Mr. Lew signaled that the IMF and Greece would also need to compromise. The IMF is pressing for Greece to commit to wage and pension cuts if the country doesn’t meet its budget targets in the coming years. Athens has instead said it would approve across-the-board reductions in spending, a proposal the fund says isn’t credible.

Are Greek Threats Credible?

Greek threats are not credible. Greece has little say in this matter. Nor does U.S. Treasury Secretary Jacob Lew.

However, there is a major difference this time. The IMF wants debt haircuts or it threatens to back out of the deal.

Germany’s insistence all along is the IMF must remain a partner.

This is a battle between the IMF and Germany. No one else’s opinion counts.

 

Greece Short-Term Debt Timeline

Greece Debt Obligations1

Can Greece come up with €11,235,558,147 in June and July?

Of course not. That is not the way the “bailout” works.

In practice, the Troika gives Greece the money and Greece hands the money right back to the Troika plus a tiny bit extra from now until 2059.

The repayment calculation assumes Greece can maintain a budget surplus of 3.5% of GDP from 2017 until then, a ridiculous belief to say the least.

 

Greece Long-Term Debt Timeline

Greece Debt Obligations2

Total Debt Owed

  • EFSF: €131 Billion
  • Eurozone Governments: €53 Billion
  • Private Investors: €36 Billion
  • ESM: €25 Billion
  • ECB: €20 Billion
  • Treasury Bill Holders: €15 Billion
  • IMF: €14 Billion

Synopsis

  1. Greece needs to come up with €11,235,558,147 thru the end of July.
  2. Under the current “bailout” scheme, Greece needs to repay nearly  €300 billion between now and 2059.
  3. Starting 2017, Greece is supposed to run a primary account surplus of 3.5% through 2059.
  4. The IMF proposes a primary surplus of 1.5%. That proposal, stand-alone would stretch debt payments well beyond the already ridiculous 2059 date.
  5. In conjunction with a new primary surplus target of 1.5%, the IMF threatens to back out of the whole deal unless there is debt relief.
  6. Realistically, Greece is not going to maintain a primary surplus of 1.5% either.
  7. Germany does not want debt relief and its constitution does not allow transfer mechanisms.
  8. The ECB which is owed €20 billion, most of that due in the next three years, cannot allow debt relief on its portion.
  9. Merkel does not want another crisis on top of the Greek refugee crisis she has now.
  10. The EU does not want another crisis ahead of the Brexit vote.

Another Greek Bluff? An IMF Bluff?

On its own, Greek demands are meaningless, unless this isn’t a bluff.

Would Greece walk away this time after what we have seen in the past? Is Greece secretly printing Drachmas?

Regardless, something has to bend (or break), if the IMF genuinely sticks to its guns.

If the IMF does back out, would Germany enforce the terms of the deal as demanded by the third bailout?

There are a lot of questions here and no one really knows how far Germany will bend or how firm the IMF will be.

 

Another Can-Kicking Exercise?

Despite Greece’s demand “We need a big debt restructuring, no more kicking the can”, the most likely outcome is a trivial debt restructuring “can kicking” compromise to get past the Brexit vote.

“Likely” and “guaranteed” are not the same. There are other forces in play: the refugee crisis, Brexit, Merkel’s declining popularity.

Unless Greece is willing to return to the Drachma, this squabble is between Germany and the IMF.

After seeing one can kicking exercise after another, after another, for years on end, and after the amazing cave-in by the Greek government that lead to the third bailout, no one seems remotely concerned this effort will fail.

Perhaps this is the effort that fails or at least leads to a major position change by Germany. The outcome may come down to this question:

Is the IMF bluffing, or is it serious?

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wildbad's picture

Oh, Greece..are they still here?  Go talk to Iceland.  They did it right.  You are doing it wrong.

Stiff the creditors, go back to a simple agrarian societ for a few years and woo the tourists.Make sure you have some good Austrian economists in the new cabinet.

Enjoy your Ouzo and Calamatas

wise_owl_says...'s picture

no one can afford debt, including trumps corporate bankruptcies. so when debt is taken on, just simply file a chapter. only in USA. do that in other countries and you get disappeared. how about not accepting dirty money loans from tptb in first place.

 

A to Z alphabet soylent soup -stupid 'whoh is me' video circulating with no solutions, but i have some-... personal responsibility, moral judgement, ethics, motivation, honesty (gold and silver, not paper), and fighting for liberty (its not free). but that takes too much effort for muppet masses... A to Z will persist out of sheer lazy socialist 'values?'.

i honestly believe that self loathing libertard communists that sell their children into slavery (by voting their wallet on moar .gov corporate and personal handouts / bailouts), just say they love their children, while quietly despising them.  our children get to inherit this earth, look what we are leaving them due to selfishness and not a lick of true sacrifice by not following method of A to Z elimination. imho, it is imperative that everyone over 40 get in ground quick like so children have some breathing room. ie kings, queens, bishops, priests, imams, bankers, institutional investors and holders, politicians, and all military / police henchmen that protect all above -everything that is corrupt and bound for hell-. party on j a c k a s s e s, reap what you vote!

 

Theonewhoknows's picture

Hey, you know that debt is the best way to enslave someone while not caring if he is clothed, fed and sheltered - you should try it some time (Africa loves it) http://independenttrader.org/the-true-reason-behind-armed-conflicts.html

piliage's picture

The Greeks are a strong majority of brain dead corrupt socialists who are addicted to sucking on the government tit. They blew their chance, now, they will be forced to 'go Greek' to German and French bankers for eternity.

I would love nothing more than the Greeks to tell the EU to fuck off, but the only way that happens is if Varoufakis comes back on the scene and runs on a specific election position to default.The Greeks aren't willing to default, they love sucking on the EU honker too much, so that will never happen.

Pity.

the late idi armin's picture

i don't about the Greek people but the Greek politicians want to walk the european stage even at a very low level. if they default they would become the western Armenia. 

GotGalt's picture

Option 4:

Draghi spits rainbow euros out of his ass and satisfies all parties within the EU and world. Problem solved.

samjam7's picture

2059 eh? Yes, we can Troika, let's do this!

Zero Point's picture

Can someone name me a country that ISN'T stealing from it's grand children?

dogfish's picture

Just the mythical countrys with unicorns and flying horses,as for the rest of us were fucked.

taggaroonie's picture

The loans were made with stolen money and are supposed to be paid back with stolen money.

So is a default theft?

 

Watson's picture

This is becoming quite interesting.

Germany (AKA Ms Merkel) is accountable to her voters, and those voters appear increasingly unhappy
with her stance on various thing (see rise of AfD).
So although her instinct is to bail ('European Solidarity' AKA German war guilt),
it is not obvious that it is politically acceptable for her to grant debt relief for a bunch of people who retire earlier than her own citizens.

The IMF is, of course, not really accountable to anyone.

There is another factor: at this point all German banks have passed on their Greek risk.

So maybe, just maybe, she will let Greece go...calculating that the resulting disruption won't hurt Germany
too much, but may persuade her voters to support a much bigger bailout (for the Italian banking system) down the road.

The only problem with that is that I think Italy's problems are too big even for Germany.

At which point Germany wakes up to a new-DEM.

Watson

NoWayJose's picture

Merkel's 'fall' may be the black swan that finally takes down the EU and stawk markets. The Brexit is just 'noise' compared to that.

Terp's picture

At this point most Germans have realized that "money" doesn´t seem to be an issue anymore, given the sums thrown around recently.

I don´t think many people care for Greece anymore, the problems are much closer to home by now.

Bopper09's picture

There is no can.  It's almost just a small aluminum round it's been dented so many times.  Although that aluminum is real, so worth far more than fake failing fucking fraudulent garbage currency that they're kicking it for.

Paul Kersey's picture

If the Brits don't vote to leave the EU, then this is what they'll have to look forward to some day.  For a country to give up its sovereignty to the IMF and the ECB is an act of insanity.  At least GB kept its currency.

 Brits, get the hell out while you still can. The EU has becom a technocracy run by elites for their own benefit and for the benefit of Germany.  The Swiss probably have Europe's highest standard of living because they didn't join. 

JustUsChickensHere's picture

Slightly OT - but definitely more pressure for EU banks in the medium term... another charge on Spanish bank balance sheets.

http://www.dailymail.co.uk/news/article-2359550/Hope-thousands-Britons-l...

Hillarys Server's picture

Mark Zuckerberg should hire the entire population of Greece for 11 billion dollars to be full-time extraterritorial Facebook censorers. Problem solved.

Grandad Grumps's picture

Why is Greece in debt?

1. ALL money is created from debt.
2. The EU/ECB central power wants all local countries to be slave states to the central power ... just as after the civil war, the individual US states increasingly became slave states to the central power in America.
3. In the current world, it is the ability to create money that determines who has power and who does not have power. Even those who have huge amounts of money can have it taken away in an instant. There is no true security in a system with money as its central power. (It does not have to be this way)
4. Technocrats are not saints. Heck, they are most likely not even decent people and so they do what they perceive as being in their best interest and not what is right for the countries and people.

Plato's Republic fails because those in charge, may be intelligent and experienced, but they are too weak and flawed to put the good of all ahead of the good of themselves and their peer group.

Last of the Middle Class's picture

Grow some balls guys. Nationalize the debt and throw the EU asshats out! What a fucking mess.

buzzsaw99's picture

Yeah. Well, that sounds like a pretty good deal. But I think I may have a better one. How about, I give you the finger. :he does: [/Neo, The Matrix]

Pliskin's picture

My take on how this will go down, for what it's worth;

Greece can't afford to pay its debts.

Greece defaults and gets kicked out of the Eurozone/EU/Schengen area.

Millions of refugees pour into Greece, with no-where to go.

All bordering Countries seal their borders with Greece.

The refugees keep coming...and coming.

Greece completely breaks down, war between the refugees (Armed by Turkey) and the Greeks.

Greece is taken over by Muslims.

Turkey annex Greece.

No more Greece.

Erdogan's happy, Merkel is happy, U.S. is happy, your average, uneducated sheep in the EU countries are happy.

Problem solved.

skepsis101's picture

Or . . . Greek Navy/National Guard/Airforce respond by sinking every stinking piece of flotsam and jetsam carrying a muslim horde to Europe. Caliph Erdogan responds by attacking Greece and NATO suddenly has its nightmare first civil war on the European continent. All hell breaks out in the European Union (Hungary, Slovakia, Poland, Austria support Greece's right to self-defense as well as the common defense of Europe, while Merkel's head implodes as she tries to hold the Fourth German Reich (EU) together and smack down Greece.  Gen. Breedlove threatens Greece, and Russia quietly arms the Greek patriots one night a la Syria.

Now that would be a movie worth watching!

adonisdemilo's picture

Time for new elections, only this time vote for somebody with enough sense to tell the Troika to fuck off.

 

css1971's picture

Pay Greece, not Turkey to hold the refugees.

Theonewhoknows's picture

Hey if this is bad think about all the programs to bail out Greece were breaking all EU treaties! Fun, isn't it? Elite will keep elitin' I guess...

EFSM - based on art.122(2)"exceptional circumstances beyond Member States control" [the 2008 meltdown] and Vienna convention tells you that reading those words should be in good faith and in their ordinary meaning i.e. the help should be only granted given 122(2) conditions are met. Now Greek governments lied about their economic data to the EU, binged on cheap credit and got what markets gave them. Read Boris Ryvkin about that and basic Austrian Business Cycle theory. Also, EU knew about that - Parliamentary reporter Anne Silbert wrote that: 122(2) was supposed to be used against earthquakes, floods and hurricanes not 3 decades of bad policy, but due to the small size of this fund no one cared.

EFSF - Luxembourg company with 440 bn EUR that breaks art 124 of TFEU - which limits privileged access of public authorities of EU members to financial institutions. Giving Greece money at very low interest rate was a privileged access. The risk is taken by signatories to EFSF. Also, Art 125 TFEU has explicit NO BAIL OUT clause prohibiting member state from assuming liabilities of another member state.

ESM - build on principle only for eurozone members (Art 136 and Euro-Pact plus). But Stability and Growth Pact - SGP - presented by van Rompuy's taskforce may be the basis of enforcing fines and other measures if a country does not follow the EU guidelines: excessive imbalance an excessive deficit procedures which in turn will end up (under the same SGP) in the pockets of bankrupted euro zone countries. This is explicitly against art 136 which says non-euro countries doesn't need to pay. I hope I shed a light on this matter for you. More? Here

Herdee's picture

I think the largest bank in Germany has its' hands full right now with enough problems.Maybe this will break their back by igniting a massive, ongoing and failing derivatives scam.Starting to get a lot more complicated.Greece,just don't give Germany your gold.