"There Was White Smoke": Greece Reaches Deal With Lenders, Promising Even More Austerity

Tyler Durden's picture

Greek government bond yields fell after Greece and its lenders said they reached a long-awaited deal on reforms required to release further bailout funds. With a promise to further cut pensions and give taxpayers fewer breaks, Greece paved the way for the disbursement of further rescue funds from international lenders and possibly opened the door to reworking its massive debt Reuters reported.

The deal was reached early on Tuesday morning, when officials from both sides said they had agreed on a package of bailout-mandated reforms, ending six months of staff-level haggling. Greek Finance Minister Euclid Tsakalotos announced it with a term associated with papal elections. "There was white smoke," he told reporters.

As part of the reforms, Athens has promised to cut pensions in 2019 and cut the tax-free threshold in 2020 to produce savings worth 2 percent of gross domestic product. If Greece outperforms targets, it will be allowed to activate a set of measures offsetting the impact of the additional austerity, which includes mainly lowering taxes. Athens also agreed to sell coal-fired plants and coal mines equal to about 40% of its dominant power utility Public Power Corp's capacity.

On the budgetary target level, the lenders are now likely to decide among themselves on Greece's medium-term primary surplus targets, a key element for granting further debt relief.

 

In a draft document seen by Reuters, the IMF says Greece can reach a primary surplus - the budget balance excluding debt repayments - of 2.2 percent in 2018 and aim at 3.5 percent annually in 2019-2021. It suggests the primary surplus target be reduced to 1.5 percent of GDP thereafter.

Euro zone lenders, however, believe Greece must sustain a 3.5 percent GDP primary surplus target over a longer period.

Last year's Greek primary surplus was 4.2 percent, according to the lenders. Whether that can be maintained is unclear.

In a statement after the deal, European Commissioner for Economic Affairs Pierre Moscovici said that the “agreement reached overnight in Athens on the Greek Stability Support Program is a very positive development following months of complex negotiations" adding that "swift implementation of these commitments should enable the Eurogroup to endorse this agreement at its next meeting."

He also said that a second review is strategic for Greece as it not only delivers on key reforms to modernize the Greek economy but also secures a credible fiscal path for the years to come, beyond the ESM program.

"It is now for all partners to reach an understanding on the question of Greece’s debt in the coming weeks."

Now comes the hard part, however, as Greece needs to put the new measures, which also include opening up the energy market to competition, into law before euro zone finance ministers approve the disbursement of loans, probably at the next scheduled Eurogroup meeting on May 22. Athens needs the funds urgently to repay €7.5 euros in debt maturing in July.

The Eurogroup meeting, meanwhile, may mark the first formal discussion of debt relief for Greece, an issue that means different things to each side. As has been the case for the past two years, the IMF believes that Greek debt is unsustainable at 179% of gross domestic product and is reluctant to participate in further funding without a debt relief agreement. EU lenders, on the other hand, have ruled out forgiving the debt and refused to discuss such things as cutting repayment rates until after a reform-for-cash deal is cut. Both groups of lenders have differed markedly about what Greece's budget is capable of sustaining.

Which means that the still "deal" remains a blank check. Nonetheless, the Greek government hailed Tuesday's agreement as now allowing the yet-to-be-defined relief go ahead. "The government believes that this road, despite the difficulties, will lead to the country's exit from bailouts," Interior Minister Panos Skourletis told ERT TV. "What's important after closing the bailout review is to have a roadmap for debt relief."

Skourletis repeated Greece's mantra that demanding increasing amounts of austerity risks alienating great swathes of EU citizens. "The consequences for every government, including ours, that is obliged to implement bailout measures, is the risk of damaging the relationship with society, particularly the groups that you want to represent," he said, well aware of the risks of promising more austerity and being unable to deliver.

Should the Greek population revolt at even more austerity imposed upon it, the current government may face a turbulent summer in which labor strikes once again drag down the depressed economy, potentially ushering in the New Democracy party back in power, and reseting the Greek process back to square one.

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Pandelis's picture

This was possible because of Trump. 

Give credit when credit is due.  Currently, the country is run by the Soros operatives team so do not expect them to acknowledge it, however, here are a few reasons why:

- White House Greece independence day a month ago, attended by Trump and Greek Archbishop of America.  They plead to Trump personally, and he is a people person given his real estate background and everything.  Being from New York he has dealt with plenty of greeks and he has been clear that he thinks positively as hard working people (contrary to what mass media has been feeding the public the last ten years, trying to rewrite thousands of years of history ... but whats new right?  this has been tried many times before ... however, there is God at the end and that is the only hope).

- A few days ago in a White House press conference Trump responded to a reporter's question he started by asking the reporter if he was Greek, then proceeded to state that THERE WILL BE NEWS IN FEW DAYS.

Trump might have given up in other important issues and if you consider who is on the other side, I would not blame him (you cant expect a white knight to come and rescue everyone from all this nightmare the world is going into).

 

On another subject for those who have not seen it, here is something from Plato worth considering:

https://www.youtube.com/watch?v=N6LUptADIww

Haus-Targaryen's picture

lol the Greeks. 

Would you like a slice of cake? 

silverer's picture

"Would you like a slice of cake?" lol

It's like the Mad TV skit: "My triple blade razors aren't good enough..."

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

Yes, Greeks. We CAN get blood out of a stone!

MalteseFalcon's picture

If I were a banker, I'd have had enough of Greece already.

Just flood the place with a few million sub-African "Dreamers".

With machetes.

Greece will not be "free" until it has elected a black Prime minister.

jus_lite_reading's picture

So any Greeks here?

Can you explain this to me, because maybe I'm missing something --

Your country is being flooded with illegal immigrants, who get houses, money and food. The REAL Greeks who worked their whole lives get ZILCH.

 

rmopf2010's picture

 

 

1) This "garden" in front of a public hospital in Athens consists of 4 small "trees".  No less than 45 gardeners are hired to take care of them.  I wonder if they polish all the leaves every day?

2) There is a public institute to take care of a lake: The "Institute for the protection of lake Kopais".  A small detail.  The lake has been dried out since 1930.

 

Who worked all their lives ? the gardeners or the folks at "Institute for the protection of lake Kopais" ??????????????

Please answer me !

 

 

 

Wrenching Away's picture

Have you been to Greece? Because I have. And when I was there, I found almost universally a welcoming and simple people. As someone who has worked with his hands his whole life, I can tell whether a man is a hard worker just by his handshake. I met a lot of hard workers in Greece.

What I didn't see? A bunch of overweight teenagers with their face glued to a new $1000 iPhone like I do everywhere in the states. If it weren't for the muslim swarm, I would consider relocating there. I'm preparing to cash in my chips here and maybe leave the USSA

ItsSnowingInColorado's picture

Greeks work more hours than anyone else in Europe. Private sector Greeks are not lazy, they just lack the technological infrastructure to be productive.

The problem with the Greeks is the government has almost no recourse to fire people, and government workers have granted themselves ridiculous pensions. Private sector workers get the shaft. 

That came about after the US backed dictator was overthrown. Every time the government was replaced, the new ruling party basically scrapped everyone in the government and filled it with their people. After prolonged disfunction, they put in a policy that prevented firing government workers but it was way to strong. 

In my mind it's really not that different than the US except we still have faith in our unfunded retirement liabilities for government workers. One of these days we will be in the same boat, bleed the tax payers dry and cut the pensions people were counting on. 

All in all its a good time to move, real estate is cheap. The healthcare isnt terrible and it's cheap. The best part of the Greeks is they will treat you like family faster than almost any culture I have known.

 

ItsSnowingInColorado's picture

The average private sector Greek worker puts in more hours than the average American worker. The only people that outwork them are the Mexicans.

The Greek government system and budgeting is crap but then again with our unfunded liabilities we really shouldn't talk too much shit. 

http://www.oecd-ilibrary.org/employment/average-annual-working-time_2075...

Killdo's picture

they have been brainwashed to thinnk like slaves (who don't even get on well with each other). Michael Lewis explains in the Boomerang - how Greeks generally don't at all trust other Greeks. I asked my Greek friends if that's true (I coudl nto believe it) - they said yes

So you have basically a group of disorganized, turned-against each others fearful slaves - in that context psychopath/kleptocrats do whatever they want - it does not have to make sense

In public primary schools, children are forced to pray every morning before being allowed to enter the school building (regardless of whether their parents ar ereligious /approve of the brainwashing) . If they don't pray they get punished (I 've seen this myself and I know about the punishment because my friends' 3 kids told me that)

Pandelis's picture

This was possible because of Trump. 

Give credit when credit is due.  Currently, the country is run by the Soros operatives team so do not expect them to acknowledge it, however, here are a few reasons why:

- White House Greece independence day a month ago, attended by Trump and Greek Archbishop of America.  They plead to Trump personally, and he is a people person given his real estate background and everything.  Being from New York he has dealt with plenty of greeks and he has been clear that he thinks positively as hard working people (contrary to what mass media has been feeding the public the last ten years, trying to rewrite thousands of years of history ... but whats new right?  this has been tried many times before ... however, there is God at the end and that is the only hope).

- A few days ago in a White House press conference Trump responded to a reporter's question he started by asking the reporter if he was Greek, then proceeded to state that THERE WILL BE NEWS IN FEW DAYS.

- All happened in less than one week.  When one considers that this show has been going on for more than few years there is only this possibility.

Trump might have given up in other important issues and if you consider who is on the other side, I would not blame him (you cant expect a white knight to come and rescue everyone from all this nightmare the world is going into).  But, here Trump delivered what he thought was the right thing to do.  In all scheme of things this is a real small issue, even for Greeks is not that important except the fact of ending this daily show of what Soybler or Dysselbloom are saying and the mud throughn daily on greek people by the mass media (i recall even ZH editor couple of times having the title of Soybler throwing up on greek proposals and one assumes ZH is a bit different from mass media ... anyway, cest la vie)

 

On another subject for those who have not seen it, here is something from Plato worth considering:

https://www.youtube.com/watch?v=N6LUptADIww

JohnGaltUk's picture

Greek Patriots need to hunt their leaders down in the street and Jo Cox them.

gunzeon's picture

Unfortunately, the beneficiaries of the rorting of the Greece's state coffers are all nicely tucked in in Monaco or Switzerland or liechtenstein living in mansions, miles from their countrymen.

Remember "La Garde List" ? See the movie AGORA (Yorgos Avgeropoulos, 2015) ... out there on BT somewhere

 

NoDebt's picture

Zzzzzzzzzzzzzzz.

 

OverTheHedge's picture

Malakeas, certainly (literal translation: it's all a load of wank).

Taking 3.5% of GDP out of Greece, year after year, will help in which way, exactly? Normally tax money stays in the country, and gets passed around, so is a zero sum game (theoretically, at least). Even interest payments stay within the national banking system, loans create "money", etc. This is just a wealth extraction system, much like the post WWI German reparations, and we all know how that went.

Regarding selling off all the assets, I am in two minds - the Greek government really doesn't do much with some things that do have a lot of potential, and as the assets stay in-country, they can always be re-nationalised once the foreign money has added value. Also, I don't think that foreigners quite understand what owning an asset in Greece means. For example, this hotel, vaguely near me, is very nice (https://www.costanavarino.com/). It took twenty years, and 10,000 official signatures to get planning permission, building permits, tourism permits etc. Twenty years from start to finish. The guy whose idea it was died a couple of years ago - at least he saw it trading before he went, but only just. I wish the buyers of the Greek electricity system the best of luck.

oncemore's picture

U wish them best of luck, I wish them best of fuck.you say it, to extract 3.5% of GDP every year already the seveth year,  is horrible dead end

I believed, that this scheme will collapse after 3 years, They perpetuate it already 7 years. It will end up in a total anihilation of Greek nation. Black moslems will take over the territory.

I do not grasp what is the benefit of it for the zionists and top 0.0001%

AnimalSpirits's picture

Don't worry, 

Greece NEVER die!!!  God say No!!! 

LOL

PontifexMaximus's picture

Greece will always get their money, always. Draghi and all the EU knows that, incl. schäuble. So, again, a nobrainer as ever.

back to basics's picture

Everyone knows that because it's not Greece that's getting the money, it's the lenders paying themselves. 

overmedicatedundersexed's picture

we get paid with money we lend to get paid..fiat makes it all possible - floating loans to keep the lender solvent- used to be called check kiting. banksters are getting paid for making bad loans..a sweet deal for major western banks..right mr yellen.

YourAverageJoe's picture

Give it time.....there will be much black smoke.

YourAverageJoe's picture

Give it time.....there will be much black smoke.

RealityCheque's picture

"Athens also agreed to sell coal-fired plants and coal mines equal to about 40% of its dominant power utility Public Power Corp's capacity."

Carpet-bagging 101. Make them sell their most useful assets to you, or one of your "friends". It's getting harder to feel sorry for Greece. Seems they just love being fucked in the ass with a cactus.

Secret Weapon's picture

Carpet-bagging 101.  I can't help but think this is the bankers end game for the U.S. as well  Pick up Fed Gov assets for pennies on the dollar.  Land, mineral rights, etc.  All to be had for pennies on the dollar when the morons in D.C. can no longer pay their bills. 

kooka's picture

Unlike Greece, the morons in DC have nukes and will use them when the unpayable bill becomes due.

English herbsman's picture

Greece has well and and truely been RAPED. 

Look to it EU countries, this is your future. Unless you're German and French elite of course.

JohnGaltUk's picture

I agree! The western empire is in the process of collapse. Empires always collapse from the periphery to the center, never from the center out.

It takes the UK 10 years to decide on a third runway, mean while in that time China has built 10 airports.

EllaDara's picture

The Greeks now feel like tampons. Beeing in the best place ever, but at the wrong time period.

rejected's picture

Greece, another example of how well voting works. And they invented democracy! 

OverTheHedge's picture

They also invented the word "Tyrant".

Ho hum...

. . . _ _ _ . . .'s picture

White smoke?

Seems more like a white flag to me.

NMA's picture

The way it works is give the local population as little as possible (wages, pensions, benifits) to do whatever as long as they dont come out to the streets...... they know Europeans are lazy anyways and have no real ambition to hustle..... and then import millions from somewhere else to do the actual work needed for society to run..... becoming more and more obvious by the day. think over the decades the face of Europe is drastically going to change.... 

Ghordius's picture

"Should the Greek population revolt at even more austerity imposed upon it, the current government may face a turbulent summer in which labor strikes once again drag down the depressed economy, potentially ushering in the New Democracy party back in power, and reseting the Greek process back to square one. "

ingenuos turn of phrase, there. dis-ingenous, to be more exact

yes, Nea Demokratia might come back to power. as a reminder, it's a "center-right" party, i.e. one that would, at least ideologically, be more apt to find that "balance the budget" aka in the Leftist vocabulary as "Austerity" a good thing

meanwhile, Greek sovereign bonds look increasingly better, and after the spectacular 2015 tourist season only trumped by the even more spectacular 2016 tourist seasons, the bookings for 2017 look even better

funny watching a morose IMF

OverTheHedge's picture

Glad to see you back after your busy weekend with the negotiations.

I would like to take issue with your constant desire for balanced budgets; I would normally agree that a balanced budget is a good thing, except for the fact that Greece was encouraged to join the Euro, fraudulently, and then encouraged to spend hugely over budget, by the same people who are now asking for balanced budgets. The same people who almost certainly profited hand-over-fist with all the submarine and tank sales, and all the Seimens deals, and all the other profligate, fraudulent nonsense either encouraged, or at the very least not discouraged, by what was up until 2008 an avuncular, genial EU. And then, suddenly, overnight, BALANCED BUDGETS OR DIE!

I think fine to have a budget surplus, if that surplus stays within Greece, for the benefit of Greeks. Otherwise, it is just strip-mining the poorest country in Europe. Hardly something for the EU to be proud of.

I repeat my contention that some of the EU decisions could be considered acts of war, certainly acts of aggression. I know you don't like me saying that, but then you don't live in Greece. You don't have to personally suffer the consequences of your beloved "balanced budgets".

Ghordius's picture

"by the same people"? look, it's an excellent comment, but you make a small while hugely relevant mistake there:

"Them" being "the same people"

if you go "They did..." then yes, it's always "Them doing this and that, and wrecking..."

the "Troika" was "Them", too. see there, the IMF completely disagreeing with the other two members of that trio of "Them"

I have godchildren that are Greeks and live in Greece. now, they did not commit the fraud of cooking the Greek State books, nor did they buy any submarines, nor did they vote for the current government, nor did they approve of many parts of this drama, which is a bit more complex then "Greeks vs Them"

OverTheHedge's picture

Sorry, had to nip out and do some plumbing.

Once again, you have missed/obfuscated the point: to whit - now that the debt is insanely huge, why would running a 3% surplus, and taking that surplus out of the country, benefit the Greek economy, or the Greeks?

Answer: It won't.

Question: Who will it benefit?

Answer - long list, including all EU banks, EU "elite", etc, so on and so forth.

So, your many comments about how running a balanced budget is a good thing, is entirely disingenuous. It is too late.

Oh, and how would you suggest we create money, if no-one increases debt? Can't have growth without increased debt. Interesting that the EU creates growth through PIIGS debt, but only allows Germany and Holland to benefit from the growth. I don't see that as being sustainable, especially as all the Germans I talk to seem to think that the growth is down to Germany, and the debt is down to the profligate south, without ever working out where the growth came from.

We need a new system, or go back to the old, sovereign system. One of the two.

AnimalSpirits's picture

Well, how to describe the ECB refusing to provide liquidity in 2015? I believe that qualifies as a hostile move - no question.

I have family in Greece and it's shocking to learn how devastating the situation has become. 

Multiple factors have contributed to Greece's current situation; but, the truth is......

Greece, April 1941, Germany used tanks; in July 2015, Germany used the banks.

 

JohnGaltUk's picture

Greek Patriots need to hunt their leaders down in the street and Jo Cox them.

Ghordius's picture

Jo Cox, British MP, was the mother of two that was killed for the "treason" of campaigning for Remain, during the Brexit referendum

you are serious about that, aren't you? your idea about about politics is really that: kill those who don't agree with you, eh?

disgusting does not even start to describe the thing

Offthebeach's picture

There's a lot of politics, maybe the majority, thats worth killing.  People, and especially people atracted to power, are not to be trusted.  At all.  

JohnGaltUk's picture

Calm down. Here iin the UK we prctice a representitive democracy. She represented an area of the UK that was 65% BREXIT and yet she was shooting off her mouth that we should REMAIN. Thanks for your votes idiots but I have my own agenda.

The way our politicians are behaving at the moment is disgusting. Mortgaging my childrens future so bankers get to keep their businesess and high paying jobs is a disgrace. She had what was comming to her that loathsome maggot. I predict she will not be the last, all you need is the sovereign bond bubble to burst and folks start losing their homes, jobs and pensions and many politicians will be hunted in the street like rabid dogs. History is littered with examples when the people have had enough.

I am saying that time in near.

Ghordius's picture

calm down? after you used Jo Cox as a verb, to "Jo Cox" them? as "kill the traitors"?

and your defense is that Jo Cox was campaigning in a 65% Leave area, which might mean that 35% were Remain?

"She had what was comming to her that loathsome maggot"?

after a "Here iin the UK we prctice a representitive democracy"?

meanwhile, what has the British banking business or the sovereign bond bubble to do with the Brexit question?

are you even remotely aware that the UK is a FIRE economy while the EU is less about FIRE then the UK?

Brexit will give you more FIRE, more bankers, more sovereign bond bubble, more of all what you are claiming is "mortgaging your children's future"

Brexit will also give you more bureaucracy, starting with the recent 2'000 hires for the British Foreign Ministry, which are only the start, then there are some 30-odd agencies that your country shared with other EU countries and will have to be... replicated in the UK

disgusting and spectacularly disinformed