Greece Draws The Line As Unity Government Leaders Refuse To Cede To Further Troika Austerity Demands

Tyler Durden's picture

It appears that Greece will not even have to wait until the dreaded March 20 funding D-Day. As was earlier reported, Greek PM Lucas Papademos may resign if he is unable to persuade his coalition unity government to agree to further Troika demands for additional austerity. It now appears that there will be no agreement, and thus the primary demand from the Troika for further cash disbursement will not be met. The FT reports: "All three party leaders in Greece’s teetering national unity government have opposed new austerity measures demanded by international lenders, forcing eurozone finance ministers to postpone approval of a new €130bn bail-out and moving the country closer to a full-blown default. Representatives of the so-called “troika” – the European Commission, European Central Bank and International Monetary Fund – have demanded further cuts in government jobs and severe reductions in Greek salaries, including an immediate 25 per cent cut in the €750 minimum monthly wage, before agreeing the new rescue. But representatives of all three coalition partners, including centre-left Pasok of former prime minister George Papandreou and the centre-right New Democracy of likely successor Antonis Samaras, said they were unwilling to back the government layoffs." Now we have been here before, and as a reminder the last time Greece threatened to pull out of Europe with the G-Pap referendum threat back in the fall, G-Pap was promptly replaced with the Trilateral Commission member and former ECB Vice President, Lucas Papademos. The problem is that for him to obtain power, he needed to form a coalition government. Well, that now appears to be in tatters, as not one party is willing to break to the Greeks that the minimum wage of €750 will be cut even further. The question is who will blink first this time, as it is quite likely that neither the Troika nor Greece want an out of control default. Unless, of course, this was Germany's plan B to the imposition of a Greek commissar all along...

More from the FT:

In addition, a Greek government official said the EU and IMF negotiators rejected a counter-proposal that would have frozen Greek wages for three years and cut social security contributions by 10 per cent.

 

Without approval of the new bail-out within a matter of days, Athens is at risk of defaulting on a €14.5bn bond that comes due on March 20. Many eurozone officials fear such a default could reignite panic in European bond markets, pushing Italy and Spain back into danger.

 

The standoff in Athens has angered officials in eurozone creditor countries, particularly in those that have retained their triple A credit ratings and will be leant on most heavily to provide new Greek aid.

 

Finance ministers from the four remaining triple As – Germany, the Netherlands, Finland and Luxembourg – met in Berlin on Friday where they agreed that Athens must move quickly or they would withhold assistance.

 

“We want no further delays,” Jan Kees de Jager, the Dutch finance minister, said after the meeting.

 

Eurozone finance ministers had hoped to meet on Monday in Brussels to sign off on the new bail-out, but officials cancelled the gathering on Friday. Jean-Claude Juncker, the Luxembourg prime minister who serves as chairman of the group, issued a statement saying only that the meeting “may be scheduled later in the week”.

Kathimerini with the pre-story:

Papademos is expected to meet PASOK’s George Papandreou, New Democracy’s Antonis Samaras and Giorgos Karatzaferis of the Popular Orthodox Rally (LAOS) on Saturday. The three politicians will have to agree on measures that will satisfy Greece’s lenders and pave the way for a new bailout.

 

However, a number of sticking points remain. One of the main issues on which the party leaders are finding it difficult to agree is the private sector wage reductions that are being demanded by the troika of the European Commission, European Central Bank and International Monetary Fund.

 

Sources told Kathimerini that the troika is demanding that the minimum wage of 751 euros per month (gross) be reduced and that labor costs in the private sector drop by 25 percent in a bid to help Greece regain competitiveness.

 

Labor unions and employers wrote to Papademos on Friday to inform him that they cannot agree on a wage cut.

 

Papademos needs the agreement of the political leaders so the prospect of Greece receiving a new bailout can be discussed at the meeting of eurozone finance ministers on Monday.

 

Greece will have to set out the measures it plans to take over the next two years to reform its economy and create a primary budget surplus as well as the framework for the debt restructuring agreement with its bondholders.

 

Skai TV and radio reported on Friday that should the leaders fail to agree a deal, Papademos will tender his resignation on Monday.

And so on. To say that by now the market may well surge, however briefly, out of pure delight that Greece has finally defaulted, may not be a stretch. Of course, the "however briefly" period will shortly thereafter end, leaving Europe with few things to look forward to aside from complete disintegration of the union and its currency. But at least US banks will be fully insulated to that "contingency" which is increasingly looking like a "certainty."

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francis_sawyer's picture

They need a black leadership council & caucus...

akak's picture

Unsterilized, of course, and preferably direct from Africa, so that they can gape in wonder at the Greek water systems and rolling wheels, never having invented nor used any such things themselves, naturally, being the obvious low IQ, sexually ravenous "failed race" that they are.

ucsbcanuck's picture

Wow, just wow... you guys never fail to amaze me with the depths you can plumb

akak's picture

Wow, just wow --- the cluelessness of many of you guys, and your thick-headed inability to recognize satire and the tongue-in-cheek mocking of a previous poster's offensive statements, never fails to amaze me.

trav7777's picture

wait...you were mocking me by making true statements?  GFD you are stupid.

akak's picture

Go help your "failed races", LOL.

ucsbcanuck's picture

Didn't realise it was sarcasm.

trav7777's picture

since you're on it, why didn't blacks have the wheel?  whitey stole it from them?

Matt's picture

If they switch to Drachmas at a value of around 10 drachmas to the dollar, and the prices are the same as here, but in Drachmas, I for one am totally going on vacation there. $10 hotel rooms, $2 meals, $0.50 for beer and wine ... that'd stimulate their economy a bit, I reckon. They won't be able to import anything, but that's better for trade deficits anyways.

Cdad's picture

Market to surge on sovereign insolvency, default, and economic collapse, bitchez!

GeneMarchbanks's picture

Now you're starting to get it...

 

GeneMarchbanks's picture

I'd rather not.

Short at your own peril, I'm sure there are bail-outs for that depending on who you know.

loveyajimbo's picture

Why is anyone still dicking around with these lazy bums and banker crooks?  Simple, default, let the banker bond-holders take it Greek style and get it over with!

 

Did France surrender to Germany again yet??

cossack55's picture

Pending.  Still issuing rubber rifles (won't scratch when dropped).

crazyjsmith's picture

Yes! Trigger them fuckin' CDS's and let the fireworks begin.

Take that Globalist/Collectivist/Eugenic NWO pigs...I mean, technocrats.

bdc63's picture

there is absolutely zero chance of the CDS's being triggered.  the bankers will not let that happen.

crazyjsmith's picture

Well, ultimately that will be decided by the Greeks and not the Unelected
"Technocrats". And it now appears they have made up their mind.

Matt's picture

You obviously haven't been paying attention. The banks that sold the CDS are the ones who sit on the ISDA commitee and determine if something is a Credit Event or not.

So if your bank had to pay out $100 Trillion dollars if a Greek default is considered a credit event, would you vote yes, it is a credit event, or vote no, they voluntarily chose not to pay, so it is not an event?

Keep in mind, your bonus relies on a "no" vote. Your base pay is $100,000 and if you get the bonus, it is $10 million.

crazyjsmith's picture

Again, it is not about accounting at that point. 100% os Zero is still Zero.

If they declare this I a non - triggering event, the scam will be revealed.

Just because these fools declare something does not make it so, come on now son.

Calmyourself's picture

Your a funny guy, you expect this piddly nation to take down the worldwide ponzi as a result o f the CDS triggering, ha..  Yeah that contract, law, custom will be rolled up real tight and stuffed up whomever complains.  You need to pay attention son, their ain't no law high enough to indict, no ocean deep enough to drown this ponzi.

crazyjsmith's picture

Yes, I do see your point, and I agree that this monster ponzi takes bigger turds than Greece, however you are thinking in a linear fashion.
This problem is SO big, that very small changes can have HUGE ramifications, it's called chaos theory, and you should check it out.

Inflation? deflation? Dollar correlating with Gold one day, then not. Bullish rallies on Hope of a Greek default? Yeah, go ahead and apply logic to this.

You think these Globalist Sociopaths, I mean , Technocrats ever forecasted their precious little Euro being on the verge of collapse? I am thinking their Hubris got in the way of them seeing this problem.

For proof of my latest point, I Give you the Honorable Mr. Corzine.

Doña K's picture

I have posted this before.

Greece is waiting for Portugal, Ireland or Spain to go first. Greece can be contained for longer, but when the others are about to explode, there are not enough digits in the ECB's or Bernanke's computers to handle this.

War is coming and it ain't gonna be pretty, no matter who you are. The US is the last mega power who allows citizens to carry guns. All of you should rely on the good old boys to get enough of this nonsence and rid the US and the rest of the world from the rotten corrupt politicians, banksters, globalist, pretentious limouzine liberals and the like.

You have been warned.

There will be no drastic changes unless there are drastic steps taken by the people themselves. No white knights arround anywhere. Vamos

Calmyourself's picture

CJS, we agree more than disagree.  Chaos / black swan theory is certainly a concern and noted. My point is the counterpoint, Corzine is not in jail the rule of law failed the US completely.  As an aside, I would like one bammy licker to give me an example of civil / criminal law failing us in another presidency quite as spectacularly as in this administration. 

 In these times to have him (corzine) free is the biggest clearest sign that there is no rule of law, just the rule of connected men.  Yes they are all psycho, but they are well connected psychopaths beyond our reach for now..

BobPaulson's picture

You mean Sarko being pegged by Merkel? 'Probably already happened. You don't want to see the videos.

Catequil's picture

This Greek debt negotiations issue - you gotta know the Greeks mentality and you will realize there will be a deal at the end. It's just their nature to bargain and bluff and be slippery till the last possible second and beyond. But that's just my opinion.

Doña K's picture

That can happen in the land of Odysseus, but the politicians who will sell the Greek people down the river, will not survive to explain why they did it.

Vamos Griegos

Catequil's picture

:))) excellent reference to Odysseus and not another ancient Greek!!!!!!

Thank you! That character just strengthens my point!

Schmuck Raker's picture

Portugal is watching...

Portugal has been discreetly sounding out advisers on options to restructure its debt. Although the government has yet to formally appoint any firm, IFR has learnt that ministers have been watching developments in Greece closely with a view to replicating elements of any final agreement.  IFR-today[http://www.ifre.com/portugal-pressed-to-restructure/20046599.article]

I guess they don't follow ZH...

http://www.zerohedge.com/news/portugal-reenters-bailout-radar-traders-re...

carbonmutant's picture

Didn't G-Pap threaten to resign too. How'd that work out...

Red Raspberry's picture

GS couldn't find a

volunteer.

cossack55's picture

"of the so-called "troika"--- EuroSatan, EuroChairSatan and InternationalMoneychangerSatan.......

Eally Ucked's picture

It looks to me that they feel markets are properly conditioned to Greek default, and they want it. The focus will shift to Portugal now. Delevaraging proceeds as it supposed to.

alien-IQ's picture

it's already priced in...or...bullish...I forget which.

Use of Weapons's picture

To earth's remotest limit we come, to the Scythian land, an untrodden solitude. And now, Hephaestus, yours is the charge to observe the mandates laid upon you by the Father—to clamp this miscreant upon the high craggy rocks in shackles of binding adamant that cannot be broken. For your own flower, flashing fire, source of all arts, he has purloined and bestowed upon mortal creatures. Such is his offence; for this he is bound to make requital to the gods, so that he may learn to bear with the sovereignty of Zeus and cease his man-loving ways.

BobPaulson's picture

I guess the option is either 563 Euros a month or 563 drachmas.

carbonmutant's picture

The exchange rate is gonna be a bitch...

BobPaulson's picture

That said, once they are firewalled and unable to issue debt because of the 95% haircut on their outstanding bonds, they actually stand a chance of restarting, once the riots, arson, looting, gang rape and beheading phase of the chaos passes.

CrashisOptimistic's picture

You guys still don't get it.

There is no restart.

They burn 400,000 barrels of brent priced oil per day.  That adds up to 5% of GDP sent out of the country each year.

No one can endure that and succeed.  

There is no fix for these problems.  They are forever.  Society devolves forever to zero now.

Matt's picture

Bullish! Long Oats, Ox carts!

akak's picture

"Bring out your dead ...... bring out your dead ......."

Non Passaran's picture

Who doesn't import X barrels of oil per day?
And besides, have you heard of biofuels? Olive oil?
Just kidding, but you're too pessimistic.

I think what's indicative of the future here is a 25% pay cut (the troika's request) OR a 25% (or more) lower drachma.

Death and Gravity's picture

The good news is that once the riots-cum-civil war is over with, rebuilding the nation from the smoking, gutted ruins of the cities will make for AWESOME economic growth rates!

Poetic injustice's picture

Zerohedge did calculate exchange rate recently... was it 20:1?

alien-IQ's picture

If anybody believes that a person in Greece can live on 562.50 Euro per month...then they are either an idiot or an economist (yes, that's redundant, I know).

Matt's picture

One can be an idiot without being an economist. Besides, idiot comes from Greek word "private person": one who voluntarily abstains from politics and the democratic process.

Imbecile might be a better term: One must either be an economist, or an imbecile.

Non Passaran's picture

I'm not so sure about that. Do their neighbors (Bulgaria, etc.) make more? A quick search on Google says average pay in Bulgaria is less than E400.

kanenas's picture

Let's forget about the standard of living. SUpposedly the Greeks should take a hit and probably survive it.

 

Check the real estate prices in the rest of the balkans. They can survive on a lower wage, but housing cost is significantly lower.

Drop the wage 25%, keep the loans intact and you got deadly mix. 

 

Now, exit EUR, and let the thing slide down to a new equilibrium.

Imports will drop, 'defence' orders from Germany/France will be cancelled, it will be more urgent to dig for Gas a'la Cyprus, exports will rise, tourism will follow. 

 

Only problem? The ourstanding debt. If Greeks exit the EUR now, bond holders will get a haircut AND paid in New Drachmas (for the GReek law bonds). If they get the PSI pill, the bonds will be too high to pay with the New Drachmas and fail again in a matter of few years.

 

My guess? Papadimos is out on Monday, latest next week.

Reason: elections period in Greece is about 30 days. Count down from the March deadline, and leave a week for the PM of the people's choice to finish the people's wish. Yes. Now is the time.

In these 30 days, and due to the Polls indicating an Exit_EUR decision, Portugal will be iunder pressure. Unless Troika decides to change its tune (not that this is a good thing) then we will see a coordinated Exit Stage Left.