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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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Fri, 02/03/2012 - 16:21 | 2124528 rbg81
rbg81's picture

So...their brilliant plan is to default and DEMAND people lend them $$ because they NEED it so badly?  Good luck with that. 

Fri, 02/03/2012 - 16:30 | 2124564 GCT
GCT's picture

Trav hates the Greeks but they will get what they want Trav!  They have and are going to continue to get the money they need to continue spending.  They have been scamming the EU all along and threatened to default.  Like one poster stated cannot have that happening in the election years! This is better then any show in the media!  Pull up your lounge chair, have a beer, and some popcorn.  This is only going to get funnier and funnier! Cannot wait the the Eurocrats response to this one to drive our markets even higher!

This is all about the banksters getting bailed out at the expense of the people even though I do agree they were the ones with the new BMW's and German military weapons.  Everything the Greek's have done the EU knew about so let not just blame the Greeks in all of this.  After all look around you there are people in this country, banksters and corporations getting bailed out just like Greece. This is what happens when you loan money to someone that never intended to pay it back. 

I bet Merkozy and the rest of the banksters will be enjoying all those new Greek Yachts!

Fri, 02/03/2012 - 16:39 | 2124595 Vigilante
Vigilante's picture

Was watching Greek channels just now.

I have the feeling this time it's for real. bluffing..

Papademos threatened to resign on Monday if the party leaders don't sign

the PSI deal.

I think the political leaders are in an untenable position.

There is no way they will give in to the current demands by the troika.

It's political suicide.

Expect VERY HIGH DRAMA till Monday morning.


Fri, 02/03/2012 - 16:43 | 2124608 lolmao500
lolmao500's picture

Good. Papademos needs to resign. That unelected scum traitor needs to get the fuck out.

Fri, 02/03/2012 - 19:14 | 2125214 slewie the pi-rat
slewie the pi-rat's picture

jeeeez!  there's that pesky parliamentary nonsense about forming a government, again!

lukePapa-D is now the "odd man out" as tyler "suggests" here that antonioSam may be next in sucession now that the greeks have decided the banksters won't give them and more help, so fuk them!

the lastPM and the "next"PM were college roomates, too,...i think...

"we can't be outa beer, we just tapped that last one 1/2 hour ago!  whose deal is it?  i'll be right back..." 


Fri, 02/03/2012 - 19:23 | 2125245 slewie the pi-rat
slewie the pi-rat's picture

and wait a sec, here?  didn't tyler tell us this morning that the junkster had cancelled come meeting on the 6th?

yet here we read (paste):

 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

and that this is from the PRE-story, so maybe this is the meeting that got cancelled

so, fuk the bankster puppets and fuk the EU, too!

now we're talkin, BiCheZ!

this is what i like to hear from these college leaders of tomorrow! 

EAT ME!!!!   now stfu and deal!

Fri, 02/03/2012 - 19:33 | 2125279 Zero Govt
Zero Govt's picture

Greek Govt, Greek Bondholders, Eurocretins: BANKRUPT

What's not plain as day? What part don't you understand?? Are you stringing this farce out bcoz you like committee meetings???

Fri, 02/03/2012 - 20:03 | 2125384 Cole Younger
Cole Younger's picture

If the Greek people would just rise up and over throw there government, the debt would go away (see: Odious debt)

Would a civil war be considered a credit event? if it wasn't considered a default, the CDS would not trigger. More austerity will likely cause a civil war. A bankrupt nation might be the  cause of a civil war as well..Makes you wonder....Is the goal to start a civil war?

Fri, 02/03/2012 - 20:02 | 2125385 cristo
cristo's picture


Eurozone Debt Web: Who Owes What To Whom?


Click on a country name to see who they owe interactive link .
Fri, 02/03/2012 - 20:58 | 2125544 kanenas
kanenas's picture

I have seen this link, and I fail to understand why on earth Greece is the focus in the news when there are a few big elephants in the room?

And why are there country pairs (and triplets) that could cancel parts of their debt? (Look at UK-Ireland)


PS: 600BC Greeks faced a similar debt crisis. Here is what happened back then. What followed is known as the Golden Age of ancient times. No CDS were triggered again.

Sat, 02/04/2012 - 00:50 | 2125976 cristo
cristo's picture
IRELAND GDP: €0.2 tn ,   Foreign debt: €1.7 tn ,   €390,969 Foreign debt per person ,   1,093% Foreign debt to GDP ,   109% Govt debt to GDP ,        and everyone is stuck on greece WTF
Fri, 02/03/2012 - 20:23 | 2125442 Georgesblog
Georgesblog's picture

Now it comes down to throwing bad money after worse. "Bailout" is now just a figure of speech. Let's not kid ourselves. Italy and Spain are waiting their turns in the woodshed.It's haircuts on the installment plan.

Fri, 02/03/2012 - 21:51 | 2125679 Joebloinvestor
Joebloinvestor's picture

HAHAHA the joke is on everyone.

Another week blows by.

They did nothing, Greece is still here and still in debt.

This is not a crisis, it is an extended stay in pergatory.

The next stop will be HELL because they will wait till it goes off a cliff.

Fri, 02/03/2012 - 22:09 | 2125715 boiltherich
boiltherich's picture

"...the troika is demanding that the minimum wage of 751 euros per month (gross) be reduced..."

From 2009

Drivers and street cleaners in the diminutive but wealthy country are guaranteed to take home at least 1,413 euros ($2,029) a month on average, or 16,956 euros ($24,348) a year, making Luxembourg top of the list for minimum wages in Europe.


Have any of you ever been to Athens?  It is one of the most expensive cities you can visit.  That is part of the reason taxes are not strictly collected, why accounting is somewhat soft and there is a lot of welfare and subsidized "employment."  Without it the poverty rate would equal Detroit.  Greece is smaller than Alabama, and urban Athens is over 3 million of the 10 million that live in the whole nation.  You can't have a city the size of Chicago in the EU where the people are told they must face cuts to minimum wage that is already under $1,000 per month, people on unemployment here are paid better.  Especially when that city is more expensive than Chicago. 

People yammer endlessly here about rights and freedoms and without exception they mean their rights and freedoms, there is no worse theft and denial of rights and freedoms than to be sentenced to a life of structural poverty.  Right now the people of Greece who had looked to the eurozone as their ticket to a fully functioning European democracy with all the rights and privileges that go with that, they now see that they have been had by capitalism and the moneychangers of the bond/debt world.  If you support capitalism and democracy you need to recognize and admit that it has not worked in the very birthplace of both.  Central fiat banking greed has and always will destroy what it wants most, the total ownership of the assets of all nations and people. 

I am not a communist, I do not ascribe to Marx, but where you have unfettered capitalism you end up with revolution and poverty that leads to socialism or communism, and that is not an opinion, it is history and fact.  There is greed and it is equally and perfectly offset by the anger of those that had to be exploited for the wealthy to become so filthy rich.  It is a swinging pendulum, and the pendulum is swinging toward the death and destruction of the wealthy once again, resist if you like, I think you will like your life better if you just accept it. 

Sat, 02/04/2012 - 03:36 | 2126128 slewie the pi-rat
slewie the pi-rat's picture

i think you are incorrect in equating fiat banksterism with "unbridled capitalism"

true capitalism is based upon REAL money and circulation of REAL credit instruments in agriculture, mining, manufacturing, medicine, trade, and...gambling!  L0L!!!  also, debt is extinguishable in capitalism~~by gold or gold and silver.  that's how debts are settled, not with more debt

capitalism can't be had by defining  [money = debt]

when money is defined as = gold/silver, then we have "capital"

i like your fighting spirit so i gotta tease you, here: People yammer endlessly here about capitalism and freedoms and without exception they mean their conceptions of capitalism and freedoms

you're very close to this, i can see, pointing to (paste) 'Central fiat banking greed' but again,  this is not capitalism, at all, imo

if i were a fiat bankster with the debt bull and the print button, and i was coming up against the "unintended" (L0L!!!) consequences of the worthless paper i have passing off as money, b/c [debt = money], by golly (!) i might try to tell the people i had ponzied that any "problems" people might be experiencig would be due to "unbridled capitalism", myself! 

but that wouldn't make it true, would it?

imo, unfettered fiat banksterism has nothing to do with capitalism, it is simply unfettered fiat banksterism and is pretty much exactly as you describe

  • the "pendulum" is the ponzi ending~~the end of the illusion
  • paper-ponzi "wealth" will be destroyed~~the end of a delusion

great!  just what we need!  and if you've got gold and silver and sound money, what the hell do you care what happens to the moronic shitheads?  they're not your responsibility, you are!

you've got this pretty close to plumb, already, b_ich, but if you look at it from this angle, you're just a tad off is all, it looks like...

Sat, 02/04/2012 - 09:05 | 2126282 AnAnonymous
AnAnonymous's picture

Real this, real that...

Money is debt, period.

Hard or fiat currency.

Sat, 02/04/2012 - 11:38 | 2126400 slewie the pi-rat
slewie the pi-rat's picture

and that is generally true

but not always, imo



Sat, 02/04/2012 - 08:41 | 2126258 Market Efficien...
Market Efficiency Romantic's picture

The demanded 25% wage cut is a typical TKO condition. Noone, even if willing, could sign up on that with a >3 day validity. It is the diplomatic term for 'get the hell out of here'.

Even though, I share the criticism for Greek's continuous unawareness for its real NPV, the more than opportunistic, flip-flop EU strategy is about to turn into a real desaster for Greece: First, they convinced an unwilling government to stay, promising the funds needed to survive the period of transformation, then in the middle of the process, when Greece has starved its economy close to death and the debt burden has again increased dramatically, Greece is dropped by the EU like a hot potato.

I know, Greece has long closed its eyes, it has cheated, and yes, a German led EU again benefits form the current situation, but the lack in honesty in EU and Euro-area policy needs to be noted. For more than a year, Euro leaders maintained a policy of low, manageable numbers due to entirely domestic reasoning (to achieve political support for rescue funding) and hence derived respective demands from Greece. Now, the problem appears to increasingly spin out of control, which is BS, and demands drom Greek seem in turn to increase on a daily basis.


Sat, 02/04/2012 - 14:05 | 2126717 PORTA PORTA
PORTA PORTA's picture

The Sovereign Debt Crisis in Greece: Chronology of Events.

23 December 2009: Parliament adopts the 2010 budget setting a general government
deficit target of 9.1 percent of GDP.

15 January 2010: Government submits the updated stability programme (SP),
projecting a reduction of the government deficit of 4 percentage points to 8.7 percent
of GDP in 2010, and correction of the excessive deficit by 2012. The debt ratio was
projected to peak at 121 percent of GDP in 2011.

1 February 2010: 2-year bond spreads reach 347 basis points; 10-years bond spreads
reach 270 basis points.

2 February 2010: Greece announces a set of measures in addition to those announced
in the SP (freezing wages and raising excises with the aim of reducing the government

3 February 2010: The Commission adopts (i) a proposal for a Council Decision, in
view of the excessive deficit correction in Greece by 2012, (ii) a draft Council
Recommendation with a view to ending the inconsistency with the broad guidelines of
the economic policies, and (iii) a draft Council Opinion on the SP.

16 February 2010: Council adopts the above-mentioned documents, after discussion
in the Eurogroup.

8 April 2010: 2-year bond spreads reach 652 basis points; 10-years bond spreads
reach 430 basis points.

15 April 2010: Greece requests ‘discussions with the European Commission, the ECB
and the IMF on a multi-year programme of economic policies (…) that could be
supported with financial assistance, if the Greek authorities were to decide to request
such assistance.’

23 April 2010: Greece requests financial assistance from the euro-area Member
States and the IMF.

27 April 2010: 2-year bond spreads reach 1552 basis points; 10-years bond spreads
reach 755 basis points.

2 May 2010: Greece, the Commission, the ECB and IMF announce an agreement on a
three-year programme of economic and financial policies. The Eurogroup
unanimously agrees to activate stability support to Greece via bilateral loans centrally
pooled by the European Commission

6 May 2010: The Greek Parliament votes to accept a series of policy measures
included in the programme of economic and financial policies, including an increase
in VAT and excises, as well as further reductions in public sector wages and pensions.

6 May 2010: ECB adopts temporary measures relating to the eligibility of marketable
debt instruments issued or guaranteed by the Greek Government.

7 May 2010: 2-year bond spreads reach 1739 basis points; 10-years bond spreads
reach 1287 basis points.

7 May 2010: The Council adopts a Decision according to Articles 126(9) and 136 of
the Treaty including the main conditions to be respected by Greece in the context of
the financial assistance programme.

9 May 2010: IMF executive board approves the Stand-by arrangement (SBA).

9 and 10 May 2010: The Council and the EU Member States endorse a financial
stabilisation mechanism.

18 May 2010: The euro-area Member States disburse the first instalment (EUR 14.5
billion) of a pooled loan to Greece.





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