On Thursday we noted [5] that no matter how tempting it may be to tune out the almost hourly warnings from various sources claiming Greece is finally set to run out of cash, one can’t just assume the government will yet again find another couch cushion to reach into in order to scrape up a few more euros to pay government employees and creditors and thereby forestall the inevitable for another few weeks. Eventually, there simply will be no more money and the first signs that Greece has entered the final, terminal phase in the long and painful road to complete insolvency showed up last month in the form of a sweeping decree which required municipalities to transfer excess cash to the central bank.
That mandate was greeted with incredulity and with the country’s local governments less than willing to turn over their funds, Athens finally ran out of money (if only for 8 or so hours) on Tuesday when pensioners showed up at ATMs only to discover that their money simply was not there. Amusingly, the government blamed the delay on a “technical glitch”, and while we suppose it’s not exactly a lie to call running out of money a “technical glitch”, it was abundantly clear that the country’s socialist saviors were making a feeble attempt to avert a pensioner mutiny. Today, we get more details about the situation and sure enough, the retirees are restless.
Via The Australian [6]:
Panicking pensioners queued at banks, raided their accounts and broke into a board meeting of the state pension fund as Greece struggled to pay its two million pension recipients.
Officials claimed that a “technical hitch” had delayed some payments as Greece braced itself to run out of money in days without a breakthrough from secret talks in Brussels…
The country’s state pension funds almost defaulted after a shortfall of “several hundred million euros” delayed payments to pensioners this week. Many people panicked when they discovered that their pension payments were not in their accounts.
“Normally I only withdraw half the money at the end of the month but today I’m taking it all,” said Sotiria Zlatini, 75, a former civil servant. “There are so many rumours going round.”
In a sign of public discontent, pensioners broke into a board meeting of the state pension fund demanding that it stop transferring cash reserves to the government under an emergency decree to keep the country solvent.
Meanwhile, Syriza remains stuck between insolvency and its campaign promises and it now appears that the government’s “red lines” may once again undercut the negotiating process just when it appeared that some progress (whatever that means at this point) was possible over the weekend. Here’s Bloomberg [7]:
Greek Prime Minister Alexis Tsipras told his cabinet on Thursday that he’s confident a deal to unlock bailout aid is close, even as his government sent conflicting signals on its willingness to agree on long-stalled reforms.
Tsipras addressed his ministers as Greece and its euro-area partners stepped up talks in a bid to reach a preliminary deal by May 3, ahead of looming debt payments in early May, three people with knowledge of the talks said earlier. The aim would be for finance ministers to sign off on the accord by their next scheduled meeting on May 11, the officials said, asking not to be named because the talks are private…
One European Union official cautioned that at the moment getting a technical deal by Sunday looked optimistic. Hard and long negotiations will take place over the coming days, with more talks planned for next week. Even so, reaching a comprehensive agreement by May 11 remains unlikely, the official said.
An agreement could still stumble at opposition within Tsipras’s government. In a sign of the obstacles yet to overcome for a deal, Tsipras told his ministers that any agreement would be in line with the popular mandate as expressed by the government’s “red lines” in the talks, according to Sakellaridis. The remark echoed a statement by Greece’s Finance Ministry on Wednesday that the government “retains red lines” in the negotiations, which include a sales tax on islands, pension and labor market reforms and asset sales.
Finance Minister Yanis Varoufakis on Thursday said Greece wouldn’t discuss pension cuts or the sales tax increase in the current talks, with any pension reform being part of a broader agreement in June.
Despite the red line rhetoric, Tsipras admits that a referedndum may be necessary on a possible deal with creditors which essentially means that in a worst case scenario, Athens may have to make concessions that are inconsistent with the 'annihilate all austerity' line that got Syriza elected.
The problem, as we noted earlier this week, is that two out of three Greeks aren't interested in a referendum. Of course they're also not interested in leaving the euro... or in implementing further austerity measures in order to get a bailout... or in empty ATMs.
We wish them the best of luck.
