Greece: T-Minus 30 Days To Funding D-Day (Give Or Take)

In this interview with the BBC's Andrew Marr, Greek Prime Minister George Papandreou makes it clear that Greece has enough cash to get it through another 30 days (and likely less), or to last it thought "Mid-March." While this statement was likely supposed to remove pressure from expectations that Greece will auction off another €5 billion this week, which as we disclosed previously will most likely not happen, this revelation will likely not achieve the required goal. It has been well known for a long-time that Greek bond maturities culminate with €16.7 billion over April and May. Specifically, there is €8.22 billion maturing on April 20. The fact that there is a lag time of at least a month between when Greece should be rolling maturities and actually in need of funding, will likely be taken as a sign of additional weakness, as spending apparently has not moderated by one bit. This means that Greece will now have to raise double the amount as it approaches the funding deadline when taking into account the natural deficit generated between mid-March and April 20. How happy the EU, and Germany in particular, will be with this disclosure will be seen in tomorrow's Greek CDS market.

Furthermore, Papandreou's attempt to marginalize the importance of the auction which now it appears will not take place is refuted by Greek website, which (Google translated) notes the following:

It is obvious that this auction is perhaps the most crucial in the history of borrowing as the country takes place amid wild speculative gambling in bonds and amid dire situation for the economy.

Taking a lesson straight out of the Obama administration, Papandreou placed the blame for the Greek catastrophe squarely where it belongs: it is all the prior administration's fault, thank you...oh yes, and tax-evading tax"payers."

"We had a mismanagement of the economy from the previous economy. And we have to admit that. And the mismamangement had to do with a lot of corruption, cronyism, clientilism, and the way money was used. Taxpayers just began to say "why should I pay my taxes" and we had an increase in tax evasion, which of course then hit our budget and deficit. When we were elected a few months ago, we found out that the deficit was actually double the figures that the previous government had announced officially, and that of course further created problems with credibility."

Adding to the head-scrathing is George's validation for the "support" of his far-overdue austerity measures.

"Even though there are austerity measures and they do hurt, we have the support right now for the austerity measures which is around 50 to 60 percent of the population, and the government also has that support."

Unfortunately, the problem is that the other 40 to 50 percent are currently on strike.

And, just in case you missed it the first one trillion times, Greece does not want financial support... Just political. Presumably political support will be enough to collapse GGB yields from the current 6.8% ballpark to something on par with Bunds, once Greece regains market "credibility." It is a good thing that Papandreou's government has been on the stage for just a few months, as otherwise one would be tempted to question his understanding of basic finance. 

"We need the help so that we can borrow at the same rate as other countries, not at high rates which undermine our ability to make the changes we need to make."

His response to the question of whether Greece will issue bonds next week is the abovementioned avoidance in which he notes that Greece has money until mid-March. This is quite bad, because it means that not only will Greece need to issue at least the €8.22 billion due on April 20, but whatever cash burn the government will see from mid-March to late April, likely a total of at least €10 billion, if not materially more. If Greece is unable to raise €5 billion next week, just how capable will it be to access capital markets in one month, for double the amount, and when bond vigilantes know they will be able to extract whatever interest expense they desire as the country will have no option but to pay whatever is demanded of it?

The kicker comes from Marr's question: "If the speculating against Greece goes on, and if you are unable to raise money in the bond markets in the usual way, I can't see what alternatives you've got to going back and asking for straightforward bail out help from the rest of the EU, beyond possibly suspending Greece from the euro itself." And when pressed on why a Greek suspension is not in the cards, which as Marr points out would deal with the situation "more quickly than anything else" Papandreou notes it would be the start of the the break up of the eurozone.

In the meantime, please visit Santorini for your summer vacation. The Greeks need your money. Overall, Papandreou really wishes this bad nightmare would just end already.

All this and more after the jump.