Moments ago, after yet another weekend in which Europe was said to have given Greece yet another "absolutely final" deadline in which to agree to deal terms, terms which now Europe can't agree on, when after five years of recovery we found out that the Greek economy is so bad it will have to put in escrow some €50 billion in assets to preserve the ECB's financial lifeline of its banks which just in October of 2014 passed the same ECB's "stress test" with flying colors, we had a revelation:
We may have hit peak bullshit— zerohedge (@zerohedge) July 12, 2015
Turns out, we weren't too far off. This is how Sky News' Ed Conway summarized the events to date:
Me: How are the talks going? EU source: "Shitty." Me: "Getting more shitty or less?" Source: "Pretty steady level of shittiness" #Greece— Ed Conway (@EdConwaySky) July 12, 2015
So for those who still care, where do we stand now? Before answer that, here is a rather florid visual of what happened just last night, when Germany's Schauble, seemingly pushed into a demonic fit of existential rage with Greece, decided to unilaterally tear apart the Eurozone just to teach Athens a lesson.
According to Reuters, what happened during last night's Eurogroup finmin meeting which concluded without a deal, is that in a "tough, even violent" atmosphere, in the words of one participant, after an overnight break the German and French finance chiefs, Wolfgang Schaeuble and Michel Sapin, sat down to clear the air between them before resuming on Sunday.
Schaeuble also crossed swords with ECB governor Mario Draghi, snapping at the Italian central banker "I'm not stupid!"
"It was crazy, a kindergarten," said a source describing the overall course of nine hours of talks on Saturday among weary ministers attending their sixth emergency Eurogroup in three weeks. "Bad emotions have completely taken over."
Schaeuble and others seemed to favour a "Grexit", another participant said. The European Central Bank's Draghi seemed "the strongest European" in the room, most opposed to the risky experiment of cutting Greece loose and braving Schaeuble's ire by interrupting him during a discussion on Athens' debt burden.
The new Greek finmin was calm, appearing resigned to whatever his country's fate would be:
By contrast, Greek Finance Euclid Tsakalotos, appointed last week in place of the often provocative Yanis Varoufakis, seemed calm and expressed a willingness to take steps to convince creditors Athens could be trusted to implement budget and economic reform measures to unlock tens of billions of euros.
At one point a fellow minister turned to Tsakalotos and told him to ignore the rows raging around him: "Don't worry Euclid," he said. "It's not your problem any more, it's theirs."
But while the future of Greece is now open-ended, with emotions overruling logic and certainly financial interests, the one things that will be the legacy of this weekend's European summit is that the fissure right across the center of Europe is now plain for all to see:
"Schaeuble's positions are irresponsible and can bring disaster," said Gianni Pittella, an ally of Italian Prime Minister Matteo Renzi. Leader of the centre-left bloc in the European Parliament, Pittella spoke at a meeting in Brussels.
That reflects something of a left-right split across Europe.
French President Francois Hollande's Socialist party issued a comradely appeal to Sigmar Gabriel, the German Social Democrat leader who sits as deputy to conservative Chancellor Angela Merkel in a coalition. It said: "The peoples of Europe do not understand the increasingly hardline position taken by Germany."
Gabriel, also in Brussels, said he aimed to keep Greece in the euro and stressed that France and Germany, traditionally the twin motors of European integration, would work together.
In Berlin and Paris, officials have played down differences in tone on Greece, stressing that Merkel and Hollande must sell their decisions to different national constituencies.
Of course, all of this is meaningless: in Europe it has always been, and always will be, Germany's way or the autobahn. Don't like it, don't let the door hit you on the way out, especially since it still appears confusing to all but Germany that the biggest beneficiary of the Eurozone was the German export sector.
As for almost everyone else, well... ask the Greeks.
Anyway, that was last night. Where are we now, as the European summit of leaders is currently entering 2am in the morning?
Well, some good news: outright talk of Grexit, and a 5 year "time out" appear to have dropped out of the draft.
#Greece was close to signing the creditors' proposal before ideas of euro time-out and privatization fund were tabled - EU source— Jarno Hartikainen (@JarnoHa) July 12, 2015
Which may help Greece but it still doesn't explain how Tsipras will pass into law the Draconian measures demanded of Greece especially since there are purely logistical hurdles which can't be forced:
But "time out" or not, that "other" demand for a Greek €50 billion escrow pre-privatization fund appears to remain. And the biggest irony: now it is the IMF itself which is spraying doubts Greece can ever deliver on this...
#EuroSummit has doubts over 50 bn€ privatization target. IMF don't think it's realistic. - EU source— Jarno Hartikainen (@JarnoHa) July 12, 2015
... the same IMF which in 2011 came up with the same privatization target, only to be severely disappointed:
As for the biggest question of the night, namely where will Greece obtain the funding assuming Tsipras can pass through parliament the latest and harshest Eurogroup term sheet yet, at this point it is better not to ask too many questions, because while the Greek program envisions €86 billion in funding needs over 3 years, it also projects a whopping €22 billion in August alone!
Greece needs an infusion of 22 billion euros ($25 billion) to pay its bills through the end of August, Maltese Finance Minister Edward Scicluna said.
This figure includes 7 billion euros by July 20, when Greece owes about 3.5 billion euros to the European Central Bank, Scicluna said in an interview. It includes 10 billion euros for banks and 5 billion euros for other needs. He spoke on the sidelines of Sunday’s euro-area summit after finance chiefs concluded their session.
As Zero Hedge first noted even with the full Third Bailout paid in full, an amount of debt that would bring its total debt/GDP over 200%, Greece will likely be at the same bargaining table in a few months, only this time with its prized assets already pledged as secured collateral to a loan which will, drumroll, be used to repay the Troika, and with virtually nothing left over for the Greek people. This is about as close to an example of aggravated asset-stripping of a bankrupt debtor without the debtor of even having the benefit of being in default, as one can find in real life.
Some have suggested a combination of EFSF funding, others have said French bilateral loans (subsequently denied), but the reality is that this is irrelevant: if new money comes it will be secured from day one with Greek assets. In other words, any new money coming to Greece will be in the form of a DIP loan, secured with liens on tangible assets and when (not if) Greece is unable to repay, the creditors - who have created paper out of thin air - will be first to collect all too real Greek assets held in escrow in a Luxembourg subsidiary.
So what happens next? Well, Tsipras may finally be granted permission to go back to Athens and try to sell this disastrous "deal" to his people, but not for a few hours more.
"Will probably take some more hours." #EuroSummit— Stefan Leifert (@StefanLeifert) July 12, 2015
We expect some resolution around first light this morning, and while another Greek can kicking and some last-moment "hope" is surely in the cards, we know two things: Greece is officially finished - there is no way the Tsipras or any other government can politicall recover after such a humiliating spectacle when half of Europe made a mockery of the Greek people; and perhaps better, we finally have seen the true face of Europe: visible only when things are finally falling apart.
It is a very ugly face as Greece, where the #ThisIsACoup hashtag is now trending, have finally realized.
And somehow we doubt, if asked or otherwise, they will want to be a part of it ever again.... and not just Greece but every other country in Europe as well.