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Greece
Warns It May Default On IMF Loan Next Week
26
Febraury, 2015
Now
that the Greek tragicomedy of the new government "threatening"
to leave the Eurozone if it doesn't get its way, has been postponed
for a few weeks, if not months, we can go back to the biggest story
involving Greece, one we first covered in October
of 2014, when
we said that Greece needs about €43 billion through the end of 2015
to cover its funding needs. Earlier today, the broader market finally
woke up to precisely this problem for Greece, when MarketNews
reported that Greek creditors are now contemplating a third bailout
which could be as large as €30 billion.
Of
course, the only "use of proceeds" of this bailout would be
to cover prior
financing obligations:
maturities and interest on pre-existing debt. None would actually go
to the Greeks themselves; however a third bailout would certainly
come with even more draconian conditions and terms that would make
the current Greek "austerity" measures seem like a walk in
the park.
So
now that the Greek topic is back to overall debt sustainability, a
few hours ago Greece Kathimerini
reported that
the Euro Working Group "discussed Greece’s imminent funding
problems on Thursday amid mounting concern about how the country will
meet its obligations next months."
This
follows a suggestion earlier in the day by the Greek Minister of
State for Coordinating Government Operations Alekos Flambouraris
that "Greece
might delay payment to the International Monetary Fund if it cannot
find the necessary money.
According
to Kathimerini calculations, Greece is due to pay the IMF 1.6 billion
euros next month but Flambouraris said that Athens might ask to delay
this payment for two months. "Greece
has a total of 7.27 billion euros in obligations next month of
which 4.6 billion euros is in treasury bills that are due to be
rolled over. The government’s first T-bill issue will have to take
place by Thursday as 1.6 billion euros has to be rolled over the next
day."
One
possible solution is for the Troika, pardon, Institutions to raise
the €15 billion limit on T-bill issues, a request which however the
ECB has so far rejected.
But
wait, how does a country "delay" a payment on a debt
obligation, especially when it is due to the very IMF that has over
the past year refused to even consider lending Greece any more money
(apparently all of its spare cash goes to Kiev these days)?
Well,
it doesn't. Back to Kathimerini which reports that "the
possibility of Greece postponing the repayment of any debt tranches
to the International Monetary Fund is seen as “exceptionally
complicated” with “many obstacles,” according to officials
familiar with the subject. They
stress that such a move would constitute a “clear default,” with
consequences for a large number of other loans Greece has received."
A
delayed IMF loan repayment would generate multiple consequences,
which market professionals estimate would have a negative impact on
Greece and its economy, as when the Fund lends money to a country it
is always the first to be paid back. If
a country forfeits a repayment, this is considered a credit event, or
default.
Wait,
so, after all the drama of the past month, and all the posturing by
the once-proud new Syriza government whose spine, leverage and
confidence have since been crushed, Greece may actually have no money
to pay the IMF with? Well, yes, because remember: the biggest problem
- as
explained yesterday -
that has always faced Greece, is not its massive debt load, but the
reason why Greece accumulated this massive debt load in the first
place: its chronic inability to collect taxes!
“Greeks consider taxes as theft,” said Aristides Hatzis, an associate professor of law and economics at the University of Athens. “Normally taxes are considered the price you have to pay for a just state, but this is not accepted by the Greek mentality.”
And
that's the whole problem in a nutshell.
So
when is the Greek drama set to make a surprise come back appearance?
Greece
is due to pay the IMF 310 million euros on March 6, 350 million on
March 13, 580 million on March 16 and another 350 million on March
20.
We
suggest readers grab a seat and some popcorn on any of those days,
because the inevitable day when Greece finally runs out of not just
its own but
other people's money, may
arrive as recently as one week from today.
Full Circle: The First Anti-
Government Protest In
Greece Turns Ugly
26
Febraury, 2015
Athens:
first anti-gov’t protest by far-left ANTARSYA turns ugly
The
first anti-government rally in Athens turned ugly as
anti-authoritarian protesters started to smash the windows of a
pastry shop and two jewelry shops and put two vehicles and several
garbage bins on fire.
via
@MakisSinodinos
via newsit.gr
According
to latest information, there was no intervention by riot police
although squads were standing near by.
Earlier
KTG wrote:
The
first anti-government protest has been launched in Athens on Thursday
afternoon. A month after the left-wing/nationalist SYRIZA-Independent
Greeks coalition took office, a week after the Eurogroup agreement in
Brussels.
With
anti-EU banners and red party flags, members of Anticapitalist
Left Cooperation for the Overthrow (ANTARSYA)
took to the streets in downtown Athens to protest the extension of
continuation of loan agreements and Varoufakis’ Reform List with
“austerity measures.”
picture
via @MakisSinodinos
ANTARSYA calls
for defaulting on Greece’s debt, and nationalization without
compensation of major industries, banning of lay-offs, the
disarmament of the police, full political and social rights for
immigrants.
Although
ANTARSYA is not successful in parliamentary elections it does manage
to win seats in municipalities since 2010. In January
elections, ANTARSYA received 39,411 votes (0.64% of the overall
vote).
For
tomorrow, Friday, the Greek Communist party KKE has called for a
anti-government protest against austerity and the loan agreements.
According to KKE, Varoufakis’ Reforms list contains “all the
measures adopted by the capital, the governments and the EU
against the workers.”
In
Greek Parliament KKE holds 15 seats.
KKE
is against the €uro, the European Union, and against everything and
everyone in general. It vehemently rejected any offer form SYRIZa for
coalition government. It is the party of eternal opposition.
PS
I f you ask me, when Nea Dimokratia and PASOK and Potami will launch
anti-government protests all I can tell you: not for the time being.
Greece Suffers Biggest Bank
Run In History: January
Deposits Plunge To 2005
Levels
26
Febraury, 2015
One
of the biggest question marks surrounding the Greek negotiation and
ultimately, bailout extension, was just how panicked was the Greek
population and domestic corporations. Recall that as explained
previously, the tension boiled down to this: the Troika did
everything in its power to accelerate the bank run in order to crush
any negotiating leverage Varoufakis may have; Greece on the other
hand was desperate to make its cash drain appear far better than
rumored.
Moments
ago the Bank
of Greece presented its
latest, January, deposit data. And it's a doozy:following
a record €12.2 billion monthly outflow,
greater in absolute and relative terms thananything experienced
during any of the previous Greek crises and bailouts, the
total amount of Greek corporate and household deposits has now
tumbled to just €148 billion, down 7.7% from the month before, and
down 10% since November.
This number is in line with some of the more pessimistic
expectations, and
brings the total cash holdings at Greek banks to the lowest level
since August 2005.
What's
worse is that the outflow has most certainly continued in February,
when according to rumors another €10 billion or more may have been
withdrawn. And while the new FinMin is desperate to make it seem that
now that Greece has a can kicking bailout extension "deal"
the bank run has stopped, this is very much in doubt.
One
thing is certain: Greek banks, already crushed by record NPLs
somewhere in the 40% range, and without any equity buffer, are now
all, without exception, dead banks walking following this latest cash
rush. And absent another bailout - one which S&P calculated in
October will need to fund Greece with more than €40 billion in
additional cash - and one which will come with even more draconian
conditions, we
simply don't see how Greece gets away from its current
"self-reinforcing feedback loop" predicament without
Cyprus-style capital controls.
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