Sunday, 28 June 2015

Greece - steps towards default

We don’t need EU permission’: Greek parliament ratifies bailout referendum



Greek Prime Minister Alexis Tsipras delivers a speech during a parliamentary session in Athens, Greece June 28, 2015 (Reuters / Yannis Behrakis)
Greek Prime Minister Alexis Tsipras delivers a speech during a parliamentary session in Athens, Greece June 28, 2015 (Reuters / Yannis Behrakis)

RT
27 June, 2015, 01.25 am Moscow time

As an equal member of the EU, Greece does not need to ask permissions from anyone to let the Greek people speak and have their voices heard, PM Tsipras told his parliament, promising that the state’s sovereignty and future will be decided via referendum.


Referendums have been used all across Europe as a way for people to directly express their will and have their voices heard, and Greece is fully in its right to conduct one PM Alexis Tsipras said during a late-night debate in parliament.
The message from a number of Finance Ministers today-with a number of exceptions--was that #democracy should be stifled. #Greece#vouli
Alexis Tsipras (@tsipras_eu) June 27, 2015

With Tsipras’ ruling coalition holding 163 seats in the 300-seat parliament, the body has backed Tsipras’ motion to hold a referendum.
The conditions for a new bailout deal and reforms proposed by Greece's creditors were an ultimatum and an insult, Tsipras said. During the rowdy debate in the Greek Parliament, the main opposition party, New Democracy, briefly walked out over a dispute with the parliamentary speaker, but later returned.

We exhausted every limit of concessions so there could be an agreement,” Tsipras said. Perhaps some saw that as a weakness.”
We don't need to ask permission from Mr. Schäuble or Mr. Dijsselbloem to let the voice of the Greek people to be heard. #Greece#vouli
Alexis Tsipras (@tsipras_eu) June 27, 2015

The day of truth is coming for the creditors, the time when they will see that Greece will not surrender, that Greece is not a game that has ended,” he said, concluding his address by calling on all Greeks to reject the ultimatum” with a resounding NO.”

The head of the International Monetary Fund meanwhile said that creditors "will continue to work" to keep Greece within the single currency zone. She said the Eurogroup "always showed flexibility to adjust to the new political and economic situation in Greece," rejecting Tsipras’ claims that his country was facing an ultimatum.

I certainly hope that the bundled payment due to the IMF on Tuesday night, at the latest, will be paid,”Lagarde told CNBC in a separate interview.
The EU Council President Donald Tusk also warned that Athens must stay within the single currency zone no mater what the outcome of the referendum might be.
"Greece is and should remain euro area member," Tusk tweeted after eurozone finance ministers refused to extend the bailout agreement on Saturday, adding he remains "in contact with leaders to ensure integrity of euro area of 19 countries."






Eurozone Rejects Greek Bailout Extension: All Bailout Programs Expire On June 30, Referendum Moot



First thing this morning, when summarizing the flurry of overnight events, we focused on today's final gambit by Greece:







"... moments ago Varoufakis was quoted as saying he would ask the Eurogroup for a bailout extension of a few weeks to accommodate the referendum.
And the punchline: if the Eurogroup says "Oxi", then the entire Greek gambit, which has been a bet that to Europe the opportunity cost of a Grexit is higher than folding to Greek demands, collapses.
If the Eurogroup declines Varoufakis' request, there simply can not be a referendum, as the "institutions proposal" will no longer be on the table. As such, the only question is whether the ECB will also end the ELA at midnight on June 30, adding insult to injury, and causing the collapse of the Greek banking system days ahead of a referendum whose purpose would now be moot."

And, as expected, with the Eurozone meeting on Greece having just ended after a brief hour of deliberations, AFP reports that the answer, was indeed, no.
#BREAKING: Eurozone ministers reject Greek bailout extension: sources
Agence France-Presse (@AFP) June 27, 2015

And then this:
  • EUROGROUP PRESS CONFERENCE CALLED OFF IN BRUSSELS
  • EURO-AREA FIN. MINISTERS TO CONTINUE TALKS WITHOUT GREECE: ANP
  • EUROGROUP TO RECONVENE AFTER BRIEFING W/O GREECE: EU OFFICIAL
In effect, and very symbolically, Greece is already out of the Eurogroup. Worse: the referendum is now moot as the programs will expire on Tuesday night and Greece won't have anything actionable to vote on next Sunday.
What happens next: Eurogroup makes it official that the Greek proposal ends on June 30 making the referendum moot as the institutions proposal will no longer be on the table, the ECB pulls a "Cyprus" on Greek ELA, and a Greek bank system which is put on indefinite hiatus, leading to a "soft" Greek default if not outright Grexit, paving the way for even more ECB QE.
In the meantime, here is the live feed from the Euro-ex-Greece-Group where now only 18 countries are allowed to opine on the future of the costliest, and most artificial monetary experiment in history.







Since the 20 February 2015 agreement of the Eurogroup on the extension of the current financial assistance arrangement, intensive negotiations have taken place between the institutions and the Greek authorities to achieve a successful conclusion of the review. Given the prolonged deadlock in negotiations and the urgency of the situation, institutions have put forward a comprehensive proposal on policy conditionality, making use of the given flexibility within the current arrangement.
Regrettably, despite efforts at all levels and full support of the Eurogroup, this proposal has been rejected by the Greek authorities who broke off the programme negotiations late on the 26 June unilaterally. The Eurogroup recalls the significant financial transfers and support provided to Greece over the last years. The Eurogroup has been open until the very last moment to further support the Greek people through a continued growth-oriented programme.
The Eurogroup takes note of the decision of the Greek government to put forward a proposal to call for a referendum, which is expected to take place on Sunday July 5, which is after the expiration of the programme period. The current financial assistance arrangement with Greece will expire on 30 June 2015, as well as all agreements related to the current Greek programme including  the transfer by euro area Member States of SMP and ANFA equivalent profits.
The euro area authorities stand ready to do whatever is necessary to ensure financial stability of the euro area.

[1] Supported by all members of the Eurogroup except the Greek member.

Presenting the Euro-ex-Greece-Group

Greek Parliament Votes In Favor Of Referendum



Greek Parliament Votes In Favor Of Referendum



* * *

Greece’s referendum question will would have read as follows (before the offer was rescinded):

"Greek people are hereby asked to decide whether they accept a draft agreement document submitted by the European Commission, the European Central Bank and the International Monetary Fund, at the Eurogroup meeting held on on June 25 and which consists of two documents:

"The first document is called Reforms for the Completion of the Current Program and Beyond and the second document is called Preliminary Debt Sustainability Analysis.

"- Those citizens who reject the institutions’ proposal vote Not Approved / NO."

"- Those citizens who accept the institutions’ proposal vote Approved / YES."
The two documents reflect the complexity of Greece’s financial predicament.

The first includes sections on "parametric budgetary measures" and "unified wage grid reform."

The second has a discussion of the methodological advantages of using ‘‘gross annual financing needs’’ to assess Greece’s debt burden, rather than the more traditional debt-to-GDP ratio.

* * *


We noted earlier:

The Greek parliament is in session on Saturday evening as lawmakers debate the country's EMU fate and vote on the referendum called by PM Alexis Tsipras just after midnight this morning.

TSIPRAS SAYS REFERENDUM WILL BE MOMENT OF TRUTH FOR CREDITORS

TSIPRAS: GREEK PROPOSAL FOR SUSTAINABLE DEAL STILL ON TABLE

TSIPRAS SAYS REFERENDUM NOT MEANT AS RUPTURE WITH EUROPE

TSIPRAS SAYS GAME OF BAILOUT HAS COME TO AN END

GREEK PARLIAMENT TO RESUME IN 10 MIN AHEAD OF REFERENDUM VOTE

SAMARAS SAYS REFERENDUM DRAGS COUNTRY OUT OF EUROPE
SAMARAS SAYS CREDITORS DISCUSSING PLAN B FOR GREECE
STATE MINISTER PAPPAS SAYS GOVT STILL AIMING FOR AGREEMENT

Parliament Speaker Zoe Konstantopoulou announces 10-min recess after opposition New Democracy lawmakers walk out of chamber in the middle of debate.




From the Guardian

EU ministers refuse bailout extension for Greece as referendum looms


Greek parliament approves referendum vote, as EU finance ministers seek to insulate rest of eurozone from anticipated financial mayhem

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