The Greek crisis

Letting Greece Twist In The Wind

Wolf Richter

Testosterone Pit,

24 August, 2012

With impeccable timing, it seeped to the surface that a group of ten experts at the German Finance Ministry is studying ways to deal with a Greek exit from the Eurozone. Though rumors about a “Plan-B” had been circulating for months, the leak provided details. A Finance Ministry spokesperson clarified helpfully on Friday, rather than denying it, that the group has been in existence for over a year. Impeccable timing because it happened as Greek Prime Minister Antonis Samaras was arriving in Berlin for his begging and charm expedition. German Chancellor Angela Merkel must have smiled. The heat was on.

They should be soul mates, Samaras and Merkel, both belonging to conservative parties. But during the prior government when he led the opposition, he fought tooth and nail against her sacrosanct structural reforms. So their schmooze on Friday must have been quite something. But at the press conference, she said, “I want Greece to remain part of the Eurozone.” And she knew of “no one in the governing parties who doesn’t want that.”

Yes, she said that! Despite the onslaught of politicians in her government who over the past months promoted Greece’s exit—even hours before the meeting, on ZDF’s morning TV show. Maybe Merkel didn’t watch it. “We cannot provide more money,” Volker Kauder, Chairman of her CDU/CSU parliamentary group, told Germans nationwide. And Greece’s exit, he added, would be “no problem for the euro.”

Nevertheless, she soldiered on: “Commitments must be kept.” And warned, “Words must be followed by deeds.” She was “deeply convinced” that the Samaras government would do “everything” to solve the problems, but any decision would have to wait “for the Troika report.”

Ah-ha. Inspectors the EU, the ECB, and the IMF will spend much of September combing through Greece with a fine-toothed comb to come up with a report, the big report, the one that would determine if Greece deserved more bailout billions. The report would be so big that every politician, even Merkel, could hide behind it. No one would want to be the one to kick Greece out. But the faceless Troika report issued by a triple-layered, non-democratic bureaucracy could take the heat [read.... Greece Prints Euros To Stay Afloat, The ECB Approves, The Bundesbank Nods, No One Wants To Get Blamed For Kicking Greece Out].

She laced her speech with meaningless expressions of support but didn’t commit to anything. It was a good beginning, she said, but much work remained to be done—sounding like a broken record.

But she can’t change her tune easily. In a poll released on Friday, 72% of Germans were against giving Greece the third bailout package that would be required if Greece were given more time to implement its reforms; 67% were against giving Greece more time, and 61% thought Greece should return to the drachma. So a switcheroo would be costly for her.

“We’re a very proud people, and we don’t want to be dependent on borrowed money,” Samaras said when it was his turn. “We don’t want more money. We need time to breathe.” Then he lamented the “toxic declarations” by a “high-ranking politician”—a jab at vice-Chancellor Philipp Rösler, Volker Kauder, or any of the others. How could they publicly discuss that Greece would revert to the drachma? That’s why no one wanted to invest in Greece. It was rendering the privatization of state-owned enterprises impossible. Greece needed investment, not austerity, he said.

So Merkel grabbed his balls and yanked: She’d been reading the Greek tabloids..., she said—the papers that had been depicting her with Hitler mustache and Nazi uniform—as if to say, look, this is politics ... tit for tat. Then she jabbered about “two realities” in Germany and Greece that would have to be brought back together.

He deemed the discussion “especially constructive.” For Merkel, it was “intensive.” In other words, they hadn’t agreed on anything. Samaras packed up his bags empty-handed. Nothing would happen before the Troika report. And then Merkel could hide behind it. She has been on record from day one that she wanted Greece to remain in the Eurozone. No one could blame her. Greece would run out of money, default, and revert to the drachma on its own. And voters couldn’t blame her for throwing more of their money at Greece to keep it in the Eurozone another year or two. So maybe she’d hang on to power, something almost no head of state has been able to do in the debt crisis.

Yet, hope is once again gushing through the system that the debt crisis could be wished away by a nod from Merkel, a wink from the Bundesbank, or a click of the mouse at the ECB. But in Greece there has been an incident....  Euro Optimism Surges, A Greek Tax Revolt Flares Up: It’s Decision Time, Again.

And here is.... The Eurozone Crisis Between Euro-Morons And Zombie-Bankers by George Dorgan.

Merkel and Hollande sidestep Greece's plea for breathing space

Angela Merkel and Francois Hollande pledged to keep Greece in the eurozone, but offered Greece no immediate relief from its current regime of painful austerity measures.

The Telegraph,

25 August, 2012

Francois Hollande, the French president, said that Greece must stay in the eurozone but must first prove it is determined to overhaul its economy so Europe can do its part and move on from the debt crisis.

Following talks with the Greek prime minister, Antonis Samaras, on Saturday, Mr Hollande said that "Greece is in the eurozone and Greece must stay in the eurozone".

But, he cautioned: "It still has to demonstrate the credibility of its programme and the willingness of its leaders to go the whole way, while doing it in a way that is bearable for the population."

“Once these commitments, which are not only financial but about structural reforms that the Greeks want, have been ratified by parliament and confirmed, Europe must do its part,” the French president added.

However, Mr Hollande side-stepped Greece's request for more time to implement the harsh austerity measures its creditors insist upon.

As part of a €130bn bailout package from the EU and IMF, Greece has committed to sweeping reforms and some €11.5bn of cuts in 2013 and 2014. But, it is thought that Mr Samaras wants two more years to make the cuts.

The Greek prime minister has used interviews with German and French newspapers over the last week to call for more time to meet the targets set out under the bailout agreement, saying Greece needs some "breathing space".

But neither Mr Hollande nor the German chancellor, Angela Merkel, have responded directly to that request.

After talks with Mrs Merkel on Friday, the German chancellor pledged to keep Greece in the eurozone, saying she was "deeply convinced" that the new Greek government was “doing everything to solve the problems. But, she refused to address Greece's plea for more time.

Germany's finance minister on Satuday reaffirmed his opposition to giving Greece more time to carry out promised reforms. "More time generally means more money and that very soon means a new [bailout] programme," Wolfgang Schaeuble told the Tagesspiegel on Sunday newspaper.

Mr Hollande indicated that any decision on delays for Greece must wait for a report next month by the "troika" of Greece's debt inspectors

"We've been facing this question for two and a half years, there's no time to lose, there are commitments to reaffirm on both sides, decisions to take, and the sooner the better," he added.

Addressing Mr Hollande's concerns about Greece's commitment to reform, the Greek prime minister said his government will meet its obligations.

“Of course we need to make an effort,” said Mr Samaras. “We can keep our promises and goals, reduce our deficit and debt, accomplish structural reforms.”

The Greek leader also dampened talk of the nation potentially exiting the eurozone, saying: "Many say Greece won’t make it, that it can’t stay in the euro. I came here to say Greece will make it, it will stay in the eurozone."

Separately, Der Spiegel reported on Saturday that Mrs Merkel had called for a new European Union treaty to further integration, but was facing lukewarm interest from her European partners

Migrants protest Greek wave of racist attacks

Over 3,000 immigrants flocked to the center of Athens to protest the wave of xenophobic attacks sweeping Greece. Racist violence has seen a marked increase in the wake of the financial crisis, with NGOs condemning police indifference to the attacks

RT,

25 August, 2012

Thousands of protesters marched on the Greek parliament in Athens in one of the largest anti-racist rallies the capital has ever seen. They carried banners emblazoned with the slogans "No Islamophobia" and "Neo Nazis out!"

Some protesters brandished banners implicating Greek far-right party Golden Dawn, which has been accused of inciting xenophobia and racial violence.

Golden Dawn MP Ilias Kasidiaris attacked the Greek government for allowing the rally to take place.

“The constitution protects gatherings of Greeks and not of foreigners,” he said in a statement.

The protests follow a countrywide police crackdown on illegal immigration in Greece. The Greek government provoked immigrant ire after rounding up hundreds of undocumented immigrants in the town of Corinth and holding them in a nearby military camp. The move sparked protests from residents and local authorities, rallying against the creation of a detention center in the town.

"We will do everything possible to prevent such a disaster," Corinth's mayor Alexandros Pnevmatikos told Skai TV. "We don't want the camp, which is in the center of the city close to densely-populated neighborhoods, to become a holding center."

Pnevmatikos threatened to cut the camp’s water supply and rubbish disposal if the 350 migrants held there were not released.

Far right supporters of Golden Dawn clashed with police outside the army camp on Thursday and hurled bottles at a deputy who had come to visit the camp.

The nationwide campaign to curtail illegal immigration has been dubbed "Xenios Zeus" after the ancient Greek god of guests and travelers. The Greek authorities have thus far arrested thousands of illegal immigrants.

Police turn blind eye to racial violence

Greece’s minister for public order announced on Thursday that a special unit would be created within the Greek police to combat the “phenomenon of racist violence.” The move came after several rights groups criticized Greece for its failure to curb the rise in xenophobic attacks.

Human Rights Watch released a report last month condemning Greek police for their failure to act of cases of racial violence.

"Migrants and asylum seekers spoke to Human Rights Watch of virtual no-go areas in Athens after dark because of fear of attacks by often black-clad groups of Greeks intent on violence,” said the report.

The document also implies collusion between Golden Dawn and local police forces in connection with the attacks.

The extremist party denies any connection to the racial attacks sweeping Greece.

Last month Golden Dawn spokesperson Ilias Kasidiaris said that immigration was a government conspiracy to turn Greece into “a wretched protectorate inhabited by subhumans, with no conscience, with no country, with no national culture.”

One of the party’s solutions to immigration is to mine areas along the Greek border where high concentrations of immigrants cross into the country.

Golden Dawn currently has 18 seats out of 300 in the Greek parliament and has seen a rise in popularity in the wake of an increase in unemployment and crime levels.

The Unvarnished Truth About Greece

Zero Hedge,

24 August, 2012

While Belize is comfortable buggering bondholders, the Greeks (following this morning's headlines) remain beholden to their euro-zone overlords - having survived a few more months on the back of reach-around 'bailouts' and ponzi-financing - all in the effort of providing more time for the 'rest of Europe' to figure out how to handle the 'Athens moment' that is surely coming. With September and October critical 'event-rich' months, Patrick Young, of DV Advisors, provides the clearest and least 'rose-tinted' perspective on where Greece has been, where they are now, and where this will all end. From the forged application for euro-zone membership to Oz-like fantasies of growth and austerity targets that remain pipe-dreams (and are constantly being missed), the bold Irishman in this brief clip explains "Greece has not done anything to really help itself, missed every deadline its been given" and the PM's comments on their 'spectacular come-back' clarifies the 'utter delusion' among the Greek political class because "Greece is bankrupt; full stop; game over" and Merkel must agree to 'let' Greece leave the Euro (post Troika) - as the rise of civil unrest, since whatever new money flows their way exits right out the back door and never 'helps' the people, is inevitable.

Especially following these mixed headlines (via Bloomberg):

*HOLLANDE: PEOPLE SHOULD STOP ASKING IF GREECE WILL STAY IN EURO

*HOLLANDE SAYS GREECE HAS TO DEMONSTRATE CREDIBILITY

*SAMARAS SAYS GREECE WILL STAY IN THE EURO ZONE

• Alexander Dobrindt, general secretary of the Christian Social Union, said he sees no way around Greece leaving the euro area, Bild am Sonntag reported, citing an interview.
• Dobrindt sees Greece out of the euro in 2013
• Greece should receive EU support when it leaves the currency union and have the option of returning: Dobrindt

More on Greece

This might be slightly older news - before the failure of mainstream parties to form a government


Greece ‘worst case’ outcome sparks new turmoil

Investors woke up Monday to a “worst case” scenario in Greece after voters punished mainstream, pro-bailout parties in parliamentary elections, potentially creating a political vacuum that could fan doubts over the country’s ability to meet the terms of its latest bailout and remain in the euro, strategists said.

MarketWatch

7 May, 2012

With 99% of the vote counted, the center-right party New Democracy was on track to hold 108 seats in the 300-seat lower house of parliament, while the center-left Socialists, known as Pasok, were seen at 41, according to Greek newspaper Kathimerini. Pasok came in third behind the left-wing and anti-bailout Syriza party, which has won 52 seats, the report said.

That leaves a combination of New Democracy and Pasok — the country’s long-dominant parties and architects of the recent bailout — two seats short of a 151-seat majority.

“This is the crisis we have all feared,” said Carl Weinberg, chief economist at High Frequency Economics in Valhalla, N.Y., in a note to clients.

Voters deliver a stinging rejection of Greece’s two incumbent parties.

Greece’s president on Monday gave New Democracy leader Antonis Samaras three days to put together a coalition, the Associated Press reported.

If he fails, the mandate will go to the head of the second-place Syriza party and then to Pasok. Each would have three days to complete government-formation talks.

Observers said the inconclusive result makes it unlikely a solid coalition can be formed — potentially setting the stage for another election as early as June.

Meanwhile, leaders of smaller parties, which campaigned hard against the terms of the latest bailout, were triumphant. “The people of Europe can no longer be reconciled with the bailouts of barbarism,” Syriza leader Alexis Tsipras told Greece’s state-run NET TV late Sunday, according to Bloomberg.

In the markets, the Athens General Index GR:GD -6.67% remained down nearly 7%, while Greek government bonds sold off sharply, sending the 10-year yield soaring more than 2.5 percentage points to 23.25%, according to electronic trading platform Tradeweb.

Other European equity markets began the day under pressure but then turned mostly higher, while U.S. stock-index futures pointed to a slightly lower start for Wall Street. Read Europe Markets.

Meanwhile, the yield on the 10-year German bund DE:10YR_GER 0.00% fell as low as 1.556%, according to Tradeweb, within spitting distance of the record low of 1.549% set last week on safe-haven demand. The yield was seen at 1.58% in recent action, up by around 1 basis point.

The euro EURUSD -0.14% slumped to its lowest level versus the dollar since February before paring losses to change hands at $1.3035 in recent action, down from $1.3095 in North American trade late Friday.

Prospects for a ‘messy euro-zone exit’

While New Democracy and Pasok are calling for a grand coalition, “the willingness of other parties to go down that route looks low, so Greece could be back at the polls next month,” said Elsa Lignos, senior currency strategist at RBC Capital Markets in London. 

“Overall the breakdown in the political process may bring threats of a messy euro-zone exit back into market focus.”

The formation of a “rejectionist” government in Athens would force the International Monetary Fund and the European Union to suspend maintenance payments for Greece, High Frequency Economics’ Weinberg said.

Venizelos: The Arrogance of Power

"We Embittered the People to Protect the Future of the Nation"

If you want to understand the reason PASOK went down in flames in a crushing defeat in Greek elections, simply look at the arrogance and gall of party leader Evangelos Venizelos in a statement following the election.

“We embittered the people so we could protect the future of the nation", said PASOK party leader and troika sponsored clown, Evangelos Venizelos.

Ekathimerini reports Election swing leaves Greece teetering.

PASOK leader Evangelos Venizelos and New Democracy chief Antonis Samaras both declared themselves open to the idea of forming a pro-European national unity administration that would include other parties and would seek to renegotiate the terms of the EU-IMF loan agreement.

“All Greeks have to get to know each other again,” said Venizelos, who admitted that PASOK had paid the price for carrying the burden of the crisis. “We embittered the people so we could protect the future of the nation.”

He said that the possibility of forming a national unity government with a “European orientation” regardless of parties’ positions on the bailout should be explored.

Samaras said he would seek to form a “national salvation government” to keep the country in the eurozone and pledged to “amend” Greece’s debt deal with foreign creditors in a bid to boost growth. He attributed the outcome of the elections, in which voters punished the two main parties, to “the disappointment of the Greek people for dead-end policies that have pushed them to the limits.”

However, the possibility of a third group joining such a government looked extremely slim last night. Perhaps the best hope for Greece’s two main parties would have been Democratic Left, which maintained a clear pro-European stance during the campaign.

However, party leader Fotis Kouvelis repeated his position that cooperation with New Democracy and PASOK was not in Democratic Left’s intentions. “The results show people’s frustration and anger,” he said.

A failure by PASOK and ND to form a government would leave second-placed SYRIZA, the night’s big winners, with the option of trying to form a government. Greece’s electoral law means that in case of a hung parliament, the first party has three days to form a government, followed by the second party and then the group that comes in third.

National Salvation Party

The idea that Troika sponsored clowns can form the basis of Greek salvation is ridiculous. Furthermore, Venizelos' statement is right up there with other top Orwellian idiocies.

Top Orwellian Comments Of All Times

An American major after the destruction of the Vietnamese Village Ben Tre: "It became necessary to destroy the village in order to save it."

Vice President Joe Biden: "We Have to Go Spend Money to Keep From Going Bankrupt."

President George W. Bush: "I've abandoned free-market principles to save the free-market system."(For a discussion please see The Most Redeeming Feature of Capitalism is Failure)

Nancy Pelosi said "We have to pass the health care bill to see what's in it." (YouTube Video)

Larry Summers says "The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending." (Reuters)

We can safely add “We embittered the people so we could protect the future of the nation" to that list. As I said, Best thing For Greece is Tell the Troika "Go to Hell", and the election proves most Greek voters know it, even though they have been brainwashed into wanting to stay in the euro.

Greek political chaos

Greece: Conservative leader unable to form coalition

Greek conservative leader Antonis Samaras says he has failed to form a coalition government and has handed back the mandate to President Karolos Papoulias

Radio New Zealand,

8 May, 2012

Mr Samaras, whose New Democracy party won the biggest share of the vote in Sunday's inconclusive election, was given the first chance to form an administration by the president.

Syriza, which took second place will now be given the opportunity to try and form an administration.

New Democracy will still be the largest party in the new parliament.

Mr Samaras says the party did everything it could but it was impossible to form a government in the current political environment.

Two-thirds of Greek voters backed parties opposed to the EU/IMF deal, renewing fears that Athens may default on its debts and leave the eurozone.

Chancellor Angela Merkel of Germany has made clear that Greece's reforms must go on, saying they are of ''utmost importance''.

A further 11 billion euros of cuts in spending is due to be found next month under Greece's current bailout plan.

Since November, Greece has been run by a coalition, led by technocrat Prime Minister Lucas Papademos, which secured a 130 billion euro deal this year.

Pasok was in power when Greece negotiated the terms of a bailout of 110 billion euros in 2010.

New Democracy's support on Sunday slipped from 33.5% to less than 19% of the vote while Pasok's share plummeted from 43% to just over 13%.

If Syriza fails to form a coalition, Pasok, the third party will receive the mandate.

If still no coalition emerges, Greece will hold another election.

Syriza is opposed to the austerity measures.

Pasok's leader, former finance minister Evangelos Venizelos, has called for a broad coalition government of pro-European parties.

''A coalition government of the old two-party system would not have sufficient legitimacy or sufficient domestic and international credibility if it would gather a slim majority,'' he said on Sunday.