Greece's Euro Exit Seems Inevitable - page 7
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Dark Mood Swallows Stocks in Athens, Banks Dive
Stocks in Greece were trading deeply in the red zone on Monday as worries over the country's future financing dented sentiment among traders, just a few hours before the crucial Eurogroup meeting.
The Athens Stock Exchange General Index slumped 3.90% to 806.27 during the European trading hours, with the banking sector hit the hardest.
Piraeus Bank slumped almost 11%, Alpha Bank dived 8.79%, and shares of National Bank of Greece tumbled 6.50%.
Euro zone finance ministers meet today in Brussels to discuss the situation in Greece, but top officials, including Eurogroup Chair Jeroen Dijsselbloem and Germany's Finance Minister Wolfgang Schaeuble, have been expressing pessimism over making a breakthrough.
Schaeuble and Greece's Finance Minister Yanis Varoufakis are due to meet on Monday ahead of the Eurogroup meeting, according to media reports.
"Things have progressed but are not ripe enough to allow to conclude," France's Finance Minister Michel Sapin stated on Monday.
European Central Bank Governing Council member Ewald Nowotny said on Monday thatsolution to Greece's debt problem is more political than economic.
Athens should pay another €750 million to the International Monetary Fund (IMF) on Tuesday, with the country running out of money.
Greek policymakers are still deadlocked in negotiations with international lenders about the next tranche of bailout funds, with several media reporting that the IMF is working on contingency plans for a Greek default.
Meanwhile, the latest poll suggested that a majority of Greeks wants their government and creditors to find an agreement.
Adding to the negative picture,Greece slashed its economic growth projections for this year, now expecting GDP to rise about 0.8%, after predicting a 1.4% hike in March.
read more
Tsipras Says He Won’t Cross Red Lines in Talks With Creditors
Greece won’t cross its red lines in negotiations with international creditors just because time is pressing to close a deal, Prime Minister Alexis Tsipras said.
“Those who think that our red lines will fade as time goes on would do well to forget it,” Tsipras said at a conference in Athens late Friday. “I want to assure the Greek people that there’s no way the government will back down on the issue of pension and wage cuts,” he said. “A deal must be reached but it must be mutually beneficial.”
Tsipras will address the standoff in bailout negotiations on the sidelines of a meeting of European Union leaders to be held May 21-22 in Riga, Latvia, according to a Greek government official who asked not to be identified as the diplomacy is not public.
More than 110 days of talks between Greece and its creditors have failed to produce an agreement to unlock further aid from the country’s 240-billion euro ($275 billion) bailout and avert default. The standoff has triggered a liquidity squeeze, pulling the country back into a recession and renewing doubts over Greece’s future in the euro area.
“The bottom line is that pressure on Greek authorities to come to a deal is rising,” JPMorgan Chase analysts Malcolm Barr and David Mackie wrote in a note to clients Friday. “The pressures on central government cash flow, pressures on the banking system and the political timetable are all converging on late May-early June. At that point some form of interim deal will need to be struck” and “it’s clear that time is running out,” they said.
Negotiations in the so-called Brussels Group of Greek and creditor institution representatives will continue over the weekend and into next week, an EU official said, asking not to be named as the talks are private.
Open Issues
While Greece has found common ground with its creditors in areas including fiscal targets, a marginal change to the sales tax rate and tax administration reform, there are “still open issues” concerning labor market and pension system reforms, Tsipras said.
Greece may seek an additional meeting of euro-area finance ministers by the end of May, Greek government spokesman Gabriel Sakellaridis said on May 14, as the cash crunch intensifies.
It remains unclear how Tsipras will deal with the likely objection by the Left Platform section of his Syriza party to the content of any deal, Barr and Mackie said. “Even small countries can stand upright to confront imperialist pressures and threats,” Greek Energy Minister Panagiotis Lafazanis said today in Athens following a meeting with Venezuela’s ambassador to Greece. Lafazanis leads the Left Platform.
Tsipras Mandate
Tsipras’s mandate from the Greek people is the biggest stumbling block to a deal with the country’s creditors, Maltese Finance Minister Edward Scicluna said in an interview Friday.
The yield on Greek 10-year bonds ended Friday up 20.9 basis points at 10.76 percent. The yield climbed to as high as 13.93 percent in April, the highest since December 2012, after dropping to as low as 5.52 percent in 2014. The benchmark Athens Stock Exchange General Index closed Friday 2.6 percent lower.
Credit-rating company DBRS downgraded Greece’s issuer rating to CCC from B on Friday citing a “further increase in uncertainty over whether Greece and its creditors will reach an agreement on a program that restores macroeconomic stability and improves Greece’s cash position.” Fitch Ratings later in the day affirmed its CCC grade for Greece.
“I think a third deal is simply needed and there is no way around a third deal,” ING Germany Chief Economist Carsten Brzeski said in a Bloomberg Television interview Friday. “It’s either a third bailout package or it’s a Grexit, no matter how you look at it. I think that there is no in-between solution.”
source
Greece Will Default On June 5 Without Deal, IMF Leaks
Another week came and went with no breakthrough in negotiations between Greece and its creditors. The IMF is now fed up and has reportedly refused to be a part of any new bailout program for Greece, after Athens drew down its SDR reserves to makes its latest payment to the Fund. That money will now need to be repaid and in a move that surely marks the new gold standard for absurd circular funding schemes, Greece will likely look to use the next tranche of IMF money to payback its IMF SDR reserve which it tapped to pay the IMF. The country’s public sector employees live in limbo, not knowing from one week to the next whether they will be paid and commuters are now subjected to a 50 second looped highlight reel of the Nazi occupation meant to rally the country behind the government’s quarter trillion euro war reparations claim (they might as well just ask for a 'gagillion') on Germany which has now become the symbol of tyranny and debt servitude for many Greek citizens.
Given the situation, one would be inclined to think that Alexis Tsipras would be falling all over himself to cut a deal with creditors because while giving up on campaign promises to voters isn’t ideal, it’s better than going down in history as the PM who sent the country careening into a drachma death spiral, and besides, giving up on campaign promises is something most politicians do all the time (it’s a job requirement for the US presidency). Alas we were back to the now ubiquitous ‘red line’ rhetoric on Friday as Tsipras continued to employ the “tell EU officials one thing behind close doors and tell the public the exact opposite a day later” negotiating technique. Here’s more from Bloomberg:
Greek PM threatened not to pay back more than $850 million to the IMF
Greece's Prime Minister Alexis Tsipras had at one stage warned foreign creditors that Athens would not repay 750 million euros due to the IMF in May unless they provided it with immediate liquidity, the Kathimerini newspaper reported on Saturday.
Athens ultimately made the May 12 payment by emptying an International Monetary Fund holding account.
Citing European sources, the newspaper said Tsipras made the threat in a May 8 letter to EU Commission President Jean-Claude Juncker, IMF head Christine Lagarde and ECB President Mario Draghi.
The Greek government did not immediately respond to a request for comment.
In his letter, Tsipras said Greece was starved of domestic sources of liquidity as it has been meeting its domestic and foreign debt obligations despite not having received any aid under its 240 billion euro bailout since last August, the newspaper said.
To restore liquidity, Tsipras proposed the ECB raise Greece's treasury bill issuance ceiling; a partial disbursement of loan tranches worth 7.3 billion euros; the return of 1.9 billion euros in profits the ECB made by buying Greek bonds since 2010; and the return of 1.2 billion euros in the euro zone's bailout fund, the EFSF.
The letter was viewed as "possible bluff" and reinforced a climate of mistrust between the two sides, the newspaper said.
Greece's cash reserves are dwindling and negotiations between Tsipras' new left-led government and its lenders over a cash-for-reforms deal have been fraught with delays for months.
On Friday, Tsipras said the two sides had found some common ground, but the government would not back down from its red lines such as no cuts to wages and pensions.
source
Greece cannot make June 5 IMF payment without deal - lawmaker
Greece will not be able to make a payment to the International Monetary Fund that falls due on June 5 without a deal with its international lenders, the government's parliamentary speaker said on Wednesday.
Athens faces several payments totalling about 1.5 billion euros (1 billion pounds) to the IMF next month and is in talks with the European Union and the International Monetary Fund to clinch a cash-for-reforms deal before it runs out of money.
"Now is the moment that negotiations are coming to a head. Now is the moment of truth, on June 5," parliamentary speaker Nikos Filis, from the ruling Syriza party, told ANT1 television.
"If there is no deal by then that will address the current funding problem, they won't get any money," he said.
Without access to debt markets or aid, the government has found itself locked in tough negotiations as coffers run dry.
A payment of about 750 million euros to the IMF last week was only made after emptying a holding account at the Fund.
Talks with the European Union and International Monetary Fund lenders have dragged on for the past four months. A successful conclusion would release around 7.2 billion euros in aid, but talks have stumbled over pension and labour reform proposed by the creditors and resisted by Athens.
"There is no money for the foreign (lenders) when they have not given us any funds for a year," Filis said. "We don't have it to make the payment and this is part of the discussion."
He said the government would make sure that it has money to pay pensions and wages before servicing debt repayments to the IMF.
read more
The have 2 more weeks - and then some new excuses
Spokesman: Merkel-Hollande-Tsipras talks focused on successful completion of bailout
Headlines via Reuters :
Just the headline, nothing further at this stage
OK .... here's the next headline:
More:
There will be no Grexit - that is all a drama played to keep us entertained
Tsipras Urges European Creditors to Compromise on Greek Deal
Greek society can’t absorb more austerity, and the country’s creditors must compromise to break the impasse over the release of funds for its cash-strapped economy, Prime Minister Alexis Tsipras said.
Tsipras sought to placate critics within his Syriza party after returning from a European Union summit in Riga, Latvia, where talks with German Chancellor Angela Merkel and French President Francois Hollande failed to yield a breakthrough on measures to unlock bailout funding. Some members of his party advocate defaulting on loans rather than backing down from the anti-austerity policies that swept it to power in January even if that leads the country out of the euro.
“We’ve shown willingness to compromise to get to a mutually beneficial solution,” Tsipras said in a speech at the start of a two-day meeting of Syriza’s central committee on Saturday. “But we ask from our partners the same respect and to also make concessions.”
Merkel and Hollande last week gave Tsipras until the end of May to reach a deal on its aid program, including economic policy changes demanded by Greece’s creditors. As time runs short, his government has to pay monthly salaries and pensions by next Friday and repay about 300 million euros ($330 million) to the IMF a week later.
No Breakup
A Greek exit from the euro is just a matter of time and wouldn’t lead to the breakup of monetary union, former Federal Reserve Chairman Alan Greenspan told Het Financieele Dagblad in an interview published Saturday. An exit could make the euro stronger, billionaire investor Warren Buffett said in an interview in the Euro-am-Sonntag newspaper.
German Finance Minister Wolfgang Schaeuble mentioned the possibility that Greece may need a parallel currency alongside the euro if the country’s talks with creditors fail, according to two people who attended a recent meeting, noting he didn’t endorse the idea. The German Finance Ministry on Friday called the account of Schaeuble’s remarks “inaccurate.”
Negotiators from Greece and its creditors are continuing technical talks in the so-called Brussels Group “over the coming days in order to accelerate progress,” European Commission spokeswoman Mina Andreeva said Friday.
Euro-area finance ministry officials, known as the Euro Working Group, will hold a teleconference call on Thursday to discuss Greece, two people familiar with the matter said, asking not to be named in line with policy. Earlier in the week, the ECB’s Governing Council will hold its weekly review of emergency liquidity support to the country’s lenders.
Pensions, sales-tax rates and targets for a primary budget surplus are among the open issues remaining between Greece and its creditors, a Greek government official told reporters after the meeting between Tsipras, Merkel and Hollande. A main obstacle is that the IMF needs to be on board, he said.
Immediate Hardship
“I know that there is a lot of work to be done, that the parties are now working,” IMF Managing Director Christine Lagarde said Friday in Brazil. “It has to be a comprehensive approach and, as I said in other places, it cannot be a quick and dirty job. The IMF is not known for doing that, nor are the other partners in the negotiations.”
Failure to reach a deal quickly would create immediate hardship for Greece, U.S. Treasury Secretary Jacob J. Lew told Tsipras in a phone call Friday, according to an e-mailed statement from the Treasury.
“We’ve already seen the factions within Syriza beginning to rumble around this situation,” Michala Marcussen, global head of economics at Societe Generale SA, said in a Bloomberg TV interview on Friday. “We find it very difficult to see a situation where we can come up with a solution and we can say ‘that’s it, Greece is solved, we can now move on.’ This will be an ongoing issue.”
read more
Greece does not have the money to make June IMF repayment: interior minister
Greece cannot make debt repayments to the International Monetary Fund (IMF) next month unless it achieves a deal with creditors, its interior minister said on Sunday, the most explicit remarks yet from Athens about the likelihood of default if talks fail.
Shut out of bond markets and with bailout aid locked, cash-strapped Athens has been scraping state coffers to meet debt obligations and to pay wages and pensions.
After four months of talks with its euro zone partners and the IMF, the country's leftist-led government is still scrambling for a deal that could release up to 7.2 billion euros ($7.9 billion) in remaining aid to avert bankruptcy.
"The four installments for the IMF in June are 1.6 billion euros ($1.8 billion). This money will not be given and is not there to be given," Interior Minister Nikos Voutsis told Greek Mega TV's weekend show.
Asked about his concern over a credit event if Athens misses a payment, he said: "We are not seeking this, we don't want it, it is not our strategy. Things have matured for a deal of logic."
"We are discussing, based on our contained optimism, that there will be a strong agreement (with lenders) so that the country will be able to breathe. This is the bet," Voutsis said.
Previously, the Athens government has said it is in danger of running out of money soon without a deal, but has insisted it still plans to make all upcoming payments.
The government is under pressure to agree to more cuts and reforms to secure the funding, but opposes measures which it says make the situation worse by preventing recovery from one of the deepest recessions in modern times.
Voutsis said the government was determined to fight against the lenders' strategy of "asphyxiation".
"This policy of extreme austerity and unemployment in Greece must be hit," he said. "We will not escape from this fight."
In an effort to placate the hard left faction of his Syriza party, Greek Prime Minister Alexis Tsipras said on Saturday the government was on a final stretch toward a deal but would not accept "humiliating terms".
Finance Minister Yanis Varoufakis said Greece had made "enormous strides" at reaching a deal with its lenders to avert bankruptcy but it was now up to the institutions to do their bit.
read more