Greece's Euro Exit Seems Inevitable - page 15
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Merkel and Schaeuble squaring up again over Greece
Bild headline shows the fight on Greece could be in Germany not Brussels
Bloomberg carrying the headline from Germany's Bild saying that Merkel is in favour of new talks with Greece while Schaeuble is against them
It's not new news that Merkel and Schaeuble seem to be at odds over Greece and as today's Eurogroup meeting edges closer, it looks like Wolfy boy holds some of the biggest cards
Even if the Eurogroup provisionally rubber stamp the new deal it still has to go back to member states to vote on in their respective parliaments. Merkel would face anxious times from the Bundestag over seeing the proposals pass. Last month Bloomberg noted sources saying that she may be forced to tie the Greek deal with a vote of confidence and that if it came down to the nitty gritty, most would side with Schaeuble's view on Greece
We also need to remember that it is not just Germany that could scupper the deal as there are more than a few countries who are against giving Greece a deal, if it leads to more debt haircuts and restructuring. Whether any of those smaller countries have the nuts to be the ones that send Greece out of the euro is another matter though
Update: Finally some further details from the Bild article which says that Merkel has backed new talks out of consideration for other EU partners, especially France, and Schaeuble regards the latest Greek proposals as inadequate. Two weeks ago, he also supposedly said that he would have broken off talks a long time ago
Germany's Schaeuble says suggestions far from sufficient for Greek bailout
Schaeuble's latest comments:
This guy desperately wants Greece out of the euro. This helps to explain why. (and this)
He's got some backing too. Here are comments from Slovakia's finance minister:
Austria's finance minister also said he saw a 60:40 chance of a deal but only if Greece guaranteed the reform measures would actually be applied.
Finland Echoes Germany, Wants Greece Out; Five Other Nations Back Grexit
Initially it was just an unconfirmed report circulating in the German FAS media that the local FinMin had proposed a "temporary Grexit" option. Then it got some more traction when a ZDF journalist reported that it was much more than just speculation...
It now appears that this was not only not a rumor, but Schauble's sentiment is contagious: moments ago Finnish broadcaster MTV reported that first Finland, and then the Eurozone's smaller, if somewhat more solvent nations, Estonia, Lithuania, Slovakia, Slovenia and even the Netherlands, support the German position on temporarily suspending Greece' Euro membership.
But... Schauble may just be following Merkel's orders, as the two are mmerely playing good cop, bad cop.
Finnish Kauppalehti confirms that the Finns party leader Timo Soini just said no to more Greek bailouts:
Minister for Foreign Affairs Timo Soini According to the Finnish Government does not allow for supporting the Greek. "The starting point is of course the fact that Finland's responsibilities do not grow. It is a government program entry," Foreign Minister Timo Soini commented on a possible third rescue package for Greece to Ilta-Sanomat.
In which case one can forget Grexit: at this point of total diplomatic failure, one should be worried how long before all the other insolvent, if actively pretending to be doing ok, PIIGS have before the wrath of "Northern Europe" turns their way. As for Greece, it now appears just a matter of time.
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Greek crisis splits Europe that cannot agree on its original proposals –EUR to crash?
A long 9 hour discussion in the group of euro-zone finance ministers ended without conclusion. There were worrying signs even before the meetup began, but the outcome so far is a total disaster. The Eurogroup will re-convene on Sunday at 9:00 GMT, just hours ahead of the leaders’ summit that is considered the real deadline to resolve the Greek crisis. Otherwise, there is a real danger that Greece will be forced out of the euro-zone, even if there are no provisions for that in the EU treaties.
What seemed like a done deal is going down to the wire, and there may be no happy end.
What Germany really wants
After Greece surrendered on austerity measures and approved them in parliament, hopes were high that they would be passed on in the Eurogroup. After all, Greece finally agreed to the demands that were presented as a take it or leave it offer from the institutions (aka the troika) just two weeks ago.
But after the Greek referendum, this is not enough. Or perhaps it was never going to be enough, with Germany always wanting a Grexit, as former Greek finance minister Yanis Varoufakis had said just on Friday.
This line of thought was seen with a German hard line: a desire for a Grexit. According to paper floated by Germany, Greece will temporarily leave the euro-zone but hand over 50 billion worth of state assets to the euro-zone. So, even less economic independence but without the euro. This is not exactly consistent with a Europe that is united together, perhaps united with chains.
Debt restructuring issue
In order to become independent again and pay back a significant amount of its debt, some form of debt restructuring is needed. Everybody knows that. Greece asked for it after the IMF already said it.
German finance minister Schaeuble wants to push Greece out while there are provisions for forcing a country out of the monetary union do not exist. On the other hand, he does admit that Greece needs a debt cut in order to make its debt sustainable, but says it is illegal under current rules. Hypocrisy at its best.
Split Europe
Germany is supported by Finland which is even more extreme. On the other hand, we have a frustrated Italy that is angry with the humiliation of Greece, and a frustrated France. The second core country tried to assist Greece with its proposals, and this angered Germany.
Things do not look good. If this continues, EUR/USD is headed for a third consecutive Sunday gap, but this time it could be wider and perhaps will not close so fast.
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That is just an excuse for another round (on taxpayers of course)
Tsipras to have talks with Merkel, Hollande and Tusk as Eurogroup offers Grexit-lite
Reuters just reporting that Tsipras is to hold separate talks on the sidelines of the Eurozone leaders summit currently in progress
Part of the Eurogroup proposal is a form of Grexit- lite as I reported just now whereby Greece takes a holiday from the Eurozone in return for some discussion on debt restructuring
Quite how that would pan out and what markets would make of it is difficult to gauge ahead of further detail but I'd say increased uncertainty, euro wobble to start with then more demand as markets and Europe reconciles a stronger Eurozone less one weak member. I couldn't see Greece coming back into the fold in a hurry
The debt restructuring carrot is surely too big to refuse but Hollande had previously said today that he"dismisses the concept of a provisional Grexit"
More detail awaited later when the leaders release a statement. No time scheduled for that as yet
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What has been done is disgraceful. If Greeks (the voters) do not do anything, than, they deserve it
Grexit Still on the Table Even With EU’s Latest Band-Aid
The last-ditch agreement that’s supposed to keep Greece in the euro almost never happened. Even now, its designers are unconvinced it will work.
It will take “a small miracle,” Slovak Prime Minister Robert Fico said after the 17-hour summit that ended Monday. “There’s little faith in the current Greek government,” Dutch Prime Minister Mark Rutte told his Parliament Thursday.
The deal promises to further degrade a shattered economy through spending cuts and tax increases; it relies for implementation on a self-described party of the radical left; it counts on sales of state assets that Greece’s economy minister says “do not exist;” it leaves untouched a debt load the International Monetary Fund believes will never be repaid.
If anything, Greece and its creditors are further apart than ever, with the country’s leaders arguing they were forced to accept a bad deal under duress.
“It’s clearly a Band-Aid solution,” Ian Bremmer, president of Eurasia Group, a political-risk consulting firm, said in an e-mail. “I’d love to say we’ll be back here in a year or two. It’s more likely to be a few months.”
For now, anyway, things are on track. Greek lawmakers did as demanded, approving new austerity measures. European finance chiefs agreed to provide bridge financing and the blueprint for a three-year rescue plan. The European Central Bank increased its emergency credit line to Greek lenders.
Conflicting Assumptions
“We always acted on the assumption that Greece will remain a member of the euro area,” ECB President Mario Draghi said on Thursday. “There was never a question.”
To others, there was.
Following a July 5 plebiscite in which 61 percent of Greeks backed Prime Minister Alexis Tsipras’s rejection of conditions demanded by creditors, Jean-Claude Juncker, president of the European Union’s executive arm, spoke openly about Grexit.
Europe presented last weekend’s talks as a now-or-never chance to find a durable solution to five years of crisis fighting. The hard line, which included a German idea to suspend Greece’s euro membership, forced Tsipras to capitulate.
The demands went “beyond harsh into pure vindictiveness,” wrote Nobel laureate economist Paul Krugman.
The process that created the tentative deal could hardly be described as elegant. Deep inside the Justus Lipsius building that houses the European Council, leaders of the 19 euro-area countries and their aides shuttled between plenary sessions and smaller huddles. Some napped when they could; others threatened to leave as a deal looked unlikely.
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It was never off the table : once when they become owners of Greek banks, there is no reason whatsoever to leave the Greece in the EU. In that moment that will own all they need to keep the country under control 100% and with grexit they will have no obligations to finance the country. Perfect for banksters : they get a whole country cheap and all they have to do is keep sucking the money out f that country
Once they take control of the banks, they could not care less if Greece is in the EU or not - even better for EU if they are not - no obligations and they are going to control the country using the banks