Greece's Euro Exit Seems Inevitable - page 9
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Greece to make counter-offer on bailout deal to creditors
Greek Prime Minister Alexis Tsipras and his country’s international creditors were able to agree on some aspects of a financing deal at a meeting Wednesday night, but differences remain on some key issues, European officials said Thursday.
Tsipras will submit a counter offer to his country’s creditors, including the rest of the eurozone and the International Monetary Fund, two officials said. They spoke after the Greek prime minister held late-night talks with European Commission President Jean-Claude Juncker and Jeroen Dijsselbloem, the Dutch finance minister who represents the currency union’s national governments in the talks.
“Proposals and counter proposals are part of the combative negotiations that are ongoing,” one official said.
“Yesterday we saw some convergence in a few points, but not on others. It will be difficult,” the official added.
After the meeting, which ended in the early hours of Thursday, Tsipras said that he was content with new budget targets presented by the creditors, which are below those in his country’s existing bailout deal. But he rejected proposals for further cuts to pensions and increases to value-added tax, which creditors insist will be central to meeting budget targets and bringing Greece’s finances onto a sustainable path.
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With a Rebel Yell, Greece Shouts 'More, More, More'!
Greece's government has refused the so-called "take-it-or-leave-it ultimatum" from its creditors, which demands further austerity and unpopular taxation, pension and labor reforms as the conditions for the €7.2 billion in further financial help, pushing for its own reform proposal.
he Alexis Tsipras government in Greece has rebelled and announced it would not accept the terms proposed by its creditors -- the European Commission, European Central Bank and International Monetary Fund.
Instead, it once again laid its own terms on the table at the last minute, bundling its payments into a single payment at the end of the month as the debt-strapped country is essentially asking for more time, more money, more patience.
The Greek government insists that its own 47-page proposal should be considered as the base for further negotiations as the only realistic way out of the current crisis. Discussions must end up with a “realistic point of view,” the prime minister said after his meeting with EU officials.
“The proposal presented by the institutions in Brussels ... contains extremist positions that cannot be accepted by the Greek government. They do not even correspond to the changes that have been accepted by the Brussels Group! (technical teams)”, the Greek government said on Thursday.
Lenders' proposal
The list of creditors' proposals outlines the main areas of reforms:
- Fiscal: Primary surpluses of 1% of GDP in 2015, 2% in 2016, 3% in 2017 and 3.5% of GDP in 2018.
- Creditors suggest launching a social welfare review, leading to the gradual rollout of a guaranteed basic income.
- VAT changes: establishing a 23% standard VAT rate, eliminating exemptions, with only food, medicine and hotel accommodations eligible for an 11% rate.
- Pension reforms: tightening early retirement rules to save 1% of GDP. That implies a more rapid overhaul than the Greek proposal.
- Labor reform: while the Tsipras government wants to reverse some changes in the labor reforms passed under previous administrations, creditors insist that they would not be reversed.
Soon we shall be eligible for retirement at 100
Pushing Greece out could be Europe’s final act
European Union leaders continue to play a game of brinkmanship with the Greek government. Greece has met its creditors’ demands far more than halfway. Yet Germany and Greece’s other creditors continue to demand that the country sign on to a program that has proven to be a failure, and that few economists ever thought could, would, or should be implemented.
The swing in Greece’s fiscal position from a large primary deficit to a surplus was almost unprecedented, but the demand that the country achieve a primary surplus of 4.5% of gross domestic product was unconscionable.
As markets grasp that a vicious downward spiral is structurally embedded in the euro, the consequences for the next crisis become profound. And another crisis in inevitable: it is in the very nature of capitalism.
Unfortunately, at the time that the “troika” — the European Commission, the European Central Bank, and the International Monetary Fund — first included this irresponsible demand in the international financial program for Greece, the country’s authorities had no choice but to accede to it.
The folly of continuing to pursue this program is particularly acute now, given the 25% decline in GDP that Greece has endured since the beginning of the crisis. The troika badly misjudged the macroeconomic effects of the program that they imposed. According to their published forecasts, they believed that, by cutting wages and accepting other austerity measures, Greek exports would increase and the economy would quickly return to growth. They also believed that the first debt restructuring would lead to debt sustainability.
The troika’s forecasts have been wrong, and repeatedly so. And not by a little, but by an enormous amount. Greece’s voters were right to demand a change in course, and their government is right to refuse to sign on to a deeply flawed program.
Having said that, there is room for a deal: Greece has made clear its willingness to engage in continued reforms, and has welcomed Europe’s help in implementing some of them. A dose of reality on the part of Greece’s creditors — about what is achievable, and about the macroeconomic consequences of different fiscal and structural reforms — could provide the basis of an agreement that would be good not only for Greece, but for all of Europe.
FT reports on poll of institutional investors - one third expect Grexit from eurozone
The Financial Times reports on a poll by GAM, a Swiss asset management company:
The article is here, and while the FT is gated it can be read with a free registration: One-third of large investors expect Grexit from Eurozone
(ps. Alternative headline: FT reports on poll of institutional investors - two thirds expect no Grexit from Eurozone :-D )
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Meanwhile, the Greek people want to stay in the euro, according to this Kathimerini report: SYRIZA holds firm in polls, eight in 10 still want euro:
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And the story never end
This is becoming ridiculous
Eurozone finance ministers are running out of patience with Greece
Finnish finance minister Stubb laying the smack down on Greek talks
That "few" is probably many but it sounds like the wick is burning low on Europe's patience with these negotiations. Heightened talk of a lack of worry over contagion following a possible Greek exit could raise the risk of that happening, in the markets eye
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'Greek tragedy' needs happy ending now: EU's Moscovici
A top EU official urged Greece on Thursday to step up efforts to come up with a list of reforms, saying that reaching a deal with its international lenders was possible but that work must be intensified in the coming days.
"I really like Greek tragedy but now we must move to the happy ending," EU Economic Affairs Commissioner Pierre Moscovici told RTL radio.
Referring to a June 18 meeting of euro zone finance ministers, he said: "In the coming days we must really intensify talks and they must be productive."
Moscovici said divergences remained, in particular on Greece's primary surplus, but added: "We are close to the landing strip. There is political will, we can and must succeed."
Greek Prime Minister Alexis Tsipras held a new round of late-night talks on Wednesday with the leaders of Germany and France and agreed to intensify negotiations with Athens' creditors ahead of a looming default at the end of the month.
"Greece must make more efforts to provide a list of reforms so that their economy can be more solid and so that they can fulfill their commitments to their creditors," Moscovici said.
"I am convinced that divergences have now been narrowed enough so that in the days to come we can intensify our work and reach the outcome we all want."
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IMF quits Greek talks; EU tells Tsipras: stop gambling
The International Monetary Fund dramatically raised the stakes in Greece's stalled debt talks on Thursday, announcing that its delegation had broken off negotiations in Brussels and flown home because of major differences with Athens.
The surprise IMF announcement came as the European Union told leftist Greek Prime Minister Alexis Tsipras bluntly to stop gambling with his cash-strapped country's future and take crucial decisions needed to avert a devastating default.
A Greek source told Reuters that the entire Greek delegation that had been negotiating a cash-for-reform deal had left Brussels for home on Thursday, citing outstanding disagreements.
"There are major differences between us in most key areas," IMF spokesman Gerry Rice told reporters in Washington. "There has been no progress in narrowing these differences recently and thus we are well away from an agreement."
Greece needs a deal to unlock aid before the end of the month when it is otherwise set to default on a 1.6 billion euro ($1.80 billion) repayment to the Washington-based IMF.
That could trigger capital controls and possibly send Greece hurtling toward an exit from the euro zone, with unpredictable consequences for financial markets and the European economy.
Rice said the key sticking points remained pensions, taxes and financing. The IMF technical team had returned to the United States but remained "fully engaged" with Athens.
European stocks fell after the IMF comments.
GAME OVER?
Earlier, European Council President Donald Tusk spelled out an unprecedentedly forthright message to Greece's radical anti-austerity government after four months of bitter negotiations.
"There is no more time for gambling. The day is coming, I'm afraid, that someone says that the game is over," he told a news conference after chairing an EU-Latin America summit that was dominated by intense talks with Tsipras on the sidelines.
"It is very obvious that we need decisions, not negotiations," Tusk said, adding that Athens needed to be "more realistic."
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EU's Dijsselbloem says Greece must be prepared for difficult measures
There will be no rush into a Greek deal
No rush ? Given the circus show so far you gotta love that comment
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