Greece Effectively Defaults To IMF Using SDR Reserves To "Repay" Fund; 1 Month Countd - page 2
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Tsipras Brands IMF Criminal as Merkel Focuses on Greek Solution
Prime Minister Alexis Tsipras hurled criticism at Greece’s creditors, accusing the International Monetary Fund of “criminal” responsibility for his country’s predicament.
Addressing lawmakers in Athens on Tuesday, Tsipras gave no sign of backing down in the standoff over Greece’s bailout. Instead, he blasted the IMF’s adherence to austerity and accused the European Central Bank of using tactics that were akin to “financial asphyxiation.”
“The situation in which we find ourselves today is that IMF positions prevail when it comes to the strictness of austerity measures asked, while at the same time EU positions prevail when it comes to the denial for any discussion about Greek debt sustainability,” Tsipras, 40, said.
Tsipras’s rhetoric further diminishes the chances that the Greek government will be able to bridge the divide with its creditors in the IMF, the ECB and the European Commission any time soon. With two weeks until Greece’s euro-area bailout expires on June 30, the onus on resolving the deadlock lies with a meeting of finance ministers on Thursday followed by a June 25-26 summit of European Union leaders.
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IMF dismisses hope of grace period on Greek loans
The IMF dashed any hope on Thursday that Greece could avert default if it fails to repay a 1.6 billion loan by the end of June, piling pressure on leftist Prime Minister Alexis Tsipras, who showed no sign of yielding to creditors' demands.
Euro zone finance ministers descended on Luxembourg for a meeting once billed as the final chance to reach a deal, but any expectation of a breakthrough there had all but vanished with Athens ruling it out as a forum to discuss new proposals.
Ireland's finance minister said he expected any chance of a last-ditch deal to avert a Greek default to hinge on a European Union leaders' summit late next week.
As the impasse deepened, deposit withdrawals from Greek banks accelerated again this week, with 3 billion euros being pulled out between Monday and Wednesday, banking sources said. And Athens reported a steep 24 percent fall in tax revenue in May, even though the central government posted a primary surplus before debt service in the first five months of this year.
IMF boss Christine Lagarde closed one of Greece's last potential escape hatches, declaring that the global lender would consider Athens in default if it misses the June payment, despite some reports that there might be some leeway.
"It will be in default, it will be in arrears vis-a-vis the IMF on July 1, but I hope it is not the case, I really do," Lagarde told reporters in Luxembourg. "There is no grace period or two-month delay, as I have seen here and there," she said.
German Chancellor Angela Merkel said a deal was still possible to provide Greece with additional funds, if Athens showed the necessary will. French Finance Minister Michel Sapin also spoke optimistically at the Luxembourg talks.
But Tsipras - making a symbolic visit to Russia at a time of sour relations between Moscow and the EU - insisted creditor demands for pension cuts would worsen the economic crisis.
In a guest column for Der Tagesspiegel newspaper in Berlin, he sought to dispel what he called a "myth" that German taxpayers were paying Greek pensions and wages.
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That Lagarde thing is still talking? Her only quality is 100% obedience.
She must be terified knowing what happened to Dominique Strauss-Kahn : Was Dominique Strauss-Kahn Trying to Torpedo the Dollar? | Global Research - Centre for Research on Globalization . At least that guy had balls to tell this :
She, on the other hand, is so terrified that she escaped from the Trouka-Greece negotiations (to avoid being misunderstood to trying to save the EU - her masters would never forgive her)
'Capital controls imminent' as money floods out of Greece's banks and default looms
After yet another failed summit, the blame and recriminations started as soon as Thursday's Eurogroup meeting broke up. Greece is now just 11 days away from its next major debt repayment, which it almost certainly can't make without a bailout deal.
"Capital controls imminent without breakthrough," is how Barclays analysts headlined their morning email on the subject.
On June 30 Greece owes €1.5 billion ($1.70 billion, £1.08 billion) to the International Monetary Fund (IMF) that the government almost certainly doesn't have.
It then owes another €3.5 billion (£2.51 billion, $3.97 billion) to the European Central Bank (ECB) on July 20.
Without the cash, the country could default on its debts and tumble into a painful process which led to it leaving the eurozone. That's not something that the Greek people want, but they're also firmly against the
There were two major, emergency developments from the Eurogroup meeting.
Firstly, an internal leak told Reuters that ECB executive board member Benoit Coeure said "tomorrow, yes. Monday, I don't know," when asked if Greek banks would be able to stay open. The ECB denied the report, and is hosting an emergency call today on the provision of Emergency Liquidity Assistance (ELA) to Greece — the last thing that's propping up the banking system.
Secondly, with no breakthrough from the bloc's finance ministers, the eurozone's heads of government will meet for an emergency summit on Monday. The timeline for a potential deal (even if both sides were able to reach one) is now incredibly tight, since an agreement really needs to go through national parliaments before June 30. It's not clear if Prime Minister Alexis Tsipras will be any more likely to agree to what's on the table than finance minister Yanis Varoufakis.
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Weekend of Fear in Greece as Monday Brings Salvation or Ruin
Dorothea Lambros stood outside an HSBC branch in central Athens on Friday afternoon, an envelope stuffed with cash in one hand and a 38,000 euro ($43,000) cashier’s check in the other.
She was a few minutes too late to make her deposit at the London-based bank. She was too scared to take her life-savings back to her Greek bank. She worried it wouldn’t survive the weekend.
“I don’t know what happens on Monday,” said Lambros, a 58-year-old government employee.
Nobody does. Every shifting deadline, every last-gasp effort has built up to this: a nation that went to sleep on Friday not knowing what Monday will bring. A deal, or more brinkmanship. Shuttered banks and empty cash machines, or a few more days of euros in their pockets and drachmas in their past - - and maybe their future.
On a street corner, a performance artist burned what he said were his last euros. Nearby, an Afghan beggar joked about how he should have gone to Sweden instead. A mother grabbed her toddler’s hand as a dozen policemen motorcycled past, heading to a rally outside Parliament. And in his neighborhood restaurant Panagis Vourloumis, a 78 year-old ex-CEO, current investment banker and survivor of coups, dictators and communists, leaned forward and laid his worries on the table.
“We thought we had escaped the past, that we were a normal country now,” he said. “But instead, we are living day-to-day.”
“This, today now, is the worst I have ever seen,” he said.
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Why The IMF Will Reject The Latest Greek Proposal In Just Two Numbers
As we summarized earlier, the latest "final" Greek proposal is in trouble: it may very well not pass the Greek parliament due to mounting objections among all parties not least in Tsipras' own Syriza. But a Greek parliament vote on the decision may be moot: according to Bloomberg, Tsipras will fly to Brussels on Wednesday, where he will meet the heads of the Troika: Draghi, Juncker and, of course, Christine Lagarde.
It is the IMF's head that will tell Greece to go back to the drawing board.
Recall that as the WSJ reported, "the Washington-based IMF has said Greece’s economy is already too heavily taxed and that too many additional tax increases would hurt economic growth, making it harder to pay down Greece’s debt."
Also recall that as IMF's Olivier Blanchard explicitly demanded, Greece needs to cut spending, not hike taxes - which it has patently demonstrated it is incapable of collecting - and especially pensions: "Why insist on pensions? Pensions and wages account for about 75% of primary spending; the other 25% have already been cut to the bone. Pension expenditures account for over 16% of GDP, and transfers from the budget to the pension system are close to 10% of GDP. We believe a reduction of pension expenditures of 1% of GDP (out of 16%) is needed, and that it can be done while protecting the poorest pensioners."
So why will the IMF throw up all over the latest Greek proposal in just two numbers? Here is the answer, courtesy of Kathimerini:
The proposals contain 7.9 billion euros of measures, of which 7.3 are from increases to tax and social security contributions.
The IMF demands no tax hikes and pension cuts. Instead it will get almost exclusively tax hikes, amounting to 92% of the proposed measures, and just a few cuts, few of which actually impact Greek pensions. In short: the proposal is not only unsustainable, it is also unenforceable, something which the Germans - already facing a third Greek bailout - will be quick to point out.
Which is why tomorrow, after Tsipras is finished with the meeting with the Troika, he will have a new homework assignment: revise the "final final" proposal and come up with much less in tax hikes, much more in spending cuts: something which the already furious hard-line elements within Syriza will have a field day with.
Then again, we already knew all of that:
IMF DISAGREES WITH GREECE ON CORPORATE TAX, VAT AND PENSIONS - EU SOURCES
And all this takes place just 7 days before the Greek payment to the IMF is officially due, at which point Greece may or may not be declared in default, but when the ECB will no longer be able to say Greece is compliant with the terms of its bailout program and will have no choice but to yank the ELA.
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ECB's Weidmann: Eurosystem can't provide Greece bridging financing
More from Weidmann
The ever chipper Bundesbank head Jens Weidmann
IMF Confirms Greek Referendum "Irrelevant" After Program Expires On Tuesday
If there was any confusion if, as we warned first thing todaywas the biggest problem with the Greek referendum namely that next weekend there will no longer be a proposal to vote on, the IMF's Christine Lagarde just put it to rest. As she told the BBC moments ago, the Greek government's planned referendum on the terms of any new bailout plan will be invalid after Tuesday, when the current programme expires. As a result, the Greek people would be voting on proposals that were no longer in place.
Incidentally, in another interview with CNBC, Lagarde confirmed that hope is still an investment thesis: " I certainly hope that the bundled payment due to the IMF on Tuesday night, at the latest, will be paid."
Good luck, really. But assuming Greece, which hasn't had any cash in over a month and has zero intention of paying the IMF its €1.5 billion, whe then? So it's time to rephrase the referendum question which as was presented on the website of the Greek parliamentis currently as follows:Greece ... "Defaulting to the IMF tomorrow looks like a certainty"
Comments from Sam Tuck, a senior currency strategist at ANZ Bank New Zealand:Reported on BloombergYep ... +1 to "Things are going to be very very volatile, and there is a lot that can change very rapidly" especially.
Plenty of trading opportunities already today, and more to come. Immerse yourself in the present, forget the predictions.
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Will Greece Default on Tuesday? One Important Player Won’t Say
Almost all the key players have taken a stance on whether it would be a default if Greece misses its $1.7 billion payment to the International Monetary Fund Tuesday -- except for the institution that may matter the most.
The European Central Bank, which is keeping the Greek banking system alive with almost 89 billion euros ($100 billion) of Emergency Liquidity Assistance, hasn’t said how it would classify or react to a missed IMF payment, and a spokesman declined to comment Monday on what position the Frankfurt-based ECB would use.
Even so, policy makers would have to take any missed payment into account when they discuss the level of assistance for Greek banks on Wednesday, with the outcome having implications for Greece’s membership in the euro. The three major credit-rating companies say failure to pay the Washington-based IMF wouldn’t constitute a default because that term is reserved for private-sector creditors, and the IMF avoids the word.
The ECB’s decision on whether to provide ELA “will not be taken without political cover at the highest level,” Erik Nielsen, global chief economist at UniCredit SpA in London, said in a note.
Klaus Regling, head of the euro-area states’ crisis fund that supports Greece, said earlier in June that it has the option to accelerate Greece’s payment schedule on 130.9 billion euros ($147 billion) if it falls into arrears with the IMF. The key moment is when the IMF chief tells the fund’s board that Greece is overdue, which the IMF says would happen promptly.
Board Advice
Regling would then have to make a recommendation to the European Financial Stability Facility’s board of directors, who are deputy finance ministers from the euro area, a European Union official said Saturday.
While IMF Managing Director Christine Lagarde told CNBC over the weekend that she still hoped Greece would fulfill the June 30 payment, chances were dim after Prime Minister Alexis Tsipras called a surprise referendum on the bailout for July 5, talks with creditors collapsed and Greece’s banks shut for at least a week.
A Greek government official said Monday that the nation won’t make the payment to the IMF. The person asked not to be named, in line with policy.
While Lagarde used the word “default” earlier this month to refer to the situation of Greece missing a payment, fund spokesman Gerry Rice said last week that the lender wouldn’t use the term in official communication. The IMF would instead refer to Greece being in “arrears.”
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