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Greece and the economic crisis 2015

NEWS ARCHIVE - May 6 - May 11

May 11, 2015

Greece seeks Eurozone recognition of economic progress - BBC

"Greece's left-wing government has said it will not break anti-austerity electoral promises, something that has put the country at odds with European creditors.

Greece has until June to agree a new reform deal with its creditors.

Greek Prime Minister Alexis Tsipras is reported to have told his cabinet that Europe needs to acknowledge the economic reforms that Greece has made.

"We want a clear confirmation of the progress that has been made," he told a meeting on Sunday, Greece's Ana state news agency reported. Eurozone ministers are not hopeful of a deal being struck.

"We have made progress, but we are not very close to an agreement," Eurogroup chair Jeroen Dijsselbloem told the Italian newspaper Corriere della Sera.

"It will surely not be reached at the Eurogroup meeting on Monday," he said."

The gov’t had better act fast and deliver the kind of structural reforms that will make the difference - eKathimerini

"...the Eurogroup is on Monday likely to endorse the progress made in the negotiations between Greece and its creditors in the last couple of weeks but the conclusion of the last review of the second bailout program is not in sight yet. History teaches the two parties may be able to agree on measures to fill the estimated fiscal gap but it will be harder to agree on other structural reforms. To bridge the gaps, it requires mutual concessions and political statesmanship, especially in Greece.

...Undoubtedly, more progress has to be made in the days ahead and in our opinion this is more likely on the fiscal side rather than pensions or labor reforms. Greek governments find it politically easier to raise tax revenues to meet primary budget goals. Spending cuts is a tougher cookie with the public investment budget and procurements being among the first to be targeted. This is more so with the leftist-led administration, which wants to use the tax system to redistribute income as well. Therefore, it is not surprising tax hikes on luxury items, the overhaul of the value-added tax with the introduction of a unified VAT rate, a windfall tax on people earning more than 50,000 euros per year and a tax on the 500 wealthiest families are on the table."

Judgement day at the eurogroup meeting - ethnos.gr

"Decisive developments are expected to be the current meeting of the Eurogroup. At the moment the government is seeking progress though partners harden their stance in the negotiations.

'We want to have a clear recognition of the progress achieved,' Prime Minister Tsipras has stressed at the marathon meeting of the government council."

[English via Google translate]

IMF Works With Bank Regulators on Contingency Plans for Greek Default - WSJ

"The International Monetary Fund is working with national authorities in southeastern Europe on contingency plans for a Greek default, a senior fund official said—a rare public admission that regulators are preparing for the potential failure to agree on continued aid for Athens.

...“We are in a dialogue with all of these countries,” said Jörg Decressin, deputy director of the IMF’s Europe department. “We are talking with them about the contingency plans they have, what measures they can take.”

...“It would be foolish for anyone in the policy world not to be worried at this stage,” Mr. Decressin said."

IMF and ECB Loom Large Over Greece’s Debt Talks - NY Times

"...The influence of the E.C.B. and the I.M.F. will be felt behind the scenes on Monday, when finance ministers from Greece and other European nations meet in their latest effort to break an impasse that is paralyzing the Greek economy and frightening global markets.

...If there are no concrete signs of progress in the talks Monday, a majority of the central bank’s governing council would be in favor of placing additional restrictions on lending to Greek banks as early as this week, people briefed on the council’s discussions said.

“Their interest is to get their money back,” said Zsolt Darvas, a senior fellow at Bruegel, a research organization in Brussels.

Greek officials, meanwhile, have contemplated steps that would test the institutions’ hard-line stance."

How the ECB became the real villain of Greece's debt drama - UK Telegraph

"In the last three months, the Frankfurt-based ECB has become the target of vociferous criticism for its handling of the Greek crisis.

Weeks before the confetti attack, Mr Draghi was heckled by a Greek journalist at a press conference in Nicosia. Before that, he was the subject of a tirade from a Greek MEP during an address at the European Parliament.

On both occasions, the Italian was shouted down as he was forced to defend his institution’s role in Greece’s debt drama.

...Not only has the ECB rebuffed requests for temporary financial relief, but its disciplinarian stance has led to accusations that it is acting ‘ultra vires’ - taking politically motivated action outside of its legal remit to ensure financial stability in the eurozone."

Greece’s plight at odds with public's lack of concern as default deferred - UK Guardian

"The talks between Alexis Tsipras’s government and its creditors have dragged on for so long that it has become hard to believe there will ever be a decisive make-or-break juncture. And never has that been harder to believe than now, with the arrival of summer and the entrancing distractions it brings to a country like Greece.

There is a striking disconnection in Athens between the blithe lack of concern that the government evinces, and which it has successfully communicated to much of the public, and the objective seriousness of Greece’s plight.

This week Greece and the eurozone face a week of fresh nail-biting uncertainty as the single currency area’s finance ministers prepare to report on progress towards an agreement with Tsipras’s government. On Tuesday Greece is due to repay €770m (£560m) to the IMF.

...The evidence of real and painful economic hardship is subtle in Athens. But it is there.

As it passes through Dafni, a suburb of the capital, the road to Vouliagmeni becomes a shopping area. About four out of every five shops has closed.

“The owners of the shops think the reason they have no customers is because of a mall that opened up nearby,” said Nikos Servios, from the nearby Neos Kosmos district, who went to buy a pair of shoes. “But I’ve been to the other mall and most of the people go there to window-shop, watch a movie – it has a cinema – or drink a coffee. Nobody is buying.”

May 10, 2015

Merkel Pressed to Give Up on Greece as Germans Urge Strong Euro - Bloomberg

"German Chancellor Angela Merkel is coming under growing pressure from within the ranks of her own party bloc to give up on Greece for the sake of the euro.

...With European finance ministers due to resume talks on Greece on Monday, hardening sentiment in Germany risks sending mixed signals to investors as Prime Minister Alexis Tsipras’s government attempts to reach a deal with creditors.

...As talks between Greece and its creditors drag on, the view that the euro would be stronger without Greece is gaining ground in Merkel’s Christian Democratic-led bloc, according to two lawmakers. They asked not to be identified because they don’t want to publicly challenge Merkel.

“Having its own currency could help Greece get back on its feet,” Hans-Peter Friedrich, one of 29 lawmakers from Merkel’s bloc who voted against extending Greece’s aid program, said in an e-mailed answer to questions."

Greece hits crunch time over €750m repayment to IMF - FInancial Times

"Cancel the summer holidays. Tuesday’s €750m repayment is the biggest that the Greek government has had to make to the IMF so far this year. But it is really just the start of a difficult few months that make it likely that Greece and its creditors are going to have a long hot summer high on brinkmanship and stress, and short on fun.

The immediate discussions are over releasing another €7.2bn from a European-led bailout. Greece owes more than that to the IMF and other creditors in the months to come.

In June alone, Greece owes another €1.5bn to the IMF and it is due to repay the same sum across four payments in September. Meanwhile, it owes some €3bn to the European Central Bank in July and August.

Given its current cash struggles it is unlikely to make all of those payments without receiving at least some of the bailout funds."

May 9, 2015

Samaras: There has to be a deal with Greece's lenders - ANA-MPA

"I was the one who, throughout this period, insisted intensely there should be a solution. There should be a deal because it cannot continue this way," New Democracy leader told Focus FM, adding he’s worried the government will launch a tax raid because SYRIZA was unprepared to govern.

"The economy has really reached the limits. Nothing works. Right now there’s a complete economic immobility, which is also powered by a very negative psychology. This combination is destructive for the Greek economy,” Samaras was quoted as saying."

May 8, 2015

US wants Greece to consider more than Russian pipeline - Foxnews

"Greece's left-wing government has expressed interest in a Moscow-backed pipeline project dubbed Turkish Stream that would bring natural gas across the Black Sea to Turkey and from there to Europe, potentially through Greece. The U.S. has been encouraging the Trans-Adriatic Pipeline, which will take Azeri gas from the Caspian Sea to Italy.

Hochstein stressed that while Russia was a major gas supplier for Europe, it was important for Greece and Europe to ensure diverse suppliers.

"Diversification is ultimately the best way to create security of supply," he said. "And that means that you should be allowed to bring in other sources of gas that are non-Russian, just to have competition."

That would also reduce the chances of energy being used for political leverage, he said."

Eurozone officials say they're baffled by Varoufakis documents - WSJ

"Economic plans and growth estimates distributed by Greek Finance Minister Yanis Varoufakis to some of his eurozone counterparts have baffled officials involved in the talks over its international bailout.

Officials say that the files differ greatly from what has been discussed at the technical level in Brussels in recent days and underline how Mr. Varoufakis continues to complicate progress toward a financing deal.

...While some of the outlined measures are the same as those agreed to in the negotiations—such as the creation of an independent tax commissioner—the paper differs in other areas.

One significant difference is the creation of a so-called bad bank that would house and wind down Greek lenders’ bad loans. “Conveniently, the financing of the bad bank is not treated,” an EU official said."

A bitcoin-like solution for Greece - CNBC

"This past Wednesday, Greece was able to make a 200-million euro (US$224 million) interest payment to the International Monetary Fund, but only by requiring all state enterprises — including schools and pension funds — to transfer reserves to an account at the Greek central bank. Next Tuesday, Greece faces an even bigger payment of 750 million euros to the IMF. As of now, it is unclear how Greece will manage to make this payment.

...The European Central Bank is apparently working on an IOU-based secondary currency similar to the IOU's used by California in 2009, according to a Reuters report last month. Interestingly, Yanis Varoufakis (Greece's new Finance Minister) wrote a blog post in February proposing a similar currency, which he dubbed Future Tax Coin (FT-Coin).

In both of these cases, the secondary currency would borrow tax revenue from the future to pay for obligations today. Furthermore, the secondary currency would be tantamount to a T-bill that was backed by the full faith and credit of the Greek government. As a trust-based financial instrument, acceptance would be a function of the confidence in the Greek government to collect future taxes."

Greece bows to pressure from UEFA, FIFA as violence bill passes - Yahoo Sports

"The Greek parliament on Thursday voted into law a controversial bill to curb violence in domestic sports after bowing to pressure for changes from football governing bodies UEFA and FIFA.

...European governing body UEFA together with world body FIFA had warned Greece that amendments focusing on the right of the government to intervene with the affairs of the country's football federation would not be tolerated and would lead to the federation's suspension."

Varoufakis Says Greece Ready to Take EU Impasse Down to the Wire - Yahoo Finance

"Greece has less than a week to prove to the European Central Bank that it’s serious about reaching an agreement with international lenders. Failure to make progress in bailout talks or repay about 745 million euros ($839 million) owed to the International Monetary Fund on May 12 may prompt the imposition of tighter liquidity rules on its banks.

...Varoufakis said that while there’s convergence between the two sides, the Greek government won’t bow to creditors’ demands for more austerity."

Greece hoping for 'Happy Ending' - Reuters

Video report at Reuters

"Greece's PM hopes a deal to access emergency funding will soon be reached - others aren't so optimistic. Kirsty Basset reports."

Further coverage:

Tsipras sees 'happy ending' for Greece - UK Guardian

Greece Hoping for a 'Happy Ending' - NASDAQ

May 7, 2015

Government is sticking to its non-negotiable "red lines"

"Greece's new leftist government has said further cuts to pension payments and reforms making it easier to fire workers in the private sector are among "red lines" it will no cross.

"There should not be an expectation on the part of institutions that the government has to back down on everything in order to have a deal," Gabriel Sakellaridis told a news conference.

...An omnibus bill of reforms promised to lenders in return for aid will only be submitted to parliament after a deal with the creditors has been struck, he said. "

Sapin says Greece belongs in euro - Investing

"French Finance Michel Sapin said on Thursday that euro zone states would find a solution to the Greek debt crisis and that Greece should remain in the currency union.

Speaking to the finance committee of the European Parliament in Brussels, he said it was "legitimate" for the new Greek government to seek changes in line with the will of its voters but also that Greece "must respect its commitments" as a long-standing member of the European Union, euro zone and IMF. "

Golden Dawn leaders' trial adjourned until next week - UK Guardian

"The trial of dozens of members of Europe’s most violent neo-Nazi political party, the far-right Golden Dawn in Greece, has been adjourned until next week after resuming briefly in the country’s largest prison.

Three years to the day after entering the Greek parliament, the entire leadership of Golden Dawn was among the 69 defendants in the dock for a trial in which they are accused of masquerading as a political force to pursue a criminal agenda of murder and assault.

...Despite the allegations, the neo-fascists emerged as Greece’s third-biggest political force – behind the radical left party, Syriza, of the prime minister, Alexis Tsipras, and the centre-right New Democracy party – when elections were held in January. Seventeen MPs in total represent Golden Dawn."

May 6, 2015

ECB Weighs Whether to Extend a Lifeline to Greece - NY Times

"...On Wednesday, the central bank’s governing council met in Frankfurt, but it was not expected to decide on any new measures affecting Greece. Instead, the council was planning to closely watch the outcome of a meeting in Brussels on Monday between Greece and the Eurogroup of finance ministers from eurozone countries.

Policy makers there will decide whether Greece has come up with an adequate set of economic overhauls required before they will release more financial aid to the country, which is quickly running out of money."

Pension reform under discussion - Reuters

"Juncker and Tsipras "discussed the importance of reforms to modernise the pension system so that it is fair, fiscally sustainable and effective in averting old-age poverty," a joint statement from Greece and the European Commission said."

Greece blames EU-IMF row for blocking deal - Yahoo

"Greece and its creditors on Tuesday ruled out any bailout deal to avoid bankruptcy at a make-or-break meeting next week, as the IMF said Athens may need debt relief to survive its crisis.

...Reports said that at the heart of the row are IMF rules under which the fund can only support countries whose debt is judged to be sustainable, and that doubts over Greece were growing.

Germany's powerful Finance Minister Wolfgang Schaeuble -- one of the harshest critics of Greek Prime Minister Alexis Tsipras's radical government -- had already led a wave of scepticism over whether a deal could be found.

"I'm somewhat sceptical whether that'll be possible by Monday. But I'm not ruling it out," Schaeuble said."

Greece points finger of blame at creditors - eKathimerini

"Government officials pointed to the divisions within the so-called institutions, following a report in the Financial Times according to which the IMF has pushed for Greek debt relief. In a strongly worded statement, a government source highlighted “serious disagreements and contrasting opinions between the IMF and the EC which create obstacles in negotiations and high risks.”

...Any slim hopes that had lingered for a possible deal at next Monday’s Eurogroup summit appeared to have been abandoned, with Finance Minister Yanis Varoufakis also admitting that an agreement is not expected then though progress is being made. Varoufakis, who visited Paris and Brussels on Tuesday, is due in Rome on Wednesday and Madrid on Friday for talks with his counterparts as Greek officials stage a last-ditch diplomatic offensive in a bid to secure political, and financial, support."

After 5 ghastly years of bailout program, Greece still sees no end to financial pain - Fox News

"Wednesday marks five years since Greece voted in its first bailout deal, a day after violent popular protests left three dead. The act was followed by years of turmoil in which the country tried to overhaul its economy in the midst of a downturn as brutal as the Great Depression.

But after a myriad budget cuts, a million lost jobs, 250,000 closed businesses and nearly 240 billion euros ($267 billion) in rescue loans, the country is once again on the brink of default and relations with its creditors are worse than ever.

Moody's rating agency said Monday that Greece is, despite all its savings efforts, still the fourth riskiest sovereign bond issuer, behind Ukraine, Venezuela and Argentina, all which have either defaulted on their debt or are perilously close to doing so.

It's clear that the creditors — Greece's fellow eurozone member states and the International Monetary Fund — underestimated the problem and miscalculated how to fix it:"

Greece blows hot and cold in race to avert cash crunch - Reuters

"As a goodwill gesture, a senior privatization official said Athens was ready to finalize a 1.2 billion euro deal with German operator Fraport to run regional airports and to reopen bidding for a majority stake in the port of Piraeus. p>Tuesday's diplomatic flurry came after leftist Prime Minister Alexis Tsipras spoke by telephone on Monday night to German Chancellor Angela Merkel, Europe's pre-eminent leader and Greece's chief creditor.

Athens wants the ECB to increase the liquidity lifeline and permit the banks to buy more short-term treasury bills, easing the government's immediate funding crunch. Greece has already commandeered cash reserves from municipalities and government bodies as it scrapes together funds to repay 970 million euros to the IMF by May 12.

But euro zone central bank sources say hardliners led by Germany's Bundesbank want the "haircut" on Greek securities offered as collateral for the funding to be increased following recent credit rating downgrades of Greece and its banks."

Greece pushes for urgent Europe bailout deal - BBC

"The Greek government is desperate to reach a deal with its international creditors before a scheduled €1bn debt interest repayment to the IMF on 12 May, but the two sides have yet to agree on labour reforms and pensions.

Acknowledging the awkward relations with his EU counterparts, Mr Varoufakis said communicating was difficult: "There are many of us and we can't discuss amongst one another."


2015 - May 1 - May 5

2015 - May 6 - May 11

2015 - May 12 - May 19

2015 - May 20 - May 26

2015 - May 27 - May 31

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