Greece and the economic crisis 2015

NEWS ARCHIVE - June 20 - June 30

June 30, 2015

"Greece has submitted to creditors a new two-year aid proposal calling for parallel debt restructuring, the office of Prime Minister Alexis Tsipras said on Tuesday, in what seemed like a last-ditch effort by Athens to resolve an impasse with lenders.

The statement came hours before Athens was set to default on a loan to the International Monetary Fund. It was unclear how creditors would respond."

Greece's Only Hope - National Interest

"Prime Minister Tsipras’ Syriza-led coalition government has waged a war to find an alternative to chaining Greece to its massive mountain of debt, equal to more than 180 percent of GDP. The Greek public has undergone years of brutal austerity, stratospherically high unemployment (around 25 percent), and a substantial multiyear contraction in economic activity. Adding to the highly problematic nature of matters, Greece’s public-sector debt has not fallen, but has actually increased, making many question the value of austerity.

...The hardline on Greece largely comes from Germany, where Chancellor Angela Merkel is under pressure from the public and within her own government not to give in to Greek demands, even if that means Greece leaving the eurozone. Indeed, the chancellor’s ally Christian Social Union leader Hans Michelbach recently stated, "Either Greece declares itself willing for a viable solution or the country must leave the euro. The euro zone could cope with the consequences of a Greek exit."

...A Grexit will not offer a quick and easy answer for Greece. As the Economist observed (June 20, 2015): “The upshot is that Grexit is a process, not an event. Even if talks fail, even if Greece defaults, even if it introduces capital controls and the government starts to issue paper IOUs because no more euros are left—even then, a referendum or a new government could still offer Greece a way back.”

Greece Staggers Into Economic Unknown With Bailout Set to Expire - MSN

"Greece is staggering deeper into the economic unknown, saying it will miss a payment to the International Monetary Fund today and leaving the protection of Europe’s bailout regime at midnight.

...The most pressing question on day two of capital controls was: how will the ECB respond to a missed payment to the IMF.

The central bank, which has pumped 89 billion euros ($100 billion) of Emergency Liquidity Assistance into the country, hasn’t said how it would classify or react. A spokesman declined to comment Monday.

Even so, policy makers would have to consider the effect of any missed payment on the solvency of Greek banks when they discuss the level of assistance on Wednesday. They’ll also weigh the political implications."

"The escalating prospect of a default to the IMF was a major reason why the European Central Bank limited its emergency loans to Greek banks and Greece’s government was forced to institute capital controls—financial martial law that prevents a mass exodus of cash out of the country.

And Athens’ default to the IMF activates clauses in Greek government bonds held by eurozone governments that gives creditors the right—but not the obligation—to “accelerate” their own holdings, an act that would essentially force Greece into default on its other debts. Unable to pay its debts, or finance its domestic obligations, Greece’s economy and financial system would collapse.

Greece’s eurozone creditors have signaled they are unlikely to immediately accelerate their Greek bonds holdings. But the threat gives officials powerful leverage over Athens, forcing the government to think twice about refusing to negotiate a bailout deal."

"The growing possibility that Athens could be forced out of the single currency brought into sharp focus the chaos that could be unleashed in Greece and the risks to the stability of the euro.

"What would happen if Greece came out of the euro? There would be a negative message that euro membership is reversible," said Spanish Prime Minister Mariano Rajoy, who a week ago declared that he did not fear contagion from Greece.

"People may think that if one country can leave the euro, others could do so in the future. I think that is the most serious problem that could arise."

"But for locals, the miserly 60 euros ($67) per day cash limit at ATMs means it will soon be a massive strain just to run a small business or keep a family going. And the drama is unfolding without a script, no safety net in sight. Beyond Greece, the fate of the vaunted, decades-old European project is in doubt with the approach of Sunday's referendum on the latest international bailout proposal — a de facto vote on whether or not to remain in the euro.

The capital controls are one in series of maneuvers by Greece's radical left government — which came to power this year on a promise to break free of austerity programs — that has threatened the stability of the global financial system. Many fear that ruling Syriza party's hard line on the bailout will force Greece out of the EU itself, and possibly lead to a contagion effect that would eventually unravel the union."

June 29, 2015

"European banks slumped the most since 2011, erasing more than 50 billion euros ($56 billion) in market value, after Greece imposed capital controls and shut lenders.

... Greece shut its banks and imposed capital controls to help avert the collapse of its financial system amid increasing concerns it will be forced out of the euro area. Banks will be closed at least until July 6, the day after Greeks vote in a referendum on proposals to restore bailout aid.

While the risk of contagion has eased since Greece triggered a sovereign debt crisis in 2009, when foreign banks had larger direct exposures to the country, lenders remain vulnerable to the threat of a euro breakup. Some also face swings in prices on their sovereign holdings.

...Greece leaving the euro region would be a “blip” for British banks, said Scott Vincent, managing partner of consultancy firm Parker Fitzgerald.

“The exposure to Greece is absolutely minimal,” Vincent said. “The banking sector is well-prepared for” Greece defaulting or leaving the currency region, he added."

"If Greece defaults on its debt, it will be the biggest default by a country in history. Greece is expected to miss a €1.5 billion ($1.7 billion) debt payment on Tuesday. That won't be enough to put it in the record books yet, but it could eventually make Greece default on its entire debt load: €323 billion ($360 billion).

This isn't the first time Greece has been on the brink. Greece already holds the record for the biggest default ever by a country from 2012 when it went into technical default and had to restructure about $138 billion of its debt. Back then, Greece was quickly bailed out by its European peers. That's unlikely to happen now.

...Recent defaults:

1. Greece -- $138 billion, March 2012.

2. Argentina -- $95 billion, November 2001.

3. Jamaica -- $7.9 billion, February 2010.

4. Ecuador -- $3.2 billion, December 2008.

"German Chancellor Angela Merkel has that we should not try to influence the outcome of the referendum. However, we should note there will be an impact. There are rules on which the euro is built and they must be observed. We do not want to euro to fail."

"...[Syriza] are maintaining the fiction that the question of accepting the bailout terms is quite separate from whether Greece defaults on its debt payments, sees its financial sector collapse and is forced to issue its own currency in one guise or another.

Not once in his address on the referendum did Tsipras mention the common currency....

...This is populist dishonesty. It may be that by this point Greece would be better off defaulting and returning to the drachma (though I doubt it). And it may be that a majority of Greeks would make the choice to go it alone, rather than continue a dysfunctional relationship with the nation’s economic partners and creditors (although opinion polls suggest not). But the proposed referendum doesn’t ask those questions.

Tsipras and his party want this vote to legitimize their decision to default and exit the euro, most likely after that decision has already been made, without actually telling Greeks that this is the choice they are making. It gives further weight to my suspicion that Syriza’s erratic negotiating behavior for the last five months has been driven by a preference for default and exiting the euro they could not express, because the party had no mandate for it. "

"In a referendum next Sunday, Greek voters are set to decide whether Greece should accept a new bailout — with lots of strings — or whether instead Greece should default on its debts, which would likely force it drop the Euro and introduce its own currency.

...Not all countries in the European Union use the Euro. England doesn’t, and neither does Denmark. It’s at least possible that Greece will be permitted to remain in the EU, even if it drops the Euro."

"Banks in Greece and the country's stock exchange will be shut all week in a sign of the deepening financial crisis.

The drastic move comes after people rushed to withdraw their cash amid panic ahead of the referendum on bailout terms.

Under the controls, there will be a daily €60 limit on withdrawals from cash machines, which will reopen on Tuesday.

The euro fell sharply against the dollar amid investor jitters of a Greek debt default and exit from the eurozone.

Speaking in a televised address, Prime Minister Alexis Tsipras urged calm and insisted bank deposits were safe."

"It is Greece’s European identity that is at stake in the referendum that the government has decided to call for July 5. Although the question on the ballot will be whether voters want the government to accept or reject the terms of the bailout deal submitted by creditors, the real question is whether Greece wishes to remain a member of the eurozone.

That’s because a “no” vote would set in train a series of events including government default, bank collapses and nonpayment of salaries and pensions that would force Athens to introduce a parallel currency. And since there is currently no legal way of exiting the eurozone without quitting the European Union too, a “no” vote in the referendum could also put at stake Greece’s membership in the EU.

With hindsight, Greece’s decision to join the euro was ambitious, perhaps recklessly so. Euro membership was a bet that the disciplines required to belong to the single currency would help bring about the modernization of the Greek state and the liberalization of its economy, said Stathis Kalyvas, a professor of political science at Yale University and author of a new book titled “Modern Greece”.

This never happened during the boom years and, despite the best efforts of Greece’s creditors, nor has it happened during five years of depression. Powerful vested interests have prevented the overhaul of Greece’s dysfunctional political and bureaucratic systems, forcing Athens to rely on poorly designed tax rises and spending cuts to balance its books. "

"Greece's five-year financial crisis took its most dramatic turn yet, with the cabinet deciding after an 8-hour session that Greek banks would remain shut for six business days and restrictions would be imposed on cash withdrawals.

The Athens Stock Exchange would also not open Monday, financial sector officials confirmed.

The referendum decision, ratified by Parliament after a marathon 13-hour session that ended in the early hours of Sunday, shocked and angered Greece's European partners. The country's negotiations with its European creditors have been suspended, with both sides accusing each other of being responsible for talks breaking off.

Tsipras also blamed the European Central Bank's Sunday decision not to increase the amount of emergency liquidity the lenders could access from the central bank — meaning Greece has no way to replenish fast diminishing deposits.

"It is now more than clear that this decision has no other aim than to blackmail the will of the Greek people and prevent the smooth democratic process of the referendum," Tsipras said. "

"The president is a largely ceremonial role in Greece, but can step in case of a national emergency - by stepping down.

If the president were to resign then a referendum would be suspended until a new president is elected, which requires the candidate win with three-fifths majority in parliament.

This option remains highly unlikely at the moment, and presidency officials have said Prokopis Pavlopoulos will not resign. But the former conservative politician, who normally stays clear of politics, was quoted by Greek newspaper Real News this month as saying that he would not be prepared to serve as president if the country left the euro.

...Referendums are not legally binding in Greece, and are viewed as a 'consultative process'. A minimum turnout of 40% is required."

June 28, 2015

"In the streets of Greece, worried people queued outside banks for cash from dawn to dusk after Tsipras' announcement in the early hours of Saturday, after billions of euros had already been emptied in the preceding weeks.

Greece has a 1.6 billion euro ($1.8 billion) debt due to the International Monetary Fund on Tuesday and its bailout program expires the same day, after which it is unclear how the country might survive financially.

The referendum is set for next Sunday with the question on whether to accept proposed reforms needed to get bailout loans from other eurozone countries and the IMF. The government is advocating a rejection of the proposals."

"For investors around the world looking at Greece, there was but one question Sunday: What is going to happen when the markets open on Monday?

That question is particularly acute for the hedge fund investors — including luminaries like David Einhorn and John Paulson — who have collectively poured more than 10 billion euros into Greek government bonds, bank stocks and a slew of other investments.

...in recent months these investors have spent little time breaking down balance sheets or discounting cash flows. Instead, they have spent every effort trying to figure out what the Syriza government is up to.

Some have tried to get an edge by listening to Greek radio. Others have hired outside firms to study video clips of Mr. Tsipras and his finance minister, Yanis Varoufakis, to try and discern from body movement and voice tone whether they are telling the truth. And an increasing number have resorted to begging journalists for inside scuttlebutt. "

"The European Central Bank is of the opinion that Greece will need to impose a bank holiday to stem deposit outflows as liquidity dries up, according to a person familiar with the ECB’s thinking. The level of Emergency Liquidity Assistance available to the Greek banking system is insufficient to cover lenders’ needs, the person said, asking not to be identified as the information isn’t public. An ECB spokesman declined to comment. The decision to impose a bank holiday is the responsibility of the Greek government or the country’s central bank.

The ECB decided on Sunday to cap ELA at current levels after Prime Minister Alexis Tsipras’s government quit talks with international creditors to resolve the country’s debt crisis on Friday and called a referendum on the terms of the bailout program. "

June 27, 2015

"Euro-area finance chiefs poured scorn on the Greek government’s decision to call a referendum on the terms of the country’s bailout and said the door was closing to any further discussion on resolving a standoff over aid.

Finance chiefs from 18 euro nations said they would grill their Greek counterpart, Yanis Varoufakis, on what his government proposed after the sudden announcement of a referendum upended their work on the way forward for Greece. They are meeting in Brussels on Saturday hours after Prime Minister Alexis Tsipras called a July 5 ballot on whether Greece should accept the demands of the country’s creditors.

...German Finance Minister Wolfgang Schaeuble said the Greek government appeared to have “unilaterally” pulled out of any further negotiation with its plan to a ballot on a common proposal put forward by creditors.

“We no longer have a basis for negotiation,” he told reporters as he arrived for the meeting.

...Belgian Finance Minister Johan Van Overtveldt expressed bemusement at the referendum. “I find it quite a bizarre move to ask the people what they think of something and say at the same time the government is opposed to it,” said"

"Hundreds of people lined up at Greek banks and drained cash machines after Prime Minister Alexis Tsipras called a referendum to decide his country’s fate following the latest impasse in talks with creditors.

Two senior Greek retail bank executives said as many as 500 of the country’s more than 7,000 ATMs had ran out of cash as of Saturday morning, and that some lenders may not be able open on Monday unless there was an emergency liquidity injection from the Bank of Greece. A central bank spokesman said it was making efforts to supply money to the system."

"Alexis Tsipras has taken a massive gamble on Greece’s future. By calling a referendum on whether to accept the creditors’ latest offer of cash in return for unpopular reforms, the Greek prime minister is offering the people a choice between the bad and the extremely bad.

...One immediate consequence of the failure to reach a deal is that Greece won’t be able to repay the IMF the 1.5 billion euros it owes on June 30. Another is that Greece won’t be able to get an extension of the euro zone bailout, which runs out on the same day.

The big unanswered question is whether the European Central Bank will continue authorising emergency liquidity to Greek banks during the week-long referendum campaign. It has been keeping the banks on life support as deposits have steadily drained from the system.

...With the banks in meltdown, Tsipras might try to avoid the inevitable by issuing IOUs to pay his bills. But this is unlikely to do more than postpone the time before Greece returned to the drachma or whatever it would call its new currency."

June 26, 2015

"Greece’s creditors are proposing a five-month program extension and 15.5 billion euros ($17.3 billion) of funding to resolve a standoff with Prime Minister Alexis Tsipras’s government, said a European official.

The proposal by Greece’s three creditor institutions -- the International Monetary Fund, the European Central Bank and the European Commission -- would extend Greece’s bailout program through November, the official told reporters in Brussels, asking not to named because negotiations are ongoing."

"The two camps still can't agree on what reforms and austerity measures are acceptable for Athens to qualify for its last €7.2 billion (£5.13 billion, $8.06 billion) bailout tranche.

Though the country seems to have had dozens of last-chance and 11th hour meetings, without an agreement over the weekend, Athens would almost certainly miss its June 30 debt repayment. "

"European Union leaders made crystal clear to Tsipras at a summit on Thursday evening that their patience is exhausted and Greece will be given a "take it or leave it" choice at a finance ministers' meeting on Saturday.

If it rejects the cash-for-reforms proposal put together by the European Commission, the European Central Bank and the International Monetary Fund, the Eurogroup will turn to "Plan B", preparing to cope with the fallout from a Greek default and limit the damage from ensuing financial turmoil.

Yet the firebrand premier remains an enigma to Commission President Jean-Claude Juncker, German Chancellor Angela Merkel and French President Francois Hollande... "

"...talks collapsed on Thursday morning after the bailout monitors — the European Commission, International Monetary Fund and European Central Bank — demanded Mr Tsipras accept a compromise proposal or have the plan presented as a “take it or leave it” offer before the finance ministers.

Creditor plans were thwarted, however, by Yanis Varoufakis, the Greek finance minister, who presented his own proposal — described by officials as the creditors’ plan with edits — which the ministers then agreed to assess before cutting off talks completely.

Still, multiple officials said there was no chance of creditors accepting the new Greek proposal and that they were readying plans to “ring fence” Greece so any economic upheaval unleashed by a default would not spread. Those plans are believed to include capital controls and even humanitarian aid."

June 25, 2015

"Talks stalled late Wednesday, with Greece still unwilling to accept calls from Europe and the International Monetary Fund to spend less on pensions, raise more money from sales taxes, and scale back a planned tax increases on business.

Greece also wants any deal to include ways to relieve the burden of its enormous debt -- even lower interest rates and longer repayment schedules.

...The stakes couldn't be higher. Without a deal, Greece won't be able to repay the International Monetary Fund 1.5 billion euros due Tuesday.

If it misses the payment, Greece may have to introduce capital controls to prevent a run on its banks. It would then risk slipping out of the eurozone."

"For the Greeks themselves, the simple answer is that it would almost certainly be a calamity. A banking system already under considerable stress would face collapse as what has -- so far -- been described as a bank walk (rather than bank run) turned into a bank sprint; rapid devaluation of a successor currency would lead to high inflation; and extended exclusion from the sovereign bond market would be unavoidable. A forced, chaotic departure would be politically destabilizing and it is hard to see where the Greek population would turn next to govern it.

...Some consumer goods manufacturers in major exporting economies like Germany might lose some sales if Greece implodes, but they can easily make them up by selling to other parts of the world. Greece in short is a long way from being "too big to fail." On the contrary, it is too small to matter. When Detroit went bust recently did anyone seriously think it would inflict much harm on the U.S. economy?"

"Athens is crying ‘blackmail’, while Angela Merkel says things are going backwards and her central bank chief wants to cut Greece’s banks off from the last lifeline it has. Greece’s Prime Minister is accusing the creditors of wanting to bring down his government, while the creditors talk of Athens’ “amazing” carelessness.

...The conditions now under discussion reject most of the Greek proposals earlier this week because they focused too much on tax increases and not enough on the issue of reforming the Greek pension system. According to reports, it was the IMF that resisted yet another short-term fix without addressing the biggest long-term risk to the budget. That’s consistent with the IMF’s admission two years ago that it was a mistake in 2010 to focus so much on fixing the short-term budget balance rather than the structural issues which had created the budgetary mess. It is, however, a staggering and painful irony to see the creditors rejecting Greek proposals because they were, well, too much like the same old medicine they themselves had prescribed."

"A disorderly collapse of Greek finances would do few involved—or global markets—much good, but it’s foolish to believe more austerity and labor market reforms could fix Greece.

Thanks to austerity imposed since 2010, Athens has accomplished a primary national budget surplus. Spending, net of interest payments, is about 1 percent of GDP, and private sector wages have fallen some 25 percent.

Contrary to the predictions of German Chancellor Angela Merkel and IMF Managing Director Christine Legarde, those have not rekindled growth. GDP is down 25 percent and national debt has soared from 130 to 180 percent of GDP.

Servicing that debt would require a primary surplus of almost 6 percent of GDP—assuming creditors would accept a paltry 3 percent on bonds—and send Greece into a death spiral. "

June 24, 2015

"Commission vice president Valdis Drombrovskis does make time for the media. "We are in a process of intensive negotiations. We are making progress. We are not there yet but will report to the ministers on the status of negotiations on how to move forward."

"It is likely we are going to have a long night."

Greek finance minister Yanis Varoufakis has nothing to say to reporters. He's followed by the EU's economics chief Pierre Moscovici, and before that head honcho and Dutch finance minister Jeroen Dijsselbloem.

He also heads straight for the meeting, telling reporters: "I'm going to go in." Seems like a man in a rush.

Madame Lagarde is also here which means her chat with the Greek PM is over. "

"Tsipras criticized the International Monetary Fund as being needlessly picky about the reforms Greece had proposed, which consisted largely of tax increases.

A Greek official confirmed the IMF was focusing on toning down the tax increases, saying they can hurt businesses. The official, who asked not to be identified because the talks were ongoing, said creditors are demanding, among other things, a freeze on pensions, scrapping some proposed taxes and surcharges on business, and higher sales tax on some goods.

...Greece has a 1.6 billion euro ($1.8 billion) debt to pay on Tuesday which it cannot afford unless the creditors unfreeze 7.2 billion euros (8.1 billion dollars) in bailout money.

Despite the lingering disagreements with the IMF and several EU officials, Greek Economy Minister Giorgos Stathakis said he was confident an agreement could be finalized within the day.

"The details are what's left - a small gap," he told private Mega Television. "It'll be over today."

"Sources close to the negotiations said the creditors had presented counter-proposals to Athens to overcome differences, with euro zone finance ministers due to convene at 1700 GMT to try to approve an agreement.

Before flying to Brussels for meetings with the creditors, leftist Greek Prime Minister Alexis Tsipras attacked the stance of "certain" creditors as strange because he said they had rejected measures Athens put forward to plug a budget gap.

"The repeated rejection of equivalent measures by certain institutions never occurred before - neither in Ireland nor Portugal," Mr Tsipras tweeted.

"This odd stance seems to indicate that either there is no interest in an agreement or that special interests are being backed."

"The ECB governing council, which approves any increase in ELA, has held a conference call each day this week. Since February, ELA increase requests are sent by the Bank of Greece every week. The board proposed that such requests can switch to daily ones.

According to The financial Times article, the move puts pressure on politicians to find a deal that will determine if the currency union survives in its current guise. On Monday, Athens tabled the first substantial concessions in months to its international creditors."

"Greek prime minister, Alexis Tsipras, faced criticism from within his coalition government over compromise proposals that will raise €8bn by increasing pensions contributions, phasing out early retirement, hiking corporation tax and raising some rates of VAT.

“Many MPs, be them on the left or not, are very sceptical about accepting such a programme,” said Costas Lapavitsas, an economics professor at the University of London who is now an MP for Tsipras’s ruling leftwing Syriza party. “How will they explain it to their voters? How will they return to their electoral constituencies and explain this agreement to them?”

The government’s junior coalition partner, the small rightwing Independent Greeks party (Anel) deepended complications for Tsipras by warning it would only support an agreement that committed to some form of debt write-off. Greece’s creditors are not expected to make such a commitment this week. Panos Kammenos, Anel’s leader, said his party would oppose a proposed VAT increase for Greek islands “even if the government falls”. "

"Whenever a company files for bankruptcy, it is damaging for that company’s employees and shareholders — though it is often a necessary exercise to shed debt and give the company any hope of thriving in the future. But no two bankruptcies are the same.

Sometimes, as when the retailer RadioShack filed for bankruptcy protection earlier this year, the widespread reaction is not shock, but rather, “Wait, weren’t they bankrupt already?” Stores close, workers lose their jobs and the company just may relaunch under new ownership and in a leaner form, getting a fresh start.

...Which brings us back to Greece. The country’s negotiations over the extension of a bailout program were coming to a head Wednesday as Prime Minister Alexis Tsipras flew to Brussels to confront skeptical leaders of other European nations.

An overriding premise of the response by European and Greek leaders over the last five years has been that Greece is more like Lehman Brothers than like RadioShack. If it were to do the nation-state equivalent of filing for bankruptcy — repudiate its debts, exit the eurozone, devalue its currency — it would cause catastrophic ripples across Europe.

With hindsight, it is clear that European creditors bungled their response by demanding extreme fiscal austerity without any pressure release valve to lessen the economic pain for Greek citizens."

June 23, 2015

"Euro-area finance chiefs tempered optimism that a deal on Greece was in the offing, saying expectations of a breakthrough were inflated amid confusion over new Greek proposals intended to unlock aid.

...Tsipras was due to meet with ECB chief Mario Draghi and International Monetary Fund head Christine Lagarde before attending an emergency summit on Greece of euro-area leaders including German Chancellor Angela Merkel and French President Francois Hollande.

Hollande, speaking in Paris, said Europe’s two biggest economies were doing “everything” to keep Greece in the euro. “If we can’t reach a full accord tonight we must at least lay the basis for an accord in the coming days,” he said."

"Negotiations on the reforms that Greece must undertake to secure its financial future have dragged on since February.

A debt default by Greece could destabilise its banks – Greeks are already withdrawing increasingly large amounts of money – and could in a worst case scenario cause the country to have to leave the euro.

That would be hugely painful for Greeks but experts are more divided about its effects on Europe and the world economy. Several European countries have said publicly they are preparing for the possibility."

"Europe is hatching an agreement to release 7.2 billion euros ($8 billion) in bailout loans to Greece, without which the country will default to the International Monetary Fund next week, and possibly tumble out of the eurozone.

...Greece has the second highest debt mountain in the world based on the size of its economy. Until recently Tsipras, and his combative finance minister Yanis Varoufakis, were insisting that relieving that burden had to be part of the agreement under discussion.

...But economists say Greece won't grow fast enough, or generate big enough budget surpluses, to service its enormous debt any time soon -- even given the extremely low interest rates and deferred payment schedules attached to the international bailout loans."

"...According to the Wall Street Journal, at the end of 2014, Greeks collectively owed their government about €76 billion ($86 billion) in unpaid taxes accrued over decades, though mostly since 2009. The government says most of that has been lost to insolvency and only a fraction can be recovered.

Billions more in taxes are owed on never-reported revenue from Greece’s vast underground economy, which was estimated before the crisis to equal more than a quarter of the country’s gross domestic product.

In the same period new arrears kept mounting. IMF data shows that of the 2.6 million Greek debtors, only 92,323 have set up monthly payment plans. Overdue tax collection fell €382 million ($433 million) short of its target in 2013. Greece’s inability to levy and collect tax represents a “critical risk” to the country’s compliance with its creditors’ conditions, the IMF concluded, and even then nobody is really doing the collecting. According to the Intra-European Organisation of Tax Administrations (Iota), there is now only one tax collector per 1,127 Greek citizens, whereas in Germany it’s one per 730.

This happened because the country does not so much owe the money to the EU in general and Germany in particular but rather the banks that issued the loans on the understanding they would be under-written by the dead hand of the IMF."

June 22, 2015

"Eurozone finance ministers will meet again on Wednesday in a bid to reach a final bailout deal for Greece ahead of an EU leaders' summit the following day, EU President Donald Tusk said."

A new Greek offer for a cash-for-reforms deal raised hopes of an agreement as euro zone leaders prepared for an emergency summit on Monday, with EU officials welcoming the proposals as a "good basis for progress" to avert a default by Athens.

European shares surged and the Greek stock market jumped nearly 7 percent on hopes that the government could finally end months of wrangling that have left the country on the verge of bankruptcy and possibly being pushed out of the euro bloc.

In a sign of the more positive mood music, EU Economic Commissioner Pierre Moscovici said he was "convinced" that euro zone leaders would find a resolution on the basis of the latest proposal by Greek Prime Minister Alexis Tsipras.

"If the European project is fundamentally a political endeavor, the use of a currency union and a continental central bank has reduced "European" politics to a drab endeavor of neoliberalism. Consequently, once the economic growth slowed or stalled, pro-European parties on the left and right both found themselves extremely vulnerable. Center left-parties like Labour in the U.K. or the Socialists in France found themselves entirely disconnected, culturally, from the working classes. On the right, parties like France's Union for a Popular Movement had ceded the language of patriotism to the euroskeptics. In other words, the European project has been very good at creating solidarity among a cross-national economic elite, but the centrist political parties have abandoned the solidarity that creates lasting right-wing or left-wing coalitions.

Paradoxically, the EU makes the nationalism of smaller states seem possible — look at Scotland or Catalonia. But its unresponsive, undemocratic institutions enflame anti-EU nationalisms from Sweden to Greece. There was the surge of the Danish People's Party in elections last week. Even France now faces a choice between parties discredited by the last decade and the National Front of Marine Le Pen. Britain's euroskeptic UKIP may have won only one seat in Parliament, but it captured far more votes than the Scottish National Party and the Liberal Democrats. A Grexit will only strengthen the arguments of the euroskeptic parties.

Even if the European Union can survive the economic reverberations of a Grexit, it is still a major setback for the European project, which was predicated not just on the promise of making European war unthinkable, but on raising living standards across the continent. "

June 21, 2015

"On the eve of an emergency summit of European leaders in Brussels, finance minister Yanis Varoufakis appealed to German chancellor Angela Merkel to strike an "honourable compromise" to keep the country in the euro.

Ms Merkel faced a choice "to follow the sirens within her own government that embolden her to throw overboard the only Greek government that has remained true to its principles", Mr Varoufakis wrote in the Frankfurter Allgemeine Sonntagszeitung. "

June 20, 2015

'Last Days of Pompeii' in Greece as crunch time approaches - UK Telegraph

"Greeks do not know for certain if their banks will stay open next week, nor even whether euros or drachmas will emerge from cash machines beyond this month.

But in the graffiti-stained streets of Athens, alongside the shuttered windows of countless abandoned shops, the bars and restaurants are full of people trying to forget their troubles.

“You do get the sense that it’s like the last days of Pompeii,” said Marie-Therese Iatrou, a 49-year-old Athenian. “It’s like ‘sod it, I’m going to go out and have a drink with my friends’. Someone said they haven’t paid for their electricity or their rent, but they’re going to go out.”

The next stage of the avalanche would be a failure to repay €1.5 billion (£1.1 billion) to the International Monetary Fund by the due date of 30 June. If that happens, events could then unfold with inexorable power. A formal default could make Greece’s membership of the euro – and perhaps even of the European Union - impossible to sustain.

So it is that ordinary people must endure a profound sense of uncertainty. “It’s like living with lead in your stomach,” said Ms Iatrou. “You can’t plan ahead: you can’t be secure in the knowledge that you will get your pension. We simply don’t know what’s going to happen next week or next month.”

NEWS ARCHIVE - June 2015

2015 - June 1 - 12

2015 - June 13 - 19

2015 - June 20 - 30

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