http://www.telegraph.co.uk/news/worldnews/europe/greece/9263267/Key-Left-wing-leader-Fotis-Kouvelis-plays-down-hopes-for-Greek-coalition.html
10:27PM BST 13 May 2012
Fotis Kouvelis, head of the small Democratic Left grouping, was the last of seven party chiefs to meet President Carolos Papoulias as he searched for a government that could save Greece's EU bailout deal.
The late-night meeting was seen as the final chance to avert new polls next month that would strengthen the hold of the anti-bailout forces, bring Greece's likely exit from the euro and cause possible turmoil across the EU.
Greece's government has been paralysed since last Sunday's election when voters rejected the established pro-bailout parties, Pasok and New Democracy, in favour of a constellation of smaller groups which want to tear up the deal.
Democratic Left, which won six per cent of the votes and 19 seats, suggested last week that it would be prepared to join a coalition including the established parties. But it later backtracked, saying it would not be part of any government that did not include the largest anti-bailout grouping, Syriza.
Mr Kouvelis said yesterday that any coalition government should "immediately" cancel legislation that slashed the minimum wage and facilitated layoffs, and start to "disengage" Greece from the unpopular EU-IMF rescue package.
http://globaleconomicanalysis.blogspot.com/2012/05/good-news-from-greece-greek-unity-talks.html
Good News From Greece: Greek Unity Talks Hit Impasse; Math Lesson For New Democracy; Syriza Up to 25.5% in Latest Polls
Under the category of good news from Greece, the Financial Times reportsGreek Unity Talks Hit Impasse.
Talks between Greece’s president and the leaders of the country’s three largest political parties on forming a coalition government reached an impasse on Sunday, increasing the chances that the country will hold fresh national elections in June.
Antonis Samaras, the conservative leader, said the radical left coalition Syriza had blocked a last-ditch effort to break the deadlock.
“Syriza doesn’t accept the formation of a viable government, or agree to support a government that would seek to renegotiate the terms of the bailout,” Mr Samaras said after the 90-minute meeting chaired by Karolos Papoulias at the presidential mansion.
Alexis Tsipras, the Syriza leader, said after the meeting: ”They wanted Syriza to collude in a crime … to ignore the voice of the people”, referring to the fact that 70 per cent of Greeks voting last Sunday backed anti-austerity parties.
Math Lesson For New Democracy
Note the irony in New Democracy leader Samaras placing the blame on Alexis Tsipras.
Syriza got 16.2% of the vote. Precisely whose fault is it that Samaras cannot muster a simple majority without that 16%?
Perhaps the message that parties do not want to join a coalition that has raped and tortured Greek citizens to bailout German and French banks ought to sink into Samaras' thick head.
Snatching Defeat From Jaws of Victory
Until new elections are actually called, however, eurosceptics still fear the answer to this question: Will Greece Snatch Defeat From the Jaws of Victory?
Pressure from the Troika and fear-mongering by all the politicians in the bailout-bed will be immense. There will be another decade of pain and suffering for Greeks if they stick to the Troika plan.
However, there will be short but intense pain for Greeks if they tell the Troika to shove it. Which is worse? It seems Greeks have come to the correct conclusion.Syriza Up to 25.5% in Latest Polls
Note the irony in New Democracy leader Samaras placing the blame on Alexis Tsipras.
Syriza got 16.2% of the vote. Precisely whose fault is it that Samaras cannot muster a simple majority without that 16%?
Perhaps the message that parties do not want to join a coalition that has raped and tortured Greek citizens to bailout German and French banks ought to sink into Samaras' thick head.
Snatching Defeat From Jaws of Victory
Until new elections are actually called, however, eurosceptics still fear the answer to this question: Will Greece Snatch Defeat From the Jaws of Victory?
Pressure from the Troika and fear-mongering by all the politicians in the bailout-bed will be immense. There will be another decade of pain and suffering for Greeks if they stick to the Troika plan.
However, there will be short but intense pain for Greeks if they tell the Troika to shove it. Which is worse? It seems Greeks have come to the correct conclusion.Syriza Up to 25.5% in Latest Polls
Please consider Latest polls shows clear lead for far-left Syriza
Real News reports that the Coalition of the Radical Left (SYRIZA) has gained support at the expense of the other parties. It puts Syriza on 25.5 percent, New Democracy on 21 percent, PASOK on 14.6 percent and the Communists KKE on 5.3 percent.Given that Greek law gives the winning party an extra 50 seats in parliament, a coalition between SYRIZA and one or two leftist parties is now in sight, yet another math lesson for Samaras as well as Troika-clown Evangelos Venizelos, leader of Pasok a Greek socialist party whose support in the polls is now down to 10%.
In general, I have little use for socialists and radical left parties of any kind. However, they are the only ones talking sense about what needs to happen to the bailout agreements.
The simple fact of the matter is Greece will not recover until it defaults on all external debt. Once that happens, and Greece takes a dive, hopefully new political forces can put Greece on the right path to needed reform.
and....
http://www.zerohedge.com/news/greece-get-european-aid-even-after-it-exits-speculates-spiegel
Greece To Get European Aid Even After It Exits, Speculates Spiegel
As suspected, yesterday's report that the Troika may be caving on Greece appears more and more as a red-herring trial balloon, leaked by the Greek press without substantiation, and which sought to lighten the tension ahead of a trading week which is already looking rather askew. Because not even a full 24 hours later, Germany fires right back with an article in the Spiegel which not only anticipates the Grexit, but what happens the day after: namely that Greece would receive further aid from the EFSF if it exited the euro. It also notes that the EFSF aid to service bonds would continue. Greece would continue to get aid as EU member as every other member state. While it is unclear if this article is in response to the WiWo piece we noted yesterday which tried to quantify the costs of a Greek impact, and which has nowominously been picked up by Die Welt, in which Germany was finally starting to get worried about the hundreds of billions in sunk costs should Greece exit, the punchline here, needless to say, is not only the contemplation of a Greek exit but that Greece would be "all taken care of" even as the newly reintroduced Drachma lost a few hundred percent in value every day as Greece stormed its way back to FX competitiveness. Spiegel's punchline: "This is to the consequences of a possible €-egress will be mitigated." Hopefully the market agrees.
From Spiegel:
and....Greece is to SPIEGEL information even in case of egress expect further € billion bailout from the European EFSF. The European rescue package is designed by the Federal Ministry of Finance therefore emphasize only those amounts that go directly to the household of Greece. Those billions, with which the bonds will be served, which took over the European Central Bank (ECB) as part of its rescue measures should, however, continue to flow.This is to the consequences of a possible €-egress will be mitigated. This could be prevented with the central bank losses, hit by the end of the budgets of the Member States.
Further consideration of the House of Finance Minister Wolfgang Schäuble (CDU) provide, according to Spiegel, that the Greeks, even if they get no help from the rescue more pots of the euro countries, not to be left alone. Greece remains a member of the EU, they are entitled to assistance from Brussels, as are accorded to other EU countries with its own currency in trouble. These would be funded not only by the countries of the Euro-zone, but by all 27 EU Member States.After the elections of last Sunday and so far unsuccessful attempt to get a government concluded in Athens, is in the black-yellow coalition government talked more openly about the possibility of a Euro exit - resentment is growing.An Athens exit from the euro would be "not the end of the euro nor the end of the EU," said CSU head Horst Seehofer: "We need to get Germany's economic strength, which is more important than a stay in Greece in the Euro zone."
But, but, less than a year ago the best and brightest among you said: "Were Greece to be forced out of the euro area (say by the ECB refusing to continue lending to Greek banks through the regular channels at the Eurosystem and stopping Greece’s access to enhanced credit support (ELA) at the Greek central bank), there would be no reason for Greece not to repudiate completely all sovereign debt held by the private sector and by the ECB....In the case of a confrontation-driven Greek exit from the euro area, we would therefore expect to see around a 90 percent NPV cut in its sovereign debt, with 100 percent NPV losses on all debt issued under Greek law, including the debt held, directly or directly, by the ECB/Eurosystem. We would also expect 100 percent NPV losses on the loans by the Greek Loan Facility and the EFSF to the Greek sovereign....In our view, the bottom line for Greece from an exit is therefore a financial collapse and an even deeper recession than the country is already experiencing - probably a depression."
http://www.zerohedge.com/news/if-greece-exits-here-what-happens
If Greece Exits, Here Is What Happens
- Bank Run
- Budget Deficit
- Creditors
- default
- European Central Bank
- Fail
- Finland
- fixed
- France
- Funding Gap
- Germany
- Greece
- Gross Domestic Product
- Hyperinflation
- International Monetary Fund
- Netherlands
- Real Interest Rates
- Recession
- Sovereign Debt
- Willem Buiter
Now that the Greek exit is back to being topic #1of discussion, just as it was back in the fall of 2011, and the media has been flooded by groundless speculation posited by journalists who have never used excel in their lives and are merely paid mouthpieces of bigger bank interests (long live access journalism and the book sales it facilitates), it is time to rewind to a step by step analysis of precisely what will happen in the moment before Greece announces the EMU exit, how the transition from pre to post occurs, and the aftermath of what said transition would entail, courtesy of one of the smarter minds out there, Citi's Willem Buiter, who pontificated precisely on this topic last year, and whose thoughts he has graciously provided for all to read onhis own website. Of course, take all of this with a huge grain of salt - these are observations by the chief economist of a bank which will likely be swept aside the second the EMU starts the post-Grexit rumble.
From Willem Buiter
What happens when Greece exits from the euro area?
Were Greece to be forced out of the euro area (say by the ECB refusing to continue lending to Greek banks through the regular channels at the Eurosystem and stopping Greece’s access to enhanced credit support (ELA) at the Greek central bank), there would be no reason for Greece not to repudiate completely all sovereign debt held by the private sector and by the ECB. Domestic political pressures might even drive the government of the day to repudiate the loans it had received from the Greek Loan Facility and from the EFSF, despite it having been issued under English law. Only the IMF would be likely to continue to be exempt from a default on its exposure, because a newly ex-euro area Greece would need all the friends it could get – outside the EU. In the case of a confrontation-driven Greek exit from the euro area, we would therefore expect to see around a 90 percent NPV cut in its sovereign debt, with 100 percent NPV losses on all debt issued under Greek law, including the debt held, directly or directly, by the ECB/Eurosystem. We would also expect 100 percent NPV losses on the loans by the Greek Loan Facility and the EFSF to the Greek sovereign.
Consequences for Greece
Costs of EA exit for Greece are very high, most notably the damage done to balance sheets of Greek banks and nonfinancial corporates in anticipation of EA exit.
We have recently discussed at length what we think would happen should Greece leave the euro area (Buiter and Rahbari (2011)), so we shall be brief here. Note that we assume that Greece exits the euro area and does not engage in the technical fudge discussed in Buiter and Rahbari (2011), under which it technically stays in the euro area but introduces a second, parallel or complementary currency.
The instant before Greece exits it (somehow) introduces a new currency (the New Drachma or ND, say). Assume for simplicity that at the moment of its introduction the exchange rate between the ND and the euro is 1 for 1. This currency then immediately depreciates sharply vis-Ã -vis the euro (by 40 percent seems a reasonable point estimate). All pre-existing financial instruments and contracts under Greek law are redenominated into ND at the 1 for 1 exchange rate.
What this means is that, as soon as the possibility of a Greek exit becomes known, there will be a bank run in Greece and denial of further funding to any and all entities, private or public, through instruments and contracts under Greek law. Holders of existing euro-denominated contracts under Greek law want to avoid their conversion into ND and the subsequent sharp depreciation of the ND. The Greek banking system would be destroyed even before Greece had left the euro area.
There would remain many contracts and financial instruments involving Greek private and public entities denominated in euro (or other currencies, like the US dollar) that are not under Greek law. These would not get redenominated into ND. With part of their balance sheet redenominated into ND which would depreciate sharply and the rest remaining denominated in euro and other currencies, any portfolio mismatch would cause disruptive capital gains and losses for what’s left of the Greek banking system, Greek non-bank financial institutions and any private or public entity with a (now) mismatched balance sheet. Widespread defaults seem certain.
As discussed in Buiter and Rahbari (2011), we believe that the improvement in Greek competitiveness that would result from the introduction of the ND and its sharp depreciation vis-Ã -vis the euro would be short-lived in the absence of meaningful further structural reform of labour markets, product markets and the public sector. Higher domestic Greek ND-denominated wage inflation and other domestic cost inflation would swiftly restore the old uncompetitive real equilibrium or a worse one, given the diminution of pressures for structural reform resulting from euro area exit.
In our view, the bottom line for Greece from an exit is therefore a financial collapse and an even deeper recession than the country is already experiencing - probably a depression.
Monetising the deficit
A key difference between the ‘Greece stays in’ and the ‘Greece exits’ scenarios is that we believe/assume that if Greece remains a member of the euro area, there would be official funding for the Greek sovereign (from the Greek Loan Facility, the EFSF and the IMF), even after the inevitable deep coercive Greek sovereign debt restructuring, and even if NPV losses were imposed on the official creditors – the Greek Loan Facility, the EFSF and the ECB. The ECB probably would no longer engage in outright purchases of Greek sovereign debt through the SMP, but the EFSF would be able to take over that role following the enhancement and enlargement of the EFSF later in 2011.4 If Greece remains a member of the euro area, the ECB would likewise, in our view, continue to fund Greek banks (which would have to be recapitalised following the Greek sovereign debt restructuring), both through the regular liquidity facilities of the Eurosystem and through the ELA.
In the case of a (confrontational and bitter) departure of Greece from the euro area, it is likely that all official funding would vanish, at least for a while, even from the IMF (which would, under our most likely scenario, not have suffered any losses on its loans to the Greek sovereign). The ECB/Eurosystem would, of course, following a Greek exit, cease funding the Greek banks.
This means that the Greek sovereign would either have to close its budget gap through additional fiscal austerity, following its departure from the euro area, or find other means to finance it. The gap would be the primary (non-interest) general government deficit plus the interest due on the debt the Greek sovereign would continue to serve (the debt issued under foreign law other than the loans from the Greek Loan Facility and the EFSF, and the debt to the IMF), plus any refinancing of this remaining sovereign debt as it matured. We expect the Greek General Government deficit, including interest, to come out at around 10 percent of GDP for 2011, while the programme target is 7.6 percent. General government interest as a share of GDP is likely to be around 7.2 percent of GDP in 2011, which means that we expect the primary General Government deficit to be around 2.8 percent of GDP. We don’t know the interest bill in 2011 for the IMF loan and for the outstanding privately held debt issued under foreign law. If we assume that these account for 10 percent of the total interest bill on the general government debt – probably an overestimate as interest rates on the IMF loan are lower than on the rest of Troika funding – then we would have to add 0.72 percent to the primary deficit as a percentage of GDP to obtain an estimate of the budget deficit that would have to be funded by the Greek government, say 3.5 percent of GDP. We would have to add to that any maturing IMF loans and any maturing privately held sovereign debt not under Greek law. This is on the assumption that even those creditors under international law that continue to get serviced in full, would prefer not to renew their exposure to the Greek sovereign once they have been repaid. In addition, future disbursements by the IMF under the first Greek programme would be at risk following a Greek exit. This would create a further funding gap.
Assume the Greek authorities end up (very optimistically) having to find a further 5 percent of GDP worth of financing. This could be done by borrowing or by monetary financing.Borrowing in ND-denominated debt would likely be very costly. Nominal interest rates would be high because of high anticipated inflation – inflation that would indeed be likely to materialise. Real interest rates would also be high.
Although the Greek sovereign’s ability to service newly issued debt would be greatly enhanced following its repudiation of most of its outstanding debt, the default would raise doubts about its future willingness to service its debt. Default risk premia and liquidity premia (the market for ND-denominated Greek debt would be thin) would raise the cost of borrowing in ND-denominated debt. Even if the Greek authorities were to borrow under foreign law by issuing debt denominated in US dollars or euro, default risk premia and liquidity premia would likely be prohibitive for at least the first few quarters following the kind of confrontational or non-consensual debt default we would expect if Greece were pushed out of the euro area.
So the authorities might have to finance at least 5 percent worth of GDP through issuance of ND base money, under circumstances where the markets would inevitably expect a high rate of inflation. The demand for real ND base money would be very limited. The country would likely remain de-facto euroised to a significant extent, with euro notes constituting an attractive store of value and means of payment even for domestic transactions relative to New Drachma notes. We have few observations on post-currency union exit base money demand to tell us whether a 5 percent of GDP expected inflation tax could be extracted at all by the issuance of ND – that is, at any rate of inflation. If it is feasible at all, it would probably involve a very high rate of inflation. It is possible that we would end up with hyperinflation.
The obvious alternative to monetisation is a further tightening in the primary deficit through additional fiscal austerity (of something under 5 percent of GDP), allowing for some non-inflationary issuance of base money. Because Greek exit would be in part the result of austerity fatigue in Greece, this outcome does not seem likely.
A collapsed banking system, widespread default throughout the economy, a continuing non-competitive economy and high inflation with a material risk of hyperinflation would make for a deep and enduring recession/depression in Greece. Social and political dislocation would be certain. There would, in our view, be a material risk of a downward spiral of dysfunctional politics and economics.
Consequences for the remaining euro area and EU member states of a Greek exit
For the world outside Greece, and especially for the remaining euro area member states following a Greek exit, the key insight would be that a taboo was broken with a euro area exit by Greece. The irrevocably fixed conversion rates at which the old Drachma was joined to the euro in 2001 would, de facto, have been revoked. The permanent currency union would have been revealed to be a snowball on a hot stove.
Not only would Greek official credibility be shot, the same thing would happen for the rest of the EA member states in our view. First, monetary union is a two-sided binding commitment. Both sides renege if the accord is broken. Second, Greece would only exit from the euro area if it was driven out by the rest of the euro area member states, with the active cooperation of the ECB. Even though it would be Greece that cuts the umbilical cord, it would be clear for all the world to see that it was the remaining euro area member states and the ECB that forced them to wield the scalpel.
It does not help to say that Greece ought never to have been admitted to the euro area because the authorities during the years leading up to Greek membership in 2001, knowingly falsified the fiscal data to meet the Maastricht criteria for EMU admission, and continued doing so for long afterwards.6 After all, what Greece did was just an exaggerated version of the deliberate data manipulation, distortion and misrepresentation that allowed the vast majority of the euro area member states to join the EMU, including quite a few from what is now called the core euro area7. The preventive arm of the euro area, the Stability and Growth Pact (SGP) which, if it had been enforced would have prevented the Greek situation from arising, was emasculated by Germany and France in 2004, when these two countries were about to be at the receiving end of its enforcement.
Euro area membership is a two-sided commitment. If Greece fails to keep that commitment and exits, the remaining members also and equally fail to keep their commitment. This is not just a morality tale. It has highly practical implications. When Greece can exit, any country can exit. If we look at the austerity fatigue and resistance to structural reform in the rest of the periphery and in quite a few core euro area countries, it is not plausible to argue that the Greek case is completely unique and that its exit creates no precedent.Despite the fact that both Greece’s fiscal situation and its structural, supply-side economic problems are by some margin the most severe in the euro area, Greece’s exit would create a powerful and highly visible precedent.
As soon as Greece has exited, we expect the markets will focus on the country or countries most likely to exit next from the euro area. Any non-captive/financially sophisticated owner of a deposit account in that country (or in those countries) will withdraw his deposits from banks in countries deemed at risk - even a small risk - of exit. Any non-captive depositor who fears a non-zero risk of the future introduction of a New Escudo, a New Punt, a New Peseta or a New Lira (to name but the most obvious candidates) would withdraw his deposits from the countries involved at the drop of a hat and deposit them in the handful of countries likely to remain in the euro area no matter what - Germany, Luxembourg, the Netherlands, Austria and Finland. The ‘broad periphery’ and ‘soft core’ countries deemed at any risk of exit could of course start issuing deposits under English or New York law in an attempt to stop a deposit run, but even that might not be sufficient. Who wants to have their deposit tied up in litigation for months or years?
Apart from bank runs in every country deemed, by markets and investors, to be even remotely at risk of exit from the euro area, there would be de facto funding strikes by external investors and lenders for borrowers from these countries. Again, putting under foreign law (most likely English or New York) all cross-border (or perhaps even all domestic) financial contracts and instruments could at most mitigate this but would not cure it.
The funding strike and deposit run out of the periphery euro area member states (defined very broadly), would create financial havoc and mostly like cause a financial crisis followed by a deep recession in the euro area broad periphery. The counterparty inflow of deposits and diversion of funding to the ‘hard core’ euro area and the removal (or at least substantial reduction) of the risk of ECB monetisation of EA sovereign and bank debt would drive up the euro exchange rate. So the remaining euro area members would suffer (at least temporarily) from an uncompetitive exchange rate as well from the spillovers of the financial and economic crises in the broad periphery.
As noted by the new IMF Managing Director, Christine Lagarde (Lagarde (2011) and confirmed by Josef Ackerman (Ackermann (2011, p.14)), the European banking sector is seriously undercapitalised. It would not be well-positioned, in our view, to cope with the spillovers and contagion caused by a Greek exit and the fear of further exits. Ms Lagarde was arm-twisted by the EU political leadership, the ECB and the European regulators into a partial retraction of her EU banking sector capital inadequacy alarm call.10 However, this only served to draw attention to the obvious truth that despite the three bank stress tests in the EU since October 2009 and despite the capital raising that has gone on since then both to address any weaknesses revealed by these tests and to anticipate the Basel III capital requirements, the EU banking sector as a whole remains significantly undercapitalised even if sovereign debt is carried at face value. In addition, the warning by Ackermann that “… many European banks would not be able to handle writing down the sovereign bonds they hold on their banking books to market levels…” (Ackermann (2011), see also IMF (2011, pp. 12 -20)) serves as a reminder of the fact that Europe is faced with a combined sovereign debt crisis in the euro area periphery and a potential banking sector insolvency crisis throughout the EU.
A banking crisis in the euro area and in the EU would most likely result from an exit by Greece from the euro area. The fundamental financial and real economy linkages from the rest of the world to the euro area and the rest of the EU are strong enough to make this a global concern.
and...
Europe Has Bet The Farm
- European Central Bank
- European Union
- Eurozone
- France
- Germany
- Greece
- Gross Domestic Product
- International Monetary Fund
- Reality
From Mark Grant, author of Out of the Box
Things that go Bump in the Night
Europe is heading for a showdown and in a number of places; that much can be acknowledged with certainty. The first, and perhaps the most important, is the stand-off between France and the European Commission. The EU budgetary office is demanding that France reduce its deficit to 3.00% for 2012 while the projection is for 4.50% so that the Commission is threatening France with large fines. Mr. Hollande ran his campaign upon a reduction in the retirement age, more generous pensions, shorter work hours and more governmental spending so that the budgetary miss is likely to be larger than forecast; somewhere around 5.2% in my estimation. France then finds itself, one way or another, with a larger budgetary deficit and if the EU then imposes fines and sanctions Paris may thumb its nose at Berlin/Brussels in what could be a rather nasty affair with unknown consequences. Mrs. Merkel in one corner and Mr. Hollande in another slugging it out will not make for harmonious relations. Then there are the issues of Greece and Spain and the Socialist reaction is bound to be very different than the Austerity imposition as demanded by Germany. Jawohl ! “After all, one can’t complain. I have my friends. Somebody spoke to me only yesterday. And was it last week or the week before that Rabbit bumped into me and said Bother!”
-Eeyore
The new EU fiscal pact is becoming something of a deviated piece of humor as Spain is being released from its constraints and Greece is now only constrained by the fear and loathing of the country removing its hand from the honey pot. “Keep Eating,” is the resounding cry from all of the European politicians as they are truly frightened of the old bear not following orders. It may well be that the new political dandy in Greece is correct; Europe may soon be begging for Greece to take the money under almost any terms as they do not wish to dance the jig of contingent liabilities becoming real ones and having to be accounted for in actuality with all of the pending losses that this would entail. What will they say in Berlin; “Mein Gott, waren wir nur ein Scherz“(My God, we were just kidding.) If Greece defaults or leaves the Eurozone then the ECB will be broke and have to be re-capitalized, the IMF will take one serious financial hit, the EIB will be seriously impaired and while the Greek bonds are mostly held by governmental bodies now the municipal debt, the derivatives, the bank loans are still to be found in securitizations of many of the large European banks and American banks who will be forced to recognize thier losses. Charades is so much fun until someone comes up with the answer.
The real debt of Greece is approximately $1.30 trillion and as contingent morphs into actual the impending explosion may become reality. This amount of money is 40.60% of the entire GDP of Germany because it is a small country that now has a giant debt given its population. Europe has, in fact, bet the farm and the decision now rests entirely with the Greek electorate. The European Union has played its hand badly and reality is very close to biting off the hand that fed it! I want to repeat this for you, I want you to understand the gravity of what Europe is facing; Europe has BET THE FARM and the croupier is about to roll the dice. We are all facing a momentous instant in time and all of the noise in the background is quelled by the showman announcing the main event; Let’s Roll.
and.....“You are about to have your first experience with a Greek lunch. I will kill you if you pretend to like it.”-Jacqueline Kennedy Onassis
http://www.zerohedge.com/contributed/2012-19-12/endgame-%E2%80%9Cgreeks-feel-hopeless%E2%80%9D
Wolf Richter www.testosteronepit.com
On Thursday, rumors that Greece would have a government goosed the stock markets in Europe. While everybody was out to lunch in Frankfurt, the DAX ran up 110 points, before it settled down a bit. In Athens, the ATHEX, which appears to be on a multi-year trajectory toward zero, jumped 4.2% and the bank index 13%. But on Friday, when it became clear that the rumor was just another rumor, the ATHEX resumed its downward trajectory. And Greeks went to bed without a new government.
During the May 6 election, Greek voters demolished the former top two political parties—the conservative New Democracy and socialist PASOK—that had divvyied up the spoils for decades and that had gotten Greece into its morass. In their outrage, Greeks voted for every alternative in sight, from the radical left to the Neo-Nazis on the right—in the process clobbering those who’d signed the reform memorandum that the Troika had handed them in exchange for hundreds of billions of bailout euros. Neither New Democracy with 18.9% nor PASOK with 13.2% had the votes to govern. And by Friday, all efforts had failed to form a coalition government of whatever kind.
Saturday, President Karolos Papoulias got involved in the horse-trading and spoke of “nuggets of optimism.” And on Sunday, he will invite the leaders of all parties for a last effort to cobble together a coalition government. If that fails, there will be new elections and more opportunities for the will of the people to shift in different directions. And their will is already shifting.
In a poll released on Thursday, the radical left SYRIZA would come out ahead with 23.8% of the vote, up from an already astonishing 16.8% (second place) during the May 6 elections. As the party with the most votes, thanks to an ingenious quirk in Greece’s election law, it would automatically receive an additional 50 of the 300 seats—giving it 121 of the 151 seats required to govern. With that, it will be easier to form a coalition. And it passionately rejects the reform measures imposed by the Troika, though just as passionately, it wants to keep the flood of bailout billions flowing.
A risky assumption because the Troika may shut off the bailout spigot, triggering a massive default and Greece’s return to the drachma. Bundesbank President Jens Weidmann hammered that home on Saturday: “If Athens doesn’t keep its word, that is a democratic decision. But that means the basis for further financial aid falls away.” And if Greece ended up dropping the euro, he said to nip any extortion efforts in the bud, the consequences would be more serious for Greece than for the Eurozone.
Perhaps it was aimed at Evangelos Venizelos, former Finance Minister, president of the PASOK, and master of the bailout game, who’d proclaimed: “There are certain misconceptions that worry me. For instance, the misconception that whatever happens, we are not going to leave the euro.” For the pre-election machinations, read.... “We Are Their Greatest Fear.”
In the poll, only SYRIZA gained. All other parties lost ground. New Democracy drifted down to 17.4%. PASOK, which had won by a landslide in 2009, sank to 10.8%. The Neo-Nazi Golden Dawn that in the past had never even made it into parliament but that had received nearly 7% of the vote last Sunday—sending shockwaves through Europe and causing a bout of soul-searching in Greece—well, it dropped to 4.9% in the poll, perhaps a sign that Greeks are already souring on it.
“No, the Greeks are not Nazis,” wroteblogger Panos Sialakas. And “the vast majority of those who did vote for Golden Dawn are not Nazis either.” Culprit: the horrid economy that is in its fifth year of deep recession: “People feel angry and disappointed with the mainstream parties and their failing policies.... And the worst? Greeks feel hopeless.”
“They’re also angry with the EU, Germany in particular, for the tough austerity program,” he wrote. A powerful chorus in the Greek tragedy. Layoffs, cuts in wages and benefits, deregulation of markets, etc. that would make Greece competitive in a globalized economy, are painful and don’t seem to work. But they “pushed the majority of the Greek population to the limit, and something has to be changed as soon as possible,” wrote Sialakas.
And the Germans are angry at the Greeks for not doing enough to restructure the economy, root out corruption, get a functional tax collection system in place, and live within their means. German tax payers, who are taxed out the wazoo, have committed billions to bailing out Greece. Their patience is running thin, and Greece’s exit from the Eurozone is no longer the dreaded event it once was. Even Finance Minister Wolfgang Schäuble admitted that: “The risks of contagion for other countries of the Eurozone have been reduced, and the Eurozone as a whole has become more resistant.”
The difference between Greece and other countries whose governments spend beyond their means, such as the US or Japan, is that it doesn’t have its own currency that it can print, debase, and devalue with utter abandon every time the credit markets sneeze. And the credit markets have lost confidence that Greece can service its debt without monetization. Hence the debt crisis. But there are solutions....
“The Greeks are still debt slaves, and will be until they tell Brussels to take a hike,” said David Stockman, Director of the Office of Management and Budget under President Reagan. With similarly pungent flourishes, he talked of a “paralyzed” Fed that is in its “final days,” hostage of Wall Street “robots” trading in markets that are “artificially medicated.” For his awesome interview, read.... The Emperor is Naked: David Stockman.
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http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_13/05/2012_441897
Tsipras rejects 'illogical' role for SYRIZA in unity gov't
Tsipras appeared to close the door on any lingering hope that SYRIZA could take part in a unity government following talks with the other party leaders and President Karolos Papoulias on Sunday. “They are not just asking SYRIZA to agree, they are asking it to be complicit in crimes and we will not do that,” he said. Tsipras said he had asked Papoulias to publish the minutes of the meeting so “citizens can draw their own conclusions.” He accused PASOK and New Democracy of ignoring the outcome of Sunday’s elections, which dealt their parties huge losses and elevated SYRIZA to second place. “The parties that governed us not only have failed to heed the message from the elections, they are also blackmailing us,” he said. “New Democracy, PASOK and Democratic Left have 168 seats in Parliament. They can progress if they want. Their demands for SYRIZA to take part are unprecedented and illogical.” He said the party would remain committed to its pre-election pledge to reject the terms of Greece’s bailout. |
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Samaras accuses SYRIZA of obstructing gov't deal
New Democracy leader Antonis Samaras has accused the Coalition of the Radical Left (SYRIZA) of preventing an agreement to form a unity government. Samaras made a brief statement following a 90-minute meeting with SYRIZA chief Alexis Tsipras, PASOK leader Evangelos Venizelos and President Karolos Papoulias. “I made very effort to form a government but SYRIZA does not want to listen to the mandate from the Greek people and does not accept the formation of a viable government, nor does it accept giving its tacit support to a government that would renegotiate the [EU-IMF] memorandum,” said Samaras. “I honestly don’t know where they are going with this,” he added.
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