http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_29/05/2012_444424
( US meddling in Greece election - note the meeting planned with Venizelos .. )
Caretaker finance minister meets US undersecretary
The meeting was attended by Christopher Smart, the US Treasury’s deputy assistant secretary for Europe and Eurasia, the statement said. Brainard was also due to meet with PASOK leader Evangelos Venizelos in Athens on Tuesday night. [Bloomberg] |
and....
| http://globaleconomicanalysis.blogspot.com/2012/05/bailout-scam-collecting-non-interest-on.html ( Why do Samaras and Venizelos think preserving this is of primo importance to Greece ? ) Bailout Scam: Collecting Non-Interest on Non-Loans; "Because We’re Europe"
The absurdity of the Greek "bailout" setup is in the news once again. The New York Times reports Athens No Longer Sees Most of Its Bailout Aid
In an elaborate payment system that began after the May 6 election that brought down the Greek government, and is meant to ensure that the Greeks do not touch the cash, the big three creditors are now wiring bailout payments to an escrow account in Greece. There the money sits for two or three days — before much of it is sent back to the troika as interest payment on the Greek bonds that Europe accepted under terms of the bailout deal struck in February. On its face, the situation seems absurd. The European authorities are effectively lending Greece money so Greece can repay the money it borrowed from them.
Non-Interest on Non-Loans
If the money never gets to the borrower, then it's not a loan. Scam is a more appropriate word. Of the €141.7 billion bailout, only €47.2 can be construed as a loan all of which nearly all went to government operations, none to the average Greek citizen. As for Mayer's statement “Greece will not default on the troika" we will see about that. Nearly three-quarters of Greece’s debt, or €182 billion, is now effectively owned by the EU the ECB or the IMF, according to estimates by the investment bank UBS. If Syriza party leader Alexis Tsipras wins the June 17 election, the Troika is going to take a big hit. The ECB's share is estimated to be between €35 billion to €55 billion.
Social security debts threaten standstill in health sector
By Penny Bouloutza
The provision of primary medical care and medicines to about 9 million people is at risk of collapse due to the accumulated debts of the National Organization for the Provision of Health Services (EOPPY), as the government has reneged on its promise to settle all arrears to private suppliers of the old insurance funds that now comprise EOPPY by the end of March, totalling 1.7 billion euros.
Pharmacists last week decided to indefinitely suspend dispensing medicines on credit, protesting the accumulation of debts of 540 million euros for prescriptions up to March. The insured now have to pay themselves for the cost of their medicines, and claim it from their social insurance funds.
EOPPY-contracted private doctors are reported to be planning similar action, claiming they are owed 620 million euros for services they provided up to the end of March.
“Doctors have been paid only in some districts for services rendered in the first two months of 2012. Diagnostic labs fear they may have to pull their shutters down as they have no money to pay operating costs. Of the 4,500 doctors that initially signed contracts with EOPPY, 500 have withdrawn because they are not being paid,” EOPPY doctors’ president Giorgos Eleftheriou said. EOPPY also owes 800 million euros to private clinics, while the debts of its constituent parts to public hospitals until December 31, 2011, totalled 1.8 billion euros.
Pharmacists in Attica are to decide on their next moves on Wednesday, depending on the progress of piecemeal payment of arrears until the elections of June 17 for medicines dispensed in March and April, as promised by the caretaker government.
and...
General payments freeze takes hold
Political uncertainty and fears of a Greek eurozone exit that have recently come on top of the protracted recession and choking lack of liquidity seem to have accelerated the downturn in the real economy, which is near crash condition. Together the rise of the black economy and the freeze in payments, the clearest sign of disintegration is in public revenue collection. After showing a timid rise in the beginning of May, it nosedived right after the May 6 elections. By May 20 the fall was in the order of 20 percent, with taxpayers putting off paying dues and the practice of discounts for not issuing a receipt spreading even to the catering sector. The government, meanwhile, facing the threat of a delay in the disbursement of bailout installments from the troika, has suspended rebates and payments to suppliers of the public sector. The effects of this mutual suspension of payments between private and public sector are further exacerbated by two factors: First, the inability of banks to maintain a satisfactory level of liquidity in the economy. Loans have been cut off even to businesses with a sound financial base. Since the beginning of the crisis, deposits have been reduced by about 70 billion euros, while withdrawals have accelerated since the May 6 election. Bank officials estimate the drain in the last 20 days at about 2.5 billion euros. Loans to households and enterprises have fallen by about 11 billion euros in the last two years. Second, the suspension of credit between businesses, which prefer not to sell at all instead of selling on credit and post-dated checks that may never be paid. This is indicated by the decline in the number of bouncing checks, which is due to anything but brisk business. A recent survey by business consultants ICAP showed that for 74 percent of businesses the priority is not an increase in sales but a reduction in bad credit and the protection of their viability. The prevailing uncertainty about the economic future of the country has also caused a partial black-out in transactions with foreign firms, some of which have begun suspending payments over fears that either that they will lose their money or that Greek products and services will soon cost less, being denominated in drachmas. For instance, Italian tour operator Veratour notified Greek partner hoteliers on Thursday that, “we shall not be able to make further down payments, at least until the situation in the country becomes a little clearer and stabler… we have to take some time to evaluate likely future scenarios concerning your country.”
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http://globaleconomicanalysis.blogspot.com/2012/05/ponzi-financing-in-greece-continues.html
Ponzi Financing in Greece Continues; Greek Banks Receive €18bn Transfer
Greek banks have been shut off from regular ECB liquidity operations due to lack of sufficient collateral. Today the Banks have that collateral thanks to a disbursement of funds from the EFSF which in turn will be used as collateral for more loans from the ECB.
If this makes little sense to you it is because it should not make any sense to anyone. It is another act of desperation in a long line of desperate acts.
Please consider Greek banks receive €18bn transfer
If this makes little sense to you it is because it should not make any sense to anyone. It is another act of desperation in a long line of desperate acts.
Please consider Greek banks receive €18bn transfer
Greece’s four largest banks received a €18bn transfer on Monday as the first installment of a recapitalization plan agreed as part of the country’s second bailout by the EU and the International Monetary Fund.
The funding, in bonds issued by the European Financial Stability Facility, will help banks reduce their dependence on emergency liquidity assistance, a temporary lifeline provided by the Greek central bank after they were excluded from European Central Bank liquidity operations this month.Anyone who thinks this will stop outflows has holes in the head. As I see it, it will allow a means of additional outflows.
The four banks are now expected to regain access to the ECB’s liquidity operations, using the bonds as collateral for funding at cheaper rates than under the emergency liquidity arrangement.
Bankers said they hoped the funding would help stem a continuing outflow of deposits since an inconclusive general election on May 6 triggered fears that Greece would soon be forced to leave the eurozone.
and...
http://www.zerohedge.com/contributed/2012-05-28/capital-controls-coming-greece-and-switzerland
Capital Controls Coming to Greece and Switzerland
Greece
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A few weeks ago I wrote about my conversation with a friend in Athens (Link). At the time, he believed that the June 17 election would bring a different result than the May 6 election disaster - the catalyst for change being the fear of leaving the Euro. So far he has been proven right. So I called to get an update.
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BK – It seems you might be right. The polls from Greece this weekend have given the European markets a lift today. Do you still believe that the centrist parties will win sufficient votes to form a coalition government and avoid a catastrophe?
Athens – Only a fucking idiot would invest money based on these polls.
BK – Are the polls not correct?
Athens – The European leaders have scared the Greeks with their talk about throwing Greece to the wolves. So yes, I think that the fringe on the extreme left and right will not get as many votes as they did on May 6. But Syriza (anti-bailout) has gained votes. The election is a complete crapshoot.
It may not matter. It’s not certain that Greece can make it to June 17 without a crisis.
BK – Explain that.
Athens – There is no money left in Greece. In the first two weeks of June, the government and the banks will face a huge cash squeeze. Everyday more money leaves as depositors withdraw cash and transfer money out of the country.
It’s clear to everyone who lives here. Greeks are not stupid. Either exchange controls happen before the election, or they happen immediately after. The election will not change that either way.
BK – What do you mean by "exchange controls?"
Athens – A ban on money transfers out of the country. Limits on the amount of cash that can be withdrawn from a bank or ATM.
BK – What are the odds that this happens before June 17?
Athens – The election is now twenty days away. For Greece that is a very long time. If the Europeans wanted to send a message to Greece, they would stop the emergency lending. So I would say it's 50-50 that we see some measures before the election .
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Switzerland
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Last week there was a funny looking move in the EURCHF cross rate.
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We now know that this blip was an insider who bailed on a short EURCHF position after getting a call that the head of the Swiss National Bank (SNB), Thomas Jordan, would soon be publicly talking about exchange controls in Switzerland.
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The move in the direction of exchange controls is not just a matter for the SNB. The entire government is behind the effort to ring-fence the country from its neighbor’s troubles.
At the request of the Swiss Central bank, Switzerland’s National Bank Financial Market Authority (FINMA) has formed a “crisis committee”. The members include Federal Councillor Eveline Widmer-Schlumpf, SNB President Thomas Jordan, and FINMA President Anne Héritier Lachat.
This crisis group has the authority to do pretty much as it pleases. If it wanted to introduce exchange controls in Switzerland it could do it in an hour. I’m sure that a complete roadmap of policy actions has already been laid out. I’m also sure that benchmarks have been set that would trigger the introduction of exchange controls. Certainly one of those benchmarks would be if Greece establishes its own set of controls, or formally leaves the EU. We are very close on those triggers.
There is a very strong possibility that exchange controls are established in both the strongest and the weakest countries in Europe in less than a fortnight. If those two extremes establish capital barriers, the other countries of Europe will be forced to take similar actions in a matter of months.
Who will blink first? Will it be Switzerland or Greece that ignites the fires in Europe? My guess is that Switzerland will force the issue onto the table. It will happen very soon.
Notes:
I have no positions in the CHF crosses. I think you would be nuts if you did. Don’t let the flat lined graph of the EURCHF at 1.2012 fool you. There is a ton of two-way risk in that cross these days.
There are nearly 10m homeowners in Eastern Europe (Hungary, Poland, the Czech Republic, Romania and Croatia) who have a mortgage in CHF. I think those folks have something to worry about. What happens in the FX market over the next month or so is not clear, what will happen to the EURCHF rate in the next few years is a clear as it gets.
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http://www.guardian.co.uk/business/2012/may/29/greek-drachma-rumours-banknote-printer
Banknote printer won't be drawn on drachma rumours
De La Rue refused to confirm rumours it was printing drachmas in case Greece leaves the eurozone
Email
Greek drachma: De La Rue won't commit on the rumours that it is printing the currency. Photograph: Alamy
Banknote printer De La Rue said a strong performance in currencies drove underlying profits up 73% last year, but refused to confirm rumours it was printing drachmas in case Greece leaves the eurozone.
Chief executive Tim Cobbold said: "There are 200 countries in the world. Every country doesn't order every year. This year there are orders for customers we didn't supply in a previous year."
Forward orders for currencies at the year end in March rose 18%, compared with long-term growth in the banknote market of 4%.
De La Rue is still recovering from a scandal in 2010 when employees were found to have falsified certain paper specification test certificates for a limited number of customers. Its then-chief executive and several managers subsequently resigned and profits tumbled.
Cobbold said on Tuesday morning that "discussions remain ongoing with the principal customer concerned", previously identified as the Reserve Bank of India. He said the dispute was taking longer to settle because the company had to deal with a government who "have a whole series of pressures on them".
Last summer De La Rue introduced a so-called improvement plan, closing two facilities, which resulted in 200 job losses. Asked whether there would be any further job losses, Cobbold said: "Largely we have been through the actions on the improvement plan." He said the company was making "good progress" with the plan and is on track to hit its target of over £100m operating profits next year.
Full-year pre-tax profits fell by 55% to £32.9m as a result of a one-off boost to profits last year from the sale of De La Rue's stake in Camelot, and the one-off costs of implementing the recovery plan. But underlying pre-tax profit rose to £57.7m and revenues were up 14% at £528m. Chairman Nicholas Brookes will retire in July, handing over to Philip Rogerson, 67, who is also chairman of Bunzl and Carillion. Cobbold said: "[Rogerson] joined the board on March 1. I can only say from the time he's given since then that I'm very confident he will have the time to dedicate to De La Rue."
The company will pay a final dividend of 28.2p on 2 August, making the total dividend 42.3p, the same as the previous year. The shares slipped 7p to £10.02.
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