Greece updstes on the day but here is the question - can Greece stay solvent until June 17th ?

http://www.telegraph.co.uk/finance/financialcrisis/9268627/Bondholder-fury-as-Athens-pays-off-debts-to-hedge-funds.html

By Louise Armitstead, Chief business correspondent

10:36PM BST 15 May 2012

2 Comments

Bondholders, who were forced to accept losses of around 75pc on their debt two months ago or lose everything, hired lawyers to claim they were "fraudulently misled" after Athens repaid €435m to debtors who resisted the restructuring.

The owners of the €435m bonds are hedge funds that refused to accept the terms of the bond swap in March, despite being repeatedly warned that Athens would not have any money to pay them later. But when the bonds fell due on Tuesday, Athens decided to pay them in full to avoid more uncertainty amid the political chaos.

An official involved in the negotiation said: "It was considered imprudent to default on a bond issue at a moment of political instability, when the country's membership of the euro is being questioned."

However, in solving the immediate threat, lawyers said Greece now has a far bigger problem. Bondholders with a total of €6.4bn refused to participate in the so-called private-sector involvement (PSI), leading to questions about whether they will also be paid in full.

James Campbell, partner at London-based law firm Pillsbury, said he had been instructed by bondholders who did accept losses to pursue their case. He confirmed: "Bondholders feel they were fraudulently misled when the negotiating authorities said there was no alternative to the restructuring. Clearly there was, and now bondholders want to recover their losses."Mr Campbell added: "The decision by Athens to repay the €430m in full will have serious repercussions for any future debt restructuring and the sovereign bond market as a whole. The system only works if bondholders can trust sovereigns."

The Greek finance ministry said in a statement: "The decision weighed carefully all relevant factors and implications as well as the current conjuncture. Today's decision does not prejudice future decisions on the treatment of the remaining bonds
not tendered in the PSI exchange."

More than 85pc of Greek bondholders accepted the deal in March, which was the biggest sovereign restructuring ever attempted. The deal, which took nearly eight months to thrash out, was a precondition to international leaders releasing the €130bn second bail-out needed to avert a Greek default.

It was achieved after Greek politicians controversially inserted Collective Action Clauses (CACs), which allowed them to impose the deal with just 66pc of support from bondholders. Experts warned that the legal challenge to Greece would face an uphill battle because bondholders agreed to the swap.

One credit hedge fund said the claim was "emotional" rather than substantial. "Some outriders have got lucky but that doesn't mean that everyone else can get paid, that's still impossible."

and....

http://www.zerohedge.com/news/majority-neo-normal-greek-cops-vote-neo-nazi

Majority Of Neo-Normal Greek Cops Vote Neo-Nazi

Submitted by Tyler Durden on 05/15/2012 17:23 -0400

• Greece
 
• Newspaper

In a somewhat stunning revelation, especially after our earlier note on the Golden Dawn leader's 'position' on the issues of the day, GreekReporter notes via the news paper To Vima, that more than half of all police officers in Greece voted for pro-Nazi party Golden Dawn in the elections of May 6th. It's not really for us to judge (well maybe it is) but when some polling stations report Golden Dawn receiving 19-24% of the votes, things are going from the dismal to the horrific (and potentially chaotic) very fast.

ANSAmed: Greece: More than half police officers voted Neonazi party

Upsetting result revealed by newspaper "To Vima"

(ANSAmed) - ATHENS, MAY 11 - More than half of all police officers in Greece voted for pro-Nazi party Chrysi Avgi' (Golden Dawn) in the elections of May 6. This is the disconcerting result of an analysis carried out by the authoritative newspaper To Vima (TheTribune) in several constituencies in Athens, where 5,000 police officers in service in the Greek capital also cast their ballot.

At some polling stations Chrysi Avgi' obtained 19 to 24% of votes.

Others, like Agios Panteleimonas and Kypseli, traditional strongholds of the party, reached 15 to 18%. According to the newspaper, at the 11 polling stations (from 806 to 816) located near the police station (Ellas), Chrysi Avgi' received most votes, reaching 18.64% at station 813 and 23.67% at number 816.

Other polling stations situated at a short distance from the ones mentioned before, where police officers do not vote, recorded 12-14% of votes for the Golden Dawn party.

Moreover, the four polling stations located near the riot police station (MAT), used by the police, recorded percentages between 13 and 19 for Chrysi Avgi'.

These figures, To Vima underlines, are impressive, considering the fact that other polling stations close to the riot police station reached 7-10% of votes for the pro-Nazi party. Based on the electoral lists, 550 to 700 people have voted at each of these voting stations, of which 20 to 30% police officers.This means, the newspaper worked out, that 45 to 59% of police officers have voted for Chrysi Avgi'. (ANSAmed).

and ......

http://www.zerohedge.com/news/has-greek-bank-run-started

Has The Greek Bank Run Started?

Submitted by Tyler Durden on 05/15/2012 11:36 -0400

• Bank Run
 
• Greece
 
• Reality

While the long-term decline in bank deposits over the past 3 years has been well documented both on Zero Hedge and elsewhere, it is the most recent, acute post-election phase that has not gotten much coverage. Minutes ago Bloomberg sent out a notice that things in Greece may be on the verge of the final collapse. From Bloomberg: "Anxious Greeks have withdrawn as much as 700 million euros ($893 million) from the nation’s banks since the inconclusive May 6 election, President Karolos Papoulias told party leaders yesterday, according to a transcript of the meeting posted on the presidency’s website today.Papoulias said he got the information from the head of the Bank of Greece, the central bank, George Provopoulos, according to the transcript." While this was likely a negotiation talking point to facilitate the formation of the government, the reality as we now know is that there has been NO government formed, which now means that the bank run will only get worse. Needless to say, a Greek banking system which is now virtually shut out of any extrenal funding except for the ELA, where it has a few billions euros in access left, will be unable to deal with hundreds of millions in deposit outflows.

This may be the beginning of the end for Greece, just as Buiter and later JPM warned over the weekend.

And courtesy of Russian_market, here is a picture of the first Greek ATM lines:

and.....

http://www.guardian.co.uk/business/2012/may/15/eurozone-crisis-gdp-greek-government-talks

6.18pm: Another worrying development tonight. Around €700m has been withdrawn from Greek banks since the election on May 6.

Greek president Karolos Papoulias passed this news onto the country's leaders during talks yesterday, having learned it from central bank president George Provopoulos.

Provopoulos has apparently confirmed the fact, denying that it's a sign of panic but just people fearing that the escalating crisis could _lead_ to panic (that's via regular reader and crisis expert @irategreek). A subtle difference.

Update: you can see the statement in the minutes from yesterday's meeting, here (search for "700")

We've been reporting for months that there's been a quiet bank run in Greece (the monthly deposit data has shown a steady decline in reserves). A switch back to the drachma would involve a major devaluation, slashing the value of euro-denominated assets, so it would make sense for savers to withdraw fund if they believed a Greek euro exit was imminent.

5.41pm: We should also learn tomorrow when Greece's new elections are to be held. Government officials are suggesting that they could happen on June 10 or 17.

There is also concern that Greece could soon run out of money. As Helena Smith reports from Athens:

With an €18bn (£14.4bn) cash injection for the banking system put on hold, a senior official in the outgoing government admitted there were concerns over whether Greece could "make it" until the next election.

"It is a real issue," he told the Guardian. "The economy is in very bad shape. "The banks have no money. There is no liquidity. It is vital that this cash injection is released by the EFSF [the EU's emergency rescue fund]."

EU partners, led by Berlin, have made plain that there can be no further aid without Athens honouring pledges it signed as part of the latest €130bn loan agreement.

Helena's full story about today's developments in the crisis is online here.

European officials had indicated earlier this week that they were prepared to fund Greece until new elections had been conducted in June. But it's a fast-moving issue -- and certainly the pronouncements from EU leaders today have been that Athens will not get more money unless it meets its obligations.

The twists and turns in the crisis must be awfully frustrating for citizens in Greece. As regular reader James Wilkins writes this evening:

If the EU, lead by Berlin, refuse to release funds that will tide Greece over until the election it will be clear they have no respect for democracy. Every failed African state could expect more generosity.

5.26pm: Looking back at Greece, the next question is: who will become caretaker prime minister for the few weeks until new elections are held?

The decision will be taken tomorrow at another meeting at the presidential palace, starting at 1pm Greek time (11am BST). The front-runner appears to be Panagiotis Pikrammenos, the head of Greece's Council of State ( the supreme administrative court of Greece).

4.07pm: Despite the political vacuum in Greece, its government has decided today to pay €435m to investors who hold bonds that matured today.

These bonds are part of €6.4bn of outstanding debt held by traders who refused to take part in the bond swap this year, which reduced Greece's national debt by €100bn.

In a statement, Greece's Ministry of Finance said it had "weighed carefully all relevant factors and implications" before deciding to pay the bonds. It's a controversial move -- handing over cash to foreign bondholders when Greece's financial position is so precarious.

James Campbell, partner at international law firm Pillsbury, argues that Greece was in a terribly difficult position. Had it not paid the €435m, it would have defaulted. But by paying up today, it faces the risk of legal action from bond-holders who did take a haircut (losing 70% of the value of their bonds).

That Greece has paid may not be the end of the affair. We can see significant protests from those bondholders who agreed to previous debt restructuring on the basis that Greece said that there was no money available to do anything else. Lawsuits may follow if previous "co-operative" bondholders view this as a misrepresentation.

Furthermore, Greece's decision to pay will be seen as a victory for the hold-out bondholders which will embolden them. In March the press widely reported that funds were buying up bonds issued by Hellenic Railways and guaranteed by the state. Like the bonds repaid today, those bonds are governed by English law and the proposed restructuring of them was not successful. These bonds are up next for repayment and we will be monitoring developments with interest. Greece may only have deferred the pain for another day.

Just what Greece needs right now, a legal battle with international investors....

3.51pm: City analysts are warning that Greece could soon face bankruptcy, if its international partners withhold payments under its aid plan.

Jonathan Loynes, chief European economist at Capital Economics, said:

There is now a considerable danger that Greece simply runs out of money next month - that it can't pay wages, can't run public transport, can't maintain infrastructure and that the country just descends into complete chaos.

3.30pm: Now Antonis Samaras, whose right-wing New Democracy Party came first in the election nine days ago (but with under 19% of the vote) is speaking.

Samaras began by warning that Greece is living through its most critical and difficult times since 1974 (the year when the military dictatorship was otherthrown). He then blamed "a wall of arrogance" for thwarting efforts to avoid new elections, in what looks like an attack on the parties who have campaigned against Greece's financial programme.

Those elections, he added, were a clash between Europeanism and "opportunistic adventurism".

It also appears, though, that Samaras acknowledged that Greece's bailout conditions need to change, stating:

Europe now understands that austerity without development is not the way ago. Once I was the sole person saying this.

3.21pm: German finance minister Wolfgang Schäuble has become the first foreign politican to comment on the collapse of today's last-ditch talks. He insisted that little had changed, and that Greece must stick to the terms of its aid package.

Schäuble (in Brussels for today's meeting of fellow finance ministers) said:

If Greece....wants to stay in the euro then they have to accept the conditions.

Closing firms outnumber new ones By Dimitra Manifava The first quarter of 2012 was the first during Greece’s ongoing crisis that saw more enterprises shutting down than opening, according to figures released on Tuesday by the Development Ministry’s General Secretariat for Commerce. Data showed that 8,361 new enterprises went into business in the January-March period, while 10,315 ceased operation. Up until the end of 2011, start-up businesses had continued to outnumber those closing down in spite of the difficult economic conditions. The General Secretariat noted yesterday that the ‘One-Stop Shop’ service for establishing new enterprises has been up and running since April 4, cutting the cost for start-ups by up to 61.7 percent. and.... Stocks continue to plunge as market fears for the worst Greek stocks kept sliding on Tuesday, sending the main index to new 20-year lows after political leaders failed to form a government of any kind in the 12 days following the May 6 election. The prospect of a euro exit is increasingly worrying investors. The Athens Exchange (ATHEX) general index ended the day at 562.88 points, declining by 3.62 percent from Monday’s closing figure of 584.04 points. The blue chip FTSE/ATHEX 20 index gave up 4.25 percent to close at 212.35 points. Eurobank EFG, which had outperformed on Monday, was the worst off among blue chips on Tuesday as it fell 10.60 percent. Viohalco contracted 10.09 percent. In total, 33 stocks recorded gains, 90 posted losses and 18 remained unchanged. Turnover amounted to 43.4 million euros, against Monday’s 38.9 million. and..... PPC to cut property tax from bills By Chryssa Liaggou Public Power Corporation (PPC) has already disengaged itself from involvement in the payment of the special property tax that had been incorporated into electricity bills. Well-informed sources suggest that the new bills the company is issuing do not include the property levy despite the law providing for the first installment concerning 2012. The decision, the same sources say, appears to have the acquiescence of the Finance Ministry. Judging by the fact that unpaid bills in the first quarter of the year totaled some 1 billion euros, PPC believes it has become clear that households cannot afford to pay electricity bills that are burdened further by the extraordinary property tax in the current recession conditions. and..... http://ftalphaville.ft.com/blog/2012/05/15/1000971/greece-when-the-lights-go-out/ Greece: when the lights go out Posted by Masa Serdarevic on May 15 17:13. The  desperate  cunning scheme to get Greeks to pay property taxes by bundling them with electricity bills didn’t last long. You guessed it, people stopped paying their electricity bills and now it looks like the power company – which had to be bailed out last month – has stopped even trying to collect the levy. From Ekathimerini, the Greek daily (emphasis ours): Public Power Corporation (PPC) has already disengaged itself from involvement in the payment of the special property tax that had been incorporated into electricity bills. Well-informed sources suggest that the new bills the company is issuing do not include the property levy despite the law providing for the first installment concerning 2012. The decision, the same sources say, appears to have the acquiescence of the Finance Ministry. Judging by the fact that unpaid bills in the first quarter of the year totaled some 1 billion euros, PPC believes it has become clear that households cannot afford to pay electricity bills that are burdened further by the extraordinary property tax in the current recession conditions. The government had hoped to raise €1.7bn-€2bn from the levy in the fourth quarter of last year. But a massive unions-led civil disobedience movement against this “injustice” scuppered that and a ruling that it was illegal to disconnect people’s electricity supply for non-payment sent the collection rate even lower. However, the memorandum of understanding with the IMF-EU signed in March demands that Athens collects a range of back taxes, such as the property tax from 2009 which was essentially never collected. So it will be interesting to see how the Troika reacts to these most recent developments. Ironically, the scale of non-payment means that the PPC itself has run out of money. Last month it needed a €250m liquidity injection from the government so as to avert a nation-wide energy supply meltdown. So even less of the already-too-small pot of tax revenues is going to the government. The PPC has until end of June to find new sources of funding. It seems unlikely that people who stopped paying power bills last year are suddenly going to start now. From a friendly trader: When we talk about Greece “running out of money” in coming weeks/months, the combination of dire recession, plus non compliance in Revenue collection will speed the day that Civil Servants and suppliers are paid in IOU’s or “New Drachma” in the absence of any funding from the EU/IMF… While EU-IMF funding is still forthcoming, the overwhelming support for the anti-bailout parties as Greece heads for new elections next month puts an obvious question mark over future assistance. But the PCC experience suggests we really could be moving towards the IOU stage of this crisis as liquidity issues bite. and.... Greek economy contracts by 6.2 pct in Q1 Greece’s economy shrank in the first three months of 2012, the 13th contraction in the past 14 quarters as policy makers struggled to stay in the euro. Gross domestic product dropped 6.2 percent from a year earlier in the first quarter after contracting 7.5 percent in the fourth quarter of 2011, the Athens-based Hellenic Statistical Authority said in an e-mailed statement on Tuesday. The figure is based on non-seasonally adjusted data. The agency didn’t provide a seasonally adjusted figure. The European Commission forecasts Greece’s economy will contract 4.7 percent this year, its fifth year of a recession compounded by spending cuts and tax increases demanded as a condition for a rescue. Greece has been in a political impasse since inconclusive May 6 elections left party leaders unable to form a government. The deadlock has raised the possibility of another vote to be held as early as next month, and also raised doubts that Greece can avoid an exit from the euro area. [Bloomberg]