http://www.athensnews.gr/portal/8/55398
8.59pm New Democracy leader Antonis Samaras has commented on his meeting with Alexis Tsipras and naturally, it isn't positive. Samaras noted that he would back a government of national security if it meant staying in the euro. Furthermore, he added that he alone had sent a letter to Brussels asking for significant changes in the bailout policy and as that letter had been positively received, he saw no point in going back on such a request. He stressed that in negating the memorandum, Alexis Tsipras wants Greece to exit the euro and enter into bankruptcy. "This is something I cannot agree to" he said. He noted that the Greek public had voted for a political change, but also to stay in the euro. The ball is now firmly in the court of Evangelos Venizelos, but there is little hope that he will find a solution where others have not.
8.21pm Europe cannot help Greece if it is not prepared to do its bit to shape up its economy, European Central Bank policymaker Ewald Nowotny said on Wednesday. "You can't help somebody who is not prepared to do his own part in it," Nowotny told a trade finance conference in Vienna, adding that it was up to the Greek people and their political parties to determine Greece's future path. "I think it is very obvious that this is not a one-sided affair," he added, pressing Greece to make structural adjustments to its economy in order to receive outside help. Turning to ECB monetary policy, Nowotny said the bank has no intention of changing course any time soon after cutting interest rates to a record low and providing the financial system with unprecedented liquidity. "There is no intention to change in the near future," Nowotny said. "We are watchful but we do not see an imminent danger of inflation."
7.57pm Despite rampant rumors that Pasok's chief Evangelos Venizelos was to announce that he was to co-sign a letter with Alexis Tsipras, turning his back on the memorandum, he eventually did no such thing. Instead he noted, after concluding his meeting with the Syriza captain, that the Greek people has chosen two things: stability and a governmental solution, as well as for the country to remain within the eurozone. Just in case you missed that, that was three. Moreover, he said that he proposed a goverment of national security with the participation of the Democratic Left, Pasok, New Democracy and Syriza or alternatively a government constructed as Tsipras saw fit with Pasok's full backing, if of course it meant Greece stayed within the eurozone. Ultimately, he said that no solution was found and once again proving political commentators wrong, who had predicted he would pass up the exploratory mandate, said that he would now host his own series of meetings, in the quest to formulate a highly elusive coalition government. Tsipras is now meeting Antonis Samaras and we await the result of their talks.
Greek far-left leader fails in coalition bid
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Greek political parties have failed to form a viable government amid warnings by creditors that a loan to be paid on Thursday could be the last if the country failed to honour repayment commitments.
The warnings came after the leader of the radical left-wing party, who had been charged with forming a government, told international lenders that any cabinet he heads would renege on the terms of the $31bn bailout.
Late on Wednesday, Alexis Tsipras said, however, that he was giving up efforts to form a coalition government.
"We cannot make true our dream of a left-wing government," he told his Syriza parliamentary group which came second in the weekend election.
"Tomorrow, I shall hand back the mandate given to me by the president of the republic and we shall continue to take part in the constitutional processes," he said.
It will now be Socialist leader, Evangelos Venizelos, whose party came third in Sunday's elections, to attempt to form a government.
"I will receive a mandate [to form a government] and continue the national effort," the PASOK leader said after meeting Tsipras.
'Quitting' eurozone
Tsipras had been tasked on Tuesday with forming a government after the conservatives, who secured the largest number of parliamentary seats, failed to hammer out an alliance.
In Brussels, a EU official told AFP news agency that Greece would receive a $5.4bn loan as expected on Thursday, but a further $1.29bn would be held back until Monday.
Eurozone officials who met on Wednesday evening "decided to leave the decision on disbursement of [$1.29bn] to the Eurogroup on Monday", said the source, referring to the eurozone finance ministers.
The political uncertainty pushed markets and the euro down, as fears resurfaced of Greece quitting the eurozone before the year is out.
Should Venizelos fail to put together a coalition, the president would be forced to call on all elected officials to form a "unity" government.
If this cannot be done by May 17, new elections will be called.
Greek parties, meanwhile, have been warning that they might not be able to live up to commitments earlier made to the EU and to the IMF for further budget cuts.
These will be reviewed by its creditors, who will then determine whether to release the next batch of bailout funds that keep Greece solvent.
European concerns
Even the leaders of the outgoing Pasok-New Democracy coalition that signed off on the agreement with the IMF and the EU on March 9 have started to suggest that the deal would have to be reopened.
Such talk has angered a number of leaders in Europe.
Jean Asselborn, Luxembourg foreign minister, said future loans would not be forthcoming unless Greece installed a stable government.
"We have to say to the Greek people right now that the situation is serious, that no European Union country will be able to release even a portion of the 130 billion euros for the Greeks, if there is no functioning government that respects the rules and manages the disbursed money," Asselborn said in Brussels.
Eurozone finance ministers are due to meet on Monday in Brussels.
Speaking in Berlin on Wednesday, Angela Merkel, German chancellor, stressed that EU countries that have signed the bloc's fiscal pact for greater budgetary discipline must stick to what they have agreed.
"Everyone must stick to the things we have agreed. Twenty-five countries have already ... signed the fiscal pact," she said in remarks seen as directed at both Greece and France, whose president-elect, Francois Hollande,
has also said he wants to renegotiate the deal.
Wolfgang Schaeuble, German finance minister, said: "If Greece wants to remain in the eurozone, there is no better solution than the path it has already taken."
Referring to austerity cuts and reforms in return for loans, he said, "You can't have one without the other."
Speaking in Athens, Tsipras had earlier said that the result of the election, which decimated the pro-austerity parties, "has clearly nullified the loan agreement and [pledges] sent to Europe and the IMF".
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Venizelos to try forming a gov’t
Socialist leader to take the baton after SYRIZA chief fails to get other parties on board a leftist coalition
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The leader of socialist PASOK, Evangelos Venizelos, is on Thursday expected to get a shot at forming a government after efforts by Coalition of the Radical Left (SYRIZA) chief Alexis Tsipras appeared to have hit a wall late last night.
Venizelos, whose party ranked third after SYRIZA in Sunday’s early elections, said after talks with Tsipras on Wednesday that he would ask President Karolos Papoulias to give him a mandate to explore coalition possibilities, indicating that negotiations with the leftist leader had failed to yield a compromise. “I will receive the mandate from President Karolos Papoulias tomorrow and continue the national effort,” Venizelos said. “We can’t reach a solution now but we will keep trying,” he added.
The Socialist leader, who asked Tsipras to participate in a broader unity government, emphasized the importance of politicians looking beyond party concerns at such a critical time for the nation. Greeks primarily want “stability and government so that the country is not led once again to elections,” he said.
Tsipras, for his part, said he would hand in his mandate, noting that “the dream to form a leftist government was not realized.” Despite this failure, he said, his party had succeeded in bringing a sea change to the political scene with foreign creditors now more open to renegotiate the bailout’s onerous terms. “We have forced all of Europe to speak about the great change brought about by the Greek vote,” he said.
In Brussels and in Berlin, sources said, European officials reiterated their desire to support Greece through its debt crisis and safeguard its position in the eurozone but also emphasized that the decision was ultimately in Greek hands.
“If Greece wants to remain in the eurozone, there is no better solution than the path it has already taken,” said German Finance Minister Wolfgang Schaeuble. Commenting on the demand for austerity measures in return for rescue loans, the minister remarked, “You can’t have one without the other.”
Tsipras had demanded on Tuesday that Venizelos and conservative New Democracy leader Antonis Samaras revoke their signatures on Greece’s debt pact with its creditors. Both leaders rejected his proposal -- Venizelos more diplomatically, by counterproposing a broader unity government, and Samaras more vehemently, by accusing Tsipras of putting the country’s solvency and future in the eurozone in jeopardy.
“He is asking me to accept Greece’s exit from the eurozone and the country’s bankruptcy,” Samaras said in a televised statement issued after the two men’s talks. “I am not prepared to do that,” he said. Earlier in the day, the conservative leader had been even sharper-tongued, saying that he hoped Tsipras would “regain his senses” before their meeting.
Samaras’s tough stance opposite Tsipras was being interpreted as an attempt to cast the leftist leader as an enemy of the urban class ahead of a second round of elections. Earlier Samaras had appealed to “center-right forces” to collaborate to secure Greece’s future in the EU.
Tsipras also met on Wednesday with the leader of nationalist party Independent Greeks, Panos Kammenos, who also campaigned against Greece’s debt deal. Kammenos, a former conservative MP, stated the obvious after the talks: that the anti-bailout parties do not have the necessary majority to form a government.
“SYRIZA’s 52 MPs, Independent Greeks’ 33 and Fotis Kouvelis’s 19 do not add up to the minority of 120 seats needed in view of the Communist Party’s refusal,” he said, referring to the Democratic Left leader. Kammenos added that he had discussed “issues of national importance” with Tsipras, including a bilateral row over the name of the Former Yugoslav Republic of Macedonia and the issue of illegal immigration. He said there were “differences of opinion.”
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http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1264_09/05/2012_441397
Funding to end if bailout is rejected
Outgoing finance minister warns of dire consequences if SYRIZA plans are applied
By Prokopis Hatzinikolaou
Finance Minister Filippos Sachinidis warned on Wednesday that should the next government reject the memorandum agreed between Athens and its official creditors, the latter will most certainly stop their funding immediately and Greece will need to make overnight cuts of 4.5 billion euros to cover its internal needs.
The outgoing minister added that if the proposals of the Coalition of the Radical Left (SYRIZA), as expressed by party deputy Dimitris Stratoulis on Tuesday, were applied, the budget deficit would soar to 2009 levels -- 24 billion euros.
If Stratoulis’s proposals for a return of the money collected in property tax and an end to salary and pension cuts, “then we would have to make further cuts of 24 billion euros, because that is where the proposals of Mr Stratoulis would lead us,” Sachinidis said.
Asked whether there was any chance that the memorandum might be renegotiated, Sachinidis said that agreements with the country’s creditors are not set in stone but could be flexible. He added, “We could proceed to changes and amendments to the memorandum.” But if the memorandum is rejected altogether, then “our institutional creditors will believe they have no obligation to continue funding Greece.”
The European Financial Stability Facility (EFSF) gave on Wednesday the green light for the disbursement of the second installment of the new bailout package, amounting to 5.2 billion euros, but Athens will only receive 4.2 billion on Thursday, with the rest to arrive in June, depending on the country’s needs, the EFSF suggested.
It remains unknown when and whether the following installment will arrive. The Finance Ministry had said on Tuesday that the public coffers can only cover the state’s expenses until June.
Bank sources expressed major concern regarding political developments and even suggested yesterday that a moderate trend of deposit withdrawal from banks had been observed in the aftermath of the Stratoulis statements, which also included a plan for the use of deposits to kick-start growth in the country. However, Stratoulis made it clear that deposits would be guaranteed up to a certain level. The threshold could be 100,000 euros.
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State asset sell-off plan is proceeding
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The government transferred the shares of major state banks and public utilities and corporations to the state privatization fund (TAIPED) with a decision published online on Wednesday.
The transfers, aimed to promote the sell-off process, included 92 percent of ATEbank (pictured), 34 percent of Hellenic Postbank, 17 percent of Public Power Corporation, 25 percent of Athens International Airport and 80 percent of the Hellenic Vehicle Industry (ELVO).
The shares of the Piraeus and Thessaloniki port authorities, the Public Gas Corporation (DEPA), the Athens and Thessaloniki water and sewage companies (EYDAP and EYATH) and the Hellenic Horse-Race Betting Organization (ODIE) were also transferred to TAIPED.
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Oh, Greek moratoria (redux)
Posted by Joseph Cotterill on May 09 19:21.
EFSF will make €5.2bn payment to Greece – Reuters
Although €4.2bn will be disbursed on 10 May and the rest has been held back because Greece doesn’t need it until June, apparently. Anyway, on that note…
Macro Man had a succinct riposte earlier to the view that Greece’s official creditors would let it flop out of the euro if it defaulted on them.
1. 70% of Greece’s debt is now made up of official loans already disbursed: EUR 140bn.
2. The ECB owns EUR 40bn of Greek bonds.
3. Greek banks currently repo EUR 140bn with the ECB.
A Greek debt moratorium would thus impose exceptionally large losses on international creditors directly. To the above, the indirect costs would also be material as there is not a sufficiently large firewall to prevent the spread of contagion, nor do the Bundeathstar and EU policymakers more broadly truly appreciate the potential for contagion to accelerate beyond their ability to contain it. The magnitude of a such a sufficient policy response is just not even close to getting on the radar yet.
We guess you could gloss it like so: The eurozone is afraid of sunk costs crystallising right now, i.e. writing down the existing bailout loans. So great is this fear that it outweights the prospective costs of making future bailouts and Greece not paying these back either.
And we all know how powerful sunk cost bias is.
May’s €5.2bn loan release from the eurozone creditors might have been a pretty good case in point. It wasn’t clear for a while on Wednesday whether they would consider delaying its actual distribution (the release having already been approved). But in any case, Greece simply needed that cash to pay off €3bn-plus of bonds held by the ECB that will mature this month. Leaving the ECB in the lurch would have been pretty abrupt OSI.
In fact you could say this episode is just a preview of the eventual endgame for the official creditors — they have the incentive to evergreen exposure until a time when households in the eurozone core could absorb converting the bailout loan balance into fiscal transfers to Greece.
That’s the optimistic perspective.
But what then about audience costs on the Greek side? Syriza’s Alexis Tsipras has just used three highly public days of coalition negotiations to commit to not accepting the new bailout, all in front of voters ahead of any repeat election. In fact Syriza appears to still have electoral momentum even from a relatively small change in the vote.
Moreover, Macro Man says that some creditors don’t truly appreciate the indirect costs of Grexit. That’s true, but it’s not clear when they will appreciate it. The incentive to do so may be less obvious when other peripheral bonds don’t correlate much to Greece any more. Equally there’s a caucus in Greece that doesn’t seem to appreciate the rapid austerity that would follow from operating a structural deficit outside the euro.
Whatever the political risk equivalent of ‘price discovery’ is, it doesn’t seem to be here yet.
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