Greece still in the vice grip of the Troika - or are they ? Has the US by way of US Treasury Secretary launched a double game against the EU ? Up to now , the Coalition has been performing as weakly as expected....has something changed ? ?

http://hat4uk.wordpress.com/2012/07/30/greece-the-washington-v-berlin-poker-game-returns-to-athens-advantage/

JULY 30, 2012 · 7:57 PM

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Greece: the Washington v Berlin poker game returns…to Athens’ advantage.

US Treasury Secretary Geithner may yet wind up being Greece’s saviour.

A few airy vapors emerged in the way of rationales for US Federal Treasury Secretary Tim Geithner’s session with German finance minister Wolfgang Schäuble today. The two men ‘expressed confidence in euro-area member states’ efforts to reform and move towards greater integration’, ‘welcomed the Irish example of placing successfully longer-term bonds last week and Portugal’s continued success in meeting program commitments and zzzzzzzzzzzzzzz…..’

Bazooka Geithner was scheduled to travel on to Frankfurt Monday afternoon for a session with European Central Bank President Mario Draghi, and no doubt at that time they will talk about Borussia Dortmund’s women’s soccer friendly against Inter-Milan’s mixed-sex 2nd XI next Thursday. It promises to be a storming game, but most people watching ClubMed developments (especially those in Athens) could be forgiven for suggesting that Greece’s future location as a sphere of vital influence was the main reason Mr Geithner was talking to two of the most powerful financial players in Europe.

The eurozone has been a pimple on the backside of global money for two years now, but while the buttock-blemish just keeps on getting bigger, nothing seems to bring it to a head. My theory is that the problem is now so big, it has expanded far beyond the fiscal arse, and is about to launch an assault on the head: but whether I’m right or wrong, there’ve been so many jigsaw bits, clues and signs falling into place of late, you’d have to be Mr Magoo in a tank not to notice them.

What’s going on here is a high-stakes poker game between Washington and Berlin. And once again, we are talking Greek default into the welcoming arms (in every sense) of America v Merkel’s FiskalUnion vision wherein Greece stays in the eurotent…along with its strategic, mineral, and energy importance to Brussels.

Here are some examples of what I mean.

“One thing that’s started happening among eurobankers is debt syndication,” a Madrid based debt expert told me late last week. “The situation here has gone beyond critical…Spain is a cert for full-on bailout. And Greece is running to fall backwards. So senior bank executives are looking to spread risk: they’re happy to lend the same target sum, but to five clients not one. And preferably across three EU States. I asked two guys last weekend [21st/27th July] what they most feared right now, and it was Germany throwing the towel in. So in that outlook which, you know, I think is not unreasonable, you can see why the target setters have said ‘same goals but more borrowers’.”

The anti-Greek feeling among Bankfurters has been growing of late, I am certain. This tendency is also, we now see, shown to be far closer to the German public pulse than that of the Merkel inner circle. Early today Bild splashed the results of a poll by the Emnid research institute. They showed that over 70% of respondents wanted Greece to leave the eurozone if it couldn’t stick to its repayments schedule; while a technical majority of 51% (the first time I’ve seen one) felt Germany would be better off without the euro. The poll is significant, in that it shows any gentle shoving of Athens towards the Exit Lounge would give the MerkeSchäuble Coalition Government a clear electoral advantage next year. Equally important, it showed that Fritz in the street thinks doing nothing Brussels-style is not an option.

The one pair of cold eyes into which Tim Geithner hasn’t stared yet belong to Angela Merkel. Being a born geopolitician, she will still be mulling over what the greatest risk might be: Germany taking on board a Hindenburg of debt, or Berlin-am-Brussels losing the resources and power to have the deciding say in the Middle East….via Greece.

Yesterday I posted about Geithner sending special envoy Collyns to lick the Greeks all over, and reassure them of just how valued they will be as and when a return to the Drachma takes place. I’m confident that German intelligence is aware of the content of their discussion; and I’m told that this is reflected in reports coming back from Athens today about the Greek government finally resolving to draw a line in the sand about Troika demands.

What I suspect might be happening now is that the usual suspects among Greece’s elite of troughers are balancing the horrors of losing the Brussels gravy train against the potential of joining an American version with more First Class carriages.

What’s more, I’m reasonably sure that the Troika is in possession of Berlin’s knowledge about the American offer. This from Athens News yesterday (my italics):

‘…the atmosphere at the [Friday Coalition/Troika] dinner was “exceptionally good” and marked a change in the attitude so far of the representatives of Greece’s creditors….‘

A couple of hours ago (4pm BST Monday) Greek PM Antonis Samaras was due to hold talks with PASOK leader Evangelos Venizelos, and the minor Party Democratic Left’s leader Fotis Kouvelis. I’ve had wildly conflicting reports today as to who if anyone will object to what in the way of Troika demands. Kouvelis, however, is felt by many to oppose any more pension or salary cuts. And some sources think all three men will not budge on auctioning State assets. As this has been a consistent (and from their viewpoint, totally understandable) foot-dragging subject since the first Greek bailout, The Slog’s informants may well be right. However, Finance Minister Yannis Stournaras and Labor Minister Yiannis Vroutsismet met earlier today: Stournaras was the recipient of envoy Collyn’s alleged ‘total support’ message last week. So it’s very possible that the Greek side now feel they have more cards for when the next Troika session occurs.

Even the scheduling for that keeps changing. I was told last Saturday that it would be this evening, but now I understand it has been postponed. According to Athens News the story is that the Troika is digging in ‘until a package of measures is agreed’.

This is a very finely balanced diplomatic situation, but you have to take your hat off to Geithner this time: he seems to have learned the lesson of the EU Poland summit – viz, Yankee bombast doesn’t play well in Europe. Indeed, he is displaying considerably more craft and subtlety at the moment than Hillary Clinton over at State when it comes to Obamite Arab foreign policy. As everyone in the US tells me, love or hate the guy (to quote one trusted contact) “Tim Geithner is not just another money-f**king banker…he’s a cultured man who does see the higher game.”

Make of that what you will. The point is, it’s hard to see how the Federal Treasury Secretary can lose in this situation. If Germany embraces Greece as a preferable alternative to having the Pentagon crawling all over it, then Germany picks up the tab for whatever the eurozone downside turns out to be…and reassures the markets that Berlin is, after all, the final guarantor. This can only go down well on Wall Street. On the other hand, if Merkel goes with German public feeling (or is arm-locked into doing so) then Timmy can write in his memoirs how, in one all-or-nothing hand, he secured Greece as a US base for all time from which to exploit rare-earth minerals and exert fast-response influence on the Iran-Israel-Sunni Middle East farrago.

In conclusion, let me just add one thought that continues to intrigue me. The total Greek debt as of now is roughly $390bn. The US total debt is $16 trillion. For US bank collapses to start happening on the basis of a sum owed in the region of 0.7% of America’s national debt (collapses that could balloon US debt management costs enough to sink the entire country) strikes me a risk not worth considering for longer than 0.07 of a second.

This in turn leads me to ask three further questions. One, is Israel no longer deemed to be of value to the Obama Administration as an ally? Second – even more mind-concentrating – are the derivative multiple indices potentially accruing from eurozone meltdown so terrifying, the US would be happier ‘adopting’ a Greece outside the eurozone, rather than take the risk of a Greece inside triggering the nuclear reaction? And third, if that’s the case, what on Earth is Washington going to do about Spain and Italy?

Stay tuned.

and...

Leaders balk at savings  Deal on measures delayed as Venizelos and Kouvelis eye alternative course  'Society cannot endure any further burdens,' said Democratic Left chief Fotis Kouvelis Prime Minister Antonis Samaras’s coalition partners -- PASOK’s Evangelos Venizelos and Democratic Left’s Fotis Kouvelis -- attempted on Monday to argue that Greece should not agree to all of the 11.5 billion euros in spending cuts demanded by the troika but the premier seems adamant that this is the government’s only option. The three coalition leaders were due to meet on Monday to finalize the savings but a brief meeting ended with no agreement, with Venizelos and Kouvelis suggesting that a different strategy should be followed. “Society cannot endure any further burdens,” said Kouvelis. “We must curb the recession and take measures that boost growth as well as achieve fiscal adjustment,” said Venizelos. Sources told Kathimerini that the two leaders had proposed to Samaras that the cuts be split into two parts, with only 6 billion euros of savings for 2013 now along with a series of structural reforms. Venizelos and Kouvelis proposed that the remaining 5.5 billion euros in cuts be finalized at a later date, depending on the state of the economy. The PASOK leader also raised the issue of a second restructuring of Greece’s debt. The two leaders are concerned about the stability of the government should all the measures, including pension and salary cuts, be announced now. Samaras, however, insists that all the savings should be agreed now and that the government should only push for better terms over the course of the next few months. It is expected that the cuts could be finalized in a new leaders’ meeting on Monday. Samaras appears to have the backing of Finance Minister Yannis Stournaras, who indicated that party chiefs saw eye-to-eye on the need to take measures and to seek more time for fiscal adjustment. “We all agree that we must find 11.5 bln euros in savings. We all agree that we need two more years and that the road ahead is an uphill and tough one,” the minister told reporters. “The point is that our choices should not annul our ability to negotiate and remain in the eurozone,” Stournaras added. Earlier in the day, in a meeting with PASOK and Democratic Left officials, the minister was more outspoken about the risks the country faces. “Either we take the necessary measures or we return to the drachma within two months,” Stournaras said, according to sources. ekathimerini.com , Monday Jul 30, 2012 (22:57)   and.... http://www.athensnews.gr/portal/1/57343 1. ALTERNATIVE MEASURES Finance minister Yannis Stournaras met with alternate minister Christos Staikouras and representatives of Pasok and Democratic Left on Monday to discuss alternative proposals for the 11.5 billion euro cutback plan, in a bid to avert further across-the-board cutbacks in salaries and pensions. The Pasok and Democratic Left representatives asked that the measures be applied over a four-year period instead of the two-year horizon, while Democratic Left representatives also said that cuts to pensions should begin with the implementation of the already voted laws setting the ceiling at 2,750 euros, without further reducing it. Earlier, the finance minister met with the Troika chiefs. The leaders of the three coalition government parties will meet in the afternoon to discuss the package of measures, but final decisions are not expected. and contrast with the view from earlier today....

http://hat4uk.wordpress.com/2012/07/30/troikas-athens-demand-more-axe-and-more-tax-2/

Troika’s Athens demand: More axe, and more tax

TROIKA READS RIOT ACT TO GREEK COALITION

Evangelo Venizelos more Friar Tuck than Robin Hood

But Privatisation demands may produce stalemate today

I’ve been getting some irate emails from Greek Sloggers of late – especially those who earn a living supplying goods to the Athens Government. Their bitch is simple: while the new Coalition is very happy to suck up to the Troika, monies it owes to its own citizens can go hang. As one correspondent remarked last Thursday, “It’s easy to balance the books if you don’t pay any bills”.

The day before, the Troikanauts came to town with a very clear message: no more backsliding, or no more money. But it all depends on how you define ‘backsliding’. If a Vesuvius of debt just erupted and you’re on the side of the mountain, chances are you’ll backslide. In fact, the reality is, you’ll perish.

Prior to the meeting, the key Greek Party leaders -  Antonis Samaras, Fotis Kouvelis and Evangelos Venizelos – had pledged to stand firm on ‘no further cuts, and no further taxes’. At the meeting, the Coalition presented further spending, pension and salary cuts, with an update on the progress of tax collection following the recent elections. Together they totalled just under €13bn

The Slog can reveal that the tax situation is dire. It is 20% won’t pay, and 80% can’t pay. The savings are impressive, but the Athens regime is miles off target. (As any government faced with this 
mad Troika fantasy
 Herculean task would be). However, in the context of an economy at close to standstill, Coalition leaders put their case for no further attacks on the populace.

The Troika reply was a curt “More axe and more tax, or no further money”.

The Coalition response was immediate capitulation. All three leaders are now reportedly ready to to satisfy international lenders by lining up further austerity ideas when the two sides meet again today.

Greece is currently ‘surviving’ on a bailout of  €140bn in loans, but release of the last installment (around €36 bn) is being withheld. Today will be a telling debate between Troika and Coalition: until the government makes more cuts and institutes major privatisations, no more money will arrive.

The Athens government will do anything to keep control of its State assets. So we might, at long last, be at an impasse.

Greek media reported that the government may end universal healthcare, and go ahead with a proposal to cap health care subsidies at €1,600 per annum. The idea is something of a sick farce, given that the Health Service is already not paying its pharmacy bills, and so ordinary Greeks are running out of essential medication. But I understand that, once again, the Coalition is turning a blind eye to the €65bn annual tax evasion practiced by those in the elite of Greek business. There will also be no salary cuts for tax collectors, military personnel, and the Judiciary. Just fancy that.

What we have here – and the consistency is depressing – is a ruthlessly hypocritical Troika of face-saving maniacs raping a corrupt and illegally privileged governmental class. The outcome of this obscene sexual union cannot be anything other than taxpayers in the other 16 Eurozone countries subsidising and minimising the losses made by bondholders – while ordinary Greeks pay for the excesses of embezzlers and tax criminals in their own elite. Add to this the glaring reality of any kind of recovery being ruled out by austerity, and you can see why, for once, the Greek Left and the european bond markets agree: this charade of consensual scorched earth will blight Greece, and doom the eurozone.

“The Troika men came to Greece as doctors, and prescribed the medicine they said would save the Greek economy and people,” Yannis Panagopoulos, the head of the GSEE union, remarked bitterly. But from the start, most of us knew that the Troika consisted entirely of Harold Shipman* clones.

*For Greek, US and other foreign readers, Dr Harold Shipman was a British NHS physician eventually unmasked as one of the most prolific serial killers in recorded history, with over 250 murders being positively ascribed to him. Ironically, he had achieved the status of being a ‘preferred supplier’ to the UK’s State Health Service.