GREECE...??????

Lets us this thread for all GREECE related articles in one thread...thanks:

New help for Athens expects "inevitable national bankruptcy of Greece" without agreement

19/02/2012 · Before the meeting, the group € Greece must answer the still open questions. Diplomats said that if there is no agreement on Monday, a Greek default is no longer avoidable.
By Werner Mussler , Brussels / Patrick Welter, Washington

© DAPD Greece next Tuesday is officially bankrupt?

Before the decisive meeting of the Euro Group on Monday there are increasing signs that the Treasury will approve a second aid package to Greece. Federal Finance Minister Wolfgang Schäuble (CDU), said at the weekend, he expects an approval of the overall package. A staggered commitment or a promise "step by step" would not be a purposeful way, Schaeuble told the newspaper "Tagesspiegel am Sonntag".

The minister also defended himself against the allegations of the Greek President Papoulias . He does not know Mr. Schäuble, the zutreffe criticism of the president, said Schäuble. He had in the past few days several times gives the impression that the granting of new international loans was due to inadequate Greek austerity and reform commitments difficult. The federal government said it now, it had been received in the past two weeks, further assurances from Athens, which facilitated the approval of the program.

Before the meeting, it became clear that by far the largest share of new loans by euro crisis fund EFSF would wear. For previously planned total of 130 billion euros expected by the International Monetary Fund (IMF) has a significantly lower proportion than for the first Greek-help program. We're talking fresh from only about 13 billion euros payment. For the first package, the fund had contributed 30 billion of 110 billion €.
No profit is a result

In Brussels on Sunday, the Financial Secretaries of the euro area discussed the outstanding issues. Them was the draft for a binding letter of intent Athens, which contained the information required by the group € additional savings, pension reform, extensive job cuts in public services and other savings and reforms. The list was one of the preconditions for the approval of a new loan program. Other questions were still open on Sunday. Diplomats said, however, if there is no agreement on Monday, the insolvency of Greece was no longer avoidable. "No result would also be a result," it said.

Athens has to repay in the second half of March from 14.5 billion euros in bonds. The technical preparation of new loans to Athens, which would have to be taken over by the EFSF require about four weeks. Open at the weekend was the question of the Greek debt sustainability. The EU Heads of State and Government in October had set as a criterion for the Greek government debt would fall by 2020 from currently 170 to 120 percent of gross domestic product (GDP).

Quote from another article:

The patience of the federal government and other euro-zone countries with Greece, however, seems exhausted as well.
EU sources said Germany and threatened other donor countries like the
Netherlands and Finland, ostensibly so that the aid package to move at
least 130 billion euros for Greece until after the election in Athens in
April.

The IMF and Greece pushed shut one eye

02/20/2012 · The criticism that Greece experienced a special treatment by the IMF, hand and foot. As long as Europe and the IMF Greece view as a systemic risk to the global economy, they will always turn a blind eye.
By Patrick Welter

In May 2010, when Greece was the first financing package of European countries and the International Monetary Fund, it was said that the adjustment program put very high demands. The program was sewn on edge, nothing could go wrong. Ran is wrong but some. The recession is deeper than the rescuers had planned it. Above all, the requirements proved to be so high that not Greeks came along. They kept their commitments under the reform is increasingly a non-or only delayed, and the program was repeatedly blown off course. Should we become the bad money to throw good money after now? The slope of the Fund is limited to. The fund fears for his finances, and to his credibility when target values ​​for the debt to be rotated so as to fit the Euro-rescuers.
Anyone who pushes whom?

The mixture makes it difficult situation that the Euro-Europeans have a say in the IMF a due word. A second package is why Greece does not fail at the IMF. This raises the question of who actually expresses who here. If the IMF is the hard man, the Greeks and Europeans with hard drives before it needs - or is it not true that the fund but only executes what his biggest investors impose on him? The criticism that Greece experienced a special treatment by the IMF, hand and foot.

For the longest lever in the game have neither the funds nor the €-saver, it has the Greek government. As long as the IMF and the Europeans not Greece Greek drama as pure, but to watch as a systemic risk to the global financial system and the global economy, it will be before the failure of the Greeks always turn a blind eye. What today still reads as a harsh demands for Athens, is back tomorrow bargaining chip when the signatures are under the second package Greece only once. More important than noble adjustment programs would be to analyze clearly what foreign bank actually has debts in Greece, which are not depreciated.

The role of the IMF in the negotiating round is not the innocent from the country. In Greece, the quality of the fund brings wisdom once more into the twilight. The second program, Greece should focus more on competitiveness, they say. If this is right, why recommended that the funds not already in May 2010?

February 19, 2012 · 2:53 am

GREEK D-DAY: SLOG US SOURCE CONFIRMS WALL ST PLANS AS SECRET BERLIN TIMETABLE EMERGES
Wall St – Schauble – Draghi – Monti connection alleged

London Daily Telegraph piece cited as ‘on the money’

Draghi bond-swap seen as ‘ECB protection’

Further doubts about Merkel public position on default

Just before midnight GMT Saturday, within hours of Bruno Waterfield’s piece about German finance ministry Greek default preparations appearing at the London Daily Telegraph site, The Slog received confirmation from a New York based banking source that – whatever German Chancellor Angela Merkel’s public stance may be – plans have been firmed up on both sides of the Atlantic for “an inevitable Greek default some time in the third week of March 2012″.

There is only one source I trust more than this person: instrumental in enabling several Slog scoops during the Strauss-Kahn saga of last year, I have never been given a bum steer by the informant. Having been made aware of the Telegraph piece – in which the secret (and damning) Troika report on Greece’s chances is again quoted – this senior banker finally agreed to talk on condition of total anonymity.

“The [Telegraph] piece cites Wall Street rumours about preparations for default, and so now the formal German work is coming out, US planning will be assumed pretty soon,” the source began, “They’re kind of preparations, but really they’re plans. And I’d say your chances of laying your hands on physical evidence are slim. No government-sourced papers exist as far as I know. There were only two maybe three meetings, and the attendees were barely in double figures. But the position was made brutally clear: for well over a month now, the Obama Administration’s conclusion has been a dead cert Greek default. The job of the President, the security services, the Reserve and the Treasury is to protect the United States from the consequences of that, and that’s just what they’ve been doing.”

This is the second corroboration of the Slog’s initial source of the story about plans having been discussed – including dates – in Wall Street. The person – also extremely well-connected diplomatically – added:

“Angela Merkel’s public position is a necessary illusion. The pressure from Frankfurt to get onto the task of preparing for default has been augmented by Washington’s sense of urgency. I wouldn’t call it close cooperation, but Schauble, Draghi and now Monti are fully aware of it. Mario Monti in particular has, I understand, welcomed it. The action being taken by the ECB [The EU Central Bank run by Draghi] yesterday is a big clue”.

The banker is referring to Draghi’s decision to agree a preferable bond haircut ahead of the other bond holding parties. Several puzzled observers wondered why the Central Bank had openly protected itself in this way, as this subordinates the other private creditors, and thus will more than likely trigger a default.Yesterday the bank was suitably vague about confirming the move.

“Draghi is protecting his butt, pure and simple,” the informant continued, “he gets the money out from under before the truth is fully grasped. And the IMF has done the same…its contribution now is peanuts. Lagarde has been told to save her money. Good advice in my view.”

Yesterday morning, a regular Slog mole in Brussels pointed out to me that Italian bond rates had been rising again “and so it became necessary for Merkel and Monti to sound gung-ho about a deal. Frankly, the chances of getting a straight answer out of any of these beggars is close to zero. There is just far too much at stake. But I now very strongly doubt that a deal will be done Monday….and if it isn’t, then putting the steps in place for avoidance of default become well-nigh impossible”.

This view is shared by Bruno Waterfield’s piece: an EU diplomatic source confirmed that “The private sector involvement takes at least four weeks to issue the prospectus and to get subscribers, and without a deal on Monday then time will run out in March”.

“There will be no deal Sunday or Monday,” the New York source asserted, “Once the ECB is in shape, and now Draghi is happy with the key eurobanks’ viability, the Athens Government will be encouraged to declare itself bankrupt. I would have to assume most of the smart creditors have already sensed this. Nobody apart from a few Greek negotiators has paid them any real attention for days now. I guess the German preparations have surfaced because the EU now feels fairly safe.”

The Schauble preparations – confirmed for the first time by Waterfield – become a semi-final piece in the jigsaw of subterfuge and obfuscation that has been in operation since mid January. Says the Telegraph piece:

‘The sense that an endgame is approaching has been fuelled by the secret “troika” report, by EU, IMF and ECB officials on Greek debt “sustainability”. It found that even if Greece implemented all the austerity measures expected of it, and if it achieves highly optimistic economic growth targets, it will still fall short of what is needed, with debt likely to total 129 per cent of GDP in 2020.’

Although the Telegraph goes on to say ‘the European Central Bank and the European Commission are, for now, lining up with Mrs Merkel to push for the rescue attempt to continue, fearful that the financial tsunami that would be unleashed if it failed would swamp the eurozone’, my US source refutes this.

“They have to say that,” the informant comments, “for now. There can’t be seen to be any forensics left for people to find. But the Washington view is very clear: they see Merkel as the key US ally, and neither they nor Frankfurt would let her take such a risk. Look, if the ECB is protecting its backside, Berlin has no choice but to follow suit. If she pushes through and gets a deal on Monday, then it really will be proof that everyone in the EU is insane – including her. I just don’t buy that.”

At the height of the hysterical rhetoric between Brussels and Athens last week, Evangelo Venizelos declared, “there are forces in Europe trying to push Greece out of the euro.” It’s very probable there were rather more of them than he realised.

Here is a follow up of the article right above this one:

February 20, 2012 · 9:34 am

GREEK ‘DEAL’: It might be ‘agreed’ today, but it won’t be done.

The supposed Greek austerity/bondholder ‘package’ being agreed by the EU today is shot full of holes

If ever there was weaving to deceive, then that’s what we’ve been observing in both the US and EU handouts to the mainstream media over the last 24 hours.

Following The Slog’s piece yesterday – in which a trusted senior source in New York confirmed a loose arrangement between Washington, Wall Street and at least Germany to nudge Greece inexorably towards default – all has been sweetness and light. To be more accurate, the EU began licking Greece all over late Saturday afternoon, but by Sunday evening even Schauble was giving seriously good tongue. And the word from Brussels is that wow, hey you’ll never guess, the austerity package will be agreed today. Then there will be a bond swap around March 8th – 11th (so the month required to set up the details suddenly ceases to exist), and then all will be well. The EU is, unbelievably – and most things they say now are unbelievable – about to throw a staggering 130 billion of our tax euros at a horse killed weeks ago by the very austerity programme it and the IMF demanded.

So is my New York highly-trusted informant full of it? Time will tell: a day is a long time in the EU. But to be fair, after the person spoke to me early evening Saturday EST, there’ve been a couple of genuine developments. And – something the MSM is gaily ignoring – the deal will trigger default insurances left right and centre anyway.

But let’s start with Wolfgang Munchau, whose piece in the London FT this morning supports the Slog line – as did Bruno Waterfield’s in the Telegraph yesterday. Munchau – as EU-integrationist as they come – wrote that ‘A senior German official has told me that his preference is to force Greece into an immediate default. I can therefore only make sense of Mr Schäuble’s proposal to postpone elections as a targeted provocation intended to illicit an extreme reaction from Athens’. Well said Herr Munchau, that’s exactly what it was. But now Schäuble is back in the bailout tent. Why?

Several reasons present themselves.

By far the most important is that, however many times the history re-writers deny this, last Friday the ECB subordinated the private Greek bondholders to do a separate (and better) deal for itself with Athens. In credit agency eyes, that spells ‘default’ with a capital D. And equally, overnight it has been confirmed that the private creditors who hold-out will be forced to take a 70% haircut – in short, their involvement isn’t voluntary. In credit agency eyes, that spells ‘default’ in 56pt bright-Dayglo capital letters. The minute Greece signs up to this deal in its current form, it is in default. (Which, as we know, is exactly what Dr Strangelove wants).

Second, from what I’ve seen or been told about the additional savings package being imposed on Greece (and they’re still arguing about it as I write) it contains a large number of potential deal-breakers before the 130 billion is actually handed over. My hunch is that Schäuble will use these to derail the process and keep his own plan on track. If a deal is announced today, then the MSM will of course all shout “Crisis Over!” in one Stepford tone. They will be wrong: default will only be avoided when the bailout cash goes into the Athens government’s bank account. Even with an agreement today, this is not a done deal: riots alone over the next few weeks could blow it off course.

But there is a further development that just might, for once, have genuinely changed some minds during yesterday. This is that the IMF seems on the verge of using some other sucker’s money to revive the dead donkey. Maybe – just maybe – Washington and Berlin figure that they may get away with not handing any ‘real’ money over. I have my doubts about this, but let’s examine it a little.

Yesterday, Japanese Finance Minister Jun Azumi, after meetings with Chinese Vice Premier Wang Qishan and Finance Minister Xie Xuren, said the two countries were ready to offer support to the IMF – seeing how eurozone members now appear to be on the verge of forking out some of their own cash. Japan and China have agreed, it seems, that they will jointly respond to any funding request from the IMF for help with the eurozone crisis.

To grasp this fully, we need to understand one very important thing. Up until now, no ‘real’ national budgetary EU money has been handed over to Athens. So far it’s all been ‘leveraged’ – this year’s new word for ‘borrowed’. And it’s been borrowed in that notionally virtual manner that means whoever was dumb enough to give it to them will never get it back – which is a zero sum really, because the ‘money’ was never real in the first place.

The next €130 billion will be the real McCoy. The physical stuff…..removed from living budgets, and leaving various Ministers across the ezone feeling severely wounded about it. So any sign of it being replaced with money from elsewhere is obviously going to be a game-changer. It’s just possible that, as the Sino-Japanese cavalry appeared over the hill late Saturday, some minds got changed by the strong prospect of €600bn turning up.

This would mean that Asian officials gave an offstage guarantee of participation, and that strikes me – based on previous form – as highly unlikely. Wen Jiabao has said from Day One that he must see the colour of fangwoi money before he’d start piling in with some Yuan of his own. So come what may, this is going to cost ezone member States serious money.

And that’s where we are at 9.30 am Monday: another day of Debt Double-dealing – 18 hours of white flags and – perhaps – white smoke. But I remain firm in my belief that the intention of most people of influence is for Greece to default. I go back to what the Slog’s New York source told me yesterday:

“Look, if the ECB is protecting its backside, Berlin has no choice but to follow suit. If she [Merkel] pushes through and gets a deal on Monday, then it really will be proof that everyone in the EU is insane – including her. I just don’t buy that.”

Neither do I. It’s a calculated gamble, but I think that Draghi, Schauble, Washington and others have made smart moves designed to ensure the deal won’t go through: credit agencies crying default, bondholders screaming blue murder, Greeks burning down Evangelo Venizelos, Athens politicians refusing to take a poisoned pill – or some other trumped-up problem emerging today.

This yesterday from my original source:

‘There is so much fear and loathing now. Some people right at the top are quite clearly barking and have become totally unpredictable. So the sane voices who can do the math and understand reality are routinely being screamed at from all sides, but I do think it really is a very done deal on Greece now.’

He also reports that big hitters on Wall Street are heading for Lisbon this week. The pavanne continues.

BRUSSELS (AP) – After more than 12 hours of talks, the countries that use to euro agreed early Tuesday to hand Greece €130 billion ($170 billion) in further bailout loans to save it from a potentially calamitous default, an EU diplomat said.
• By Yves Logghe, AP





The euro surged as the news broke, climbing 0.7 percent to $1.328 in minutes.

The deal — details of which were still being worked out by European finance ministers in an all-night session in Brussels — was expected to bring Greece's debt down to 120.5 percent of GDP by 2020, according to the official. That's around the maximum that the International Monetary Fund and the eurozone considered sustainable. Some eurozone ministers had indicated before the meeting that they would not accept a deal that didn't put Greece's debt on a sustainable path.

The official spoke on condition of anonymity because a formal announcement was pending.

The deal should also give the green light to a related debt relief from private investors, who are expected to take significant losses on Greek bonds they hold.

Greece desperately needs another rescue package if it is to avoid default next month when a €14.5 billion bond issue comes due.

EU ministers work through night on Greece bailout

BRUSSELS — Eurozone governments worked into the night on Monday, hoping to agree on a long-awaited rescue package for Greece that would save it from a potentially calamitous bankruptcy next month, but several key points of division remained, senior officials said.

Finance ministers meeting in Brussels Monday were still wrangling over how to reduce Greece's debt load further and impose even tighter control over the country's spending, and negotiations were expected to stretch late into the night. Rich countries like Germany and the Netherlands and the International Monetary Fund want to be sure that Athens can eventually survive without aid.

But after months of delays, time for Greece is running out. The country needs to secure the euro130 billion ($170 billion) bailout so it can move ahead with a related euro100 billion ($130 billion) debt relief deal with private investors. That deal needs to be in place quickly if Athens is to avoid a disorderly default on a bond repayment on March 20.

"I am of the opinion that today we have to deliver, because we don't have any more time," Jean-Claude Juncker, the prime minister of Luxembourg who also chairs the meetings of eurozone finance ministers, said as he arrived in Brussels.

An uncontrolled bankruptcy would likely force Greece to leave the 17-country currency union and return to its old currency, the drachma, further shaking its already beaten economy and creating uncertainty across Europe.

Heading into the meeting earlier Monday, ministers were optimistic that a deal could be reached.

"We now have all of the elements to achieve an agreement," said French Finance Minister Francois Baroin. "Greece knows what it has to do, and we'll watch over it continually. We also know what we have to do."

But the finance ministers were also negotiating on several fronts, trying to move Greece's other creditors to increase their commitments. Greek Prime Minister Lucas Papademos rushed to Brussels to back up his finance chief, Evangelos Venizelos, in talks with the IMF, the European Central Bank and representatives of private holders of Greek debt.

The goal is to bring Greece's debt down to around 120 percent of gross domestic product by 2020 — the maximum the IMF sees as sustainable. At the moment, the country's debt load stands at more than 160 percent.

Last week, a new report prepared by the European Commission, the ECB and the IMF concluded that the new bailout, Greek spending cuts, and a planned euro100 billion debt relief from private investors would still leave Greece's debt at almost 129 percent of economic output by the end of the decade.

Ministers were exploring several options to close that gap, but as talks dragged on Monday, no final solution appeared imminent.

A Greek official said Monday morning that there seemed to be agreement on further reducing the interest rate on Greece's first, euro110 billion bailout as well as having national central banks in the eurozone, which also hold some Greek bonds, participate in the debt relief. The official was speaking on condition of anonymity because the talks were confidential.

However, other officials questioned the participation of national central banks, as well as whether the ECB would be willing to transfer profits from its Greek bond holdings back to Athens.

On the sidelines of the finance ministers' meeting, Venizelos headed into a new round of talks with representatives of Greece's private bondholders — mostly banks and investment funds — to explore whether they would be willing to accept further losses.

A current plan foresees private creditors swapping their old Greek bonds for new ones with half the face value, lower interest rates and much longer repayment periods.

But now some countries are pushing for bondholders to also give up on an accrued interest payment of around euro5.5 billion on their old bonds, a demand that could further discourage investors from signing up to the debt swap.

Amid the ever-changing mood over the country's rescue, some frustration was setting in among the Greeks.

"Greece comes into today's Eurogroup meeting having fulfilled all the requirements for the approval of the new program," Venizelos said. "For Greeks, this is a matter of national dignity and a national strategic choice and no other integrated and responsible choice can be opposed to it."

The Greek parliament has faced down violent protests to approve the austerity measures demanded by the eurozone. Its main political leaders have committed in writing to uphold the bailout terms even after general elections in April. On Monday in Athens, the government introduced in parliament another two pieces of emergency legislation that would introduce austerity measures including wage and pension cuts.

Despite Athens' efforts, however, some countries have indicated their patience with Greece was growing short.

"We've seen that Greece time and time again fails to satisfy the conditions that the international community makes. ... In the Netherlands, it really is an issue that you have to lend money to a country that for the umpteenth time hasn't held itself to its agreements," said Jan Kees de Jager, the finance minister from the Netherlands, which has been especially hard on Greece. "So it's indeed essential to me, and also the Dutch government, that we have control over the money that we're going to lend."

To that end, Greece is expected to be forced to set up a separate account that would ensure it services its debt. This escrow account would give legal priority to debt and interest payments over paying for government services. That would maintain pressure on Greece to stick to promised austerity and reform measures and spare the eurozone the risk of a destabilizing default.

The escrow account would, however, be an unprecedented intrusion into a sovereign state's fiscal affairs and could ultimately see Greece forced to pay interest on its debt before paying salaries to teachers and doctors.

In addition, Greece's international creditors would station permanent representatives in Athens to monitor the country's progress.

Another issue under discussion is how much the IMF will contribute to the new rescue. The fund has provided one-third of the bailouts for Ireland and Portugal and Greece's first rescue package.

"The indication is that the figure will be rather low," a European Union official said, adding however that a final decision from the fund's board is still outstanding. The official was speaking on condition of anonymity because talks were not yet concluded.

Some worry that more austerity could exacerbate Greece's problems by putting a stranglehold on growth. Prime Ministers from a dozen European countries — including the U.K., Italy and the Netherlands — wrote a letter Monday to EU President Herman Van Rompuy and Commission President Jose Manuel Barroso calling for growth across the bloc.

"The crisis we are facing is also a crisis of growth," the letter said. "It is now time to show leadership and take bold decisions which will deliver results that our people are demanding."

HECK YA!!! LOVE IT!!! CRASH FIAT SYSTEM CRASH!!!

February 21, 2012 · 11:12 am

GREEK BAILOUT: “It’s a seagoing sieve,” says Slog’s US source.
When is a deal not a deal?
WHEN….

1. it’s a default

2. there’s no real agreement

3. there are poison pills

4. there are very high hurdles to jump

5. there are loose ends all over the place

6. all-powerful forces don’t want a deal in the first place

1. Reading the deal’s main points this morning, although the ECB has made a reasonable fist of complicating its subordination of the private bondholders – money out, profits redistributed, local central banks reinvesting and so forth – it remains a preferential deal done outside this so-called ‘bailout with PSI’. The IIF creditors have sort of voluntarily taken the extra 3.5% hit, but the coupon they’ve been offered is worth less than the original. In a statement issued by representatives of private bondholders, the new interest rates – 2% for the first three years, 3% for the next five, and 4.2% thereafter (this is the scheme revealed by The Slog three weeks ago) were described as “well below market rates”, and the creditors will lose money on them. The tone of the statement screams ‘involuntary’. In English, all these factors spell default.

2. Nobody has actually signed up to anything yet: as usual with all things EuroZen, the bankers are alleged to be on-board, but the IIF statement made after the press conference suggests otherwise: ‘We recommend all investors carefully consider the proposed offer, in that it is broadly consistent with the October agreement’. That’s not true for one thing: but as a recommendation, it’s somewhat limp. Further, there is still a body of hardline ezone sovereigns who don’t want to do the deal – and in Germany itself, a growing rearguard campaign to stop it. (See this morning’s Spiegel for immediate evidence). And finally, most Greek citizens themselves will react violently to some of the more pernicious clauses.

3. The ‘agreement’ contains almost a full bottle of poison pills: Berlin has got its debt Gauleiters in the end, only 19 cents on the euro will go to the Greek Government itself, 325 million euros in additional spending cuts have been found, Athens has agreed to change its constitution to make debt repayment the top priority in government spending, the escrow account must have three months debt money in it at all times etc etc. The idea that Greece can now toddle off and have a liberal democratic general election without any of these being issues is Brussels space-cadet stuff at its most tragi-comic. (An opinion poll taken just before the Brussels deal showed that support for the two Greek parties backing the rescue package had fallen to an all-time low while leftist, anti-bailout parties showed gains.)

(THIS IS THE BEST PART!! READ IT!!! IT AN'T OVER!!!)
4. Several Grand National leaps lie ahead before the default is avoided. Parliaments in three countries that have been most critical of Greece’s second bailout – Germany, the Netherlands and Finland – must now approve the package. In Greece itself, further violence will test political resolve about yet more cuts in wages, pensions and jobs. Greece’s two biggest labour unions have already lined up protests in the capital tomorrow.(WILL GREECE BURN MORE WEDNESDAY?) Very significantly, Jean-Claude Juncker of Luxembourg and the IMF’s Christine Lagarde stressed at the press conference that Greece still had to live up to a series of “prior actions” by the end of the month before eurozone governments or the IMF can sign off on the new programme.If ever I saw a get-out clause, that’s it.

5. Other loose ends are left hanging everywhere. Nobody has elicitied any response so far from the Hedge Fund creditors. Entirely absent from comments was the IMF’s contribution to the €130bn bail-out. Christine Lagarde would say only that the contribution would be ‘significant’, but my information is that she’s lying through her $240,000 teeth as usual: the IMF will only contribute €13bn to the in new Greek funding. Not exactly a resounding vote of confidence for the deal. Juncker said he was optimistic that ezone members would cough up more cash at the EU summit in March, but this too simply doesn’t bear examination: Portugal is broke, Spain is technically insolvent, Italy has asked to be excused from this dance, and Germany has already shown extreme reluctance to to increase its exposure further still. Fritz Schmidt in dem Strasse isn’t too keen either. Finally, as Bruno Waterfield notes in his latest column at the London Daily Telegraph, the agreement remains ‘overshadowed by the pessimistic debt sustainability report compiled by the IMF, ECB and Commission, that warned of a “downside scenario” of Greek debt hitting 160 per cent of GDP in 2020 – far higher that the agreed 120.5 per cent target’.

6. This is where we get to what the MSM will largely dismiss as ‘conspiracy theory’….but for which the circumstantial and corroborative evidence gets increasingly compelling: whole crowd-scenes of actors off-stage (and several on it) simply do not want this deal to reach fruition: they have factored in a Greek default, and believe that the best way to avoid further debt-crisis contagion is for the money earmarked for bailouts to be invested in bank-propping and growth.

The cast of players who think this include David Cameron, Mario Monti, Mario Draghi, Wolfgang Schauble and most of the German Finance ministry, Christine Lagarde, probably Angela Markel herself, Tim Geithner, huge swathes of the German banking community, The White House – and elements in both Beijing and Tokyo.

I understand that the Sino-Japanese response to a switching of EU funds emphasis from bailout to growth stimulation might well attract funds from that quarter. In fact, there is a global shift of opinion now away from austerity: it having killed the Hellenic patient, the Alchemists in Berlin and the IMF are an increasingly small minority. This won’t stop the Berlin Blinker Blitzkrieg, but it is changing the actions of legislators and lenders everywhere.

Certainly, my New York source was unrepentant late last night EST. The response was brief and lucid: “If you launch a seagoing sieve, it’ll never leave harbour. No deal has been done, and no bailout will occur. The March default is still on track.”

That’s sticking your neck out, but the informant’s track-record in other areas has been impressive. I’m inclined to agree with the conclusion – as indeed was the Bankfurt Maulwurf this morning.

“Well, it’s the usual formula,” he observed, “But I am reassured that Germany’s commitments are now effectively limited. Like all the other deals made by these people, it will collapse….perhaps within days. Or things will develop in Portugal, and then people will get a clearer perspective and the insanity will end. I can certainly tell you there will be consequences for the Chancellor if it doesn’t”.

I did suggest vigorously to Maulie that he was wrong about Schauble and his Ministry ‘not being involved’ in the Greek default timetable.

“I wasn’t wrong,” he purred, “You simply asked the wrong question.”

The Bankfurt Maulwurf is, as we established some time ago, anti-Merkel and hawkishly anti-integrationist. I have no way of knowing if he represents a small lunatic fringe or a broadly based group of senior financial opinion leaders in Germany. The bloke’s background and achievements suggests he’s not that fringe or lunatic. But then, since when did sanity have anything to do with any of this?

As always, we shall see.

As stated in circles close to the
negotiations, the personal intervention of the U.S. Treasury, Mr.
Timothy Geithner was such at all levels, causing an impression on
everyone their European counterparts, who, finally, in the morning they
put their signatures under the new contract (although in the new aid
package will be adopted on February 28, during the summit scheduled for
that date).

Mr. Geithner, it was said, who during the night … at an open hearing,
described the Greek project “adequate”, inviting European finance
ministers to accept it , gave the green light to the director of the IMF
to increase participation in the Fund’s bailout plan and urged the IIF
to accept even bigger “haircut” of private debt, so the total would
reach 120.5% by the end of 2020.

The above was posted in a Greek blog. I don’t know if it is for real,
but it gives an opposite dimention for the US role in the Greek
deafult, or not ?

hehehehehehehe words get'n out....LOL

IIF's Dallara Warns Holdout Greek Bondholders Could Kill "Successful" Greek Deal

Submitted by Tyler Durden on 02/21/2012 15:22 -0500


To all those who stayed up until 6 am local
time yesterday to hear Europe announce that the Greek deal is done,
Europe is fixed, and that a pot of gold was found at the end of the rainbow, our condolences. Sorry, no isn't. Following up on our earlier post about
the potential of UK-law bondholders to once again scuttle the deal,
here comes none other than the IIF's Charles Dallara who basically says
that the fate of Greece, the Euro, and the Eurozone, are in the hands of
Greek creditors as we have been cautioning all along. And after all why on earth would hedge funds who just lost over 70% of their recoveries bear a grudge whatsoever...

From the BBC Newsnight interview to air at 10:30 pm tonight:

Jeremy Paxman: What is to stop someone like a hedge fund or
someone who has bought Greek debt trying to trigger the insurance
involved in a credit default swap?

Charles Dallara: Well
there is nothing I am aware of, Jeremy, that will definitively stop
someone who wants to take such action and there is no iron clad
guarantee...that individual investors may not contemplate counter-productive activity here. They have the rights they have the legal rights they have the market judgements to make.

...

Jeremy Paxman: If the insurance system worked they could
recover perhaps 100% of the money they've lent the Greeks instead of
something like 30%

Charles Dallara: Its not inconceivable. If too many go in that direction though, the system breaks down, we will not have the successful conclusion of this deal and then where will they be?
...

Jeremy Paxman: The whole deal could still be held for ransom?

Charles Dallara: I don't eliminate that possbility.

Oops. Well, so much for that. And where Elliott is involved, Elliott wins.

February 22, 2012 · 3:32 pm

SLOG PREDICTION VINDICATED AS FITCH DOWNGRADES GREECE, TO CALL DEFAULT ON BOND SWAP


Papademos rumoured to be mulling further election postponement

I have never known the major ratings agencies so tight-lipped as they have been over the last three days, but it looks like Fitch has now broken cover. Following its downgrade of Greek bonds this lunchtime, a few sources and insider tongues have loosened a little.

The AP report times the downgrade at 6.50 am EST, and Reuters has since added that ‘Fitch said it was downgrading Greece to “C” from “CCC,” and would follow up with further downgrade to a “restricted default” when the bond swap is completed.’ Fitch’s Peter Fitzpatrick had earlier today declined to comment on The Slog’s information about an impending default judgement, but American sources have since clarified things slightly.

“The main bond swap is scheduled for March 10,” a Washington insider told me within the last hour, “and at that point, they [Fitch] will name the event as a technical default. So now everyone wants to know what the ramifications are for insurance. That’ll depend on what deal, say, Hedge Funds have signed with specific insurers. But you could certainly speculate that some insurance will be triggered.”

The downgrade is an early blow for those who put the Brussels accord together just 36 hours ago….and quite possibly a victory for others who always wanted it to fail.

And within the last hour (since first posting this piece), a Moody’s spokesperson told me, “Greece is currently rated Ca with a Developing Outlook. Moody’s is assessing the credit implications of the Greek bailout and will comment in due course.”

Meanwhile, following the Greek Environment minister’s suggestion that the elections in Greece be further postponed, there is widespread speculation in Athens that Goldman Sachs implant Prime Minister Lucas Papademos is under pressure to announce this formally.

Germany does not apparently increase from ESM

German SME news | Posted: 22:02:12, 15:50 | Last updated: 22:02:12, 16:33

Government spokesman Seibert responded to the demand behavior of the IMF, the rescue ESM increase: In March there will be a review of the
adequacy of 500 billion euros. The March begins in 7 days.Current


Rating agency Fitch downgrades Greece down
In the German position to an increase in the ESM softening can be seen.

Although government spokesman Steffen Seibert responded formally vigorously when he was asked on Tuesday at a press conference what he thought to call for an increase in the IMF.

Seibert: "The attitude of the federal government to has not changed, that is, the attitude is: No, no need to" increase the size to 500 billion euros set ESM. And he reiterated that "it was agreed that they will actually do in March to review the level" with the EU's partners.

This makes it all right Seibert: It's true, the position of the federal government has not changed. What has changed is the date: Who on 22 February says he from 1 March wants to negotiate something that says that the 500 billion already scrutinized.

The Merkel government, it is important that the size of the ESM now been set. For the ESM, the final pact is for debt union. With the use of the money the members of the Bundestag have no say. The only point where they are included, the vote on the height. And here it is advisable from the viewpoint of Wolfgang Schäuble, the same issue now prefer a slightly higher blank check. Who knows how the members respond in six months if they have to agree again (more on the adventurous construct the ESM - here ).

So expect European diplomats said the Guardian, so that the next EU summit on 1 and 2 March, the impact of the EFSF and the ESM will be increased. So far, Germany has to pay about 21.7 billion euros. Any increase Steffen Seibert's statement can not categorically exclude even very likely.

The IMF said Christine Lagarde on Wednesday in Brussels would only participate in the rescue package for Greece, if the EU increases the effectiveness ( here ).

Greece surrenders its gold and itself to creditors in the "new" deal. Same song, just the current chorus


Date: Thursday, 23-Feb-2012 12:44:29

NEW YORK (Commodity Online): Though Greece finally reached a debt deal last week, the fine print suggest that the country may have surrendered itself to creditors and bondholders.

As per the new agreement, Greece's lenders will have the right to seize the country's gold reserves in the event of any default. Greek gold reserves are estimated to be more than 100 tonnes. Also hard hitting to its national interests is the fact that all future issues of Greek bonds will be governed in English and Luxembourg courts- conditions more favourable to the bondholders.

Credit rating agencies like S&P and Fitch had already warned that Greece would eventually default. Fitch had even quoted March 20, 2012 as the date when Greece will default on the payments. And if it does so, then as per the new deal it may have to part away from its gold amongst other things.

link: http://www.commodityonline.com/news/greece-surrenders-its-gold-and-itself-to-creditors-in-the-new-deal-46208-3-46209.html

Date: Thursday, 23-Feb-2012 13:07:02

In Response To: Greece surrenders its gold and itself to creditors in the "new" deal. Same song, just the current chorus (Watchman)

While many market participants would expect that Greece’s gold reserves would be on the table in the debt agreement, it is the somewhat covert and untransparent way that this is being done that is of concern to Greeks and to people who believe in the rule of law.

The Irish Times reported in November that EU finance ministers’ discussed a wider strategy by the ECB to sound out the possibility of gaining control over the gold reserves of the euro zone’s central banks.

Senior German politician, Gunther Krichbaum, a lawmaker in German Chancellor Angela Merkel’s governing coalition and Chairman of the Committee on the Affairs of the European Union of the German Bundestag has proposed late last year that Italy sell its sizeable gold reserves in order to lower its debt.

Gold’s importance as debt and third party, risk free collateral and as money is increasing by the day.

While Greece’s gold reserves are very small – Greece’s creditors and senior German and EU financial officials clearly understand the value and monetary and strategic importance of Greece and the other heavily indebted European nations gold reserves.

link: http://campaign.r20.constantcontact.com/render?llr=nid4i7n6&v=001p2v57KM8pgayoFd6olv9aIMqhy_pKkSwwSLflddoCHt7lxdYR9B4j-Aekakc-mhZwcdqbnTlvHhokovdofunqw806r-nVbXlQSSBuL7pbzbE7EsWXs-PMA%3D%3D

Greek bond swap begins as Germany voices doubts over bailout
Athens has launched the biggest sovereign bond restructuring in history to cut its debt by €107bn (£91bn) – amid warnings from Germany that even if it were successful, there were “no guarantees” Greece could be rescued.
A protester sits in front of a police formation during an anti-austerity rally outside the paraliament in Athens...A protester sits in front of a police formation during an anti-austerity rally outside the paraliament in Athens
Athens needs bondholders to agree to the deal within days as part of its effort to unlock the €130bn bail-out funds needed to avert default on March 20 Photo: Reuters
Louise Armitstead

By Louise Armitstead

7:16PM GMT 24 Feb 2012

Comments276 Comments

The Hellenic Ministry of Finance on Friday released the highly anticipated offer document, firing the starting gun on a colossal effort to find Greek bondholders and persuade them to participate in a €206bn debt swap. Athens needs bondholders to agree to the deal within days as part of its effort to unlock the €130bn bail-out funds needed to avert default on March 20.

Wolfgang Schaeuble warned that the bailout, which was agreed late on Monday night, might not work. In a letter to German politicians, the finance minister said: “It may also not be the last time the German Bundestag will have consider financial aid to Greece. However, the chances of success with alternatives appear to me to be significantly lower at the current time.”

Before heading to the G20 finance ministers’ meeting in Mexico this weekend, Mr Schaeuble suggested he was prepared to consider combining the eurozone’s two bailout funds, the European Financial Stability Mechanism (EFSF) and the European Stability Mechanism (ESM), to protect Spain and Italy.

Lucas Papademos, Greece’s technocrat interim prime minister, chaired a cabinet meeting on Friday afternoon that approved the deal after the Greek parliament voted it through on Thursday evening. “We are making a titanic effort to secure financial support for the country,” said Mr Papademos as he left the meeting.

Bondholders will be asked to voluntarily take a 53.5pc hit on their bonds by swapping them for new instruments worth 46.5pc of their current value.
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Bondholders will receive two-year bonds issued by the EFSF and new Greek bonds that will mature over 20 years from 2023. The new bonds will pay a coupon of 2pc for three years and 3pc for another five, followed by 4.3pc for the final 20 years.

On Thursday night the Greek parliament approved new collective action clauses (CACs) for the deal, which will make the acceptance of the tender by the majority of bondholders automatically binding on the others.

Charles Dallara, managing director of the Institute of International Finance (IIF), who represented the private creditors, said he was “quite optimistic” that the deal would be approved. He said there was no decision so far to put the CACs into effect.

Analysts said the deal may trigger the payment of credit default swaps (CDS), the complex financial instruments that investors bought to insure their sovereign bonds, even if the swap is not declared a default by rating agencies. Ahead of the bond swap, Credit Suisse said: “We continue to expect a non-voluntary debt restructuring and for it to trigger CDS.” The analysts added: “A debt restructuring/debt exchange is not an event of default but may be a CDS credit event.”

The bond swap will be run from London by Deutsche Bank and HSBC.