Thread: Now Even Greek Politicians Are Taking Cover

Now Even Greek Politicians Are Taking Cover


Submitted by testosteronepit on 02/04/2012 16:15 -050
Wolf Richter www.testosteronepit.com

Greeks yanked €65 billion out of their bank accounts since 2009, Finance Minister Evangelos Venizelos told parliament on Friday. “Of that total, €16 billion has been legally taken abroad,” he said. The rest? Stashed under mattresses or hauled to Switzerland via the land route. A whopping 20% of GDP! Capital flight of massive proportions. They see a forced conversion of their euros to drachmas. With good reason.

"The case of Greece is hopeless," said Otmar Issing, former member of the Executive Board of the Bundesbank and of the Governing Council of the ECB. But it’s legally impossible to kick Greece out of the Eurozone. So he suggested a procedure—a procedure that is already happening. Read.... Kicking Greece out of the Eurozone.

And now even the political elite in Greece is taking cover: former Prime Minister George Papandreou told MPs of his party, the Pasok, that the coalition government of Prime Minister Lucas Papademos should stay in power till the regular elections in late 2013—rather than hold early elections.

Thus, Papademos would take the fall for Greece’s default and exit from the Eurozone. The former Governor of the Bank of Greece is a “technocrat” who was anointed last November when Papandreou resigned. He is expendable. Dynastic career politicians like Papandreou might then rise from the chaos that would follow Greece’s return to the drachma. Political positioning for the “afterwards” has begun.

Yet they haven’t giving up the hunt for more money. Bailout number one for €110 billion wasn’t enough. Number two for €130 billion, whose details haven’t been decided yet, has already been declared insufficient. Meanwhile, the bailout Troika (EU, IMF, and ECB) has been imposing ever stricter budget cuts and tax increases, which have never been fully adopted by the Greek parliament or executed by the ministries.

Exhibit A: In 2011, the national healthcare system spent €4.1 billion (2% of GDP) for medications though the Troika had set a budget of €3.8 billion. For 2012, the Troika cut that to €2.1 billion. Options: rationing medications and forcing price reductions on the pharmaceutical industry. But on Thursday, Health Minister Andreas Loverdos told representatives of the pharmaceutical industry that he was shooting for €3.1 billion, and that he was working on a compromise with the Troika.

So it goes. The Troika imposes cuts. The country pushes back. The deficit is coming down, but too slowly, and gobbles up more bailout money than anticipated, as the economy continues to deteriorate. But for once, there was news that wasn’t even more catastrophic than feared, which in Greece is worthy of being leaked. The budget deficit for 2011 will be above the Troika-set limit of 9% of GDP but won’t hit the feared 9.5%, thanks to €2 billion from the detested property tax that was instituted in September amidst waves of protests.

Demands for debt forgiveness has become a growth industry. Last summer, private-sector holders of Greek sovereign bonds were pushed to accept a “voluntary” haircut of 20%, which grew to 50%, and it’s still not enough, and the negotiations are bogged down. If there is no agreement, the Troika threatened to withhold the next bailout tranche. In return, Greece threatened to default in March. And then, something even more bizarre happened... Abysmal news for Greek Bonds and Debt Swap Negotiations.
But it’s still not enough. Now the Greek government demanded that public-sector holders also accept haircuts. The ECB, which bought $45 billion of these crappy bonds to prop up the country, and Germany were incensed.

The core of the fiasco isn’t just Greece’s debt and the political machine that took it on and hid it, but also the bloated public sector and uncompetitive private sector. So the Troika demanded brutal cuts in private-sector wages and benefits. Alas, they’re set by a wage pact. And unions are rebelling. On Thursday, they were joined by employer groups. Together they’d oppose the government and the Troika. And on Friday, the Prime Minister threatened to resign unless the Troika’s demands were implemented. A Greek tragedy turns into a farce.

And they’re all still fuming over Germany’s demand that Greece surrender control over its budget to EU institutions as a condition for being spoon-fed with bailout money. This Teutonic reluctance to pay ever more to bail out Greece—and increasingly the Eurozone—has made Germany a global punching bag. Yet the amounts it has committed are already staggering. Read... Germany Frets As Bailout Risks Balloon.

Now Even Greek Politicians Are Taking Cover | ZeroHedge

Angry Youths Attack House Of Greek President Papoulias; Hurl Rocks, Molotov Cocktails


Submitted by Tyler Durden on 02/04/2012 21:54 -0500

Instead of defaulting a long time ago (when we first suggested it should) when it could have pulled an Iceland, taken a bitter pill, hyperinflated the drachma and in the process delevered overnight, if at a big social cost of losing its welfare safety net (which it is about to lose anyway courtesy of the PSI and OSI), and not be held captive to bigger geopolitical interests, and hostage to the banker superclass, Greece very likely could have been on the road to recovery now, granted with a totally different political regime. Instead, the political regime is the same, Greece is more in debt than ever before, the economy is in shambles, the banks have seen two straight years of bank runs, and most importantly the people now are poorer and more disenchanted than ever, and as the following story indicates, about to get far angrier than any Syntagma square riot cam (which is about to come back with a PayPerView vengeance) has shown to date. According to Kathimerini, late on Saturday evening, "A group of between 30 and 50 youngsters attacked the house of President Karolos Papoulias."

"The result of the attack was some minor damage to the entrance of the house at Asklipiou Street in central Athens and to the car that Papoulias uses. The hooded youngsters, who arrived by motorbike and on foot just after 8 p.m, hurled a Molotov cocktail, rocks and paint at the house but stopped short of attacking the two guards at the President’s house. Papoulias was inside at the time of the attack. Police is searching for those responsible for the unexpected attack." And while the fact that discontented Greeks are willing to attack the most porminent political figure is in itself not shocking, the fact that it is being publicly announced is quite disturbing, as it opens up the population to the realization that one can express anger and hostility at one's rulers - an oppressive regime that has been benefitting the banking oligarchical superclass at the expense of the general population. Consider it yet another "Sparatcus" moment. How many more of these before the Athens parliament is overrun? Or how much longer before the people realize they have notthing to lose?

Because it's only after we've lost everything that we're free to do anything...

Angry Youths Attack House Of Greek President Papoulias; Hurl Rocks, Molotov Cocktails | ZeroHedge

Juncker Warns Of Greek Default As Europe's Patience With Greece Runs Out


Submitted by Tyler Durden on 02/04/2012 20:13 -0500

Following up on our report from this morning that according to former Greek defense minister, German submarine chief procurer, and not to mention Jenny Twenty repeat offender, Evangelos "Xanax" Venizelos, we learn that the god of Deus Ex Machinae is about to abandon Greece, after an announcement by that most magic unicorn-infatuated of bureaucrats, Eurogroup head Jean-Claude Juncker made it clear that Greece is all but finished. As Reuters reports, "The possibility of a sovereign default by Greece cannot be ruled out, Jean-Claude Juncker, head of the Eurogroup of finance ministers from the single currency zone, said in a German magazine on Saturday." Translation: A Greek default on that €14.5 billion bond maturity D-day of March 20, is now inevitable. In an advance copy of comments to news weekly Der Spiegel, Jean-Claude Juncker was quoted as saying Greece could no longer expect solidarity from other euro zone members if it cannot implement reforms it has agreed. "If we were to establish that everything has gone wrong in Greece, there would be no new programme, and that would mean that in March they have to declare bankruptcy," he said. So after years of delaying the inevitable sovereign Lehman weekend, it is finally here. As a reminder, when Lehman filed, everyone, at least those in charge, thought the fall out could be contained. It couldn't, and the Fed had to step in with roughly $30 trillion in backstops, guarantees, and asset purchases. The same will happen this time.
Curiously, it was none other than Zero Hedge who said back in April of 2010, that Greece should just cut the cord and get on with it, because "Not only will a delay in defaulting do nothing for the economy except bleed it to death slowly, but ever more frequent risk flare episodes culminating in bank runs will intensify the deposit outflows and impair the banking system beyond repair (for depositors to keep their money in Greek banks, they need to be compensated for the risks: double digit rates sound about right), thus dooming any hope for an economic recovery." Funny how correct we were on that assessment, just two years ahead of the Eurozone's kleptocrats. On the other hand, having called Europe's bluff for as long as it did, is also an admirable development, if only instead of recycling the cash mooched out of Germany to pay European banks, it had been injected back into the economy and not into German submarines....
As for next steps, the only question now is what happens in that critical interval between February 29 when the second ECB 3-year LTRO takes place, and March 13, when the next FOMC statement is due, incidentally just after the BLS announce that all the labor numbers in the past few months were really just a joke, and the economic contraction is about to hit the US despite what those who believe that the market, and thus the economy, is really just a reflection of one month's seasonal labor adjustment.
And while in the past imminent deadlines were always promptly forgotten this time around, Greece may have boxed itself into a corner, having said earlier today that all must be set in under 24 hours or else the bailout is off the table. Alas, there will be no resolution tomorrow.

On the brink of bankruptcy, Greece must wrap up talks with foreign lenders on the bailout and quickly get political approval to ensure funds begin flowing in time for it to pay back 14.5 billion euros of bonds falling due in mid-March.

But negotiations with its 'troika' of international lenders have stumbled over their demands that include cutting labour costs by axing holiday bonuses and lowering the minimum wage - proposals strongly opposed by Greek political party leaders.

Some more from Reuters why tomorrow may be finally the day when the foreplay officially ends:

Euro zone finance ministers told Greece on Saturday it could not go ahead with an agreed deal to restructure privately-held debt until it guaranteed it would implement reforms needed to secure a second financing package from the euro zone and the IMF.

Euro zone ministers had hoped to meet on Monday to finalize the second Greek bailout, which has to be in place by mid-March if Athens is to avoid a chaotic default. But the meeting was postponed because of Greek reluctance to commit to reforms.

Instead, the ministers held a conference call on Saturday to take stock of progress on the second financing package, which euro zone leaders set at 130 billion euros back in October.

"There was a very clear message that was conveyed from all participants of the teleconference ... to the Greeks that enough is enough," one euro zone official said. "There is a great sense of frustration that they are dragging their feet.

"They should get their act together and start talking honestly, decisively and speedily with the Troika on the aspects of the programme that remain to be finalized - on fiscal and labor market reforms," the official said.

"There is a great sense of frustration with Minister Venizelos, who is very hard to get hold of because he is very busy campaigning for the leadership of (the Greek party) PASOK, so he is not available to meet with Troika members," the first official said.

"He is preparing his own political future, rather than the future of his country. People are seriously disgruntled about that and have conveyed this very clearly to him this afternoon," the official said.

"There is an increasing sense of frustration that why should we honour our part of the bargain, which we have in the past, while Greece does not seem to care that much, and has not delivered their part of the bargain," the official said.

Alas, if Venixanax is now unreachable, it pretty much seals the deal. Or lack thereof.

Juncker Warns Of Greek Default As Europe's Patience With Greece Runs Out | ZeroHedge