Eurogroup Gives Greece 10 Day Ultimatum: Apply For Bailout Or Grexit - page 9
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
EU Preview: Deal, Default or Titanic
All eyes will be on whether Greece and its lenders will find a compromise or whether the nation will cave in during a Eurogroup meeting on Friday. A broader set of macroeconomic data, including the BoE Minutes, flash PMIs, the ZEW and Ifo surveys will also draw attention in the week ahead.
Brussels - Don't underestimate European officials' ability to close a compromise deal at the last minute. The deal nobody will be very happy with, but somehow they will pull ahead.
We have an agreement, the twentieth of February arrangement, which very specifically states that a final review of the existing arrangements is going to be judged by the end of April," Greece's Finance Minister Yanis Varoufakis said with certain optimism.
"We’re working very hard towards that and we have no doubt that Europe will find a way of creating common ground between the previous program - that many of our partners insist upon, simply because it’s there, there’s a certain inertia - and the new facts on the ground, our government's priorities, the demands of the macroeconomic reality that we’re facing."
Warning signs
Even so, warning signs are multiplying by the day, and a window for a timely compromise is quickly closing as Greece's situation is becoming truly desperate as the country's coffers are empty, Athens' access to financial markets is severely restricted and the yield on three-year Greek government soared last week.
Yields on the benchmark 10-year Greek government bond added 13 basis points to 12.809% during the mid-EU session. That's the highest in about two years. Meanwhile, yields on the two-year bond rose 8 basis points to 26.806%, signaling that markets are becoming increasingly cautious about the prospect of a default.
"It can't go on," Greece's Finance Minister Yanis Varoufakis says . "If it could, then we wouldn't be a program country, right? So if our partners in the institutions say, 'No liquidity for you, no disbursements, no new contract,' then of course this is unsustainable, as it would be with any country that is in a kind of IMF program, a Troika program or ECB program."
The choice for the Alexis Tsipras-led government has come to this: complete capitulation to the creditors demands or Grexit, although analysts argue that default does not automatically mean exit from the euro zone.
In another telling sign, Varoufakis had a meeting with Lee C. Buchheit on Friday in Washington, who is a partner with New York firm Cleary Gottlieb Steen & Hamilton. He specializes in advising countries on restructuring their debts in the event of a crisis or default.
"He was the one who was responsible for the restructure of 2012 under previous governments. He is still contracted to the Greek state," Varoufakis said about the meeting. "We shall speak to anyone with ideas as to how to effect this package that will help us grow and maximize the present value we can pay to our creditors."
read more
This week they have to decide - or they are going to continue playing the carrot on the stick game indefinitely?
Nightmare Scenario. What Would Greece's Default Look Like?
As Greece's coffers are empty and Athens has already scraped the bottom for its latest repayments to the IMF, it has been locked in tough negotiations for the release of the last tranche from its earlier rescue program. However, the government has not yet enacted the reforms that creditors are demanding as a precondition and many analysts now consider a default as inevitable. - See more at:
Many investors have serious doubts that Greece will be able to reach a deal with its creditors - the European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF) - in time to avoid a default. Others speculate how much money the Alexis Tsipras led government can find before giving up.
Apart from a series of repayments and interest payments on its debts in the weeks ahead, the administration has to pay pensions, public-sector salaries and other public obligations.
"Although time is running short, there are clear indications that the Eurogroup meeting in Riga on 24 April might not bring a breakthrough," Reinhard Cluse, an economist at UBS bank, told the Guardian. "In the absence of a deal in the next few weeks, the government might not be able to avoid default, which – we fear – would likely raise the risk of 'Grexit'."
Michael Hewson, chief market analyst at CMC Markets, thinks that what ever happens, default is on the horizon: "I think default is inevitable. Whatever happens, even if they agree some tranche of aid for Greece, its economy is not going to achieve the rate of growth it needs to start paying down the debts. There is no prospect of Greece not defaulting, in my view, and if markets don't realize this they're living on another planet."
If Greece defaults, some contagion from Grexit will be inevitable, not least from the realization that the euro zone, in fact, is not irreversible.
read more
Wary of brinkmanship, euro zone steers away from new deadlines for Greece, official says
Euro zone finance ministers will not set any deadline for Greece to come up with reforms to get more funding because such time limits lead to brinkmanship in negotiations, a senior euro zone official said on Tuesday.
Greece, which is quickly running out of cash, pledged to its euro zone partners in February that by the end of April it would agree with creditors on a comprehensive list of reforms to get 7.2 billion euros remaining from its bailout.
Euro zone officials had expected the list to be presented to euro zone finance ministers this Friday in Riga. This would allow for a faster disbursement of cash to Athens, helping the debt-laden country avoid default on loan repayments on May 12.
But no package will be ready by then and it is also unlikely it will be ready by the end of the month. This is mainly because in the past weeks Greece has not been providing the creditors with the financial data they seek or saying clearly what reforms it plans.
Greek Prime Minister Alexis Tsipras will meet German Chancellor Angela Merkel at a European Union summit on migration on Thursday and the two are expected to discuss the funding crisis.
Speaking in Vienna, European Commission President Jean-Claude Juncker urged Greece to step up efforts to strike a deal with its, warning that talks were not advanced enough to find a quick solution.
A senior euro zone official involved in the talks said there had been some improvement in negotiations very recently, but not enough for a deal.
"There is a clear pick up in activity, there is a clear pick up in engagement, but we are a significant way away from a signal that a result is in sight," the official said.
"(But) the use of deadlines, which leads to certain brinkmanship and unnecessary excitement, will not be done again."
CASH CRUNCH
In a sign of how extreme the financial constraints have become, Athens on Monday ordered state entities, ranging from municipalities to a fund meant for future generations, to park idle cash at the central bank.
The official said such a step would help Greece's liquidity.
"With the decree that was passed yesterday the situation, within the limits that there are, is well manageable," he said.
But reaching an agreement with creditors on a comprehensive package of reforms by the end of April was unlikely, despite one more week left after the Riga meeting.
"If you want to present some kind of comprehensive agreement to the authorities and the institutions, analyze it, send it to the Euro Working Group to work on it, which then filters out the political questions for the Eurogroup to debate, it will be extremely difficult to keep the deadline of April 30," he said.
The problem was not ideological differences between Tsipras's left-wing government and the euro zone, but rather lack of information.
"I do not see any ideological fights," the official said.
"We need to know exactly what out of the whole program are the 70 percent which Greece has said was acceptable, or which are the 30 percent that are not, and once we have a firm picture of that, we can start discussing that," the official said.
"We are not there yet, and if there ever were to be such a 'fight', the preconditions for it have not been created," he said.
The bailout and the financing it offers expires on June 30.
source
ECB Doesn't Let Greek Banks Die, Raises ELA Again: Reports
The European Central Bank (ECB) will supply Greek commercial banks with more cash, as on Wednesday it poured more money into its emergency ELA pool, German daily Handelsblatt reported.
The Frankfurt-based central bank increased the so-called Emergency Liquidity Assistance (ELA) loans by around €1.5 billion to €75.5 billion, the paper said, citing sources from financial circles.
That was higher than the €800 million provided on April 15, and €600 million on March 5, but way less than the €3.3 billion added on February 18, and the €5 billion poured in on February 12.
Losing patience?
However, on Tuesday, Bloomberg brought a contrary story as it reported that the bank was considering limiting its support for Greek lenders, as concern grows in Frankfurt over the fate of the country.
This would put Greek banks in an extremely difficult position, as they are relying on the ECB’s emergency funding to stay afloat.
Gift from Frankfurt
The ELA is a specialized instrument to help banks who cannot access funds in the wholesale market. If the nation's lenders lose access to normal ECB lending facilities, then the ELA is their last resort to get the euros they need.
The provision is critical to the fate of Greece's banks, and in turn the country's fate, after the ECB canceled its acceptance of Greek bonds in return for funding last week.
read more
Germany's Schaeuble says he does not think there will be decisive progress on Greece
I think we get the message by now
So, no results and no progress. Great.
Euro zone warns Greece no cash till full reform deal
Euro zone finance ministers warned Greece on Friday that its leftist government will get no more aid until it agrees a complete economic reform plan, as Athens lurches closer to bankruptcy.
Greek Finance Minister Yanis Varoufakis faced a harsh morning in which euro zone ministers bemoaned talks they felt "were going nowhere" and one minister said that maybe it was time governments prepared for the plan B of a Greek default.
Jeroen Dijsselbloem, the Dutch finance minister who chaired the meeting in the Latvian capital, slammed the door on Varoufakis' proposal for early cash after partial reforms.
"A comprehensive and detailed list of reforms is needed," Dijsselbloem told a news conference following a meeting in Riga. "A comprehensive deal is necessary before any disbursement can take place ... We are all aware that time is running out."
He also said a remaining 7.2 billion euros in frozen bailout funds would no longer be available after June, and Greece's creditors would not talk about longer term funding and debt relief until Athens concluded a full interim agreement.
In a sign of the euro zone's frustration, the discussion on Greece lasted little more than an hour, while ministers declined to go into any detail over issues such as the budget surpluses Athens might target because Greece had no details prepared.
Greek Prime Minister Alexis Tsipras said after meeting German Chancellor Angela Merkel in Brussels on Thursday he hoped for an agreement by the end of this month and Merkel on Friday reiterated her call for a deal soon.
But Dijsselbloem said finance ministers would review progress again only on May 11 - a day before Greece has to make a crucial and uncertain 750 million euro payment to the International Monetary Fund.
European Central Bank President Mario Draghi said the ECB would go on allowing emergency lending to Greek banks as long as they were assessed as solvent. But he cautioned that soaring Greek government bond yields were diminishing the value of the collateral that the banks present to get funds.
Facing a wave of deposit outflows, the banks are staying afloat with 75.4 billion euros in emergency liquidity assistance from the Greek central bank. But criticism of the lifeline is growing inside the ECB, central bank sources say, and it would be in doubt if Greece missed a payment to its creditors.
European Economics Commissioner Pierre Moscovici said despite some progress in recent days, international creditors were still nowhere near an agreement with Athens.
"Our message today is very clear: We need to accelerate, we need to accelerate from today ... there is no other choice if we want to reach the goal that everyone shares, which is a stable, prosperous Greece anchored in the euro zone," Moscovici said.
Varoufakis sought to play down the differences, saying ministers had agreed to speed up the negotiations, which have also been delayed by Greece's insistence that EU/ECB/IMF teams avoid lengthy stays in Athens for fear of intensifying the popular backlash against the hated "troika".
"We agreed that an agreement will be difficult but it will happen and it will happen quickly because that is the only option we have," he told a separate news conference. He later said he was willing to find a compromise, warning of the huge cost to the euro zone if Greece were to default.
read more
What the Next Two Weeks Holds in Store in the Greek Crisis Saga
A euro area finance ministers meeting over the disbursement of bailout funds ended in acrimony on Friday, as creditors expressed frustration with the country’s refusal to comply with the terms attached to its emergency loans.
While focus now turns on a May 6 interest repayment to the International Monetary Fund and the next Eurogroup meeting on May 11 in Brussels, the country has a number of funding hurdles to clear before then and beyond.
From Monday through to the end of the month, the government needs to pay pensions and salaries to civil servants and retirees. The country’s alternate finance minister, Dimitris Mardas said Wednesday there’s not enough cash in state coffers to meet these obligations, unless local authorities comply with a decree ordering them to transfer reserves to the Bank of Greece for short-term financing of the central government.
A public holiday on May 1 will give the government a brief stay over payment of about 200 million euros interest payment to the IMF. As the deadline coincides with the holiday, followed by a weekend, the payment can be delayed until May 6, two days after it receives payment notification, a person familiar with the matter said.
The European Central Bank’s Governing Council will also hold its weekly reviews of the liquidity situation of Greek lenders, where additional Emergency Liquidity Assistance is approved. At the last meeting on April 22, it increased the available pool by 1.5 billion euros to 75.5 billion euros, indicating the standoff continues to aggravate deposit flight.
Patience is wearing thin among some governing council members with the ELA lifeline amid fears that the standoff threatens the solvency of Greek banks. At their May 6 meeting they will debate whether to raise the haircut on Greek collateral posted for ELA, a decision that could further intensify the country’s liquidity squeeze, according to another person familiar with the matter.
The government also needs to sell short-term debt on May 6 to refinance 1.4 billion euros of six-month treasury bills maturing two days later.
source
Greece's finance minister channels FDR: 'I welcome their hatred'
Amid high-level brinkmanship by Greece's finance minister Yanis Varoufakis, the euro zone officials negotiating the next tranche of bailout funds to cash-strapped Athens are getting frustrated.
Earlier this week, a participant of the April 24 meeting in Riga, Latvia, called Varoufakis a "time-waster, a gambler, and an amateur." And now eight participants talked to Bloomberg about how the game theorist's brash style made the talks maddening.
“All the ministers told him: this can’t go on,” Spanish politician Luis de Guindos told Bloomberg. “The feeling among the 18 was exactly the same. There was no kind of divergence.”
Varoufakis, for his part, sees the political turmoil differently: He tweeted a line from US President Franklin D. Roosevelt's 1936 speech given on the eve of a national election.
source