Tsipras Warns IMF, Schauble To "Stop Playing With Fire" Over Greek Debt

One day after Greek 2Y bond yields tumbled following press reports that for the first time in the latest Greek mini-crisis, the IMF and Eurozone creditors finally agreed on a "common stance" regarding what the Greek fiscal surplus and debt profile would look like, despite talks between Greece and its creditors ending in Brussels with no breakthrough, Greek PM Alexis Tsipras on Saturday warned the IMF and German Finance Minister Wolfgang Schaeuble to "stop playing with fire" in handling his country"s debt.

Nonetheless, striking a positive tone, Tsipras opened a meeting of his Syriza party by saying he was confident a solution would be found, and urged a change of course from the IMF. "We expect as soon as possible that the IMF revise its forecast so that discussions can continue at the technical level", AFP reported, suggesting that contrary to initial reports, the bid-ask between the Troika and Greece still remains irreconcilable .

Tsipras also attacked Greek nemesis Wolfgang Schauble - who earlier in the week ruled out a Greek debt cut, saying "for that Greece would have to exit the currency area"- and called for German Chancellor Angela Merkel to "encourage her finance minister to end his permanent aggressiveness" towards Greece.

As documented before, ongoing feuding with the IMF has raised fears of a new debt crisis. Greece, whose economic collapse is now worse than the US Great Depression - remains embroiled in a row with its eurozone paymasters and the IMF over debt relief and budget targets that has rattled markets and revived talk of its place in the euro. 

A silver lining emerged on Friday, when Eurogroup chief Jeroen Dijsselbloem said progress had been made in the Brussels talks with Greek Finance Minister Euclid Tsakalotos and other EU and IMF officials. But he provided few details.“Today the Greek minister of Finance, the institutions (European Commission, ECB, ESM and IMF) and I had a constructive meeting on the state of play of the second review,” Dijsselbloem said in statement sent by text message to Bloomberg. “There is a clear understanding that a timely finalization of the second review is in everybody’s interest" and added that "we made substantial progress today and are close to common ground for the mission to return to Athens the coming week."

Judging by the latest comments from Tsipras - who now badly lags behind New Democracy in the polls, and may have no choice but to stand strong on his anti-austerity promises or else lose risking control - that may have been an optimistic assessment.

According to a #MARC poll published in #ProtoThema, #ND leads #Syriza by a large margin. #KKE is third with #GD and #PASOK not far behind pic.twitter.com/gRCFKawepw

— Ioannis E Kolovos (@ioannisekolovos) January 29, 2017

Then again, with Greece nothing happens until the last minute, and conveniently that particular deadline once again coincides with a major debt repayment deadline: the Athens government faces €7 billion in maturities this summer that it cannot afford without conceding to Troika demands which are holding up new loans from Greece"s 86 billion euro bailout.

However, Greece does not have much time. Breaking the stalemate in the coming weeks is seen as paramount with elections in the Netherlands on March 15 and France in April through June threatening to make a resolution even more difficult. Dijsselbloem also warned Friday that the next meeting of eurozone ministers on February 20,  seen as an unofficial deadline ahead of the votes, would still be too early for a breakthrough.

"We will take stock of the further progress (during that meeting)", said Dijsselbloem, who is also the Dutch finance minister.

With a barrage of European political risk events in the coming months, including elections in France, the Netherlands and Germany, a potential undiffused Greek time bomb lurking in the background could be just the catalyst that breaks the record low volatility doldrums that the market has found itself in in recent months.

Dear IMF, Please Put Greece Out Of Its Misery

Submitted by Michael Shedlock via MishTalk.com,

For the umpteenth time, the IMF has warned that Greece cannot meet fiscal targets set by its creditors. And once again, the IMF insists that it will not be a part of the “Troika” unless the goals on Greece are realistic.

History suggests the IMF will cave in to Germany and agree to some half-baked plan (make that 1/8th baked plan) that will supposedly put Greece back on track. Such nonsense has been going on for years.

Mercy, Please!

[It"s worse than the Great Depression...]

h/t @MehreenKhn

Here we go again: IMF warns Greece Won’t Meet Fiscal Surplus Targets Set By Europe.

Greece’s primary budget surplus will rise to 1.5 percent over the long run from about 1 percent last year, amid a modest recovery, the IMF said Monday after executive directors met to discuss the fund’s annual assessment of the nation’s economy. Still, the projected surplus falls short of the 3.1 percent forecast by the country’s European creditors.

The fund reiterated its view that Greece’s debt is unsustainable. Most of the executive directors don’t believe the economy needs more fiscal consolidation, the IMF said.

The IMF has said it would consider giving Greece a new loan to supplement the 86 billion euros ($92 billion) it’s receiving from euro-area countries, but only if the nation’s debt-reduction plans are credible. [Mish comment: How many times have we heard that?]

Greece’s government debt will reach 275 percent of its gross domestic product by 2060, when its financing needs will represent 62 percent of GDP. Public debt will reach 181 percent of GDP this year, the IMF projected Monday.

Time for Greece to Break the Deal

The Failed Revolution notes Yanis Varoufakis, the former finance minister of prime minister Tsipras, calls on Tsipras to Break the Destructive Agreements.

The following as translated and explained by the Failed Revolution, from http://www.efsyn.gr/arthro/rixi-me-tis-pseydaisthiseis.

Varoufakis wrote among other things:

The night of the Greek referendum, I tried hard to explain to the Greek PM that the submission of Greece to the third memorandum was Schäuble’s real plan (not Grexit).

In reality, there was no hope that the 3rd toxic “program” for Greece would be rationalized progressively through the support of the European Commission to Athens. Meaning, there was no hope that IMF’s austerity and anti-social measures could be soften. The fact that Moscovici, Juncker, Sapin and others gave such promises, is no excuse because the Greek government knew since May 2015 that these people know how to tell lies, or, they are unable to keep their promises when they don’t lie.

Suddenly, the Schäuble-IMF-ECB attacked on Greece, demanding exhausting measures, while Merkel-Hollande-Commission didn’t do anything. Tsipras then retreated for one more time in order to “save” Greece. This was Schäuble’s plan.

Tsipras promises, one more time, that he will not retreat (this time!) by legislating new austerity even after 2018. If he means it, I remind him what we had agreed that is necessary and which – even today – is the only thing that may prevent the worst things to come.

Prepare for unilateral restructuring of Greek bonds held by the ECB, which must be repaid in July (and after).

Prepare the electronic system of transactions through Taxisnet which I had designed, I had started building it and even announced it to the new Minister of Finance, Euclid Tsakalotos, when I delivered the Ministry.

Therefore, if indeed the Greek PM means it this time that he will not retreat, he should prepare for breaking the deal with the creditors, so that to prevent it. The design of a parallel system for payments is ready since 2014, as he knows.

No Reason to Act Now

I offer one significant improvement to the plan: Stall for 3 months.

Wait for the IMF to do what they say. If the IMF acts first and backs out of the deal, it will put extreme pressure on Germany to provide relief.

Schäuble has stated Greece will not provide any more credit relief. So why act now?

Instead of acting in advance, Greece can blame Germany and the IMF unless there is significant relief. And as a side bonus, Merkel will take the hit for having a country exit the Eurozone on her watch.

Won’t that be fun?

Another Greek WTF Showdown Moment Explained

I wrote about much of this a few days ago in Another Greek WTF Showdown Moment Explained.

The IMF has once again threatened to pull out of the Troika following a warning that Eurogroup Loan Measures Not Enough for Greek Debt.

Perpetual Nonsense

The IMF argues correctly that Greek debt is unsustainable. Previously the IMF correctly argued Greece could not maintain a primary account surplus of 3.5 percent.

Yet the IMF now demands Greece automatically implement rules forcing it to have a primary account surplus of 3.5 percent of GDP as far as the eye can see.

Last week Eurointelligence reported that Greek officials were elated the much-despised IMF might exit the program. Although Greece hates the IMF, the IMF has at least been partially on Greece’s side, arguing for debt reductions.

Were the IMF to actually pull out to happen, Schaeuble wants Greece out of the Eurozone.

Meanwhile, Eurozone officials pretend the program is working when they know full well its not.

WTF Moments

This is one of those WTF moments where statements from Greece, from the IMF, and also the Eurozone make no apparent sense.

Yet, despite the obviously apparent nonsense, it’s possible to piece together what’s happening.

1. Neither Germany nor the Netherlands is willing to throw Greece the smallest of bones for fear of election consequences. It’s far easier for Eurozone nannycrats to pretend things are running smoothly.


2. Schaeuble has long wanted Greece out of the Eurozone. But Germany does not want to take the blame. Instead, Schaeuble wants the IMF or Greece to take the blame.


3. The IMF does not want the blame either, so it takes a preposterous stance that the debt is not sustainable but a 3.5% primary account surplus for as far as the eye can see is sustainable. The IMF takes this view despite having argued many times that 3.5% is not sustainable.


4. By pretending to now be in favor of 3.5% perpetually, the IMF can argue it is not one-sided to Greece.


5. Despite the fact the IMF is more on Greece’s side than Germany or the Eurozone nannycrats, Greece hates the IMF so much that its position of not wanting the IMF involved overrides common sense.


6. As an alternative to point 5, consider the possibility that Greece wants outs of the Eurozone, but none of the politicians want to take the blame. Instead, the politicians want to blame the IMF or Germany and are just itching for the IMF to get the hell out so they could do what they wanted to years ago (exit the eurozone). In this possibility, Greece looks to place the blame elsewhere and is waiting for the right moment.

Troika Blame Game Theory

Points 1-4 are certain. Points 5-6 are pick one. Despite the apparent absurdity of conflicting views and the IMF’s changing stance, blame game theory explains all you need to know. Here is a shorter synopsis.

1. Greece wants to blame the IMF and Germany


2. Germany wants to blame Greece and the IMF


3. The IMF wants to blame Greece and Germany

Make the IMF and Germany Commit First

Greece has four reasons to stall, making the IMF and Germany act first.

1. If the IMF does not insist on debt relief, Greece can blame the IMF and Germany.


2. If the IMF does insist on debt relief and Germany will not go along, then Greece can blame Germany.


3. If the IMF and Germany do not provide enough debt relief, then Greece can blame both of them.


4. If the IMF and Germany provide enough debt relief, then Greece wins as well.

Greece is in a no-lose setup if it stalls long enough to get the IMF and Germany to play their cards first.

Expect Trump to Pressure IMF

Greece should get out of the euro & go back to their own currency--they are just wasting time.

— Donald J. Trump (@realDonaldTrump) October 9, 2012

Trump has stated Greece should abandon the Euro, and Germany is a currency manipulator.

Thus, it is reasonable to believe Trump may threaten to pull funds from the IMF unless they cooperate.

Cooperation in this case means backing out of the Troika deal.

Related Articles

1. Trump Drives a Wedge in the EU


2. Trump Accuses Germany of “Currency Exploitation”: Merkel vs. Trump, Is Either Side Telling the Truth?

GREEK DRAMA RETURNS: IMF Schism With Greece May Jeopardize Bailout

This is all very well and good. The IMF have made demands to their puppets in Greece, which if not met, will result in the entire EU bailout to crumble to pieces. Most assuredly, this would result in markets reeling from the shock -- plunging freely towards the pits of hell.
 
The condensed version of the aforementioned crisis, which is definitely beginning to loom, has to do with lack of progress by the Greek government to balance a budget.
 
Should the IMF pullout, Germany has stated that a new deal would need to be voted on by national parliaments. The world is a much different place now, than when the last bailout was forged. With nationalism running high across Europe, there"s no guarantee that a new Greek bailout will pass now, at least not without drama.
 
The result of this chicanery is a notable divergence between German bonds and the PIGS (Portuguese, Italian, Spaniard, Greek).
 

 
The spread between Portuguese and German bunds is now 372bps.
 
Source: BBG

Almost two-thirds of the actions creditors have demanded for the disbursement of the next tranche of emergency loans have yet to be completed, the government conceded in a memo discussed between Finance Minister Euclid Tsakalotos and bailout auditors last week in Brussels, a person familiar with the matter said.
 
Even though the memo laid out a series of commitments to ensure the work will be completed, creditors said the proposals weren’t good enough, a separate official said. The people asked not to be named as the contents of the memo haven’t been made public.
 
Europe’s most indebted state is locked in talks with officials representing the European Stability Mechanism, the European Commission, the European Central Bank and the IMF over the terms attached to the loans keeping it afloat since 2010.
 
IMF staff said in a draft report obtained by Bloomberg that the current structure of Greek public finances is “fundamentally inefficient, unfair, and ultimately socially unsustainable,” adding to doubts about whether the Fund will eventually re-join the Greek bailout. Euro area governments -- notably Germany -- have said failure to get the IMF on board would require a new agreement, which needs to be approved by national parliaments.
 
In addition to asking for a lower income tax threshold and pension cuts for current retirees, a demand the Greek government doesn’t accept so far, the IMF is also pushing for the European creditors to off more debt-relief measures.
 
“We believe that Greece’s debt burden can be manageable if the agreed reforms are fully implemented,” a spokesman for the euro area’s crisis fund said Sunday.
 
A European official told reporters in Brussels last week that Greece must resolve the standoff by the next meeting of euro area finance ministers on Feb. 20, before as many as five European nations hold elections that will make negotiations politically difficult.

 
Greek stocks plunged today by more than 3.5%.
 

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