Monday, February 13, 2012

Morning Thought - The Battles Between Greece And The Troikans Are just Warming Up !

     Good morning ! Hope everyone had a great weekend , hope it was productive , restful and that we're already to spring into the new week. As the embers from the Grecian fires cool this today - with at least forty building destroyed during the carnage of protests / rioting brought about by the debate and passage of the so called Greek Rescue Bill in Parliament , let's consider where things stand after the vote ? Has Greece been pulled back from the brink by the latest heroic vote ( they are going to run out of heros shortly , like the police ran out of tear gas yesterday. )

     Actually , there still remains a considerable amount of conditionality in place to stymie any quick action to release the needed funds to Greece ( or though Greece to the banksters ) . Let's walk through the conditions one by one . First of all , joker number one :

1)  The EuroGroup of finance Ministers , which meets Wednesday , must agree that Greece has now met the terms of the package
      An interesting place to start - as the Memorandum of Understand had a blank space for the amount of the bailout ( as I recall ) , so what exactly are the terms of the Agreement when something as notable of the sum involved is not set forth  ? As you may recall , one issue last week and a reason for the withdrawal of Laos was the complaint by their party chief that pages were missing from the documents provided to him to approve. And what about the additional 43o million of additional cuts Greece still must find by Wednesday ? And since it's monday , what new demands have the Troikans cooked up over the weekend ? I guess we'll see how this plays out over the next day or so , but the bottom line is the nature and details of the M.O.U appear to be opaque.

2)  The leaders of the Greek Political parties must pledge in writing that it will implement the complete rescue plan and that no attempts to renegotiate  or otherwise repudiate said rescue package will be made.

      There are two parties in the Coaltion after the resignation Laos - Pasok and New Democracy. Regarding Pasok , it has a nominal head ( G-Pap ) of the party , the power behind the throne and Troika tool in FM Venizelos and they are steeped in disarray having expelled twenty + members yesterday who revolted against voting yes for the bailout deal - their polling numbers are about 8 percent . New Democracy faces similar disarray ( they also expelled twenty plus members yesterday ) , poll better than Pasok and currently are expected to win elections in April or perhaps sooner than that. the problem is New Democracy chief Samaras has repeated expressed his goal of renegotiating the Rescue deal for Greece - which cuts against the idea of binding guarantees / pledges / promises / sweet lies. Absent surrender by Pasok and New Democracy to the total satisfaction of the Troika and Germany led AAA Eurozone club , Greece doesn't get a euro.

3) The German Bundestage must vote to approve the package , probably on Febuary 27th.

      Germany Finance Minister Schauble and their Economic Minister Rosler have already thrown some doubt as to what Germany will do - saying in essence , the Greek vote was nice , now prove to us that you actually will take concrete steps to actually implement the deal ( rather blow smoke  as past practice has shown th Greks to do. ) Apart from Greece " proving " it will actually implement all terms of the deal , the German approval is conditional upon a Troikan report blessing the deal - who knows what the Troikans plan to say in that report ? In light of worsening economic condition in Greece ( un- employment almost 21 percent , Revenues including VAT falling off a cliff , industrial and manufacturing capacity falling off a cliff ) , how can we see a sunny report from the Troikans ? And besides , aren't the Troikans really trying to make a point to the rest of the PIIGS with how they're treating Greece - as in Portugal , Ireland , Spain and Italy shouldn't try to go Greek or face the fire and wrath Greece has suffered ? Isn't that what German FM Schauble alluded to in his discussions with Portugal's FM Gaspar ?

4) The PSI Deal must be concluded

     Today is Febuary 13th and no final offer has been presented to the so called private investors. Either the 13th or 15th represent the latest so called deadlines for the final offer - but missing a deadline , what else is new ? the real deadline for conclusion is March 20th when the 14.5 billion euro bond payment comes due. So , there remains about 5 weeks to conclude the PSI - barely time to run through all of the hoops to determine what the private investors might do , barely time to take all of the steps necessary to put the PSI debt swap in motion - and that assumes a deal was in place today. As 100 percent acceptance  is necessary and that looks unlikely , do we see the Greek Parliament pas a Collective Action Law to force recalcitrant private investors to take the deal ? Who presently hold the english law bonds of Greece which won't be as  easily crammed down investor throats ( when compared to greek law bonds ) ? What is the  real timeline and associated deadlines for  presentation of the final offer to private investors , their acceptance or rejection of the private investors , the passage of a C.A.C law and the March 20th payment which is the ultimate deadline for Greece ? If Greece can't make the payment on time , will the Troikans present Greece with bridge loan financing or roll the March 20th bond payment into either the second bailout deal or the PSI deal ? the answers are - no one knows.

    Looking quickly at everything, expect the morning relief rally to process to evening indigestion......

The Real Games In Greece and with the Troikans have begun !

7.50am: The scenes of mayhem on the streets of Athens last night, and in other parts of Greece, show the depth of public anger against the package. As we reported last night:
More than 40 buildings were set ablaze in an orgy of looting that left scores injured as protesters vented their anger at the caretaker government and parliament's ordering of a further €3.3bn of savings by slashing wages and pensions and laying off public sector workers.
Protesters run away from teargas during clashes near the Greek parliament on February 12, 2012.
Photograph: Angelos Tzortzinis/AFP/Getty Images
This picture from last night shows protesters running away from teargas during clashes between protesters and riot police near the Greek parliament.
Prime minister Lucas Papademos warned that banks would collapse and schools and hospitals would be left without funds unless the bill passed. But 43 MPs failed to back the bill, with some arguing that Greece would be better off refusing to implement the measures and defaulting its debts. All those MPs have now been expelled from the coalition government.
7.57am: Germany's economy minister has warned that last night's vote will not be enough to guarantee that Greece receives its €130bn bailout.
Speaking earlier this morning, Phillip Rösler said the vote was merely a "necessary condition" on the path to Greece's second rescue package, as Athens must also prove that the measures will be implemented.
Rösler added that the German parliament must receive a report on Greece from the Troika [the IMF, the EU and the ECB] before deciding whether to give its approval for the bailout fund.
That vote is expected to take place in the Bundestag on 27 February.
8.22am: Greece must still clear four hurdles before it receives its €130bn bailout package.
1) The eurogroup of finance ministers, which meets on Wednesday night, must agree that it has now met the terms of the package
2) The leaders of its political parties must pledge in writing that they will implement it.
3) The German Bundestag must vote to approve the package, probably on February 27th.
4) The long-running negotiations with its creditors over debt restructuring (the Private Sector Involvement) must be concluded.

Gilles Moer of Deutche Bank told Bloomberg TV this morning that it is essential for Greece to maintain its credibility with its international partners. He said that the demand for Greece's leaders to make a commitment in writing "shows the pressure that the Troika is still prepared to put on Greece".
8.30am: City analysts are speculating that the situation in Greece could be thrown into confusion in a couple of months if Antonis Samaras, head of the New Democracy party, becomes Greece's next prime minister.
Samaras, the current front-runner to replace Lucas Papademos, told parliament last night: "I ask you to vote in favour of the new loan agreement today and to have the ability to negotiate and change the current policy which has been forced on us".
That would rather thwart the Troika's demands that Greece's leaders all pledge to implement the current plan, as Megan Greene of Roubini Economics pointed out on Twitter:
Samaras also said his party will "demand the dissolution of parliament and immediate elections" once the second rescue deal is ageed.
Elisabeth Afseth, analyst at Investec, also warned this morning that "the next Greek crisis is then likely to come with the approaching election". New Democracy wants that vote to be held in April......

9.16am: In Greece, Athenians are facing the aftermath of last night's savage street fighting, which lasted for around 10 hours.
A firefighter extinguishes a smouldering building in central Athens on Monday February 13, 2012.A firefighter extinguishes a smouldering building in central Athens today. Photograph: Dimitri Messinis/AP
Helena Smith, our correspondent in Athens, says that parts of Athens' historic centre now lies in tatters. There are burned out shells of buildings, including some of the capital's fabulous 19th century edifices. Shops have been looted and smashed, and cafes are still smouldering this morning.
Helena reports:
Unsurprisingly, the vandalism made for as much coverage in the press this morning as the austerity measures Greeks will have to endure for the best part of the next decade to make their nation's debt mountain even begin to look sustainable.
"Yes through fire and tears," Ta Nea, the mass-selling daily, proclaimed from its front page in reference to the vote's passage.

But it should be pointed out, as this appears to have been lost in coverage, that it was unidentifiable hooded youths hijacking an otherwise peaceful anti-austerity demonstration who were behind the violence, not hard-working Greeks badly hit by tax hikes and repeated wage and pension cuts who took to the streets not because they wanted a fight but to vent their spleen.
They are as shell-shocked as the shop-owners who turned up to work this morning to find their properties in tatters.
12.01pm: Just in – a Greek government spokesman has said that general elections will be held in Greece in April.
Spokesman Pantelis Kapsis told reporters in Athens:
The bond swap will be concluded in March.....Elections will be held in April.
(That's via Reuters)
Ths news will please New Democracy, the centre-right party that has been demanding an early ballot. It will not delight Pasok, the socialist party whose popularity has plunged since the crisis escalated.
11.56am: The body that represents Greece's retail industry has warned today that last night's vote will not spare the country from bankruptcy.
Vassilis Korkidis, the head of the National Confederation of Greek Commerce, said in a statement that:
Yesterday's vote in the parliament may have saved the country temporarily from default, but the Greek economy is going bankrupt and the country's political system is failing.

Stay tuned !  Makes one wonder whether there are the Ides of Febuary ?