Feb 062012
 
 February 6, 2012  Posted by at 2:31 pm Finance

Euro21.jpgLouise Cooper of BGC Partners pointed out an interesting fact about the etymology of the English word “deadline” – it came from the American Civil War and referenced a line that a prisoner could not cross without being shot dead. So, with that in mind, does anyone really think Greece has not passed the “deadline” for making its debts sustainable (oxymoron) and staying in the common currency zone?

The Greek government told us today there was no 11am deadline for it agreeing to the Troika’s harsh bailout conditions (which includes slashing the minimum wage to €550/month), and the real deadline was before a meeting of Eurozone finance ministers took place, and that meeting would only happen once Greek politicians reached an agreement on agreeing to austerity demands. Here is Open Europe Blog’s take on this latest act of the circular tragedy that is Greece:

The Greek End-game?

 

All of this puts the eurozone at yet another impasse. There is no way eurozone states will agree to disburse another €130bn – €145bn without a greater commitment to austerity in both the Greek public and private sectors. But without support from all three parties any commitment would be an empty one.

Usually, this would spell another round of talks, negotiations and some form of muddling through. However, this time they have essentially set a deadline of the start of this week to finalise the entire Greek package. The reason for this is the €14.4bn in Greek debt which needs to be paid off on 20 March. For the next bailout to be released, the ‘voluntary’ restructuring needs to have taken place and the new austerity measures need to be making their way through parliament. Without the money from the second bailout Greece will not be able to pay off this maturing debt. Most experts and those involved expect that six weeks is the minimum amount of time it will take to put the restructuring in place – meaning that it needs to get underway this week, hence the deadline.

There is also the ‘side’ issue of how much money will actually be paid out in the second bailout and whether the official sector (eurozone loans/ECB) will take losses in the restructuring. These are in themselves massive issues which will affect the future of the eurozone – particularly the role of the ECB (as we have previously discussed here). But in the eyes of the eurozone these discussions cannot even take place until there is a consensus from the Greek political elite to commit to greater austerity. Unfortunately, then, there are still some very big issues to be ironed out, even after the current disagreement is settled.


2.00pm – Despite rumours of an agreement being reached, it looks as if the negotiations are far from over. Greek Prime Minister Lucas Papademos is set to hold talks with the troika later this evening to update them on his progress. Papademos will then hold another meeting with Greek political leaders tomorrow, presumably to communicate any messages which the troika wish to send. We assume the message will be for greater austerity. So don’t expect a Euro-group meeting until at least Wednesday.

Needless to say, all of this is self-referential kabuki theatre at its worst. Greece will default on its loans in March, its economy will continue to shrink dramatically and its public debt situation will never become sustainable. It will be forced to revert to its own national currency, most likely sometime between one month and change from now and the end of the year, at the latest.

That much is already baked in to the cake and is being prepared for by private and public institutions across Europe. Bruno Waterfield, The Telegraph’s Brussels Correspondent, comments on the transition from speculative scenarios of a Greek exit by the EU into concrete plans:

Telegraph Live Blog, February 6

 

Maria Damanaki, the Greek European Commissioner, has revealed that scenarios for Greece’s exit from euro have turned to plans.


She told the To Vima tis Kyriakis newspaper that discussion over a Greek default had moved over the last year from contingencies to “preparations”.


“Now they’re not simply scenarios. They are alternative plans that are being openly studied. They are not preferable at the moment. What is promoted is Greece’s internal devaluation within the eurozone. But there is preparation for other solutions, if Greece doesn’t make it despite its efforts, to continue on the eurozone path,” she said.


A European Commission spokesman said: “I have no comment on the fishery commissioner’s comments on the financial situation in Greece.”

Greece’s unions have their own plans to hold a 24 hour strike tomorrow in opposition to any further austerity. The only real deadline for Greece now (as in a line that cannot be crossed without being shot dead) is the one they must stop short of before cascading into full-blown, bloody revolution on the streets. Once the ruling and opposition parties of Greece accede to the Troika’s latest demands, this deadline will have passed as well, if it hasn’t already. Unlike Europe’s bureaucrats and politicians, the people of Greece cannot afford to keep delaying the inevitable.

Home Forums Crossing the Greek Dead Lines

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  • #8640

    ashvin
    Participant

    Louise Cooper of BGC Partners pointed out an interesting fact about the etymology of the English word “deadline” – it came from the American Civil War
    [See the full post at: Crossing the Greek Dead Lines]

    #481

    jal
    Participant

    I’m still trying to find out how this blog works.

    Since I cannot find any comments for “Re: Crossing the Greek Dead Lines”, then this must be the first comment.

    The markets have everything under control. There is no exit panic … yet.

    #486

    Bosuncookie
    Participant

    Interesting etymology on the word “deadline.” The evolution of the word from its original use to its present use would also be interesting!

    #489

    Glennjeff
    Participant

    It always amazed me as a child how wile e coyote did that anti-gravity thing. I actually believed that if one unknowingly stepped of a high place there would be a brief delay before gravity took control, and if I was quick enough I could get back to safety during that period of reality suspension. I even did some thinking about experimentally testing my hypothesis.

    I therefore conclude that Eurocrats are children and television damages cognitive function. 👿

    #496

    apc
    Member

    Congrats on the new site. Looking forward to following you work here. Best of Luck!

    #498

    ashvin
    Participant

    Glennjeff post=80 wrote: I therefore conclude that Eurocrats are children

    Not only that, but they treat their citizens like children.

    Merkozy have made several comments today about how a Greek bankruptcy “isn’t an option”, but also that Greek cannot get aid to rollover March debts without agreeing to significant austerity and securing “adequate” haircuts from private creditors. If Greece does not get both of those, it will be bankrupt. So either Merkozy believe there is no possible way their WILL does not get imposed on millions of others, like little autocratic children, or they believe Europeans are childish enough not to understand how often they contradict themselves in public.

    Probably a mix of both.

    #502

    HDP
    Member

    Flummoxed too.

    #503

    Patrick
    Member

    Kabuki theatre indeed with a dash of Beckett–Waiting for Godot. (is Godot a conflation of God and idiot?) Certainly the volks running around to their meetings must have some god–like intentions of solving the crisis and are idiots for believing it or in themselves. My personal take is, fall down already, you’ve been shot, you’re clinically dead, so stop walking around talking nonsense.

    #504

    YesMaybe
    Member

    I do think today’s ‘escrow’ idea from Merkozy makes some kind of perverse sense. They don’t care about Greece’s welfare, but they want to prevent a default. Solution: commit to paying Greece’s debts (of course, the debt isn’t being forgiven, just taken over), but don’t finance the Greek government. Who knows what effects it would have, or if it will happen.

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