Monday, July 13, 2015

Updates On Greece, EU

Any country whose financial problems leave thousands of elderly pensioners having to queue up in front of banks is an abysmal failure.  Any system that doesn’t put vulnerable pensioners first is heartless.

Governments worldwide and their bureaucracies continue to treat people like cattle. For all of their hype as saviours, the European Union is ├╝ber government.  Ditto for the out-of-control United Nations, whose bumper sticker approach of “saving humanity” is a decades-old farce.

People have become herds of cattle and statistics to tax-rich governments and bureaucracies.

“Following marathon overnight talks between 19 eurozone leaders, Greece caved in and accepted a range of reforms to secure a deal worth up to €86 billion - the country’s third bailout in five years. (DailyMail, July 12, 2015)

“While striking a deal was considered vital to securing Greece’s future within the euro and preventing the country’s economy collapsing, Prime Minister Alexis Tsipras agreed to rush key measures on tax hikes, pension reforms, and a debt repayment fund through parliament.

“The hard left Athens leader - who was elected on an anti-austerity platform - faced an immediate backlash over the deal, with many Greeks furious at Tsipras’ reluctantly accepting even tougher reforms than those categorically rejected by citizens at last week’s bailout referendum.

For anyone with a conscience, it is not the photos of austerity protesters tossing bricks out on the streets;  not the Cheshire cat grins of European Union high-rollers in media photo-ops;  not the pictures of mainstream media scribes (poor darlings!) falling asleep at the table waiting for the news of the latest 86 billion EU Greek bailout, that wrenches the human heart.

It should be the photos of elderly pensioners lined up at Greek banks, all in the hope to be able to cash out €120 ($130 US) a day from their pensions after interminably long waits.
The €120 is the allowable amount so callously arrived at by the government-pressed banks.
According to the Greek government 45% of pensioners receive monthly payments below the poverty line of €665.

During the long months pensioners had to queue outside banks for their meagre withdrawals, none of the 19 eurozone leaders at last night’s 11th-hour “marathon” session, including the hardline German Chancellor Angela Merkel, put in a word for the plight of the pensioners.

Of the endless pictures viewed worldwide from what seems to be the never-ending Greek bailout, the most indelible one is the photo depicting the outstretched hands of pensioners hoping for lineup tickets dispensed by bank personnel.

Greece, the Cradle of Democracy, the home of Socrates and the Spartans, the country whose language gave us the original Bible;  today a land whose elderly pensioners are rounded up like so many cattle at branding time in the hope of getting to withdraw $130 a day.

It doesn’t take too much imagination to see Greece coming to North America in those heart-rending bank lineup photos.  While the spotlight’s on faraway Greece, North America is already keeping war veterans waiting on pensions and health care; with America already hiring employees for the dreaded death panels in the ongoing ObamaCare odyssey.

With the cost of prescription refills going out of sight in Greece, 120 euros a day doesn’t go far.  And every one of us who knows a Greek grandmother, the family’s beloved “Yaya” also knows that most Greek grandparents spend much of their pension money on their children and grandchildren.

After grueling, often angry negotiations that tested the limits of European unity, Greece struck a preliminary rescue deal with its creditors Monday that should avert an imminent financial catastrophe but also guarantees years more hardship and sacrifice for its people.
Prime Minister Alexis Tsipras flew home to sell the bailout plan to skeptical lawmakers and political allies, some of whom accused him of selling Greece out. 
Panos Kammenos, leader of the junior partner in Tsipras' coalition government, denounced the deal as a German-led "coup."
"This deal introduced many new issues ... we cannot agree with it," he said after meeting with Tsipras.
Other Greeks rallied Monday night before Parliament in Athens, urging lawmakers to reject the new demands.

To close the deal with his partners in the euro currency, Tsipras had to consent to a raft of austerity measures, including sales tax hikes and pension and labor reforms — measures he had campaigned vociferously against over the last five years of Greece's financial crisis.

Since his election in January, the youthful Tsipras has faced intense pressure to backpedal on many of his promises to Greece's exhausted electorate. Finally, faced Sunday by the leaders of the 18 other nations that share the euro and the knowledge that Greek banks were just days from running out of money, the moment came when he couldn't resist any more.

A series of supposed red lines vanished, including objections to tight international oversight of Greece's economy, continued involvement by the International Monetary Fund in Greece's bailout program and cuts to pensions.

But in many cases, ordinary Greeks now face tougher measures than those they voted down in a nationwide referendum a little over a week ago.
Syriza's Left Platform, a group of traditionalists in Tsipras' own party, swiftly denounced the agreement as the "worst deal possible ... (one) that maintains the country's status: a debt colony under a German-run European Union."

In many ways, Tsipras' hard work begins now. As part of the deal, his government has to get the Greek Parliament to back a series of economic measures by Wednesday that creditors are demanding. And in the weeks to come, Greece will have to make further changes to its economy, such as opening to competition industries like energy that have long been protected.

Passage of the new measures appears assured, since Greece's opposition parties have pledged to support Tsipras' deal. But dissent within the ruling Syriza party is threatening his coalition, raising the prospect of some sort of national unity government or an early election later this year.

When the Greek banks eventually reopen, they will most likely have to depend on more emergency credit from the European Central Bank.

Indications are that the ECB won't sanction further help until the Greek parliament passes the first set of creditor demands on Wednesday. And even if the ECB does start raising its emergency liquidity allowance, Greek capital controls are expected to remain for many months more.

This agreement pulls Greece back from the brink of economic chaos but remains far from ensuring its long-term economic viability within the eurozone," says Eswar Prasad, a professor of trade policy at Cornell University.

Greece has other financing needs beyond its banks. On July 20, it has to make a 4.2 billion-euro ($4.6 billion) debt repayment to the ECB. It's also in arrears on about 1.5 billion euros owed to the IMF. Since its bailout program is not going to be in place by then — Jeroen Dijsselbloem, the eurozone's top official, estimated that would take about four weeks — Greece will need some further help.

Dijsselbloem said finance ministers were trying to figure out how to get Athens some bridge financing but warned they had "yet to find the golden key to solve this issue."

Greek premier Alexis Tsipras faced a furious backlash from own Syriza party on Monday night after yielding to draconian demands from Europe’s creditor powers, and agreeing to let foreign surpervisors to take control of his country.
The bitter climb-down clears the way towards an €86bn rescue package and the renewal of emergency liquidity for the Greek banking system, once Greece’s parliament has voted for pension cuts, tax rises and a raft of other measures by Wednesday. This is the first of a series of deadlines as the country is kept on a tight leash.

The terms imposed after marathon talks through the night on Sunday are far harsher than those rejected by Greek voters in a landslide referenduma week ago, and risks shattering democratic consent in Greece. It has left Europe bitterly divided along North-South lines of cleavage, severely testing the political cohesion of monetary union.

“Greece has been devastated and humiliated. Europe has showed itself Pharisaical, incapable of leadership and solidarity,” said Romano Prodi, the former Italian prime minister.

An independent fund will take control of €50bn of Greek state assets, collateral to prevent Syriza reneging on the deal at a later date. Three-quarters of this will be sued to recapitalise the Greek banks and repay debt.

International inspectors will have the power to veto legislation. The radical-Left Syriza government will be forced to repeal a raft of laws passed since it took power in January, stripping away the last fig leaf of sovereignty.

“It is unconditional surrender. We get serious austerity with no debt relief. We will have foreign supervisors crawling over everything,” said Costas Lapavitsas, a Syriza MP and one of 40 or so rebels who plan to abstain or vote against the deal, mostly from the Left Platform.

“They are telling us that from now on, they are going to govern the country. I am afraid there is going to be a real fight about this. There is a groundswell of anger and it is now perfectly clear to a lot of people that the only way out of neo-colonial servitude is to break free of monetary union,” he said.

The Independent Greeks party (ANEL) in the ruling coalition called the deal a “German coup” and said it would not have anything to do with it. The government is close to collapse. 
Mr Tsipras gave in after being locked in all-night talks with German Chancellor Angela Merkel and French president Francois Hollande, an ordeal described by one EU official as psychological “water-boarding”.

He was left with a grim choice as Greek banks ran out of cash and after two weeks of capital controls had brought industry to a halt. Food companies warned that the country will start to run out of beef and other imported meats within days and could face serious food shortages by the end of the month unless the banking system is reopened, and firms can pay foreign suppliers once again. 
The European Central Bank has yet to lift its freeze on emergency liquidity for the Greek financial system. The banks will remain shut through Wednesday.

With the provocative and dramatic Greek "time out" language pulled from the final finmin and summit draft language, the two most humiliating aspects of the latest extend and pretend "deal" for the Greek people will be the return of the Troika's (surely we can call it the Troika again as part of the Greek capitulation) IMF mission to Athens, and the escrowing of some €50 billion in  Greek assets in a liquidation fund. 
Granted said fund will not be domiciled in Luxembourg as was originally envisioned, but Europe will still have control and first refusal rights over what are technically Greek properties, in the process Athens handing over about 25% of Greek GDP (and sovereignty) over the Brussels. 
What are these assets? For the answer we go to the horse's mouth, Jeroen Dijsselbloem, who laid out the holdings of the proposed Greek privatization that would be sold off as follows: "it still is going to be an independent fund, valued at €50 billion which can be airplanes, airports, infrastructure and most certainly banks.”

Bloomberg quotes the Eurogroup finmin president:

They will be brought in with the target to privatize those in the coming years, but we will take our time for that. 

We then hope for proceeds of EU50 billion, but that will be clear later. 

The banks first have to be refinanced from this aid program, but after that I take it that they’re worth money and then we can sell them. 

The proceedings are aimed at lowering Greece’s national debt.

In other words, Greece will be liquidated piecemeal to repay creditors. In even other words, the proceeds from the Third Greek Bailout will not only not reach the Greek people, but Greece will have to sell itself in pieces to top off the creditors' funding needs.
Dijsselbloem concludes: "That is good for Greece, but also good for us. We are in the end the ones from whom the money is borrowed.
It was not exactly clear why this would be good for Greece.

The only caveat: when (not if) Greece defaults again, and it is time to collect on Europe's secured DIP loan (which is what the Third bailout really is) collateral because not even the French socialists can push for a fourth bailout, good luck trying to repossess Aegean islands or the Santorini ferry terminal.
Oh, and for those struck by a case of deja vu, the €50 billion privatization "plan" is nothing new: it was first proposed by the IMF in 2011. This is what happened next:
Which may be a problem for Greek banks since as the summit deal envisions, half of the privatization "proceeds" will go to recapitalize Greece's insolvent banks. Proceeds which the IMF projects will be about €2 billion until 2018!

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