Saturday, April 11, 2015

Athens repays IMF €450m as cash runs out

Thursday, April 9, 2015

Athens repays IMF €450m as cash runs out

by Eric Platt & Kerin Hope

Financial Times
April 9, 2015

Greece repaid €450m it owed the International Monetary Fund on Thursday, sending bond yields sliding as investors’ showed relief that it had met its latest debt deadline.

Yields on the country’s shortest dated notes declined, with three-year bonds declining 54 basis points to 20.08 per cent and five-year bonds falling 30 bps to 14.98 per cent. The 10-year yield, which moves inversely to its price, slipped 18 basis points to 11.03 per cent.

A central bank official confirmed that the payment to the IMF had been made. Alexis Tsipras, prime minister, had warned last month that Greece would not be able to pay both its international creditors and social welfare payments without urgent financial assistance from its eurozone partners.

The anti-austerity government was able to repay the IMF after it raided the cash reserves of public agencies and utilities. It should also be able pay back €420m to international investors when a six-month treasury bill expires on April 14. But its scope for similar financial engineering is dwindling fast as further debt repayment deadlines loom.

More at FT.COM

"Odious Debt" Has Finally Arrived: Greece To Write Off "Illegal" Debt

Submitted by Tyler Durden on 04/08/2015 21:24 -0400

It was back in June 2011 when we first hinted that the time of Odious Debt is rapidly approaching.

As a reminder, this is what Odious Debt is: In international law, odious debt is a legal theory which holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are thus considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.

Today, nearly four years later, Odious Debt is now a reality in Greece, where Zoi Konstantopoulou, the head of the Greek parliament and a SYRIZA member, released two videos which have promptly gone viral, designed to promote the investigative parliamentary committee to look into the circumstances surrounding the signing of the country’s two bailout agreements that led Greece to implement its austerity measures.

The short video spots, shown below, end with the message “Check it, Erase it” referring to the country’s 320 billion-euro debt.

That this concept emerges now is perhaps confusing: it was just a few days ago when the Greek FinMin promised to the IMF that Greece would honor all of its debt commitments. Should Greece decide that some (or all) of its debt was illegal and unenforceable, this will clearly not happen. Then again, this is the same political party that made pre-election promises whose execution would require about €30 billion according to German calculation, so the relentless flipflopping is not very surprising.

On the other hand, while perhaps Greece was hoping for a more favorable outcome from Tsipras' meeting with Putin today, the resultant outcome which led to virtually nothing (that was revealed at least) may embolden the Greek nation to push on with this track which is certain to infuriate the Troika.

According to Greek Reporter, Konstantopoulou has said that the newly established “Debt Truth Committee,” will investigate how much of the debt is “illegal” with a view to writing it off.

Proving that this is more than just a populist stunt, during a vote that took place early yesterday, out of the 300 Greek MPs, 156 voted in favor of establishing the public debt auditing committee.

“The committee will examine how Greece entered into the bailout agreements with its international lenders, as well as any other matter related to the memoranda’ implementation,”SYRIZA Parliamentary Secretary Christos Mantas had explained earlier.

“We are fulfilling our commitment and the social demand to explore the causes and responsibilities of an unprecedented crisis that devastated the vast majority of society,” Mantas added.

If the Greek "Debt Truth Committee" indeed persists with determining how much of its debt is legal and enforceable, and ultimately decides to rescind some (or all) of it, the only question is how long until other countries around the world, all of which are burdened with massive, untenable debt loads across the government, financial and household sectors, decide it is time to do the same and declare a fresh start.

Because as the end of the day, the winners will be 99% of the population - or all those who have been trampled upon by the central banking regime and their crony capitalist, private bank and oligarch backers. The only losers will be that 0.01% of the population which benefited during the past 8 years of what is now obvious to all has been nothing more than a farcical global "recovery."

Russia To Offer Greece New Loans, Gas Price Discount

Submitted by Tyler Durden on 04/07/2015 09:07 -0400

While Greece spent Easter weekend (not Orthodox Easter that is) assuring the IMF (the "institution", not the critical third member of the Troika that shall not be named) that the €450 million payment due to Christine Lagarde's "institution" will be made despite Greece officially (rather than just unofficially) running out of money and being forced to prioritize repaying its creditors over paying wages and pensions, its Prime Minister is currently evaluating what the Plan B will be when he visits Vladimir Putin tomorrow, one day ahead of the double Greek deadlines of IMF payment and cash running out.

As FT reports, "when Alexis Tsipras visits Vladimir Putin’s Kremlin on Wednesday there is a chance the Greek premier’s eastern manoeuvre will immediately bear fruit: kiwis, peaches and strawberries to be precise. Athens is hopeful that Moscow will lift a retaliatory ban on Greek soft fruits to demonstrate the abiding strength of Russo-Greek relations, just as both leaders feel a diplomatic chill with Europe over the Ukraine crisis and Athens’ bailout saga respectively."

Of course, every Greek request for a concession "quid" will be met with a proportional Russian quo, and it is this that worries European diplomats - namely will the Putin-Tsipras gladhanding amount to something more significant than fruit trade. "The big fear, in the words of one suspicious senior official, is a “Trojan horse” plot, where Russia extends billions in rescue loans in exchange for a Greek veto on sanctions — a move that would kill western unity over Ukraine."

No such shock is expected this week. But as Athens nears the brink of insolvency there is growing alarm that Mr Tsipras’s radical left government might turn to Moscow in desperation. It would set off the biggest panic over Greece’s strategic alignment since the 1947 US Marshall Plan, initiated to save the country from communist fighters that Mr Tsipras’ Syriza party lionise to this day.

Others are hoping that Tsipras visit is merely a, well, Trojan horse strawman, meant to instill fear in Europe that Russia can spread its tentacles to a country which is still a member of the Eurozone, and is merely a "ploy in bailout talks with Germany and the eurozone. In spite of historic cultural ties and Syriza’s Soviet romanticism, analysts think Greece is too tied to the west – through EU and Nato membership – and too deep in debt for sanctions-damaged Russia to buy it off as a reliable ally."

“The Greeks are using Russia as a way to piss off Berlin, to frighten them. Tsipras wants to show he has other options,” said Theocharis Grigoriadis, a Greece-Russia relations expert at the Free University of Berlin. 
“But he has no intention of making Greece a Russian satellite. The Russians know that. The Germans know that. It is pure theatre, a Greek game, and I’m afraid it looks like a poodle trying to scare a lion.”
And that is 100% wrong, because every decision has a bid and an ask. And all it would take for Russia to expand its "satellite" nations by one more is to offer enough promises and gifts to a nation that has been on the verge of social and economic collapse of the past 5 years.

Such as a discount to all important energy prices and, even better, a replacement loan - one which comes with less "austere" conditions than anything Greece could get out of Europe. Which, according to Russian Kommersant as reported by Reuters, is precisely the carrot that Russia will dangle before the Greek PM. From Reuters:
Russia may offer Greece a discount on gas deliveries and new loans when Greek Prime Minister Alexis Tsipras visits Moscow this week, the Kommersant business daily reported on Tuesday, citing one source in the Russian government.

A Kremlin spokesman said last week that Russian President Vladimir Putin and Tsipras planned to discuss economic ties and EU sanctions on Moscow when they meet for talks, which Kommersant said would take place on Thursday.

"We are ready to consider the issue of a gas price discount for Greece," the newspaper said quoting an unnamed Russian government source.

Russia's state-controlled producer Gazprom declined to comment. The Energy Ministry also declined to comment.

The source said that in exchange for the discount and some unspecified loans, Russia would want access to Greek assets. The source did not name any specific assets.
In recent weeks, the gas price charged by Gazprom has fallen, tracking lower oil prices. Gazprom said it wanted to acquire DEPA in 2013 but dropped its bid after failing to receive enough guarantees over DEPA's financial position.

So that is the Russian offer. The all important question remains: what will Russia request in return for these key concessions and will Greece be willing to accept it. Then again, running out of cash may just be impetus Greece needs to open up negotiating avenues which until recently it had said it would never cross as long as it is part of the Eurozone.

Greece Calculates Germany Owes It A Third Of Its Q4 GDP In WWII Reparations

Submitted by Tyler Durden on 04/06/2015 13:15 -0400

With almost 70% of Europeans already believing that Greece is a drag on the EU economy, this morning's statement by Greek Alternate Finance Minister Dimitris Mardas - coming just a week after the war-raparations committee was set-up, telling lawmakers in Parliament that he has calculated that Germany owes Greece EUR 278.7 billion in World War II reparations, will surely deepen the rift (at almost 40% of Germany's EUR 735 billion Q4 GDP) whether right or wrong.

As Bloomberg reports,
Greece's total war reparations claim amounts to EUR 278.7b, Greek Alternate Finance Minister Dimitris Mardas tells lawmakers in Parliament. 
The claim was calculated by Greece’s General Accounting Office, which has collected archival material.

This includes a EU10.3b repayment of loan country was forced to make to Germany during Nazi occupation...

Another legal issue that has surfaced concerns the 476 million reichsmarks lent against its will to Germany by the Greek National Bank during the war. If this were to be considered a form of war damage, then in principle it would be subject to reparation — except that according to the 1990 treaty, Germany would not have to pay it.
If the money were, however, to be considered a normal credit, then Greece would be entitled to get the money back. The problem is this: even partial recognition of such a debt would create a precedent that could bring untold claims in its wake.

* * *

This comes less than a week after the war reparations committee was set up... (Reuters on April 1st)

A Greek parliamentary committee set up by Prime Minister Alexis Tsipras's government to demand reparations for the Nazi occupation of Greece began work on Wednesday, in a move likely to heighten tensions between Athens and Berlin. 
Greece's emotive campaign for war damages has been waged for decades by governments and private citizens alike. But it has gained momentum in recent years as Greeks suffered under the German-backed austerity imposed by the European Union and the International Monetary fund in exchange for financial bailouts.
The committee that began work today will claim German debts include war reparations, the repayment of the so-called occupation loan that Nazi Germany forced the Bank of Greece to make and the return of stolen archaeological treasures. 
Tsipras has accused successive German governments of using legal tricks to avoid paying compensation. Germany dismisses the claims as a distraction from Greece's financial difficulties. It says it has honoured its obligations, including a 115 million- deutsche mark (60 million euros) payment to Greece in 1960. 
Relations between the two countries have frayed since Tsipras's government took power in January seeking to ditch previously agreed bailout promises of austerity measures such as steep cuts to wages and pensions. 
The Nazi theme is popular among Greek media in taking potshots at Germany, the country's biggest creditor. German officials like Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble have been depicted in Nazi uniforms or with Hitler moustaches. 
Hundreds of villages were destroyed, thousands of civilians executed and huge sums looted from the Greek central bank during the Nazi occupation. The Greek government has not officially quantified its reparation claims.

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