Germany rejects Greece 'take-it or leave-it' debt offer

[mick silver]

Germany rejects Greece 'take-it or leave-it' debt offerhttp://l.yimg.com/os/publish-images/news/2013-08-26/d19448d6-6aaa-4359-a768-eadacf5fbca9_afp-gif_new.gif (http://www.afp.com/) By Alex Pigman with John Hadoulis in Athens 18 minutes ago





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Brussels (AFP) - Germany rejected a request by Athens Thursday for a six-month extension to its EU loan programme, denting hopes that Europe and Greece can find a quick solution to a bitter debt row.
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German finance ministry rejects Greek proposal as insufficient (http://news.yahoo.com/german-finance-ministry-says-greek-proposal-insufficient-123324055--business.html) Reuters







Eurogroup head Jeroen Dijsselbloem said finance ministers from the 19-member eurozone would meet in Brussels Friday to consider a take-it or leave-it proposal by Athens to extend its European loan programme that expires at the end of the month.
But key powerhouse Germany quickly shot it down, slamming the Greek request as "not a substantial proposal for a solution" only moments after the European Union had hailed it as a step in the right direction.
"The letter does not meet the criteria agreed upon in the Eurogroup on Monday," said a spokesman for German Finance Minister Wolfgang Schaeuble.
The meeting on Friday will be the third in a little over a week by the single currency bloc's finance ministers to reach a compromise with the new leftist government in Greece after previous talks ended in chaos and recrimination.
- Personality clash -
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(http://news.yahoo.com/photos/top-european-official-says-stand-off-result-clash-photo-165536687.html)A top European official says the stand-off is the result of a clash of personalities between the Gre …

A top European official said the stand-off had come down to a clash of personalities with Germany's Schaeuble, the euro's most powerful defender, furious at the negotiating style of his Greek counterpart, the casual and fast-talking Yanis Varoufakis.
"There is a real problem of personalities and I understand that. Schaeuble is outraged by comments made by Varoufakis," the official said.
Greece made a formal request for a loan extension Thursday, offering major concessions including a return, if not in name, of the hated 'troika' mission of creditors that has overseen Athens finances through two bailouts.
Faced with the German refusal, Athens said its request was final and eurozone finance ministers would have to take it or leave it.
"Tomorrow's Eurogroup has just two choices. To accept or reject the Greek request," a government source said after the German snub.
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(http://news.yahoo.com/photos/greeces-prime-minister-alexis-tsipras-r-finance-minister-photo-165536383.html)Greece's new Prime Minister Alexis Tsipras (R) with his Finance Minister Yianis Varoufakis at th …

"We will now discover who wants to find a solution, and who does not," the official added.
Greece insists the request satisfies the demands of its partners, while also keeping a promise to end the detested austerity conditions in the bailout which it says have destroyed the economy.
"The government... is not asking for an extension to the memorandum," an official source in Athens said, referring to the reform agreement between Greece and the troika -- the EU, European Central Bank and International Monetary Fund creditors.
Wording is key to resolve the feud, with Greece's ruling Syriza party saying it is only requesting an extension to the loan part of the 240-billion-euro rescue that came with commitments to push through austerity and deep reforms.
However, key eurozone partners, led by Germany, say the distinction is unacceptable, insisting that any extension include the austerity commitments of the full programme.
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(http://news.yahoo.com/photos/greek-prime-minister-alexis-tsipras-attends-vote-president-photo-203941650.html)Leftist anti-austerity party Syriza, led by Alexis Tsipras, won Greece's snap election on a mand …

In substance, the two sides are not that far apart, with new Greek Prime Minister Alexis Tsipras willing to press on with reforms, if different from those embraced by previous conservative governments.
In return, Tsipras is demanding that the eurozone agree to short-term funding to buy the time needed to hammer out a new rescue deal, something the requested extension would provide.
Germany has rejected this option calling Thursday's extension request nothing more than "bridge financing, without meeting the requirements of the programme".
- 'Eurozone more stable' -
Meanwhile the European Commission, the EU's executive arm, seemed optimistic, believing that the Greek request could "pave the way" for a difficult compromise, a spokesman said.
With the European portion of the bailout expiring, Greece's creditors insist it needs extra financing to stave off default and an exit from the euro.
Providing much needed breathing room to Athens, the ECB decided Wednesday to increase the amount of emergency liquidity available to Greece's vulnerable banks.
The increase was weaker than expected, however, and seen by analysts as a warning by the ECB that Athens accept a deal as soon as possible.
As the clock ticked down to a Friday deadline set by Dijsselbloem, European markets held their cool and were little changed.
A report by ratings agency Standard & Poor's said the risk of financial chaos spreading in the event of a Greek exit from the eurozone is limited and lower than during the 2012 "Grexit" scare.
"The eurozone is certainly more stable and stronger than five years ago, and a hypothetical chance of a member leaving should have little effect," said Estonian Finance Minister Maris Lauri.


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Budget, Tax & Economy
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Wolfgang Schaeuble
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[Twisted Titan]

This is all kabuki theater

The new PM will bow or he will get Kaddafied in due time.

[mick silver]

this could go two ways TT ... Putin Could Offer Greece a Lifeline and Leverage As finance ministers from across Europe held emergency meetings in Brussels in an effort to keep a newly assertive Greece in the currency union, Russia’s Foreign Minister Sergey Lavrov repeated an offer from Moscow to provide Greece with the funding it needs to ease punishing austerity programs and rebuild its economy.
Last week, Tsipras discussed bolstering ties with Russia in a phone call with Putin, according to a statement released by his office. “The Russian president and the prime minister emphasized the need for substantial improvement of the cooperation between Greece and Russia — countries with deep and historic ties — especially in the sectors of economy, energy, tourism, culture and transport,” said a statement from Tsipras’s office, also noting that Putin had invited Tsipras to visit Moscow in May.
Then Wednesday, as the EU finance ministers were trying to hammer out a deal with Greece, Lavrov, Russian’s foreign minister, again raised the issue of Russia riding to the rescue of the Greek people in a joint press conference with Greek Foreign Minister Nikos Kotzias.
He said they also discussed further cooperation on the issue of energy. “We discussed energy cooperation, considering Athens’ interest in the plans of building a gas pipeline from Russia to Turkey and to the Greek border,” Lavrov said. “We believe this project has good prospects.”
Lavrov also threw in some praise for the Greek government’s initial resistance to an EU plan to extend economic sanctions against Russia over its continued aggression in eastern Ukraine. “We appreciate the stance of the Greek government, which understands the complete counter-productivity of attempts to speak this language with Russia,” he said.
via CNBC (http://www.cnbc.com/id/102420187) http://www.marketpulse.com/20150212/putin-offer-greece-lifeline-leverage/

[mick silver]

Is Putin Trying to Pry Greece Out of the European Union?
http://finance.yahoo.com/news/putin-trying-pry-greece-european-113000494.html

[mick silver]

Germany may have just put the nail in Greece's Euro zone coffin

COMMENTARY by
Cyrus Sanati (http://fortune.com/author/cyrus-sanati/)



@beyondblunt (https://twitter.com/beyondblunt)

February 19, 2015, 2:30 PM EST

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In a shocking turn of events, Germany’s finance ministry rejected Greek’s request for an extension to its expiring bailout agreement. This has only accelerated the financial panic in Greece.
Germany’s rejection of Greece’s wilted olive branch on Thursday may mean that the Grexit—Greece’s exit from the Eurozone—is now inevitable.
German and European Central Bank officials have grown increasingly obstinate in recent months, showing little sympathy for Greece’s appeals for leniency connected with its bailout agreement. It is unclear what the fallout would be if Greece were to impose capital controls and leave the euro, but it seems that Germany and the ECB just don’t care anymore.
Greece’s new left-wing government blinked on Thursday morning in its month-long standoff with its eurozone partners, saying (http://www.reuters.com/article/2015/02/19/eurozone-greece-request-idUSL5N0VT2S720150219) that it would agree to a six-month extension of the expiring bailout agreement at its current terms so that the two sides could have more time to negotiate. It was a typical “kick the can down the road” move we have come to expect from EU officials, something that Greece’s new government promised it wouldn’t do just a couple days earlier.
The markets rallied on the news, with Greek bank stocks shooting up 10% and Greek 10-year bonds yields falling back to the single digits. The so-called “radical (https://www.scribd.com/doc/256125514/Greek-Finance-Min-presentations-at-Eurogroup-11-15-Feb-2015#download)” Greek government finally fell in line with the status quo, and that itself was enough for the market to chill out and hobble onward.
But in a shocking turn of events, Germany’s finance ministry rejected the Greek proposal, saying that it amounted to a bridge financing deal that didn’t propose any “substantial” solutions to the problem at hand.
So, what has changed? Did Germany truly expect a real solution to this issue? Or was the finance ministry just pretending to play hardball to save face with the German public? This wouldn’t be the first time for Germany to claim it was calling Greece’s bluff and then fall apart at the end of the day. It has happened pretty much every time Germany has negotiated a bailout deal since the eurozone debt crisis began in 2009.
But this time could be different. A report (http://www.faz.net/aktuell/wirtschaft/eurokrise/griechenland/notenbanker-verlieren-den-glauben-an-griechenland-ezb-verhandelt-ueber-ela-kredite-13436284.html) in German newspaper Frankfurter Allgemeine Zeitung quotes an unnamed central banker from the ECB who believes that the Grexit may now be inevitable. “One gets the impression that the Greeks want to get out [of the euro] and are just looking for an escape goat,” at this point, the unnamed central banker told the paper.
This comes a couple weeks after the ECB abruptly (http://fortune.com/2015/02/06/greece-germany-eurozone-fate/) stopped taking Greek sovereign bonds from Greek banks as collateral for low-cost loans to fund their operations. The ECB had been loaning the banks money and accepting the junk Greek debt at face value even though it was worth a fraction of that amount in the real world, something that, naturally, angered Germany.
The ECB pulled this cheap financing as Greeks were pulling money out of the their banks amid growing fear of a Grexit, when the Greek banks needed the money the most. The Greek banks were forced to turn to their own central bank for cash, which also borrows from the ECB, but at a higher interest rate.
All this has accelerated the run on the Greek banks, forcing the Greek Central Bank to borrow at a frenetic pace from the ECB to make sure they have enough cash on hand to meet demand. But there is a limit to how much the Greek Central Bank can borrow from the ECB, 65 billion euros, and it appears that they just hit the ceiling. The Greeks reportedly asked the ECB to increase their line of credit by 10 billion euros, but the ECB agreed in an emergency meeting overnight that it would only increase it by 3 billion euros.
The ECB knows very well that money buys the Greek banks a week, two weeks tops. The Greek banks won’t need the money if the panic stops, but that won’t happen unless Germany relents and agrees to Greece’s demand for leniency. With Germany saying Nein today just to extend talks without granting any concessions, it is now clear that the whole situation may actually blow up this time.
Greece will then have to make a tough choice. They will either need to accept total defeat and continue on with the terms of the bailout agreement, which would probably result in a Greek default in a few months time, or they can institute capital controls (which would restrict people’s ability to withdraw cash), default on the bailout now, and leave the euro.
Will the Grexit cause the euro to fall apart? Mario Draghi, the head of the ECB, famously promised that he would do “whatever it takes ” to save the euro, so a Grexit may not automatically mean the end of the currency union. He has been preparing for years to counter the backlash that would follow a Grexit, most recently by announcing a multi-billion euro quantitative easing program that could stabilize the bond yields of EU countries if they explode post-Grexit. Will it be enough? No one knows for sure.
For Greece, neither of its option seems acceptable at this point. For some reason, Greeks overwhelmingly want to stay in the euro, which is why the Greek government swallowed its pride and agreed to kick the can down the road. Jeroen Dijsselbloem, the current head of the Euro group negotiations with Greece, called for a fourth “extraordinary” meeting tomorrow of finance ministers to discuss the Greek plan. While Dijsselbloem is somewhat hopeful that a deal can be struck—he said at the last meeting that he wouldn’t call another unless he thought a deal was close—it will be impossible to strike an agreement without German backing, meaning a Grexit could be just around the corner.

[midnight rambler]

this could go two ways TT ... Putin Could Offer Greece a Lifeline and Leverage As finance ministers from across Europe held emergency meetings in Brussels in an effort to keep a newly assertive Greece in the currency union, Russia’s Foreign Minister Sergey Lavrov repeated an offer from Moscow to provide Greece with the funding it needs to ease punishing austerity programs and rebuild its economy.
Last week, Tsipras discussed bolstering ties with Russia in a phone call with Putin, according to a statement released by his office. “The Russian president and the prime minister emphasized the need for substantial improvement of the cooperation between Greece and Russia — countries with deep and historic ties — especially in the sectors of economy, energy, tourism, culture and transport,” said a statement from Tsipras’s office, also noting that Putin had invited Tsipras to visit Moscow in May.
Then Wednesday, as the EU finance ministers were trying to hammer out a deal with Greece, Lavrov, Russian’s foreign minister, again raised the issue of Russia riding to the rescue of the Greek people in a joint press conference with Greek Foreign Minister Nikos Kotzias.
He said they also discussed further cooperation on the issue of energy. “We discussed energy cooperation, considering Athens’ interest in the plans of building a gas pipeline from Russia to Turkey and to the Greek border,” Lavrov said. “We believe this project has good prospects.”
Lavrov also threw in some praise for the Greek government’s initial resistance to an EU plan to extend economic sanctions against Russia over its continued aggression in eastern Ukraine. “We appreciate the stance of the Greek government, which understands the complete counter-productivity of attempts to speak this language with Russia,” he said.
via CNBC (http://www.cnbc.com/id/102420187) http://www.marketpulse.com/20150212/putin-offer-greece-lifeline-leverage/

How funny! 'Communist' Russia is going to step up to save Greece from high finance capitalism. lol /sarc