The Greek Problem - Two More Bailouts Needed

European Central Bank Governing Council member, Luc Coene, is quoted by Reuters:

"It's clear that we are not yet at the end of the Greek problem. 

We will need to make further efforts, certainly once, perhaps twice more. 

We will see how the situation develops."

My advice to Greece stands, leave the Eurozone and devalue your currency.

Greece Wants To Renegotiate Bailout Terms

Yannis Stournaras, the Greek finance minister, told German newspaper Handelsblatt on Monday that Greece may seek to ease its debt burden by renegotiating its bailout terms.

The renegotiation could involve lower interest payments and more time to repay 240bn euros in loans.

The BBC reports that on Sunday he admitted that Greece may face a hole in its finances of up to 10bn euros.

As I have noted before, the only real solution for Greece's financial and social woes are for it to leave the Eurozone and devalue its currency.

Greece Needs Another Aid Programme

According to the Twitterverse, German Finance Minister Wolfgang Schaeuble has said that Greece will need another aid programme.

This should come as no surprise, given that the Bundesbank said the self same thing the other week.

Greece Imploding

Greece is continuing on its downward spiral to financial implosion.

To add to the woes of the good people of Greece, on top of last week's truly shocking youth unemployment statistics (close to 65%), Reuters reports that Greece's economy shrank at annual pace of 4.6% in the second quarter, contributing to a slump of more than 20% in real terms since 2008.

Ironically, in the delusional world of economists, these figures were slightly better than the 5% contraction forecast.

Delusions aside, Der Spiegel has blown the whole charade of bailing out the Greek economy wide open. It quoted an internal document prepared by the Bundesbank as saying that Europe "will certainly agree a new aid programme for Greece" by early next year at the latest.

The Bundesbank also described the risks associated with the existing aid package for Greece as "extremely high", and said the approval last month of a 5.8 billion euro aid instalment to Athens had been "politically motivated".

As I have noted many times before, in order to survive as a democracy and civilised society Greece needs to exit the Eurozone now; others such as Cyprus need also to consider their positions. 

The Verdict on Greece

Last week I wrote that Greece had been given a three day deadline to reassure Europe and the International Monetary Fund that it could deliver on conditions attached to its international bailout in order to receive the next tranche of aid.

Unsurprisingly, post deadline, the EU and IMF have given Greece a less than ringing endorsement noting that the outlook for Greece's bailout programme remains uncertain.

Reuters quotes the Troika:

"While important progress continues to be made, policy implementation is behind in some areas.

The authorities have committed to take corrective actions to ensure deliver of the fiscal targets for 2013-14 and achieve primary balance this year.

The mission and the authorities agreed that the macroeconomic outlook remains broadly in line with programme projections, with prospects for a gradual return to growth in 2014. The outlook remains uncertain, however."

As I warned last week, those with money in Greek bank accounts would be advised to withdraw it now before the jackals pounce. 

Greece's Day of The Jackal Looms

Reuters reports that Greece has been given three days to reassure Europe and the International Monetary Fund it can deliver on conditions attached to its international bailout in order to receive the next tranche of aid.

Europe and the IMF are unhappy with the progress that Greece has made towards reforming its public sector and improving its tax collection.

In the event that Greece misses the deadline or its promises fail to assuage its "bankers", then as sure as eggs are eggs the "solution" that was foisted upon Cyprus (ie a raid on bank accounts) will be foisted upon Greece.

Those with money in Greek bank accounts would be advised to withdraw it now, before the jackals pounce. 

David Drumm Apologises

David Drumm, ex CEO of the now defunct Anglo Irish Bank, has apologised for the language used in a phone call released by the Irish Independent.

All sorted then!

Cyprus NOT Seeking Renegotiation of Bailout

Q: When is a renegotiation not a renegotiation?

A: When it is a "tweaking".

The Bungled Bailout

The IMF has issued a report that concludes that the bailout of Greece was bungled, because it was an attempt to save the single currency rather than Greece itself.

Very true indeed.

Unsurprisingly the Gnomes of Brussels flatly reject the report.

Well they would, wouldn't they?

That being said, given that the IMF thinks that the bailout was bungled, why did the IMF agree to participate in bailing Greece out twice?

Cyprus Parliament Votes

Today the Cyprus parliament will be finally given an opportunity to vote on the bailout plan imposed on it by the IMF/EU.

Pundits expect that the bill will pass.

However, if it doesn't, the EU/IMF will simply delay the bailout until the parliament votes in favour of it.

"Democracy" in action, the EU way!

Wheels Fall Off Cyprus Bailout Agreement

It seems that the wheels are falling off the Cyprus bailout deal.

The cost of the rescue has risen from Euro17.5BN to Euro23BN, but Germany remains adamant that the size of the bailout will not increase. 

Meanwhile the BBC reports that Cyprus president Nicos Anastasiades has said that he will appeal for extra assistance from the European Union, even though he claims he does not want more money.

What does he want?

Help from EU to reduce the burden of the conditions to make the bailout possible.

In other words Cyprus is trying to renegotiate the terms of the bailout, ie the wheels have fallen off the agreement!

Cyprus Brings Euro Project Crashing To Earth

The former Governor of the Central Bank of Cyprus (Athanasios Orphanides) has vented his spleen against the Eurozone and the ECB over the handling of the Cyprus bailout farce.

Mr Orphanides told the FT that the EU has been condemned to economic disintegration as a result of top policy makers’ “bullying” of Cyprus and “cavalier attitude” towards the expropriation of property:

“The European project is crashing to earth.

This is a fundamental change in the dynamics of Europe towards disintegration and I don’t see how this can be reversed.”

He bemoaned the lack of "fraternal" support from fellow Eurozone members:

“I would have expected them to support the European project. I would have expected them to protect the citizens of the smallest and weakest member states against discrimination. We have seen a cavalier attitude towards the expropriation of property and the bullying of a people.”

He noted that:

“It suggests that in Europe not all people are equal under the law.”

He quite rightly notes that the outcome of this ongoing farce has yet to be fully felt in the global financial markets:

“I don’t think that the full extent of the shattering of the trust that we have seen in this case . . . has been seen fully yet.

Banks’ funding costs in the [southern eurozone] periphery will rise further – there is no way we will avoid that. This in turn will make the recession in the periphery deeper, adding to the misery that the mishandling of the crisis has caused so far.”

Were one a cynic one might wonder whether this farce has been deliberately engineered in order to force the "peripheral" countries out of the Eurozone, or to give Germany the excuse it needs to leave it.

State Sponsored Theft

In an action that can only be described as "state sponsored theft", depositors in Cypriot banks will be hit with a one off tax on their savings, as part of the €10 billion bailout for Cyprus from the euro zone and the International Monetary Fund.

Accounts with more than €100,000 will be taxed at 9.9%, those with less at 6.75%. The money will be taken on Tuesday (Monday being a bank holiday).

It is clear that the governments of the Eurozone will do anything to keep the failed Euro experiment alive, resorting to state sponsored theft as and when required.

Clearly those with money deposited in Eurozone accounts cannot trust the governments of the Eurozone. Anyone with any commonsense will withdraw their money immediately, and place it outwith the Eurozone.

Oh and by the way, the fact that the money will not be taken until Tuesday gives people three days to empty their accounts via ATMs.

Rest assured this insane idea will cause a run on the banks in Cyprus, and will cause catastrophe in the financial markets on Monday.

Troika Postpone Greek Decision

The Troika have left Athens without signing off on the next tranche of bailout loans for the country. They will return in April.

It seems that despite Greece making "significant progress", there remain "technical issues" that need to be resolved before Greece receives the next Euro2.8BN of bailout funds.

The sticking point appears to be whether Greece is making progress on substantially reducing (25,000 job losses by 2014) the size of its civil service.

BBC Berates Barclays

Barclays and the BBC have fallen out over claims in a Panorama programme entitled "Inside Barclays: Banking on Bonuses", to be broadcast tonight, that Barclays misled shareholders.

As per the BBC:

"After a series of controversies, bosses at Barclays say they're changing the culture of the bank. But what went wrong? Reporter Richard Bilton investigates the bonus culture that drove one of our biggest banks."

Panorama will accuse Barclays wrongly naming Manchester City owner Sheikh Mansour as the source of £3BN of bail-out money received during the banking crisis in 2008. The money helped Barclays stave off a government rescue akin to the ones used to prop up RBS and Lloyds TSB.

Panorama will state that the money came from the Abu Dhabi government, and that this was not properly disclosed in its 2008 accounts.

However, Barclays contest that it re-drafted all financial documentation “overnight” once the change had been identified except for one mention in the accounts, which it blames on a “simple drafting error”.

Barclays are quoted by the Evening Standard:

“We have repeatedly demonstrated to Panorama why the allegations which they plan to make in their programme are completely unjustified. 

Barclays is satisfied that the steps taken to disclose the change in ownership of the companies which were investing in the bank in 2008 were entirely appropriate. The change in ownership of the investing companies had no bearing on the transaction or required approvals.”

Professor Alistair Milne, an expert on financial regulation in the City, said banks are expected to release accurate information about major deals.

"Any discrepancy of that kind is serious because it raises questions in the minds of investors. Every bank is well aware the annual report is a critical document and a huge amount of time and attention is put in to trying to get all the details correct."

For good measure, the programme also claims that Barclays helped clients avoid tax on an “industrial” scale.

Spain Requests Bailout That Is Not A Bailout

Spain has requested a €39.5bn bailout for its banks, which is likely to be approved later today at a meeting of eurozone finance ministers in Brussels.

However, this is not a "bailout" in the Greek sense of the word. Spain will use this money only for its banks, it will not use it to prop up its ailing economy.

The request for a full bailout, in the Greek sense of the word, has yet to come. However, be patient it will come!

Wheels Fall Off Greek Bailout Plan

Unsurprisingly the wheels have fallen off the Greek bailout plan.

For why?

Eurozone banks do not want to take the losses that will arise from the Greek bond buyback plan.

The IMF will not release the next tranche of bailout money until the Eurozone delivers on the bond buyback plan.

See the problem?

Greece - The Never Ending Story

Despite Eurozone hyperbole that the Greek crisis has been "solved", via a debt write down, bond buyback and probable gifting of the next tranche of bailout money, it appears that this is not the end of the story.

German Finance Minister Wolfgang Schaeuble has in fact warned that Greece may need additional help.

As per ekathimerini.com, Euro-area governments may provide additional funding through the European Union structural fund and further interest payment reduction as long as Greece meets all its obligations under the agreement.

In other words there is an open ended commitment to prop Greece up.

Greece Needs Another Euro32BN

The Troika draft report on Greece states that Greece needs another Euro15BN to get it through to 2014.

For good measure the report goes on to say that Greece may need extra Euro17.6BN in 2015/16.

Whilst the powers that be ponder where that money is going to come from, of more pressing need to Greece is this Friday's bond maturity deadline; yet still no sign of the next tranche of bailout money!

The Empty Vessel That Is The ESM

In case you didn't realise it, today is the official launch of the European Stability Mechanism (ESM), allegedly this is the permanent bailout fund which offers a pot of cash that can be used to bailout troubled nations.

Eurozone finance ministers, who form the ESM's board of governors, will hold the inaugural meeting in Luxembourg today, two years after the idea of setting up such a fund was endorsed.

Who says that EU politicians don't move "quickly" when there is a crisis?

Reuters reports that the fund's lending capacity will be:

"based on 80 billion euros of paid-in capital and 620 billion of callable capital, against which the ESM will borrow money on the market to lend it on to governments cut off from sustainable market funding".

Oh, and it won't reach its full capacity gradually by 2014.

What does that mean?

It means that even "fully funded" at Euro620BN it hasn't enough money to staunch the tsunami ripping through the Eurozone's finances.

Oh, but as already noted, it hasn't got Euro620BN anyway; ie it is an empty vessel!