Grexit talks break down

From the FT:

…A high-stakes meeting of eurozone finance ministers over the future of Greece’s bailout unexpectedly broke down early in deliberations after Athens angrily objected to a proposal that it continue with the terms of its current €172bn bailout, calling it “absurd” and “unacceptable”.

The draft text, obtained by the Financial Times, states that Greece would agree to a six-month “technical extension” of its current bailout, which Athens has long viewed as a red line.

“This would bridge the time for Greece authorites and the Eurogroup to work on a follow-up arrangement,” reads the statement.

Shortly after Athens issued its angry objections, EU officials said the eurgroup meeting broke up after less than four hours of deliberations.

The two-page draft, labelled “preliminary and confidential”, reads that Athens would “successfully conclude the programme, taking into account the new government’s plans” and promised the “best use of the existing flexibility in the current programme”.

A Greek government official said the statement was a “radical withdrawal” of an understanding Alexis Tsipras, the Greek prime minister, had reached with Jeroen Dijsselbleom, who chairs the committee of eurozone finance ministers.

The official added that those who wanted to continue to press Greece to accept the current bailout were “wasting their time”, adding that under the circumstances, “there can be no agreement today.”

That’s pretty clear, bend or break, Eurozone. Also from the FT, the EZ offered a small extension to deadlines:

The eurozone gave Athens until Wednesday night to reverse course. Jeroen Dijsselbloem, chairman of the eurogroup of finance ministers, said the time available for a Greek request was almost out: “We can use this week, but that’s about it,” he said. “There was a very strong opionion across the eurogroup that the next step has to come from the Greek authorities,” he added.

…Although officials said they could still get an extension approved if a request comes before the end of the week, Monday’s impasse suggests further talks may be futile and that the bailout is set to expire on February 28.

Without an EU backstop in place, eurozone officials are concerned market turmoil could begin anew and are particularly worried that it could spark a bank run in Greece, which could be impossible to stop.

It looks like market panic may be needed to grease the wheels of negotiation.



      • Should now officially have “Aussie” Yanis Varafoukis as his moniker. Any chance he can become the treasurer?
        Perhaps in a Turnball government.

      • Europe is going through the difficult process of understanding that Greece has a new government committed to changing a programme that has clearly failed in the eyes of everyone who doesn’t have a vested interest.

        Bam. Goes to show that not all academics are lettuce-leaf ivory tower types. He absolutely schooled those journalist questions.

      • Mig, Germans don’t get mad, they get goosesteppin:: Tick, no.. Double Tick!! Germany will prevail WW

    • Clear discussion, logical, “no games” as he put it.

      A politician speaking plainly is too much to handle.

      They will have to come to some compromise (eurogroup) or they will find the project losing its legitimacy as people turn against it.

      • How long Greece can keep itself afloat without foreign support???.

        The European Central Bank will decide tomorrow whether to maintain lending to Greek banks that are bleeding deposits at an estimated rate of 2 billion euros a week.

        JP Morgan bank said that at the current pace Greek banks had only 14 weeks before they run out of collateral to obtain funds from the central bank.

        Greek banks are closed next Monday for a holiday.

        German Finance Minister Wolfgang Schaeuble said that Greece had lived beyond its means for a long time and there was no appetite in Europe for giving it any more money without guarantees it was getting its finances in order.

        Read more:

  1. I guess that Greece will see what China and Russia have to offer.
    Russia might find a warm-water port handy…

      • Did you mean…what turkey would let that happen?
        NATO wouldn’t be thrilled, but Greece is a sovereign country and can invite Russian ships to use its ports.

    • To rub it in even more for Turkey, they will invite a Russian naval to be build in Cyprus!! 😛

      I don’t think it’ll happen though. Before that can happen, US/Europe will initiate a military coup, and send in NATO troops afterward for ‘peacekeeping’.

      • An even better reason for Greece to align with China and Russia.

        I don’t think NATO is dumb enough to take on China and Russia in their own region, and the US hasn’t had a lot of success with war games away from home since WW II.

      • Blackwater, I mean Xe Holdings, I mean Academi, I mean Constellis Holdings, I mean the peaceful protestors will start firing shots and Blackwater, I mean Xe Holdings, I mean Academi, I mean Constellis Holdings, I mean Greek police will fire back at them starting the coup just like in Ukraine, Syria, Iran, etc, etc, etc.

  2. Good on Greece – stick it to ’em!

    Debtor and creditors were equally responsible initially, but now, with loan after bailout loan piled on top of a credit pile that was already too big, the creditors deserve everything they have coming (which is, hopefully, nothing).

    I do hope, however, that this doesn’t turn into a situation to be resolved militarily….

      • Don’t underestimate the Greeks. They were able to kick Italy’s butt in the 40s, despite all odds.

        It ain’t the same world anymore, so will probably be a proxy war of some sort, but a bunch of pissed off Greeks are a force to be reckoned with.

      • Uranium GeoMEMBER

        + I believe greece still has conscription although it probably wont be hard to motivate an already angry youth populace.

      • Russia is looking at servicing an Iranian push back against Saudis as well in retaliation for the US orchestrated coup in Ukraine.

        They already have Crimea.

        If they took a foothold in Greece they would have an arc covering the entire middle east.

        Cooperation between China and Russia with Egypt would see the entire region plus Suez annexed.

        China already has their deep water ports and freeways through the mountains – this is astonishing.

  3. Let’s not forget that Iceland successfully defaulted on its debt.
    Within 6 months of being told nobody would loan them money for many years, Iceland was offered a loan twice the size it was seeking… at 5% interest…much lower than they were paying previously.
    The reason… Iceland no longer had any debt…so it was now the best sovereign risk in the world.

    • Icelands debt was mostly private bank debt which england told them they had to pay. Iceland said no, it’s private debt not public debt and eventually after a couple of vetos and elections in Iceland the creditors had to give up.

      • That is true..
        But, the UK government paid out the UK banks…
        Then the UK government approached the Icelandic government to pay it back…
        Government to government.

      • Yes, thanks for the reminder.
        It’s a weird situation. The Icelandic bank was a private entity the Icelandic government and people wern’t liable for it’s debts. The UK banks get their sock puppet to bail them out and them claim they are owed the money by Iceland. And the UK wasn’t the only country trying trying to extort money out of Iceland.
        The saddest part is the Icelandic government was going to pay. Completly stuff the country by voluntarily paying someone elses debt. Fortunatly the president was sane enough to veto that which because of their constitution puts the matter to referendum which failed.

  4. If the greek state beleives it can default on its obligations and rebuild itself like the nation of iceland then I think they’ve got another thing coming. With a median age now of 42 and a massive welfare state the nation is just about cooked.
    I think the greek government is just buying time, politicing, but they know there is no real future for them outside the eurozone.

    • not to mention the fact that a lot of them literally don’t want to work.

      sick of the “good on greece” comments on here. the laziest nation in the world and deserve everything that they’re currently getting

      • How is a nation lazy? How many of the worlds ships are owned/operated by Greeks?

        Idiot, you’re intellectually lazy as f#ck and I’ll laugh my arse off when it’s you

      • Questionable Economics

        Agreed. I’m Greek and we’ve cut our relatives off. They don’t want to put in the effort to improve their situation

      • According to the EU’s own statistics they work about 200hrs more than the Germans per year. Their main problem seems to be that they are a Kleptocracy drowning in corruption and tax evasion.

        One of the organisers of the Olympics complained that it cost 4 times more than it should have to build the main stadium because of all the bribes he had to pay to get it done.

        And you can be sure that the ones suffering are not the kleptocrats.

      • Questionable Economics

        @littleguy Yes exactly, lets build something but leave a piece of scaffolding on the outside, oh its not finished I don’t have to pay tax

        I read a summary of that report. Hours worked does not equal productivity. Hate to use stereotypes but Germans are efficient

      • Another thing that irritating is that they are claiming that the Greeks are trying to rip of the other European taxpayers when it was the banks that made bad loans and the various E.U. politicians helped the banks move their losses onto the government balance sheets and then claimed that the Greeks were trying to rip everyone else off.

      • Would you buy the drachma? I don’t think their committed to structural reform which is what is really needed here. Too much state not enough private enterprise.
        The only thing the EZ should consider is dropping the budget surplus from 3% to 1.5% as part of a new deal. Who the hell is running surplusses of 3% theses days, no one.

      • Elfranco:

        They are very much committed to structural reform they are socialists. Their reform and the current Neoclassical debt deflation self-flagellation program are not the same. Although there is some common ground, reducing corruption and tax evasion for example.

        If you want an example how insane the current program is look at the asset sales. When you are trying to improve the long term prospects for a country how is it ever a good idea to sell profitable assets? That just gives you a short cash injection and a worse budget position. But thats part of the requirements of the bailout. They actually require Greece to reduce it’s ability to pay as part of a loan extension, thats either madness or a scam.

    • They have a sensational tourism industry which would absolutely THRIVE on the Drachma.

      Their position in the Med also offers them great opportunities.

  5. It’s great to see someone actually standing up for democracy against the interests of the elite. It will embolden a whole new generation of young Europeans if these guys can pull this off, and potentially even if they can’t, The system is laid bare for all to see now, with all of its ugliness. There’s precious little morality on the side of the Eurozone here. It’s all very well whinging that “why should German taxpayers have to pay for Greek excesses”. Well, first of all if you’re a taxpayer in the EZ it comes with the territory – don’t like subsidizing other countries, get out. Subsidies are as old as the EZ itself. They exist because it’s of benefit for the richer nations to stimulate economic activity in the poorer ones. It’s an easy source of growth for their companies and their economies. Similarly the IMF and World Bank have been at the same thing for decades all over the world – “open up your economy to competition, deregulate, privatise etc etc”, which really means “here have some debt… now let our boys in to make some money”. They aren’t handing out this money for no reason.

    It’s morally imperative that this system is challenged before it does even more damage. Politics and economics needs to move on. Hopefully this is the start of that.

    • +1
      Important comment Dave…thank you.
      I think a lot of people hoped this would come to a head in 2000, then again in 2008.
      It would be better to take our medicine now, no matter how distasteful, than to prolong the pain for ever.

    • Similarly the IMF and World Bank have been at the same thing for decades all over the world

      Yeah, they’ve tried to be a bit more sneaky about it these days after being kicked out of South America.

      “You will borrow this money from us, and you will use it to buy our manufactured goods and services”

      What a bloody joke.

  6. Greek government should:

    1) Default on its debt
    2) Print a debt free drachma / or equivalent and take power to issue currency away from commercial banks
    3) Back it’s currency by gold (borrowed from Russia) to some extent
    4) Make illegal fractional reserve banking and legislate 100% reserve banking

    Any attempt to reverse above (banking) should be punishable by death penalty.

    Debt based money which rules the world today is a 100% scam which extracts every last bit of wealth from a society regardless of work ethic. It is pure evil.

    All debt is fake and interest should not be payable.

    • +1 mirage

      Greece has 112.4 tonnes of gold… Quite a stash for a small population of 11 million people.
      Australia has only 80 tonnes with 23 million people.

      We sold most of our gold at the 1999 (Gordon) Brown Bottom.

      • Apparently most of our gold is in the Bank of England – our loyal banker mates have been looking after it

  7. This looks more and more like political stunt from which neither side can back down any longer.

    You know, like Hitler and Neville Chamberlain on 31/8/1939.