Posted on 02/21/2015 9:10:29 AM PST by Kaslin
Bailout Blueprint: Deal, Capitulation, or Neither?
At the 12th hour Finance Chiefs Draw Up Greek Bailout Blueprint.
Negotiations led by Jeroen Dijsselbloem, the Dutch finance minister who chairs the eurogroup of 19 eurozone finance ministers, have produced a common communiqué on the extension of Greece’s €172bn bailout, according to a eurozone official.Is there a deal? Does it need to be changed?
The text was produced after nearly five hours of bilateral talks between Mr Dijsselbloem and key ministers, including Yanis Varoufakis, Greek finance minister, and Wolfgang Schäuble, his German counterpart. The eurozone official also said Mr Dijsselbloem was in direct contact with Alexis Tsipras, Greek prime minister, during the talks.
The text must now be presented to all 19 eurozone ministers for approval. “It will be fast,” said the official.
According to a Greek government official, the new text was also agreed by the three institutions that monitor the country’s bailout: the European Commission, the European Central Bank and the International Monetary Fund.
Mr Varoufakis had earlier insisted that Greece had made sufficient concessions to reach a deal to extend the bailout for six months after it expires next week and predicted that he and his 18 eurozone counterparts would reach an agreement.
He said Athens had “gone not an extra mile [but] an extra 10 miles” in its proposal for the extension, submitted to eurozone leaders on Thursday, adding it was now the turn of other ministers to meet Greece “not half way, but one-fifth of the way” to reach a deal.
Mr Varoufakis and a group of German-led eurozone countries are locked in a stand-off over the conditions of a bailout extension, with Berlin insisting the new Greek government agree to the terms of the existing bailout before it engages in negotiations over any changes in the programme.
Mr Tsipras’s government has refused, saying it was elected to end the current bailout, but has made significant concessions, agreeing to ask for an extension with some loopholes that would give it some leeway to negotiate terms.
Speaking after a meeting in Paris, the leaders of both France and Germany said they remained committed to keeping Greece in the EU’s common currency, but Angela Merkel, the German chancellor, added that Mr Varoufakis’ request needed to be changed before it would be acceptable.
“There is a need for significant improvements in the substance of what is being discussed so that we can vote on it in the German Bundestag, for example next week,” Ms Merkel said, standing next to her French counterpart, François Hollande.
If that's really the deal, then Greece bought time to speed up tax collections. In turn, that would strengthen its hand four months from now when this process starts all over.
As I pointed out previously, as long as Greece has a primary account surplus, it can stay on the euro.
I have wondered if tax collections had shrunk so much ahead of Syriza's victory that it no longer has a primary account surplus.
ECB Prepares for a Greece Exit from Euro Zone
Meanwhile, Spiegel reports ECB Prepares for a Greece Exit from Euro Zone
The European Central Bank is preparing for the event that Greece leaves the euro zone and its staff are readying contingency plans for how the rest of the bloc could be kept intact, German news magazine Spiegel reported in a preview of its magazine.I suspect the ECB has been preparing for Grexit for months, and that helps explain the hard stance of Germany.
The ECB declined to comment on the report, Reuters reported.
The German magazine also reported that the ECB was pushing Athens to introduce controls on the movement of capital.
Earlier this week, the European Central Bank denied a report in a German newspaper that it wanted Greece to introduce capital controls to stem the outflow of deposits from its banks.
Germany?s finance minister was hostile to Athens? proposal this week although the government softened its tone on Friday as euro zone finance ministers raced to break the deadlock.
The “other people’s money” appears to be running out.
That’s such a shame.
The common currency was a poorly-disguised way to transfer wealth from countries that produce to those that don’t.
Greece should go back to the drachma and solve its own problems.
From earlier reports, it appeared that the Germans had ‘gone French’ and surrendered to the Greeks. Looks like someone forgot to loop in Merkel.
Not going to happen. Grexit is a fantasy.
From the start of the EU in the mid 50s, the concern with admitting poor nations from the south, would be that of subsidizing them.
They were right. I have read the crux of the current matter, is resentment by Germans, of only getting 6 weeks off work with pay, in order for Greeks to get 10 weeks off with pay.
The “hard fought” agreement seems to be nothing more than kicking the can down the road an extra four months.
Yes, cutting their incomes, pensions and government spending by 50% would be a good start.
heh heh heh
This is what happens when you allow the PIGS at feed at the trough!
http://en.wikipedia.org/wiki/PIGS_%28economics%29
When PIGS fly everything you know about Euro crisis is wrong!
Try between 70 and 90%, Toddy. The US budget/fiscal numbers may indeed (almost surely are) fiction, but Greek number left both fiction and fantasy way behind in the 1990s and are getting further from reality with each passing day.
Which number(s)?
They'd be competitive with a 50% devaluation, don't you think?
Imports would tank.
They'd be free of the mean troika.
Win-win.
Imports would indeed tank, and Greece's economy would be effectively back where it was in about 1906.
Oh, and keep in mind that Greek debt, which, on a proportional basis DWARFS the US debt (think about that for a minute...) would have to -- completely as part of the bargain to redrachmatise -- be forgiven or defaulted upon. Good luck to the Euroturds in solving THAT little problem.
Unemployment would de facto vanish: every able-bodied person would be growing food to stave off starvation until (sigh...) US food aid arrives.
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