January 29, 2012
When the first revision of the second Greek bailout to the tidy round number of €130 billion was announced, we scoffed, mockingly. Because a country which then had a 7% budget deficit, and now has a deficit that will be well in the double digits, and not to mention a banking system that is now hollow following tens of billions in deposit withdrawals as month after month the Greek bank run gets worse, would obviously need much more liquidity (but banish the thought that it is a solvency crisis…) Sure enough, earlier today Der Spiegel broke the news that the second bailout, which has yet to be re-ratified, and absent Greece meeting demands to cede fiscal sovereignty, is likely a non-starter, would be increased to €145 billion “citing an unidentified
official from the so-called troika.” So whether or not this is true is irrelevant: what matters is that Spiegel released the article in the same series of posts in which it explained just why Germany has full right to demand (via European enforcement mechanisms or however) virtually anything in exchange for the ongoing endless bailout (such as: Merkel macht Wahlkampf für Sarkozy andGriechenland sträubt sich gegen EU-Aufpasser). Which means one thing only: the great propaganda spin machine is now on, and its only purpose is to provide Germany a buffer of “having done everything in its power” to prevent the now inevitable Greek default. Which, incidentally, means that a Greek default is inevitable. Because at this point once the default floodgates open, the question will be not where the bonds will trade, but just how big the impairment on the European DIP (aka Troika bailout package) will be.
More from Spiegel:
The situation in Athens is more dramatic: the EU wants to take control of Greece’s budget, the rescue package for the ailing state amounts to SPIEGEL information on 145 instead of 130 billion euros. In Berlin, formed a broad resistance to further aid.
It’s like a bottomless pit: the planned emergency measures for Greece are not enough to lead the country out of crisis. According to the troika of the EU Commission, European Central Bank and the International Monetary Fund, the country still needs one additional 15 billion euros. Instead of 130 billion euros, as yet decided in late October last year, would be about 145 billion euros due, according to SPIEGEL information in the Troika, which started recently, her work in Athens again.
Reason for the gap is worsening the economic situation in Greece. “We do not believe that you can collect the missing money solely with the private creditors,” it says in the Troika.
In the Berlin coalition is forming, however, resistance to further Griechlandhilfen , as it has brought, among other things, the EU Commission comes into play. “At our attitude has not changed,” said CSU leader Horst Seehofer in Der Spiegel. “For reform standstill, there is no money.” The CSU reject new aid for Greece over the programs adopted out, Seehofer said. “If the Greeks do not implement the reform programs, it can give no further assistance.”
Also FDP parliamentary leader Rainer Bruederle calls for a relentless attitude towards Athens. “Solidarity is a two way street, so far as the European Community must stand firm and demand the necessary structural reforms,” ??he says. “Only when the Greeks also provide evidence that they are serious, we can and must help the European Community.”
German political support for a Greek bailout is next to zero:
The first coalition MPs have already announced that they plan to vote against a new Greece package. The Bavarian FDP members Erwin Lotter, who has previously approved all the euro rescue package would not do the same in the case of Greece. “I thought, the Greeks took their time,” he says. “Now I am assuming that there is a bankruptcy, the problems can not be solved with more money.”
The CDU -female politician Wolfgang Bosbach, announced that he will not vote for new tools Greece. “The Greeks do not lack the political will, but the economic strength to get back on its feet.” Even in the European wing of the party is spreading now from discomfort. “It has become a big annoyance made ??broad,” says the chairman of the EU Affairs Committee Gunther Krichbaum.
“All Greek parties must finally show the absolute will to change anything fundamentally.” The deputy chairman of FDP Toncar Florian said, Greece is by far the most difficult decision for his party.
Last, and certainly least according to the Germans, is the Greek government, which until the news broke late last night, had no advance warning of German intentions:
The government in Athens according to the information officially know nothing of the plan.
At least Hank Paulson was kind enough to let congress and the population know when he came up with his three-page blank check term sheet to bailout his former employer. In Europe, Greece apparently was not even worthy the cost of a fax with the German one-pager before it was leaked to the press.
This article was posted: Sunday, January 29, 2012 at 6:50 am