Because domestic reporting on Greece’s current difficulties is abysmal, and international reporting is hit-and-miss, and because any restructuring or default in Greece is likely to have major ramifications for Ireland, there is a new temporary feature being launched today, a daily update on Greece as the countdown progresses to the decision on the release of the next tranche of its IMF/EU bailout on 6th June. If Greece fails to secure its next tranche of €12bn, the fifth since entering into a €110bn agreement with the IMF/EU last May 2010, then Greecewill be unable to repay €13.7bn of maturing debt in June 2011 and there will be some form of default. Already Moody’s is warning of dire consequences of any Greek default on other peripheral countries, including Portugal and Ireland. Standard and Poor’s today toned down the impact of a default on Ireland and this evening Taoiseach Enda Kenny dismissed any notion of a default here. Our 10-year bond closed at a record 10.99% mid-point today which suggests markets are not so sure.
The update will combine the best of international and domestic Greek reporting, and may help inform the debate here about strategy and tactics to deal with its own debt.
The players:
George Papandreou. Prime minister since 2009. Leader of PASOK, a centre-left “socialist” party. Controls 160 of the 300 seats in parliament, so can push through legislation and reforms.
Giorgos Papaconstantinou. The Finance Minister.
Antonis Samaras. Leader of the main opposition party, New Democracy, a centre-right party. Controls 91 seats in parliament, so a minority but if consensus is required, this is the party PASOK needs to talk with.
Poul (not “Paul”) Thomsen. IMF Mission Chief forGreece (andPortugal), the equivalent of Ajai Chopra inIreland. Both are officially Deputy Directors forEurope.
Labour unions. In Greece, these are many times stronger and vociferous than our own. Effectively they represent the Opposition on the street.
The bailout:
Agreed in May 2010
€110bn total with €30bn from the IMF and the remainder from the EU.
Four tranches thus far drawn-down by Greece totalling €53bn
Fifth tranche of €12bn due for draw-down in June 2011 but dependent on a positive outcome of the current review mission, reviewing progress to date and outlook
The effective interest rate on the bailout is understood be around 1% less thanIreland’s, or 4.8% approximately
The ruling PASOK political party finally gets its finger out and produces a tangible set of privatisation and austerity measures. But now, the opposition led by Antonis Samaras is being unco-operative and is criticising the austerity measures for being so severe as to affect growth. Opposition co-operation is not needed to get the measures through parliament but the IMF and EU want consensus, and if there isn’t consensus, protests are likely to spill over onto the streets.
Following their shock departure last Thursday, citing lack of progress by Greek authorities, the IMF & EU teams have returned to Athens to review progress and the feasibility of current plans to introduce more austerity and commence privatisations which are ultimately aiming to raise €50bn. The teams are scheduled to remain until June 6th when they are expected to issue pronouncements on the feasibility of Greek plans.
The OECD outlook today was mixed in its projections for Greece compared with the EU Spring Forecast. The OECD says Greek GDP will drop by 2.9% in 2011 and will rise by 0.6% in 2012. The EU Spring Forecast projected a 3.5% drop in 2011 and a rise of 1.1% in 2012.
This evening there are citizen gatherings in Athens,Thessaloniki and Patras modelled on the Spanish demonstrations. There have been calls for peaceful protest, thoughGreecehas a difficult history of violent protests in the past two years. The main focus of the protests is ongoing austerity.
A panel of Angela Merkel’s political party, the CDU, has called for wage and pension moderation in Greece. Greek pensions are still around 94% of average Greek income, while Germans’ are only 40%. At 39.6% Greece also recorded the highest increase in wages in the euro zone from 2000 to 2008, according to the panel head, Kurt Lauk said. In Austria by contrast, wages only rose by 2.9%. Greece raised its retirement age from 61 to 63 to 65 last year.
NAMA Wine Lake 
This is all Greek to me, and obviously also to the IMF and EU!
Brian
PS Think you are optimistic to say there will be only 13 entries. Bet you 100 euro/drachma (whichever is the lesser).
The countdown will be interesting and a little diversion from the usual NAMAwatch.. though I am sure that will be sprinkled in between Greekwatch.
There is also a bit of Greek stuff over at at Zerohedge – more an American view and sure the US has until July til it has to kick the can down the road again.
Should be an interesting Summer
The EU suffers from what we might call the “Cyrenaic Syndrome”, a dynamic linked to the ancient Greek philosophers Aristippus and Hegesias of Cyrene, who, in 3rd and 4th Centuries BC, hypothesised that the goal of life was the avoidance of pain and suffering. Addicts accomplish this through substance abuse. The EU is trying to accomplish this through denial and lies. There is an outright refusal to accept that austerity and restructuring the debt (haircuts for the bank bondholders, the ECB and the hard Euro States) are the ONLY ways to actually deal with the problems it faces.
Take the words of the Economic and Monetary Affairs Commissioner Olli Rehn:
… “We have contained the crisis to the three countries now in the EU-IMF programs. It is not correct to speak of a crisis of the euro or monetary union.”
Mr Rehn is in DENIAL.
Then we have the LIAR. Last week’s startling admission from the head of the EU Finance Ministers, Luxembourg’s Jean-Claude Juncker, who stated that he “LIED” to the press and the public, regarding a secret meeting of top EU officialdom, held to discuss the Greek situation:
… “It was done in the interest of the people who use the euro as their common currency. The denial immediately prevented further speculation in the markets. Speculation about an exit by Greece from the euro-zone had to be avoided at all costs, in the interest of the euro-zone.”
Denials and lies…. Is this what the EU is reduced to? Liars and spin masters.
The reality is that the EU is unwilling to accept the fact that its weaker members have become addicted to debt and deficits, and that the fiscal imbalances in the PIIGS have become unmanageable.
Without acceptance of the true position, the EU cannot make a conscious decision to adopt fiscal austerity and a restructuring of debt that will allow the situation to be resolved.
The problem is … the desire to avoid pain, at any cost.
The debt-deficit crisis is NOT “contained”, as Olli Rehn would have us believe. The problems facing Greece, Ireland, and Portugal, will look like CHILD’S PLAY, when the situation in Belgium, Spain, and Italy, begins to take center stage. This is NOW HAPPENING, on the back of the outlook downgrade placed on Belgium and Italy, in synch with intensified anxiety linked to Spain following weekend elections in which the ruling Socialist party got mauled.
The EU has more pain to take yet – even though it is still in denial.
‘hopelessly devoted to EU’ what a funny Greece cartoon at the bottom of this link
http://twistedeconotwist.wordpress.com/2011/05/25/imf-will-force-greece-into-immediate-default-unless-eu-agrees-further-funding/
does watching ‘Greece’ over an over again constitute pain avoidance?
Superb summary, thank you. Can’t help wondering though – there’s a famous quote attributed to the editor of the Skibereen Eagle from way back even before the cold days, where he declared that he was “keeping an eye on the Czar of Russia” over his expansionist designs on China; the editor was right then, you’re right now but you despair as to whether anyone in this government is actually paying any real attention. Is their approach wilful ignorance, or just plain ignorant ignorance?