Greece Says It Will Make IMF Payment Next Week As Stalemate Continues

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A brief update on the negotiations between Greece and its creditors.

A number of Greek officials seemed to regard it getting at least some funds approved by the Eurogroup at its May 11 meeting as critical to being able to make a €750 million payment to the IMF on May 12. But on Thursday, Finance Minister Yanis Varuofakis said Greece will be able to meet that obligation, se we’ll assume that yet again the government has managed somehow to stump up the needed funds.

But while that move in theory buys the government more time, in practice, it’s not clear what the point is, given the following:

The two sides remain hopelessly at odds. The only progress has been on “shape of the table” issues. As the Financial Times notes:

Some officials on both sides of the talks had hoped that Monday’s meeting would at least produce a statement endorsing their progress but even that low bar appears out of reach.

With such an endorsement, Athens hoped the European Central Bank would be persuaded to increase its cap on the amount of short-term debt the government could issue — a key relief valve that would have eased, at least temporarily, the government’s cash crunch. But no such relief is now expected.

The Greek government continues to take steps to maintain support at home, such as rehiring 4000 government workers, in defiance of the previously-agreed “reforms”. While the number of employees involved is sufficiently small as to qualify as a symbolic gesture rather than one with any real economic impact, Greece’s critics can use it to argue that there’s no reason to trust them, that if the creditors give them new funds or restructure debt, the lenders have every reason to doubt that Greece will live up to any commitments it makes.

The new drop-dead date is in theory late May, which probably really means mid June. Greece has pushed back the apparent day of reckoning by a bit more than a month. Again from the Financial Times:

The current bailout ends in June and officials are starting to examine the calendar to figure out the drop-dead moment a deal must be reached to have enough time to clear all the prerequisites for a payment to reach Athens by June 30…

Most officials believe the last week of May would be the best-case scenario, leaving a full month for eurozone parliaments — including the increasingly hostile German Bundestag — to approve the deal and for Greece to pass and implement new laws.

We found with the February negotiations that the participants were able to compress the timetable and at least one country that was thought to have to get Parliamentary approval (Finland) decided that it could skip that. But an actual disbursement of funds is a bigger matter, so it’s doubtful that any government will try to finesse legislative approval this time. So I’d guesstimate that the real cutoff date is somewhere between June 14 and June 20.

Greece remains in the sweatbox. Remember that Greece no longer has a primary surplus, and has been scraping the bottom of the barrel to make payments to its creditors. Moreover, it was already delaying domestic payments. With revenues less than regular outlays, meeting its obligations to domestic payees, like government employees and vendors, is going to be a strain. Moreover, the withheld and delayed payments will apply more downward pressure on an already depressed economy. The government is having to impose austerity merely to continue in the negotiations. Will the ruling coalition’s approval ratings deteriorate further as the squeeze continues?

As Herbert Stein said, “Things that can’t continue, won’t”. But that dictum gives no guidance as to how long it take before the break finally occurs. Greece has managed to hold on for far longer than its officials led outsiders to believe, but it can’t make the payments due to the ECB in July and August without coming to a deal. Unless one side blinks, that seems as remote as ever.

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  1. Jim

    Presumably there is absolutely no good faith on either side in these negotiations. Does anybody actually expect Greece to keep any promises it makes?

  2. generic

    The Greeks might hope that the Euros will be willing to deal once they can’t hide behind the IMF anymore. And who knows, they might. There is no doubting their political cowardice at least.

  3. Larry

    The high profile scientific journal Nature has raised a red flag in how Greece is robbing it’s institutions to pay off the IMF:

    Greek cash grab
    Government’s decision to plunder university funds shows lack of respect for science.

    I can’t imagine that Syriza can remain popular for long with tactics like this, 4000 government employees or not.

  4. Jackrabbit

    Making Sense of Greece

    Its difficult to criticize Syriza’s strategy as incompetent when ‘failure’ is inherent in the strategy. And it’s difficult for Syriza to explain their strategy because: a) on its face its irresponsible, and b) touting a strategy that could be viewed as negotiating in bad faith could anger the Troika/Institutions and thereby lead to the worst outcome.

    At the heart of the current negotiations is a ‘Catch-22’: The Troika/Institutions will not negotiate on debt restructuring until Greece proves that they have the willingness and ability to repay the debt as it stands (making restructuring moot).

    Syriza chose not to pursue populist defiance that would’ve meant confronting the Troika/Institutions directly via solidarity with the left throughout Europe. Such defiance would’ve gratified anti-neolib activists and would’ve shown more visible progress but also risked a quick Grexit.


    Note: it is in the Troika/Institutions interest to paint Syriza as irresponsible and incompetent in this Game of Chicken. They can easily enlist the media in such a campaign. As noted Syriza can not effectively counter that as they weaken Greece as they move closer and closer to default.

    H O P

    1. Jackrabbit

      Eventual Outcomes:

      1) Greece folds, invoking TINA; obtains the 7.2 billion euro bailout money that has been withheld

      2) Troika/Institutions fold, a restructuring is announced

      3) Default: ELA support continues as restructuring terms are negotiated (Troika/Institutions use threat of forced Grexit as leverage in the negotiations)
      – a) Negotiations succeed
      – b) Negotiations fail – ELA support ends: Grexit

      4) Default: Troika/Institutions cease ELA support, forcing Greece out of Euro Zone (Grexit)


      3(a) seems to be the most likely scenario and it could take months for this to play out. Greece must be making the case that it is in the interest of all parties to avoid a default as that would unnecessarily increase cost. However, the Troika/Institutions likely view the costs of default as being born principally by Greece and that those costs are the penalty for Greece defiance.

      1. Santi

        I’m guessing that Greece keeps paying (and negotiating without austerity concessions) until the bonds held by the ECB are due, in July. Then, as it is obvious that they can’t pay, they have a strong political position: those bonds were a clear political error of the ECB, were not subject to a haircut in the “bailout” of 2012 and are a perfect embryo for the EIDB investment plan. The alternative is a ECB-only default, where IMF keeps getting paid and ECB/EG decide where to expel Greece or restructure outstanding ELA/Bonds/Programmes. All of this after the “bailout” is finished, i.e. with no further conditionalities or troika for Greece…

        1. Yves Smith Post author

          A default is still a default and gives the ECB, which is the real power player here, the perfect excuse for ending the ELA, which will kill the Greek banking system and force Greece to impose capital controls, nationalize its banks, and print drachma, a de facto Grexit.

          No country, including Greece in 2012, has stood up to an ECB threat to destroy its banks. Greece, Ireland, and Cyprus all capitulated.

          This is why I fail to understand the logic of wringing the country dry of cash when it can’t/won’t forestall a default and it hands the ECB the air cover it desperately wants to get brutal, as opposed to just really mean, with Greece,

          1. Santi

            I think it is the logic of “whatever it takes”, i.e., they expect an agreement without having to retreat from their red lines, provided that they stand firm enough. Greece needs plenty of reforming, and so does Spain, Portugal, I know it well, but the policies that were imposed since 2010-2012 go against the needed reforms, and make the situation worse. Keeping “playing by the rules”, as the amtsprachers repeat like parrots all the time (just heard De Guindos saying it about Greece) is stupid when the rules are wrong and counterproductive.

            The fact that nobody wants a default will make that it does not happen.

            1. Yves Smith Post author

              That is not at all the position of the ECB, the IMF, most members of the Eurogroup who have spoken up in the last month (including, critically, Eurogroup head Jeoren Djisselbloem), and even Merkel. The message is “we would prefer that there not be a default, but Greece needs to serve up a reasonable list of reforms.” The messaging has also been pretty consistent that the authorities think they can now handle a default if it comes to that.

              1. Santi

                They are bragging, and we’ll see it soon. They turn coward when faced with dignity and a firm attitude, like all bullies.

              2. Tsigantes

                I wonder why you believe them Yves?
                The ECB put Greece into the crunch illegally (drama!) but has gone on…and on… and on supplying ELA, including enough for the recent IMF payment. The whole show should have and could have been brought to a halt weeks ago since there is supposedly “no problem with a default”. You believe they are doing this for Greece’s sake out of some kind of ‘tough love’ solidarity concern?

                You also persist in the belief that Greek banks are not total zombie banks, dead in the water since 2012-13. As if crashing them will make some huge difference lol. They are nationalised zombies in all but name, been paid for ad infinitum by the Greek taxpayers.

                1. Yves Smith Post author

                  The ECB wants to have political cover. A default will do that. They didn’t want to lower the boom while negotiations are underway, since in theory both sides could come to a deal and the ECB would have derailed that by acting prematurely.

              3. Jackrabbit

                It’s essentially a game of Chicken.

                Each side will maintain course to the fullest extent possible and try to convince the other side to change course. Part of that convincing involves their boasting of their own determination to maintain course.

                I think each side has now taken the measure of the other and are now preparing for the worst. That is why Syriza has decided to hire civil service workers.

        2. Jackrabbit

          Well, I think Greece would rather Default to a Euro entity rather than IMF. Syriza’s strategy (I believe) is for EG to face the stark choice of accepting the end of austerity (and accepting the restructuring that entails) or ‘forcing’ Greece into default.

          1. Santi

            Specially if there is not enough money for IMF and pensions/salaries, there is a middle ground: delay payment to the IMF next Tuesday, making a public declaration after the cabinet meeting that started one hour ago, saying exactly so: we’ll pay, as soon as the remnants of the bailout, benefits of Greece in ECB, etc. are delivered. This in anticipation to EG tomorrow. This seems to be what Schauble points at

      2. Jackrabbit

        An overlooked outcome (as suggested by Yves below):

        5) Change in Government / Military coop (supported by European elite – TPTB)

        a) before Default
        b) before Grexit

  5. Wist


    New law passed in the Greek legislature Tuesday regarding the rehiring of 13,000 workers cut by the previous government as part of reform.

    It also eliminated annual evaluations for civil servants and promotions based on merit.

    The deputy minister of justice (Giorgos Katrougalos) said similar rollbacks were in store.

    The interior minister stated “we aren’t going to consult (bailout monitors), we don’t have to, we’re a sovereign state.”

    The online government portal Diavegia that allowed citizens to have access to decisions regarding state procurements, recruitments, expenditures of public organizations (transparency) is being dismantled by Syrzia.

    Syrzia campaigned on ending nepotism. Miltiadis Varvitsiotis (former Marine Minister) has presented a long list of spouses, siblings, children and party veterans who have all received high ranking posts in the Tsipras government and state apparatus (inclusive of the secretary general for international economic relations – Giorgos Tsipras – cousin to PM).

    1. Jackrabbit

      The whole reform agenda seems as stalled as the “negotiations” with the Troika/Institutions.

      The lack of reform is seriously detrimental because it conveys the message that Syriza is more interested in skipping out on their debt obligations than the best interest of their people. If the Troika/Institutions see it that way, then a restructuring before default is likely. On the other hand, Greece may take a step like this because Troika/Institutions intransigence makes them feel that a Default is likely (no restructuring prior to Default). Governments often view patronage jobs as a way to tighten their control during difficult times.

      I have argued previously that Greece should’ve made examples of some tax cheats and corrupt officials to bolster their reform credentials.

      H O P

    2. Dirk77

      Apparently I was wrong: the zone (or the union?) were pushing for some reforms to battle corruption? And the only thing syriza is intransigent about is rolling back those? Hopeless.

      1. Tsigantes

        Dirk77, where did you hear that

        the only thing syriza is intransigent about is rolling back

        corruption reform?

        SYRIZA has instituted numerous measures to roll back corruption, including asking the Swiss banking authorities for cooperation – the Swiss refused; investigating the Lagarde List and prosecuting for tax evasion case by case – the Bobolas brothers (mining, media) being the best publicized ‘catch’ so far; instigating the Commission for the Tax Audit; re-opening the investigation into Siemens; and today dismissing Sekallariou from Directorship of the HRSF pending her trial for corrupt sweetheart loans when she was at the Hellenic Post Bank, which brought down the bank. Many corrupt measures of the previous government have been halted – Athens Riviera, privatization of the coasts, Ellinikon. Details you cannot be expected to know because unreported by the MSM.

        This is the first time in decades that a Greek government has worked in the public interest – unlike the previous Greek governments’ collusion with Troika, privileging the Greek crony class and EU corporations.
        Nice Try.

        1. Jackrabbit

          Yes, we don’t hear much of anti-corruption measures. Absent such info, it is easy to portray Syriza as incompetent (in negotiations with the Troika/Institutions) and self-serving.

    3. John Jones

      Did Miltiadis Varvitsiotis put himself on the list for the post he received from his daddy?

      Funny the troika the euros and the media never had a problem with Miltiadis while he was doing their dirty work.

      1. Tsigantes

        John Jones:
        Nor did the Troika have any problem with Mrs. Sekallariou at the head of HSRF, despite the corrupt loans under her directorship at Hellenic Post Bank which brought Greece’s oldest ‘people’s bank’ down.
        She has just been removed from her post at HRSF today and is being prosecuted.

  6. which is worse - bankers or terrorists

    It’s simple: what solution will keep Syriza in power and the ECB whole? Bailouts!

    1. financial matters

      Except that this isn’t working. The 7 years of global bailouts have just increased inequality. They haven’t gone to building up the base and are reaching their limits of extraction.

      Now a bailout to put people to work would show some progress.

      I think we always want to show a premium for labor but also as Polanyi stated:

      ‘Compulsion should never be absolute; the “objector” should be offered a niche to which he can retire, the choice of a “second-best” that leaves him a life to live. Thus will be secured the right to nonconformity as the hallmark of a free society.’


      Jacobin has a recent interesting editorial on a progression to a more automated society and what this means to labor. (I would add that if people are supported at a basic level of food, medical care and education this can also act as a ‘universal basic income’ and save others from providing this support)

      “”Winning a share of the fruits of automation for the rest of us requires victory at the level of the state rather than the individual workplace.

      This could be done through a universal basic income, a minimum payment guaranteed to all citizens completely independent of work. If pushed by progressive forces, the UBI would be a non-reformist reform that would also quicken automation by making machines more competitive against workers better positioned to reject low wages. It would also facilitate labor organization by acting as a kind of strike fund and cushion against the threat of joblessness.

      A universal basic income could defend workers and realize the potential of a highly developed, post-scarcity economy; it could break the false choice between well-paid workers or labor-saving machines, strong unions or technological advancement.

      The strength of labor and the development of the forces of production, after all, are dialectically intertwined. Breathless robot hype aside, productivity growth in recent years has in fact been at historic lows, leading some pundits to warn of a “great stagnation.”

      One way to explain this is that when workers are cheap and controllable, it is easier for the boss to treat the worker herself as a machine than to find a machine to replace her. Thus, the strengthening of the working class both inside and outside the workplace becomes the force that pushes us toward the utopian ideal of a post-scarcity society and the abolition of wage labor.””

      1. Lambert Strether

        A universal basic income does not defend workers. It defends consumers. If anything, it will reinforce capital; bread and circusues works quite well, after all.

        1. financial matters

          I understand what you’re saying but I doubt that Jacobin is pro capital. This is more of a subsistence safety net that can increase worker flexibility by getting out of the commodity oriented work or starve choice.

          In the same issue they have an interesting discussion of 3d printing. (the word communistic can be unusual to mainstream but I think can be read as ‘for the common good and not completely oriented toward profit’)

          All Power to the Makerspaces

          “This is not to say that, once the costs of the mass-production of life start trending toward zero, people will not choose areas of life to sensualize with particularity, whether by physical production, or by using liberated time for renewed life activity. But that can only come as a choice rather than an imposed necessity, and it is that possibility that gives replication a communistic orientation.”

        2. vlade

          “It defends consumers.”
          And? Work, over the centuries, existed primarily so that a need could be satisfied. Vast majority of the population worked so that they could survive – by consuming the fruits of their labours so to say.

          You’re falling into the same moral imperative as those who claim that saving is good, spending is bad – as if one could exist without the other. Except now we can, actually, produce reasonable amounts of stuff without humans getting involved almost at all. And yes, it means capital produces it – but does it make capital wrong per se, or is the problem really the control of the capital and hence the control of who will get the goods which are produced at the almost-trivial cost?

          Do you really think that producing bullshit jobs, where people just turn up so that they can collect paycheck is better than universal income? To me, to be honest, this sounds very much like the work-for-benefits scheme. Which is nothing else but a 21. century form of forced labour.

          Universal income has quite a few problems (as has work-for-everyone), but the reality is, there is no real solution. Yes, people want solutions that will end the problem forever. Tough luck – unless your solution is killing all people, there’s no real solution. There are only problems that have to be dealt with. Society is not a state, it’s a process, and there can’t be solutions to a process.

  7. Tsigantes

    As Herbert Stein said, “Things that can’t continue, won’t”.

    Except in the Eurozone, where the impossible has been extended over 5 years now.

    One thing missing throughout in the – forgive me – rather one-sided analysis in this blog re Greece is analysis of what is happening in the Eurozone quite apart from Greece. Perhaps because the MSM avoids this? I would suggest that ECB’s greatest fear right now is the HETA fallout, not Greece. Frances Coppola in Forbes has covered this quite well as far as it has been visible. Another problem is the actual health of systemic Eurozone banks, despite Draghi’s ‘satisfaction’ with them. As for a Greek default it might be worth analyzing how this would immediately play out in Europe. For example, can any part of the debt be written off painlessly? Answer: ECB’s. What remains per country? Can this be absorbed? If not, what would happen? Would the ECB have time to help out (breaking rules, but so far they have clearly been made to be broken) by covering this? What about a shorting moment?

    I highly recommend looking behind the one-way noise of the MSM, Greek quislings & ‘Institutions’. There is a bigger picture and it has nothing much to do with Greece.

      1. Tsigantes

        Good question Santi.
        Nobody is saying and the financial press has kept silent – a bad sign – yet everyone “knows”, or perhaps, in this case has figured out.
        Not to mention the quite serious gathering storm around Merkel and U.S./German spying, which unfortunately is just the tip of the mysterious U.S.-German relationship (a european Elephant in the room since 1990 which Europeans “know” without proof….)

  8. Steven

    It looks to me like Syriza is betting the farm on Varoufakis’s analysis of the ECB position. He seems to be arguing that the ECB has no choice, that if its insolvency isn’t exposed by a Greek default, it will be by the next and bigger economy to default (Spain?) or the country after that (Italy?) working down the list to, eventually, France.

    I like the analysis if not necessarily all of his proposed ‘solution’:

    1. The first step would be for the ECB to make the continuation of its generous assistance to the banks conditional on having the banks write off a significant portion of the deficit countries’ debts to them. (define “significant”)
    2. Step two would have the ECB take on its books, with immediate effect, a portion of the public debt of all member states, equal in face value to the debt that the Maastricht Treaty allows them to have (i.e. up to 60 per cent of GDP). The transfer would be financed by ECB-issued bonds that are the ECB’s own liability, rather than being guaranteed by member states. Member states thus continue to service their debts, but, at least for the Maastricht-compliant part of the debt, they pay the lower interest rates secured by the ECB bond issue. (this seems like a move designed to please accountants but one that does little or nothing to stop governments from using debt instead of taxes to pay their bills. That “60%” will most likely become like the almost infinitely elastic US debt ceiling.)
    3. But by granting member states the right to finance their contribution to the EIB-financed investment projects by means of bonds issued for this purpose by the ECB (see step two above), the EIB can become the surplus recycling mechanism that the eurozone currently lacks. Its role would be to borrow, with the ECB’s assistance, surpluses from European and non-European surplus countries and invest them in Europe’s deficit regions. (translation – the EIB can be used by deficit countries to continue financing the buildup of debt.)

    Varoufakis, Yanis (2013-02-14). The Global Minotaur (Economic Controversies) (pp. 209-210). Zed Books. Kindle Edition.

    1. Yves Smith Post author

      Lots of ECB directors (as in people who have votes on the ECB board) have said individually that Greece needs to obey the rules (as in the structural reforms) and pay its debts or leave. They have made it clear that they would prefer Greece to stay but believe they can handle the costs of a departure. These remarks have been blunt, even bloodyminded.

      Draghi has also not seemed very accommodating. The ECB board rotates every two weeks. So if Draghi does not want to continue and/or a particularly bloodyminded mix of board members has the vote when this comes to a head (or on the next rotation two weeks later), Greece will have its lifeline cut off. Remember, the ELA has to be renewed by the ECB every two weeks by a board vote.

      Varoufakis wrote that before the ECB implemented QE. There is now a scarcity of bonds, particularly in Germany, for the member states to meet their purchase commitments. The countries can fund at affordable spreads as long as there is QE.

      Moreover, we’ve written about the infrastructure finance part of Varoufakis’ Modest Proposal before. The Troika and Eurogroup rejected that months ago. And as we have repeatedly pointed out, without that to finesse Eurozone-level fiscal transfers, Greece’s commitment to maintain primary surpluses (which came from Varoufakis himself after he became Finance Minister) is contractionary. He has committed the country to continued austerity.

      1. Steven

        What about Varoufakis’s “Tumbling mountaineers” argument, i.e. that even if the ECB can handle a Greek default, it won’t be able to handle the next country up the food chain or the one after that?

        1. Yves Smith Post author

          The other countries are good austerity students. This fight is over structural reforms. The good austerity students will get bailouts if they need them.

      2. generic

        To be a contrarian: The ECB board of directors have talked up a good game. Yet when push comes to shove they increase ELA. Week after week. So gambling on their political cowardice is not the worst move one could make.
        And what other choice do the Greeks have? Syrizia can’t declare Austerity to have been a success without facing annihilation and the Euros can’t admit that it was a failure since it probably killed some tens of thousands and destroyed a generation.

        1. Tsigantes

          The last thing the ECB can afford right now is default or Grexit. Too much is going on in the bond markets – especially German bund flight. Greece is low priority.

        2. Yves Smith Post author

          You are completely missing the real issue.

          The ECB is itching to cut off the ELA but as an unelected body they do not want to be seen as making a political decision. Hence they are holding their fire as long as negotiations are underway.

          Once they fail and a default would be a failure, the ECB can act. Indeed, many economists who have been central bankers contend that the ECB would be required to cut off or severely restrict the ELA in the event of a default.

          Moreover, merely tightening the collateral requirements, which the ECB is threatening to do. also allows the ECB to shift blame to Greece.

          1. generic

            Of course they want to pull ELA. That’s not the question. The question is how afraid they are of the political consequences. For the moment all we have is the usual opining from board members on things that are non of their business and threatening grumbling.
            We’ll see whether they think a Greek default gives them enough cover soon enough.

            1. financial matters

              I don’t think cover is the issue. I don’t think the creditors care who has cover if their house of cards come tumbling down. They have put a lot of effort into extend and pretend to continue their looting and consolidation of power.

  9. Wist

    Since a consummated agreement is really quite distant, a temporary measure of liquidity has to be given to Greece for the country to survive. Since the “extended” agreement expires at the end of June, I personally would like to see the Troika last out until expiration; keep the 7 billion euros from the previous bailout program; limit ECB liquidity support and use the time from now until the end of June to work on a specific “new program” that aids in a transition from “money for reform” to a program that deals with Greek financial independence. The finger pointing, the blame game, the “austerity”, the visits by technocrats, etc., should end. The government obviously doesn’t want to reform as per the bailout agreement…so be it. Remove everybody’s red lines. No more blackmail…straight fact…The current agreement ends and we all move forward. Syriza gets their independence and the Troika does it’s best at containment/humanitarian aid, technical expertise in any currency transition, etc.. The “new program” should contain monetary support (grants?) for domestic poverty, monetary support for the influx of immigrants, pro-growth infrastructure, structural modernization, etc (7 billion can go a long way). According to the FM, Greece is going to run the negotiations down “to the wire.” The Troika should make an immediate pre-emptive strike and move the negotiations to a transitional “new package”. The Troika removes the “wire”. Syriza doesn’t want to reform major issues…fine…the Troika acknowledges this. They respect Greece sovereignty. If Greece wants to default on be it. If Syriza wants to bleed the country dry…so be it. If they want a good bank/bad bank..go for it. If they want to collect taxes, address graft, protect cartels..let them. As I have stated before, the problems in Greece are both structural and cultural. The Greeks themselves have to address these issues. They cannot vote “wealth”. There should be a cathartic event that cleans the sewers. If this does not take place, all Greece will have is rotating political parties that perpetuate the structural problems and a perpetual hand begging for EU moneys.

    1. John Jones

      As I have stated before, the problems in Greece are both structural and cultural.

      Yes. Greeks are crooks, irresponsible and have no morals they need to change their ways.

    2. Yves Smith Post author

      Why does Greece have to be given any money? From the Troika’s perspective, the government is uncooperative and has dragged its feet on getting a deal. The IMF runs programs in countries all over the world, and it has said that Greece has consumed far more time and attention than its importance warrants. The IMF does not want to give Greece a special break. The Eurozone countries that went through austerity (the Baltics, Ireland, Portugal, Spain, Slovenia) REALLY don’t, since they populations took the medicine. Finland, Germany, the Netherlands, and Italy are opposed. Even France, which has been Greece-friendly, has gotten cooler of late. From their perspective, why should Greece get off? The ECB doesn’t want to either.

      If they succeed in keeping Greece in the sweatbox, they likely believe that Syriza’s popularity will continue to fall and they’ll get more compliant government back in.

      1. Wist

        Why does Greece have to be given any money? They don’t. It is humanitarian and as an aid to facilitate a transition package + limit carnage + enhance image. After Syriza has emptied the state coffers and neglected to pay a significant amount of bills, there is little left. Syriza is currently negotiating for more money and is offering drip and drab “concessions” but at the same time poking the Troika in the eye with large sticks.. .. The whole ballgame changes when the Troika says…OK, it is obvious that completing the bailout program that the “Greek government” agreed to is not going to be done. We will not negotiate anymore on this. Implemented results only. No more photo ops. No more daily dissections of progress. We DO want to work on preparing Greece and the EU for “any” eventuality. Then you provide a package that minimizes damages, ensures that the poor get fed during the interim and coordinate a response. The “Grexit” bogeyman comes out of the dark and now can be discussed rationally. No more doubt. No more evil Troika. No more square dancing. The music stops. The introduction of a “transitional package” also prepares the markets for what may come about. Liabilities and write-downs are determined and the EU moves forward without this saga continuing to exhaust and deplete the parties involved. I am sure a case can be made to kick the can down the road, but IMO that road will be a bottomless pit; a continual begging for more funds and an implosion of what little is left of Greece. The elites, the cartels, the politicians and unions want a status quo so they can continuing sucking money out of the system. Greece needs a major call to reality; a time of truth. Greeks have to look themselves in the mirror. The needed structural changes are wholesale. IMO it is very possible that Syriza has been negotiating for an eventual exit from the beginning. They have touted that they “will pay all parties” regarding debt and have donned a white hat. They seek a scapegoat to beat up when domestic funding evaporates. They are currently pandering to their base by recent legislation, union contracts and actions. When Greek collapses, they will portray themselves as a Phoenix that Greece needs to weather the storm and blame any and all. If you read op-eds in major Greek papers you can see a watershed change in their attitude toward the PM and Syriza. The sad things is that they seem to have little influence on the ruling party. The Greek populace has many takers, few givers and it seems that there is enough patronage/graft/nepotism/cartels/corruption to block the functioning of democracy.

      2. Wist

        “If they succeed……they believe…more compliant government.”

        I admit that the previous administration looks like a “10” compared to the current governance, but that is a low benchmark to start with. The problem is that these administrations are all variances of Tammany Hall with Ouzo being served. The Greeks have had a decade to get their house in order with few positive results. The deck chairs on the Titanic change along with governmental posts. If the Greeks don’t really want change, a little more “compliance” is not going to matter. Forced compliance also pushes some mutual responsibility back onto the Troika. More finger pointing, more demons created and more scapegoating.

      3. Santi

        Paul Krugman has repeatedly made the point that the ONLY nation going throught real austerity has been Greece, and you can see the results. An examples of those articles… Please don’t perpetuate the myth of the bad Greeks. In Spain they have been mostly cheating austerity for a long time. If Spain, which is 5 times bigger than Greece in economic size, had done the same level of austerity European demand would have collapsed completely long ago. Now we have a primary deficit of ~4% which allows us to grow a nominal 0.7%, which deflation turns into a 2.5%… Great numbers!!!

        1. Wist

          I am happy for Spain. Not all Greeks are bad, just many of the primary players and many that go with the corrupt flow. When one reviews internal court cases brought by whistleblowers; prosecution and sentencing of politicians/elite; polls among Greeks that realize the depth of corruption that invades their life…..the system has been poisoned. Graft and cheating is worldwide. In Greece it is pervasive and a daily way of life. Some is expected but it all has a negative economic influence. I am not for the term “austerity”. I think the Greeks have to be set free and determine their own sacrifices. They have to also determine who pays for them.

          1. John Jones

            Yes. because the media and hearsay told you so. And it fits nicely with your preconceptions of what Greeks and Greece are when you know nothing of the country or its people. Yet you still want to pontificate and finger point as you say. Yet Germany, Holland etc the troika, Euro, E.U the media etc have done no wrong. The way the economic system of the E.U and Euro work is perfect and doesn’t exploit in favor of the core countries and played no part in your deluded world. Its all about corrupt Greeks. Hey but its not all Greeks just most that don’t have the perfect character of those Dutch, Germans, Nordics and British.

        2. Tsigantes

          Exactly right about Spain, Santi. In fact Rajoy refused a memorandum & Troika programme and got away with it through Spain’s sheer economic weight. They then imposed their own Austerity Lite, which has been horrendous enough. Cutting workers wages lured in car factories [closing elsewhere]: this has helped GDP.

        3. Yves Smith Post author

          I’m quite aware that austerity does not work, but Germany, Finland, Holland. Spain, Latvia, Austria, Portugal, Slovenia, Ireland and Italy are all keen about it. And under the Eurozone rules. all countries have to approve the bailout.

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