Category Archives: Doomsday scenarios

Eurogroup to Review Greek Reform Proposals; Meeting Set for Tuesday (Updated)

As we indicated earlier today, the Eurogroup appears to still have its hand in the mix of determining whether the reform list submitted by Greece is adequate. A meeting is set to review the proposed Greek reforms tomorrow. The journalists who are in the mix are sending tweets that suggest that they are not yet clear on some key issues in the state of play. As of this posting, only some high level details of the reform list have leaked out.

Troika Not Happy with Initial Draft of Greek Reforms; Eurogroup Reported Still in the Mix (Updated)

As most readers may know, Greece and the Eurogroup ministers agreed to a memorandum last week that would replace the bailout that expires on February 28 with a four-month deal that the memo stresses is in the same framework.

But as much as the memo language was agreed by the ministers, it is not yet a done deal. And it is already looking like we might have a wild ride among the negotiators today.

Benchmarking the Greece/Eurogroup Bailout Memo and Process

Greece and the Eurozone have entered into what amounts to a letter of intent in the form of a memo released yesterday. It’s important to understand, even as a basis for further negotiations, what this document is and is not. Because this is not a definitive agreement, as in it explicitly states that Greece’s detailed structural reform proposals must be reviewed and approved by “the institutions,” the new name for the Troika, as well as approval by the Eurogroup finance ministers before any funds are released, there is still uncertainty as to how its deliberate ambiguity will be resolved.

Greece Capitulates On Bailout, Reaches Four Month Deal

Syriza folded on its position of not taking bailout funds.

Greece’s Fate in ECB’s Hands if Eurogroup Talks Fail

As most readers know well, Greece made concessions yesterday to the Eurogroup that, although contested as to how far they went, were seen as big enough concessions to win the support of Eurogroup head Jeroen Dijsselbloem and Italy. But Germany’s Wolfgang Schauble almost immediately rejected them, setting the stage for a showdown today. As we’ve discussed from the outset, the biggest bone of contention continues to be “conditionality,” otherwise known as structural reforms. Greece wants to be able to revise some measures as long as it can still meet its primary surplus target. Germany insists a deal is a deal and Greece must reaffirm all the terms of its existing agreement.

The meeting is set to start in Brussels at 3 PM local time, so we’ll know soon enough how things turn out. The two sides are making friendlier noises as of this morning, but we’ve seen these public displays of collegiality before, only to be followed by negotiation ruptures.

The Logic of Greece’s Request for a Loan Agreement Extension

Yves here. There’s been a heated debate among members of the commentariat as to whether the latest proposal by the Greek government to the Eurogroup ministers was a significant concession or a carefully worded formulation that did not give much ground. This interview with Dimitri Lascaris, a top securities lawyer in Canada, gives a nuanced discussion of that issue, including the politics on the Greek and German sides.

ECB Could Pressure Greece by Refusing to Increase ELA (Update: Small Increase Approved)

The ECB seems to be keeping Greece on a short leash by approving only a small increase in the ELA.

Negotiation Breakdown Exposes Widening Rift Between Germany and Greece

The negotiations between Greece and the Eurogroup are on a worse trajectory than conventional wisdom would have you believe.

Greece, Its International Creditors and the Euro

his is an excellent background piece on how Greece got where it is and how its various bailouts were structured. It also helps explain the past and current roles the various members of the Troika play and discusses the prospects for Greece achieving its aims.

Varoufakis Charges Eurogroup with Bad Faith Dealing in Negotiations

Yanis Varoufakis describes how he was presented with one memo before the Eurogroup meeting and a very different one at the meeting proper. No wonder the Greek side got upset with how the meeting was conducted.

Eurogroup Talks Terminated; Greece “Won’t Take Orders on Bailout”

As we indicated, we were doubtful that a deal with Greece on its bailout could get done, since if nothing else the two sides had irreconcilable positions on structural reforms. That was one of the biggest reasons for Greece rejecting the idea of extending the current bailout, that they did not want the strings attached, such as continued privatizations and further “progress” on labor-crushing market reform. The only way an agreement could have been reached would have been for Greece to capitulate on these issues, which seemed unlikely given how Syriza had risen to 80% approval ratings in the polls based on its Troika-defying stance.

So it is not surprising to learn that the bailout talks are over, with no agreement reached. But what is suprising, and not encouraging, is that if anything the Eurogroup hardened its stance against Greece and expected it to capitulate.

Michael Hudson: Ukraine Denouement – The Russian Loan and the IMF’s One-Two Punch

Will America’s insistence that Europe, Russia, and Ukraine act against their economic interest ultimately lead the US to lose Europe?

Robert Parenteau: Get a TAN, Yanis: A Timely Alternative Financing Instrument for Greece

TAN, or tax anticipation notes, would way be a for Greece to give itself more fiscal spending wriggle room without violating Eurozone rules. That will likely be necessary if Monday’s meeting in Brussels results in no extension of the current Eurozone bailout.