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1) Don’t pass new anti-poverty law, commission tells Greece by Paul Mason Channel 4 News March 17, 2015 At less than 24 hours’ notice the European Commission has vetoed a key law set to be passed by the Greek parliament tomorrow. The so-called “humanitarian crisis bill” was set to provide free electricity for some households, and address poverty among pensioners and homeless families. But in a communication seen by Channel 4 News, Declan Costello, director at the EC’s directorate for economic and financial affairs, has ordered the radical left-led coalition government in Greece to stop. A planned law to allow tax arrears to be paid in installments, set before the Greek parliament on Thursday, has also been vetoed. The move comes as Alexis Tsipras called for five-party talks at Thursday’s summit, and ahead of a critical decision by the European Central Bank over restoring borrowing facilities to Greek banks. Mr Costello’s letter says: “During our teleconference last night, you mentioned the planned parliament passage tomorrow of the ‘humanitarian crisis’ bill. We also understand that other policy initiatives, including the installment scheme law, are in train that are to go to parliament shortly. “We would strongly urge having the proper policy consultations first, including consistency with reform efforts. There are several issues to be discussed and we need to do them as a coherent and comprehensive package. “Doing otherwise would be proceeding unilaterally and in a piecemeal manner that is inconsistent with the commitments made, including to the Eurogroup as stated in the February 20 communiqué.” The European Commission had been seen as the most conciliatory of the bodies formerly known as the “troika”. Mr Costello’s letter effectively says that if the Greek parliament votes on the new law tomorrow, it is a violation of the compromise deal signed by finance minister Yanis Varoufakis on 20 February in Brussels. <http://blogs.channel4.com/paul-mason-blog/pass-antipoverty-law-commission-tells-greece/3467> 2) Exclusive: Greece angers euro creditors with lack of info, wants talks at EU summit March 17 (Reuters) - Greece frustrated its main creditors on Tuesday by refusing to update euro zone peers on its reform progress at a scheduled teleconference, insisting instead that the discussions should be escalated to Thursday's European Union summit. Describing the annoyance that has been building up among euro zone countries with the new Greek government's approach, one euro zone official said: "For many people the teleconference this afternoon could be something of a last straw." Euro zone deputy finance ministers held a teleconference at 1530 GMT to get an "update on the state of play" on Greece, which is running out of cash and time to negotiate and implement reforms that would unblock loans to prevent it from defaulting. But three sources with knowledge of the call said that, instead of an update, a Greek official had said these issues would be discussed by Prime Minister Alexis Tsipras at the EU leaders meeting in Brussels. Tsipras, whose left-led coalition took power in January, is due to meet German Chancellor Angela Merkel and French leader Francois Hollande as well as top EU officials. Two sources said that one of the officials on the call, which the sources described as short, said following the Greek refusal to update that the creditors were "riding a dead horse", suggesting the talks were getting nowhere. European officials said they did not understand what Greece hoped to achieve by bringing the issue to the summit, where Greece is not on the formal agenda and could only be discussed in meetings on the sidelines and only in broad political terms. They said EU leaders could not offer Tsipras anything more than the Eurogroup of euro zone finance ministers, because any further financial help to Athens hinged on reforms that Greece would have to implement, despite its great reluctance. All three sources with knowledge of the call confirmed the content, and the anger of euro zone ministers with the attitude of the Greek government, which does not want to honor reform commitments made by its predecessor in exchange for almost 240 billion euros in loans. The Tsipras government won the Jan. 25 election on slogans of rejecting budget consolidation and reversing some of the reforms. Euro zone officials believe Athens has made unrealistic promises it cannot now finance. While Greece agreed early last week to restart talks with its creditors on what reforms would have to be implemented to unblock further loans from the euro zone, there has been no progress since then apart from cooperation of technical teams to gather relevant data. Time is running out because Athens is likely to run of cash by the end of the month and may then default on its debt, potentially forcing itself out of the euro zone. <http://www.reuters.com/article/2015/03/17/us-eurozone-greece-frustration-idUSKBN0MD2M520150317> 3) Greece rejects 'blackmail', seeks meeting with top EU leaders by Renee Maltezou and Costas Pitas Reuters March 17, 2015 ATHENS - Greek Prime Minister Alexis Tsipras wants to meet top European leaders at this week's EU summit, a Greek official said on Tuesday, as Athens insisted it would not be 'blackmailed' over its debt crisis. Greece risks running out of cash within weeks but its EU partners, angered by the new government's fiery rhetoric against its international bailout, have frozen financial aid until it shows it is implementing reforms. The leftist government was elected in January on pledges to end austerity measures that came with its 240 billion euro bailout agreement. After acrimonious negotiations in February, Athens got a bailout extension to the end of June and promised not to make any unilateral moves that could burden its budget. With tensions still running high, Greece attacked comments by Jeroen Dijsselbloem, head of the Eurogroup of euro zone finance ministers, who said pressure on Athens was growing and an emergency loan depended on real progress on reforms. He said he wanted no repetition of events in Cyprus in 2013, when "the banks were closed a while, and capital controls - cash flows in the country and out of the country - were tied to all manner of conditions". Greek government spokesman Gabriel Sakellaridis accused Dijsselbloem of overstepping his role, saying: "We believe it is unnecessary to remind him that Greece cannot be blackmailed." Tsipras wants German Chancellor Angela Merkel, European Central Bank chief Mario Draghi, European Commission head Jean-Claude Juncker and French President Francois Hollande to join the meeting on the sidelines of the EU summit in Brussels on Thursday and Friday. It appears to be the latest effort by Tsipras to hammer out a "political solution" to resolve Greece's funding problems, which are worsening as the country remains shut out of debt markets. So far, there has been no sign of progress in talks between technical teams from Greece and its international lenders which started last week. "MEETING OF SUBSTANCE" A Greek official said Tsipras made his appeal in a phone call to Donald Tusk, president of the European Council, who organizes EU summits and coordinates business between the EU's 28 national governments. Tusk's spokesman confirmed the contact. Merkel spoke with Tsipras on Monday and invited him for talks in the German capital on March 23. At the Brussels meeting, Tsipras plans to reiterate Greece's commitment to implementing reforms and to raise Athens' cash problems, the Greek government spokesman said. "It will be a meeting of substance, not a meeting for communication purposes or a 'photo opportunity' in Berlin," Sakellaridis said. A Greek government official announced that Tsipras had accepted an invitation to meet Russian President Vladimir Putin in Moscow on April 8, a month earlier than originally expected. Tsipras's government ruffled feathers among EU leaders by suggesting Athens might not support EU policy toward Russia over the Ukraine crisis, but it has rejected talk of turning to Moscow for financial aid. Greece now needs to agree on reforms that will unlock much needed funds from European partners. But it appeared to roll back on at least one promise when it said overnight that it would rename its privatization agency and use its revenues for social welfare rather than to reduce its debt. Appealing for European solidarity, Deputy Prime Minister Yannis Dragasakis called on Greece's partners to help release the country from a trap. "The country is in a position like that of Sisyphus — a man condemned to roll a boulder to the top of a hill, only to see it roll down again," he said in an article co-authored with Finance Minister Yanis Varoufakis and deputy minister for international economic relations Euclid Tsakalotos in the Financial Times. "We risk condemning an entire generation to a future without hope. To avoid that, what we ask from our eurozone partners is to treat Greece as an equal and help us escape from this Sisyphean trap." <http://www.reuters.com/article/2015/03/18/us-eurozone-greece-tsipras-idUSKBN0MD13N20150318> 4) Greece says to use asset sales for social welfare, not to cut debt Reuters, ATHENS March 17, 2015 Greece will shortly present a law to turn its privatisation agency into a wealth fund that will use proceeds to finance social welfare policies instead of reducing its public debt, the deputy finance minister said. The move could further strain relations between Prime Minister Alexis Tsipras' new left-wing government and Greece's international creditors, who want Athens to use the revenues to cut its huge debtload. "There will be a new Sovereign Wealth fund ... and the revenue will be used to fund the government's social policies and to support the social security system," said Deputy Finance Minister Nadia Valavani. Valavani told a parliamentary committee she would present legislation in the coming weeks to merge the privatisation agency (HRADF) with the country's state property company, ETAD, to set up the new body. The leftist government is opposed to some key asset sales but has been forced to moderate somewhat its stance as it negotiates with its European partners over a new aid package. Athens has promised not to cancel completed privatisations and to only review some tenders, under the terms of a four-month extension of its bailout program agreed with its creditors last month. Greek representatives started talks with the international creditors in Brussels last week in an attempt to agree on a set of reforms and unlock much-needed remaining bailout aid. Privatisations had been meant to raise billions for Greece's depleted state coffers since 2010 under its 240 billion euro bailout with the European Union and the International Monetary Fund. However, proceeds have been disappointing since the HDRAF was set up in 2011, amounting to about 3 billion euros, a fraction of an initially targeted 22 billion euros. The parliamentary committee also approved on Tuesday a new management for the privatisation agency. Asterios Pitsiorlas, a businessman involved in the tourism sector, will become chairman, while Antonis Leoussis, former chief executive at Alpha Bank's real estate arm, will be chief executive. They replace appointees of the previous conservative government. <http://www.reuters.com/article/2015/03/17/us-eurozone-greece-privatisations-idUSKBN0MD18L20150317> 5) All we ask is that Europe give Greece a chance by Yannis Dragasakis, Deputy PM Financial Times March 17, 2015 It is a common belief that the Greek government is seeking special treatment relative to other stressed eurozone members. We are not; we are seeking equal treatment. Since the onset of the crisis, our economy has shrunk 26 per cent; unemployment has risen from 8 to 26 per cent; and wages have declined 33 per cent. These outcomes are worse than those experienced by any country during the 1930s and far worse than those projected under the two Greek adjustment programmes. This is why the Greek government has criticised these programmes. Our fiscal adjustment has been larger than in other countries. Since 2009, spending cuts and tax increases amounting to more than 45 per cent of household disposable income have been implemented. In Portugal it was 20 per cent; in Italy and Ireland 15 per cent. Not only have the fiscal measures been larger, but for each percentage point of consolidation, the economy has contracted more. This is because the Greek economy is less open than others; any decline in demand hits domestically produced goods more than imports. Successive rounds of austerity exacerbated the contraction in gross domestic product. And with that the ratio of debt-to-GDP rises, making debt dynamics unmanageable. Greece is borrowing ever more to pay back earlier debts. We entered the crisis with a large external deficit. With inflation close to zero, the cuts in relative prices required to lift competitiveness came at a high cost for stressed eurozone countries. Output had to contract, generating deflation and worsening the debt dynamics. Large debts are hard to stabilise when deflation increases the real value of debt. In the 1920s, the UK ran large primary fiscal surpluses, yet deflation increased its debt-to-GDP ratio. While the crisis has made matters worse for Greece and others, it has had unintended — but positive — consequences for “core” eurozone countries. Germany and others have benefited from exchange and interest rates that are lower than they would have faced had they still had their own currencies. The European Central Bank’s securities market purchase programme aimed to reduce the cost of borrowing of stressed countries by buying their sovereign debt. It also essentially eliminated the Greek debt held by banks in the core. Greek banks, however, continued to hold large amounts of that debt and the cost of restructuring had to be paid by the Greek taxpayer. Capital flows from stressed countries have drained liquidity from their banking systems while increasing the lending capacity of the banks in the core. The exodus of skilled labour has diminished the productive capacity of the stressed countries. The effects of this will take a generation or more to reverse. The euro’s progenitors envisaged a monetary union resembling the classical gold standard, under which adjustment between countries with external surpluses and those with external deficits was symmetric. Under the euro, the burden of adjustment rests on deficit countries. Between 2008 and 2014, the external balances of the stressed countries have swung from huge deficits to surpluses. The external surpluses of the core are unchanged. As a result, the country is in a position like that of Sisyphus — a man condemned to roll a boulder to the top of a hill, only to see it roll down again. Greeks have implemented austerity and have suffered much more than expected. Many of the 60 per cent of young people out of work will one day be reclassified as long-term unemployed. We risk condemning an entire generation to a future without hope. To avoid that, what we ask from our eurozone partners is to treat Greece as an equal and help us escape from this Sisyphean trap. The writer is the deputy prime minister of Greece. Yanis Varoufakis, finance minister, and Euclid Tsakalotos, minister for international economic affairs, are co-authors [full text above; http://www.ft.com/cms/s/0/75f74926-cc07-11e4-aeb5-00144feab7de.html#axzz3UhY1cJRY] 6) Drachma trumps euro? Greece's Euro Exit Seems Inevitable by Mark Gilbert Bloomberg View March 17 Greece's money troubles resemble a game of pass the parcel, where each successive participant rips another sheet of wrapping paper off the box -- which turns out to be empty when the final recipient reaches the core. With time and money running out, a successful endgame seems even less likely than it did a week or a month ago. It's increasingly obvious that the government's election promises are incompatible with the economic demands of its euro partners. Something's got to give. The current money-go-round is unsustainable. Euro-region taxpayers fund their governments, which in turn bankroll the European Central Bank. Cash from the ECB's Emergency Liquidity Scheme flows to the Greek banks; they buy treasury bills from their government, which uses the proceeds to … repay its International Monetary Fund debts! No wonder a recent poll by German broadcaster ZDF shows 52 percent of Germans say they want Greece out of the euro, up from 41 percent last month. There's blame on both sides for the current impasse. Euro-area leaders should be giving Greece breathing space to get its economic act together. But the Greek leadership has been cavalier in its treatment of its creditors. It's been amateurish in expecting that a vague promise to collect more taxes would win over Germany and its allies. And it's been unrealistic in expecting the ECB to plug a funding gap in the absence of a political agreement for getting back to solvency. There's a YouTube video making the rounds on Twitter this week of a lecture Yanis Varoufakis gave in Croatia in May 2013. The most arresting section comes after about two minutes, when the current Greek finance minister literally flips the bird at Germany while saying: "My proposal was that Greece should simply announce that it is defaulting, just like Argentina did, within the euro in January 2010, and stick the finger to Germany and say `well, you can now solve this problem by yourself'." Maybe Varoufakis is all grown up now that he has a big government job and isn't just a maverick professor; moreover, he says the video has been doctored, although the German television channel that aired the footage on Sunday found no evidence of manipulation, according to the Associated Press. But the image of him raising his middle finger is emblematic of how the Greek government currently regards its biggest creditor. And if what Varoufakis went on to say is instructive of the game-theory professor's mind-set, the lack of progress in negotiations with lenders isn't so surprising: "The most effective radical policy would be for a Greek government to rise up or a Greek prime minister or minister of finance, to rise up in EcoFin in the euro group, wherever, and say "folks, we're defaulting. We shall not be repaying next May the 6 billion that supposedly we owe the European Central Bank. My God you know, to have a destroyed economy that is borrowing from the ESM to pay to the European Central Bank is not just idiotic, but it’s the epitome of misanthropy. Say no to that. Put them in front of their contradictions. Make them face the contradictions of the euro zone themselves. Because the moment that the Greek prime minister declares default within the euro zone, all hell will break loose and either they will have to introduce shock absorbers, or the euro will die anyway, and then we can go to the drachma." Greece's three-year bond yield is back above 20 percent, double what it was just before Alexis Tsipras was elected prime minister on an anti-austerity platform in January. At that level, there's no way Greece can end its reliance on its bailout partners anytime soon. German Finance Minister Wolfgang Schaeuble was scathing yesterday about Greece's efforts to balance its election promises with its bailout obligations, and about its standing with international investors: "None of my colleagues, or anyone in the international institutions, can tell me how this is supposed to work. Greece was able to sell those treasury bills only in Greece, with no foreign investor ready to invest. That means that all of the confidence was destroyed again." Every day's delay in cutting a deal pushes Greece a little closer to leaving the common currency. That would be a shame, since it's an outcome no one -- apart from Schaeuble -- seems to desire. The mutability of euro membership could also unleash contagion and a domino effect. But it looks increasingly inevitable. <http://www.bloombergview.com/articles/2015-03-17/greece-s-euro-exit-seems-inevitable> 7) Liquidity problems are the hot topic in Greece by Vicky Pryce, Chief economic adviser, CEBR, and author of Greekonomics City A.M. (business news) London THE crisis in Greece is deepening. What a difference a few months can make. Last year the country was able to tap the capital markets borrowing for three and five years paying interest of under five per cent. Its four main banks had received a cleanish bill of health in the European Central Bank’s Asset Quality Review. The economy was recovering, boosted by strong tourism receipts and was about to show the first positive year of growth since the crisis hit . But in the autumn increasing political uncertainty put a stop to that and the last quarter of 2014 saw a move back to recession. The 25 January elections with the radical left-wing party Syriza emerging as the largest party affected sentiment adversely and Greece is once again shut out of the capital markets. Three-year bond yields are currently at 20 per cent, and 10-year ones at over 10 per cent. The lengthy and acrimonious negotiations with the Europeans over an extension of its bailout have not helped. Its banking system has been hit by vast withdrawals of funds as “Grexit” is mooted, with some €20bn of deposits having been withdrawn since early December. The banks have had to ask for extra ELA support which has so far been granted by the ECB although it is keeping a more frequent review of the limit and no longer considers Greek government debt as good enough collateral for the banks. It is also discouraging the banks from buying newly issued government treasury bills. There hasn’t exactly been a bank run yet but the Greek banks will be finding it harder to cope with what is an increasing percentage of non-performing loans. This was bad enough before the latest crisis, with some of them having to substantially increase bad debt provisions, as no “bad bank” has been created yet in Greece. On top of that both individuals and businesses are believed to have stopped servicing and paying back debts in the hope of a possible amnesty or improvement in terms of repayments now a Syriza led government has been voted in. With property prices falling the value of the collateral offered for many of the loans granted by Greek banks is declining, adding to the pressure. And they will not benefit from extra liquidity themselves from QE as the Greek bonds they hold do not form part of ECB purchases at present under the €60bn monthly purchases. Though in a bail out arrangement Greece is still undergoing a “review” and therefore does not qualify under the scheme. And the Greek state itself is running out of liquidity to carry out its day to day functions and to meet its maturing debt obligations. Tax revenues are collapsing with the shrinking economy. The government will soon have difficulty paying wages and pensions, let alone meeting other needs. The €7.5bn due as last disbursement to Greece from the second bail-out agreed in 2012 is unlikely to be forthcoming for a couple of months at least once the review of its programme is completed. Some €2bn debt repayments are due in the very short-term and up to €10bn over the next three months. So the latest idea is to borrow from the state employment insurance and other pension funds which indicates a high degree of desperation. The atmosphere has deteriorated, though not sufficiently yet to create wholesale panic. Yet there is talk of a possible need to impose capital controls and forcing “buy-ins” like in Cyprus which would cause big losses. Watch this space. <http://www.cityam.com/211849/liquidity-problems-are-hot-topic-greece> _________________________________________________________ Full posting guidelines at: http://www.marxmail.org/sub.htm Set your options at: http://lists.csbs.utah.edu/options/marxism/archive%40mail-archive.com
