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1) Interior minister warns Greece will default on June IMF repayment by Kerin Hope in Athens Financial Times, May 24 <http://www.ft.com/intl/cms/s/0/ba56e594-0204-11e5-82b9-00144feabdc0.html#axzz3b4sma2cc> Greece has again threatened to default on loan repayments due to the International Monetary Fund, saying it will be unable to meet pension and wage bills in June and also reimburse €1.6bn owed to the IMF without a bailout deal with creditors. “The money won’t be given . . . It isn’t there to be given,” Nikos Voutsis, the interior minister, told the Greek television station Mega. He claimed the EU and IMF were pressing Greece to make unacceptable concessions in the bailout talks in return for unlocking €7.2bn of aid frozen since last year. . . . Predicting when Athens will run out of cash has proven a fraught affair for eurozone officials, who have been bracing for default since March. Given the repeated warnings from Greek officials that bankruptcy is imminent, some officials have begun to disregard such threats, believing Athens is now using them as a negotiating tactic. But a senior Greek official with knowledge of the government’s funding position confirmed that Athens would be unable to make the IMF payments, which fall due in four separate instalments of more than €300m each between June 5 and June 19, “It’s clear the June payments to the fund can’t be covered without external financing,” the official said. Athens is under pressure to agree to more cuts and reforms to secure the financing. “We won’t accept blackmail that says it’s either liquidity with a memorandum [the Greek term for a bailout programme] or bankruptcy,” Mr Voutsis said. The talks have picked up pace in recent days after a four-month stand-off but German chancellor Angela Merkel warned at last week’s EU summit in Riga that “there is very, very intensive work to be done”. The government has ruled out a domestic default on payment obligations to Greece’s 2.9m pensioners and 600,000 public sector workers, saying they have first claim on the country’s shrinking resources. People who have spoken to Mr Tsipras say he is in a dour mood and willing to acknowledge the serious risk of an accident in coming weeks. One official in contact with the prime minister said: “The negotiations are going badly. Germany is playing hard. Even Merkel isn’t as open to helping as before.” Athens is particularly worried by the IMF stance and Mr Tsipras has been attempting to convince the US to use its influence on the IMF board to soften the institution’s demands. The prolonged cash squeeze in Greece has resulted in spending cuts across the public sector with funds being diverted from hospitals, EU subsidies and pension funds to keep up with monthly payments to the IMF. Mr Tsipras and his aides had to fly to last week’s EU summit in Riga aboard a Greek air force Hercules-130 transport aircraft because all three official government planes had been grounded for lack of spare parts, a result of budget cuts. 2) Greece 'can not afford' to repay IMF on schedule Al Jazeera, May 24 [AFP] <http://www.aljazeera.com/news/2015/05/greece-afford-repay-imf-schedule-150524130503495.html> Interior minister says Athens will not be able to pay $1.8bn installment to IMF on schedule next month. . . . Last week, the parliamentary spokesman for Greece's ruling Syriza Party said that the government cannot repay a loan to the IMF on June 5 as its priority is to pay salaries, pensions and running costs. "No country can repay its debts with only the money from its budget," Nikos Filis told Ant1 television. Finance Minister Yanis Varoufakis, speaking to the New York Times, also raised the prospect. "I am not going to pay the IMF (International Monetary Fund) and not pay pensions in the next few weeks. So I said to them: 'Decide. Do you want this to be a proper bargaining round, or do you want this to be a post-mortem?'", he said with his trademark outspokeness. . . . In exchange for the aid, creditors are demanding Greece accept tough reforms and spending cuts that anti-austerity Syriza pledged to reject when it was elected in January. According to reports, creditors are demanding further budget cuts worth $5.5bn including pension cuts and mass lay-offs. 3) Greece hasn't got the money to make June IMF repayment: interior minister by George Georgiopoulos and Kylie MacLellan Reuters, May 24 <http://www.reuters.com/article/2015/05/24/us-eurozone-greece-imf-idUSKBN0O908520150524> ATHENS/LONDON - Greece cannot make debt repayments to the International Monetary Fund (IMF) next month unless it achieves a deal with creditors, its interior minister said on Sunday, the most explicit remarks yet from Athens about the likelihood of default if talks fail. Shut out of bond markets and with bailout aid locked, cash-strapped Athens has been scraping state coffers to meet debt obligations and to pay wages and pensions. With its future as a member of the 19-nation euro zone potentially at stake, a second government minister accused its international lenders of subjecting it to slow and calculated torture. . . . Voutsis was asked about his concern over a 'credit event', a term covering scenarios like bankruptcy or default, if Athens misses a payment. "We are not seeking this, we don't want it, it is not our strategy," he said. "We are discussing, based on our contained optimism, that there will be a strong agreement (with lenders) so that the country will be able to breathe. This is the bet," Voutsis said. Previously, the Athens government has said it is in danger of running out of money soon without a deal, but has insisted it still plans to make all upcoming payments. The government is under pressure to agree to more cuts and reforms to secure the funding, but opposes measures which it says make the situation worse by preventing recovery from one of the deepest recessions in modern times. Voutsis said the government was determined to fight against the lenders' strategy of "asphyxiation". "This policy of extreme austerity and unemployment in Greece must be hit," he said. "We will not escape from this fight." . . . 4) Greece: The End of the Road by Davide Kotlar The Market Mogul, London, May 23 <http://themarketmogul.com/greece-end-road> The Greek government is running out of cash. It is somewhat impressive that the struggling country has made it thus far without official loan disbursements (the last IMF disbursement was almost a year ago). The fiscal and debt management authorities have come up with many innovative ideas to use cash buffers from various state entities, however, even this is now running out... . . . The government has recently said that a deal is within reach. In contrast, European and IMF officials continue expressing concerns about slow progress, despite some recent improvements, and still many open issues. Even if there is a deal on the program review, negotiations for a new program would be much more difficult. Greece would not receive official funds the day after a deal on the current program review. The Greek parliament would have to vote and approve such a deal first. Even such a vote would not be enough to conclude the program review, because European parliaments would also have to vote, whilst Greece would need to implement the review’s prior actions. However, there could be some potential. The Europeans could find a way to temporarily fund Greece if the Greek parliament approves a deal—the ECB could increase the limit for t-bills or distribute its profits from GGB holdings. Despite the aforementioned, it is very likely that Greece will run out of cash before any new official help. The Greek government has been trying to reach an agreement that their parliament would be able to approve without the help of opposition parliamentarians, as the latter could put the current government at risk. This has proved to be impossible so far. Unless the government’s parliamentarians make a U-turn, there are substantial risks in the weeks ahead. Potential negative ramifications include a collapse of program negotiations, a failed parliamentary vote on a deal, a referendum on a deal, or a collapse of the Greek government and substantial uncertainty until the formation of a new government. The Greek crisis was always as much about politics as economics. Now it is all about politics. . . . 5) Less Than Surprising News; Greece Can't Make The June IMF Payments, Default Looms by Tim Worstall Forbes, May 24 http://www.forbes.com/sites/timworstall/2015/05/24/less-than-surprising-news-greece-cant-make-the-june-imf-payments-default-looms> . . . As to the Eurogroup, the creditors, moving towards the Syriza position, there’s not really much more they can do. They’ve already relaxed, or at least indicated that they’re willing to relax, the target for a primary surplus this year and next. The last two sticking points are about domestic Greek policy on wages (both raising the minimum wage and hiring more governmernt employees) and labor protections (how tough is it to fire someone?). And the creditors just aren’t going to give ground on these. Because they regard them as essential to allowing the Greek economy to grow in the future into being able to repay the debt. To not insist on these would, by their understanding (whether that understanding is right or wrong is another matter) be simply condemning everyone to a default a little later on. So they’re just not going to agree. Maybe Syriza has moved a lot: but whether that movement is enough depends upon views of how extreme the original positions were. Too much so say the creditors. As to what happens next a default to the IMF does not in fact count as a default immediately. We might call it a default event, even a default-like event, not a default. First, the IMF waits 30 days, then informs the Board that the money hasn’t been received. At which point they’ve quite a lot of leeway. While this isn’t formally what happens in reality: if they think that the country is really trying to pay, has paid some of it, then no default is declared, some shuffling of the problem out of the way happens. If they think that the debtor is simply being recalcitrant, then default is declared, although no rich country not in complete extremis has ever done so. What then happens is, although it doesn’t absolutely have to, a triggering of the cross-default clauses. You’re in default to your most senior creditor? And the IMF is your most senior creditor, then you’re in default to them all. So, even if the IMF isn’t paid on June 5th it’s really July 5th and beyond that the fireworks really start. By which point, of course, one side or the other might have caved, the last tranche of the secnd bailout is delivered, the IMF paid and on the circus goes. Or not, as the case may be. &) Greek Banks Face Contingency Plans as Crisis Threatens <http://www.bloomberg.com/news/articles/2015-05-22/greek-banks-face-contingency-plans-as-crisis-threatens> by Rebecca Christie and Gaspard Sebag BloombergBusiness, May 22, 2015 The European Commission is preparing contingency plans for the Greek banking system in the event government leaders fail to agree to a deal to help the indebted nation, according to two people familiar with the talks. Officials are looking at how to manage the failure of financial firms in Greece and other events that may cause widespread investor losses, said one of the people, who asked not to be identified as the discussions are private. The four largest banks in Greece, including the National Bank of Greece SA and Alpha Bank AE, all received notifications from independent auditors questioning whether they can continue as so-called going concerns, according to earnings reports. The financial firms have suffered after the economy in Greece contracted for six straight years, a 2012 debt exchange forced the institutions to take large losses and the prolonged recession led to an increase in non-performing loans. “You cannot truly break the vicious circle of the bank-sovereign link if the sovereign is not ready to play ball,” said Nicolas Veron, a senior fellow at the Peterson Institute for International Economics in Washington. “You can mitigate it, but you cannot break it entirely.” . . . The FTSE/Athens Banks Index, which measures the performance of the bank sector of the Greek Stock Exchange, fell 0.7 percent to 682.6 at 3:48 p.m. in Athens. That’s down 96.5 percent since 2010. Optimism that Greece could reach an accord with its creditors to unlock the remaining 7.2 billion euros ($8 billion) of its bailout funds waned Friday after German Chancellor Angela Merkel said greater efforts were needed. German Finance Minster Wolfgang Schaeuble mentioned the possibility that Greece may need a parallel currency alongside the euro if talks fail, according to people familiar with his views. The banks themselves are warning investors, with the National Bank of Greece signaling that it faces restrictions in accessing the capital markets and is dependent on the European Central Bank and the Bank of Greece for funding, according to a May 18 filing with the U.S. Securities and Exchange Commission. National Bank and Alpha Bank both report first-quarter earnings on May 28. . . . The National Bank of Greece’s “ability to continue to access sufficient liquidity through emergency liquidity assistance facility as well as the significant deposits outflow between Jan. 1, 2015, and April 30, 2015, raise substantial doubt about its ability to continue as a going concern,” the firm’s auditors wrote in the filing. Greece’s shaky finances have put the banks in the spotlight while euro-area nations tussle over when and how to extend further bailout aid. Without bond market access, the government of Greece has been kept afloat through the banks and the emergency aid they get from the European Central Bank. The euro area’s top bank supervisor, ECB Supervisory Board chair Daniele Nouy, has said as recently as May 13 that Greece’s banks are solvent. “They’ve never been better equipped to go through this kind of stressful situation,” in an interview with the Wall Street Journal. Greece’s bailout program does have money set aside to help the banks if creditors are willing to release the funds. The Mediterranean nation has 10.9 billion euros in bonds parked at the European Financial Stability Facility, returned from Greece’s bank-rescue fund as a condition of its February bailout extension. This money can only be used for the recapitalizations of financial firms and only if the ECB requests it before the bailout program expires at the end of June. Greece’s banking conundrum marks a big test for the ECB in its new role as euro-area bank supervisor, which has sought to create a firewall between the banks and the government’s finances, said Guntram Wolff, director of the Brussels-based Bruegel research group. “This is actually the best way for allowing for a default and somehow being able to manage the default onto the banking system,” Wolff said. “We may be able to save one or two banks from the mess of a Greek default in Greece and those banks could continue to get funding from the ECB.” If Greece defaults or faces a similar turning point, the Greek government might introduce capital controls right away, said Diego Valiante, a research fellow at the Centre for European Policy Studies. At the same time, he said, there might not be a rush of deposits because so many funds already have left the country. “Most of the liquidity impact has already happened,” Valiante said. “Greek banks are already on a thin credit line with ELA, so they are already raising the minimum of what is indispensable for them to continue their operation.” The Bank of Greece remains the country’s bank resolution authority during the transition to the euro-area’s single system for handling failing banks. The European Commission’s competition department would also be involved, as it enforces limits on government assistance that have been put in place as a result of the euro crisis. _________________________________________________________ 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