Tsipras, Merkel and Hollande converged on the need for a compromise solution in the presence of the International Monetary Fund so to agree within 10 days. The IMF may insist on debt restructuring.
IMF Director Poul Thomson dismissed press reports that he had asked Europeans for a debt haircut. “I pushed them for debt restructuring,” he said and emphasized that no study has been done for debt sustainability.
Threats by the IMF increase pressure on the Eurozone, so that it will be more flexible. As pointed out by analysts at RBS, the decisive intervention of the IMF in the Greek issue is a positive development.
Good grief! A provision of the insurance bill to be tabled soon in the House calls for debt repayments in 40 or more months to be withheld from monthly pension. For a person who owes up to 25,000 euros and receives a pension of 1000 euros, 600 euros will be withheld. How can a person, or dependent family, survive on the remaining 400 euros ($444) per month? Perhaps the catch phrase is "40 or MORE" months which would reduce the payment. The government may reject that bill. No wonder insurance reform is still being negotiated.
I too hope Syriza hangs tough. It may help him now that the EC and ECB are insisting the IMF has to be involved for an agreement to be negotiated. The IMF is strict on reforms for insurance and labor but they also call for debt restructuring. If the debt is restructured, some of the reforms may not be necessary. Merkel and Hollande may finally realize debt restructuring is needed and will persuade the other states to accept it.
I have a feeling the creditors are making rather extreme demands because they hope to make it difficult for Tsipras to stay in power. They are hoping when some of these reforms go into effect the people will turn against the government. They want to maintain politics as usual and resent the new government’s ideas. As they say, you can't teach an old dog new tricks.
Just read that nearly 45% of pensioners in Greece (approximately 2.5 million) live on an income of less than 665 euros a month ($779) - that is, below the poverty line the EU has set. The government has introduced a bill to include provision for the restoration of a minimum pension of 360 euros for the uninsured elderly.
A recent communique by the Office of the Deputy Prime Minister, John Dragasaki states: "After five years of recession and a cumulative loss of 25% of GDP reminiscent of war, pensions have become the last safety net which prevents the complete dissolution the Greek society and this is because most old people are the ones who feed the rest of the family. "Demographics, Greece also enjoys a downward spiral, as it has one of the lowest birth rates in Europe.
Mr. Rollakis, general secretary of the country's pensioners’ federation, whose own pensions was cut by one third due to the crisis, says “I myself fear that the struggle for justice has a long way to go. Under pressure from creditors, the government can easily add pensions to the list of self-proclaimed red lines already compromised.”
Majedie Asset Management (British), Wellington Management and American Vanguard Group. Each lost about 10 mil. euro in Greece in the first 3 months of 2015.
The Cambria Investment Management has an investment of 7 million, 9% of its total assets; In the last 12 months has recorded 20% losses. (ha, the advantage of leveraging in derivatives). However, as he explains the founder Meb Faber, investment in Greece is for long-term, even if the country exits the Eurozone. Besides, according to Faber , the Grexit may prove to be a positive development for Greek shares (? That’s what he says).
And Japonica Partners is one of the largest holders of Greek government bonds. According to the former Goldman Sachs banker and founder of Japonica, Paul Kazarian, the budgetary position of Greece on the merits are clearly better than what is shown in the statistics ."The main problem in Greece is the lack of credibility.
John Paulson one of the 100 richest people in the world, with a fortune of 11.2 billion. dollars in 2014, has major holdings in Greek banks and other companies: Eurobank, Piraeus Bank, Alpha Bank, EYDAP etc.
The government has persisted in refusing collective redundancies, claiming the restoration of collective bargaining and the gradual increase in the minimum wage.
Greece is following Int’l Labor Organization (ILO) best practices. On May 15, Greek Minister of Labor Skourletis met with Guy Ryder at ILO headquarters in Geneva. ILO expressed appreciation for the new efforts of the government and its social partners to move towards the promotion of collective bargaining, including through the on-going legislative efforts aiming at conformity with international labour standards. So there should be no problem with this reform.
The new VAT rate, along with a restriction on early retirement and an unpopular property tax, would enable the government to raise an additional five to six billion euros reports Ekathimerini news.
However, the VAT issue has become the latest thorn in negotiations. Creditors propose two VAT rates, a low 11% and a high of 23%.The Greek side rejects the proposal and insists on the need for the establishment of three rates of VAT. Ha, I wonder if the cash registers at the grocery stores can be reprogrammed to accommodate the different rates.
May 21: Lenders will accept raising the minimum wage if Tsipras reforms the pension system. However, creditors will not accept an increase in the minimum wage to prior 2012 levels, but they are open to a gradual increase.
I don’t know how “gradual” an increase the creditors are agreeing to. In 2012, the austerity measures lowered private sector minimum wages by 22% to 586 euros for workers over 25. The current minimum wage is 602 euros, indicating an initial cutback. And the gov. had proposed raising the minimum wage on Oct 1 to 680 euros ($778) and next July to 751 euros ($859), presenting other revenue raising reforms to cover the increase in wages. Like Sweden and other countries, the government believes lowering wages is recessionary.
"The pension system is unsustainable and needs reform," says the Brussels Group director, Mr. Wolf, speaking to Bloomberg. They refer to social security benefits as pensions.. Mr. Stratoulis, Minister for Social Security, noted in a March report that 85.6% of pensioners are over 61 years of age. Further, of the 2.63 million pensioners (retirement, death, disability), about 1.511 million (approx 60%) receive up to 800 euros ($889) or less. Tsipras had proposed the creation of the National Wealth Fund to strengthen the financing of the SS system.
The government has agreed to raise the minimum retirement age to 65. (cont. below)
The Minister of Finance was asked recently on whether Greece is considering implementing capital controls to prevent a bank run. He replied, “Capital controls and a monetary union are incompatible. We have no plans to bring them in.” Deposit withdrawals this month have stabilized and decreased from the highs of previous months.. Also the ECB will continue to provide liquidity to the banks, as needed, until an agreement is reached, eliminating any need for capital controls. (sorry I don't have time now to discuss further)
ECB raised ELA by 200 mil euros, just enough to meet the needs of the industry, given the stabilization of deposits in recent days. IMO, ECB wants to maintain pressure on the government to submit to all reforms.
Also, after a long debate with fellow ECB members, Draghi averted an additional haircut of guarantees of the banks, arriving at the prevailing view to wait on the outcome of negotiations between Greece and its creditors.
Yes, I thought you did. You're such a bad, bad boy! LOL!
According to analysts, it is important that anyone trading the market understand the difference between fear and pessimism, greed and optimism. When prices rise too quickly and run away from the trend line, we have greed which usually corrects itself back to the trend line. When prices fall too quickly, fear is causing people to accept prices that are too low and prices fall far below the downward trend line.
When you open a chart for NBG and draw the latest trend line, the low point was a close of 1.07 on April 21. It’s easy to see the direction of that trend. Looking at a trend line from the 52 week closing low of 1.03 on Jan 28, it still shows a slight upward trend. That longer trend line was broken on April 14 and came back above it on April 27.
The longer trend indicates that the pessimistic mood of the market has only slightly been broken since January. Many foreign investors have not re-entered the Greek market since losing money. However the more recent trend since April 21 is positive. IMO much depends on the future events that unfold in Greece for the positive mood to continue. I'm surprised that the price hasn't been more volatile due to the uncertainty about the agreement with creditors.
NBG is trading above its 20 and 50 day moving average, 1.38 and 1.30 respectively and yesterday went below its 10 DMA of 1.41. Over the past month, shares of NBG are up 17.6%. Over the past 3 months they are down 14%. The relative strength index is 53.
now reported to be at a Eurogroup meeting 5-8 June. Daily fluctuations from headline news, IMO much of which is nothing but “sensational” journalism, presents short-term trading opportunities. It's reported stocks will react to expected positive statements from the Summit tomorrow. The Brussels Group will continue negotiations through Saturday focusing on VAT, pension, labor, red loans, the fiscal gap, the primary surplus and debt sustainability. The ECB continues to support the banks through ELA. Reports indicate Greece will implement some reforms and be rewarded by an 'initial agreement' with enough funds to pay debts to the IMF and ECB, and thus avoid default.
In the last few days, banks stocks have retracted some after rallying. Some analysts are predicting an eventual rally in bank stocks from 40% - 60%, or more. Goldman Sacks continues its massive buying of Piraeus warrants, which will be detrimental to shareholders when warrants are exercised (Eurobank has no warrants).
Greeks are paying taxes. Citizens are arrested and put in jail for income tax evasion if they don’t. The Officer of Safety notes that upon completion of six pending arrests of persons on the Lagarde list, a very large part of those remaining on the list will go voluntarily to the authorities to clear their debts. Unlike the prior gov, people know this gov means business.
The new legislative allowance for 100 doses (payments) gives debtors until May 26 to respond before measures will be taken against them. They have been "tagged" and monitored by the Special Collection Unit (E.M.EIS.) and Varoufakis says, "We will find them, watching them, we will be merciless."
The 465 tax collectors being hired in June will have ‘temporary’ status to reduce chances of bribery and corruption possible with long-term employment. Also the new hires will be paid a fee based on the amount they manage to collect.
As of April 29, ten days after the100 dose regulation was implemented, 240,000 borrowers owing 2 billion euros rushed to settle their debts; of these 72 have debts of more than one million euros. The list of 72 includes shipping companies of the Aegean and subsidiaries of systemic banks. As of May 8, 140,000 additional apps were received. Up to May 8, total arrears amounted to Eur2.8 billion, of which 135 million was collected and an additional 417 million was expected. Of course the remaining amounts will be collected in 99 more payments.
Also the Greek government plans to establish controls of MP bank accounts. They have gathered all the MP credentials in order to start the lifting of the banking confidentiality in Switzerland and identify whether a Greek politician has undeclared bank accounts in that country.
(forgot to note the source) Currently he is Financial Adviser to Management for Piraeus and oversees its international financial relations. I wonder how his salary compares with U.S. bank execs?
after consultation with the European Commission, and probably the IMF
- A current phase that may soon lead to an agreement to restart the financing
- A second phase that will start in June and will be completed by the autumn, which also should include an agreement on the debt.
The government still insists the red lines will remain unchanged: no to collective redundancies; restore collective bargaining; and the gradual increase in the minimum wage. The government is negotiating the terms of privatizations in the known fields (whatever that means). And they will have to seek a new formula as the partners disagree with the double VAT (15% and 18%).
Tsipras has asked the Greek negotiating team to reach a staff level agreement on Wednesday so that he can go to Thursday’s summit with solid proposals in his hands. If a staff level agreement cannot be reached, there should at least be convergence on most issues. He insists on a “political” solution and will meet with Angela Merkel, French President Francois Hollande and EC President Jean-Claude Juncker on the sidelines of Thursday’s EU summit.
First of all, in Greece there are probably few bank accounts with high balances that are the target for seizure. There were many in Cyprus. Russians were depositing large sums in Cypriot banks to take advantage of its tax haven.
In an interview, European Central Bank (ECB) President Mario Draghi gave his assurance today that the Greek banks can continue to rely on emergency liquidity assistance (ELA).
Varoufakis says, “Stability of the financial sector and banking system is very important to us. I was asked about bail in [i.e. confiscating of bank accounts] and wholeheartedly ruled it out. Categorically there will be no bail in.”
Cheer up Mucho! As the song goes Mucho, "Don't worry, be happy!" (at least temporarily)