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Tusk warns Greece “accept offer or head towards default”, Merkel oracles “Que Sera, Sera”

Nobody could expect anything else except the creditors’ warnings to reach their peak. A Eurozone Leaders Summit is scheduled for 7 pm upcoming Monday, four hours earlier the eurozone finance ministers will convene to take some decision on Greece. The debt-ridden country is supposed to submit another reforms proposal that the Eurogroup ministers will accept or reject. Monday, the 22nd of June is a critical day for Greece. And creditors will not let a minute pass without adding piece by piece to the pressure scenery.

Friday afternoon, European Council President Donald Tusk told Greece to accept a debt deal with its international creditors or face defaulting.

“The situation of Greece is getting critical,” Mr Tusk said in a video message. “We are close to the point where the Greek government will have to choose between accepting what I believe is a good offer of continued support or to head towards default.”

Short after, German Chancellor Angela Merkel declared in a diplomatic elegant “me knows nothing”style that everything is open for Monday.

The meeting on Monday can be a meeting where decisions will be taken if there is a basis for a decision,” Merkel oracled speaking at an even of her Christian Democrats / Christian Unionists (CDU / CSU). She added thatif until then there is no basis for decision, the meeting will be just a “consultative meeting” and the wait should be continued.

I suppose other EU officials as well as Greece’s EU-partners, prime ministers ad finance ministers, named and unnamed “officials” added their sauce to the Greek pressure dish, trying to reach Prime Minister Alexis Tsipras’ ears. However, the Prime Minister is currently in Saint Peterburg chatting and chanting with Russian President Valdimir Putin.

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  1. Kneel and obey for the European Commision

  2. Is an alignment with Putin resulting in freedom or just the subjection to a different master?

    • Giaourti Giaourtaki

      No idea, but Putin and Märklin have more in common than Putin and Gazprom 04 Schröder, as they are old bedfellows since their time in FDJ-KGB, that’s also the reason for she uses the terminus “reform” in its Stalinist meaning, but no wonder in a land that calls bars “location” and kindergarten Kita or translates “at the end of the day” like a stupid google-translator

  3. Giaourti Giaourtaki

    The first thing freaks like Tusk did in Greece after Stalinism ended was to go Crete and steal the jobs of the Hippies in the Green Houses away to boost their career.

  4. While the charade goes on, we would do well to remind ourselves of what caused all this in Europe, who pays for it, and who benefits from it… This is well worth a full, attentative read. Quite an eye-opener…

    How It Worked

    Here’s how it worked. When German banks pulled money out of Greece, the other national central banks of the euro area collectively offset the outflow with loans to the Greek central bank. These loans appeared on the balance sheet of the Bundesbank, Germany’s central bank, as claims on the rest of the euro area. This mechanism, designed to keep the currency area’s accounts in balance, made it easier for the German banks to exit their positions.
    Now for the tricky part: As opposed to the claims of the private banks, the Bundesbank’s claims were only partly the responsibility of Germany.

    If Greece reneged on its debt, the losses would be shared among all euro-area countries, according to their shareholding in the ECB. Germany’s stake would be about 28 percent. In short, over the last couple of years, much of the risk sitting on German banks’ balance sheets shifted to the taxpayers of the entire currency union.

    It’s hard to quantify exactly how much Germany has benefited from its European bailout. One indicator would be the amount German banks pulled out of other euro-area countries since the crisis began. According to the BIS, they yanked $353 billion from December 2009 to the end of 2011 (the latest data available). Another would be the increase in the Bundesbank’s claims on other euro-area central banks. That amounts to 466 billion euros ($590 billion) from December 2009 through April 2012, though it would also reflect non-German depositors moving their money into German banks.
    By comparison, Greece has received a total of about 340 billion euros in official loans to recapitalize its banks, replace fleeing capital, restructure its debts and help its government make ends meet. Only about 15 billion euros of that has come directly from Germany. The rest is all from the ECB, the EU and the International Monetary Fund.
    Better Prepared
    Germany’s changing financial exposure has major implications for its role as a leader of Europe’s response to the crisis. Before Germany’s banks pulled back their funds, they stood to lose a ton of money if Greece left the euro. Now any losses will be shared with the taxpayers of the entire euro area — particularly France, whose banks still have a lot of outstanding loans to Greece. Perhaps this is what some German officials mean when they say that the euro area is better prepared for a Greek exit.

    This is a quote from an article published by bloomberg in 2012
    The article further states that if there is fallout from the Greek situation in e.g. Spain, Ireland, Portugal etc, then Germany would not be protected by this bit of creative accounting any longer and follow the rest of us down the swannie.
    The whole charade with the Eurogroup, the ping-pong politics, the ever increasing hostility towards Greece from all corners would strongly indicate that this has not changed. It would explain the visciousness with which Greece is being hounded. Could it be that the plan always was to shed the German risk by passing it on to the taxpayers accross the EU, and then to cauterise the wound by forcing Greece out of the Union?

    • You guys, who did not start even transparent accounting policies in public sector 4 years afrer receiving huge bailout, are the last one who shoud speak about transfer of risks from banks to taxpayers.

      Not just that, it is normal, that those who lent the money – German and French banks got them back. Or even this is not considered normal in Greece?

      Do not forget that there was a loss – private creditors including Germans and French banks lost money “Greek government bonds were required at the same time to sign a deal accepting extended maturities, lower interest rates, and a 53.5% face value loss” (Wikipedia – Greek government-debt crisis)

      • private creditors including Germans and French banks lost money

        So, you really say it all there. Would you accept that if your neigbourhood grocer goes bust everybody who used to shop there should carry the can and cough up, or would you agree that that is the risk the grocer takes whne he starts the shop? PRIVATE is the operative word here. Smae thing happened in Ireland. PRIVATE banks get into ridiculous debt through the practice of casino banking, tax payers end up paying the losses. Why is this acceptable for PRIVATE banks, but not for your PRIVATE green grocer, or anybody else? Or, in other words, why would tax payers pay for private losses, no matter who clicks up the losses? And by the way, this article, which you probably didn’t bother to read in it’s entirety , was not written by “you guys”, it was written by what is generally accepted to be an international authroity on all things financial…

        • Ephilant, I don’t think you understand how ELA and risk sharing works. Risk sharing was built in as part of ECB. That’s a good thing.
          Germany did not pull any tricks here, this is how Eurozone was set up. As tukan says, private banks are not as protected. In the end, ECB bails out private banks by assuming their liabilities and collateral. Not a fan of central banks and TBTF banks, would like to see some of them go out of business as the result of bad lending practices.

        • Simple fact is, that private investors including banks (not only German and French) lost money on “lower interest rates, and a 53.5% face value loss” on bonds. That changed the future value of Greek bonds they were holding, and they lost money. In my country there is one bank that despite capital increase will probably banktupt due to this action.

          As simple as that, no need to speak about grocers.

          • Giaourti Giaourtaki

            And in this game ECB bought cheap Greek bonds from hedge-funds and Greece has to pay ECB 27 billion for it, so far ECB made 6 billion profit from Greece; plus that the heaviest losses had Greek banks and pension-funds, how can that be called a haircut then?
            What most people don’t get is that interest was meant to cover risk not the profit, also there is a huge difference between debt and interest – Greece pays 200 billion until 2030, 150 billion of it is interest – and another funny thing is that it’s all looking like that if people put money on a bank the bank starts to own this money, they are even worse than any Mafia and have only 2-5% of the savers money in their safes; in Cyprus the Troika stole the savers 4 billion and gave it to Pireaus Bank as a tip.
            And who saved capitalism with loans after Lehman? Wasn’t it the Corsican Mafia who recapitalized 1/3 of the losses?

          • The simple fact is that you are comparing apples with pears. There is no mention of private banks in the Bloomberg article, you are the one who bings them up. The are and remain private banks and have as much right as the grocer to palm their losses on to taxpayers. Also, this article was not written by me, it was written by people who understand risk sharing and ELA a lot better than any one of us, including yourself. People who speak of Central Banks, not private banks. And those who do understand clearly state that “tricks were pulled”…

          • fact: many international banks made losses on Greek sovereighn bonds during bailout.

            you guys (Giaourti, ephilant) may not like the fact, it may not fit in to the picture you have about bailuot, you may try to hide it by speaking about something else (like grocers, apples, pears, mafia or hedge funds), but it remains a fact. It remains a fact even if it is not mentioned in some Bloomberg article ephilant:)

          • But that is neither the general argument put forward, nor the point ot of this particuler discussiion… Private busisesses make profits and losses, that is the nature of capitalism. Teh point put forward is the question why the private business of banking is allowed to pass their losses on to tax payers everywhere (using the services of very corrupt politicians and the creative accounting techniques developed by the likes op KPMG or PWC), while other private business rightfully so isn’t awarded the same priviledge…The losses in question are not the losses made on sovereign bonds, but the losses made through greedy transactions BEFORE any bailout was ever mentioned thorugh thier very own casino banking practices, like e.g. Anglo Irish Banks, or Deftia, or Hypo, or Banque General, or Blackwater, or…. It would be very good if you sould actually start reading what is being said instead of (deliberately?) changing topic and muddling the waters with totally irrelevant (relating to the topic) stuff…

    • Not quite true. It wasn’t just German risk, but France/French banks were Greece’s biggest creditor (and Benelux if it was a country):

  5. You really need to read this again.

    If Greece reneged on its debt, the losses would be shared among all euro-area countries, according to their shareholding in the ECB. Germany’s stake would be about 28 percent.

    Nobody mentions private banks. That is of course the other scandal. Why are private banks facilitated in passing their mostly self inflicted losses on to tax payers world wide, while other private businesses who end up making a loss are simply declared bankrupt and closed up? Some businesses are more equal than others?

  6. And, here’s another nice bit on how the powers that be work…

    Last Thursday’s eurogroup meeting went down in history as a lost opportunity to produce an already belated agreement between Greece and its creditors.

    Perhaps the most telling remark by any finance minister in that meeting came from Michael Noonan. He protested that ministers had not been made privy to the institutions’ proposal to my government before being asked to participate in the discussion.

    Michael Noonan is the current Irish FinMin, and he complains about being asked to discuss stuff he hasn’t seen. Petty he doesn’t disclose that he was told how to vote as well, it just would have rounded the whole charade up for what it is, a charade…

  7. From that same article in the Irish times, these little niceties:

    In fact, as our German counterpart was later to confirm, any written submission to a finance minister by either Greece or the institutions was “unacceptable”, as he would then need to table it at the Bundestag, thus negating its utility as a negotiating bid.

    The euro zone moves in a mysterious way. Momentous decisions are rubber- stamped by finance ministers who remain in the dark on the details, while unelected officials of mighty institutions are locked into one-sided negotiations with a solitary government-in-distress.

    It begs the question: if not the politicians, then who are the decision makers in the EU, and WHY do we allow this????

    • keeptalkinggreece

      the markets, the bankers and the financiers. ‘we’ allow this because politicians are corrupt and in desperate need of support of the markets, the bankers and the financiers.

      • So what’s Greece going to do about corrupt politicians? In meantime, Greece is paying for electing bad people to high offices.

        • keeptalkinggreece

          GR is considering to bring over some good people from Germany/Holland etc but some bureaucratic problems need to be cleared first