Why Greece's spillover across euro area will probably be contained this time

[greengiraffe]

Give in or we’ll starve banks, Europe tells Athens
BRUNO WATERFIELD THE TIMES JUNE 11, 2015 12:03PM

Europe: we’ll starve Greek banks
Greece's Prime Minister Alexis Tsipras, left, near European Commission President Jean-Claude Juncker at the start of the summit in Brussels. Source: AFP

Europe is ready to curb emergency credit to Greece’s stricken banks unless Athens capitulates to the demands of its international creditors.

Officials in Brussels warned last night that the European Central Bank would impose tighter rules on the security required for aid to Greek banks unless the leftist Syriza government signed up to austerity measures.

“The deadline is next week and without a clear prospect of agreement the ECB will have to take the decision on Wednesday,” an official told The Times.

Greek banking sources fear that the ECB could increase the level of collateral it requires in return for emergency aid from an average of about 30 per cent to 40 per cent. That would cut at least 12 billion euros from the cash available to Greek banks. Many are already close to collapse with deposits leaving Greece at a rate of 1 billion euros a day.

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MORECourt reverses Greek pension cuts
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The extra pressure on Athens came after the European Commission, along with Germany, Finland and Austria, rejected the latest reforms proposed by Athens.

Greek Prime Minister Alexis Tsipras travelled to Brussels on Wednesday hoping to hold eleventh-hour talks with Angela Merkel and Francois Hollande before a weekend deadline to find a deal to save Greece from becoming bankrupt.

The German Chancellor and the French President will tell Mr Tsipras that he must make further concessions on pension cuts, VAT increases and austerity targets in return for eurozone and International Monetary Fund (IMF) loans worth 7.2 billion euros.

“We want to keep Greece in the eurozone,” said Ms Merkel. “Where there is a will, there is a way.”

Mr Hollande warned Greece that time was running out. “We must now move quickly,” he said.

Without the cash injection, Greece will default on IMF debt repayments at the end of the month. A deadline has been set for early next week to allow national parliaments in eurozone countries to vote on the deal. EU officials have rejected new Greek debt and reform proposals and accused Mr Tsipras of reneging on a previous commitment to meet fiscal targets.

Greece has climbed down on fiscal targets but wants the eurozone to use its bailout fund to repay an additional 6.7 billion euros of debts owed to the ECB that fall due in July and August.

Germany and other eurozone countries are said to be preparing for an interim agreement, allowing Greece to pay debts over the summer in return for agreement on fiscal targets and at least one major economic reform.

Failure to reach a deal will push Greece to default on 1.6 billion euros owed to the IMF, triggering a bank run and a Greek exit from the euro.

The Times

[greengiraffe]

Greek talks on hold after progress stalls, IMF says
THE AUSTRALIAN JUNE 12, 2015 6:52AM

The International Monetary Fund has halted its bailout talks with Greece after a failure to make progress in negotiations, the emergency lender’s top spokesman has said.

“There are major differences between us in most key areas,” IMF spokesman Gerry Rice said.

“There has been no progress in narrowing these differences recently. Thus, we are well away from an agreement.”

Mr Rice said the IMF team negotiating with Greece has been pulled out of Brussels, where talks are occurring with European officials.

“The ball is very much in Greece’s court right now,” he said.

The IMF statement indicated a halt to negotiations over technical details of the bailout with the so-called troika, which also includes officials from the European Commission and the European Central Bank, that haven’t taken place for several days anyway. That halt won’t necessarily prevent further talks among political leaders to resolve the crisis.

The comments came as Greek President Alexis Tsipras met with European Commission President Jean-Claude Juncker in Brussels to try to resolve the stand-off. Months of largely fruitless negotiations between Greece and its creditors -- the IMF, other eurozone governments and the European Central Bank -- have pushed Greece to the brink of default and potential exit from the currency union.

Mr Juncker held an “important, friendly and constructive meeting” with Mr Tsipras, the commission said in a statement.

“President Juncker explained a possible process with the three institutions that would still allow finding mutually acceptable solutions in time,” the commission said. “They agreed to stay in close contact over the coming days.”

The statement, along with the IMF move and comments from other EU leaders, show that the process of reaching a rescue deal with Greece has moved into a new stage.

The country’s creditors now seem less willing to engage in drawn-out negotiations to reach further compromises, but instead want the Athens government to quickly make decisions. Early last week, the creditors put a final proposal on the table and urged Greece to accept it, though the government later responded with a counterproposal that gained no traction.

A Greek government official tried to strike a more positive note after the Juncker meeting.

“We are working toward bridging the differences...as well as the attainment of a deal that will ensure growth with social cohesion and sustainable public debt,” the official said, echoing earlier comments from Mr Tsipras.

Last week, Greece became the first developed nation in the IMF’s history to delay its emergency loan repayments by bundling them into one bill due at the end of the month.

Although the strategy bought the country more time to negotiate a financing deal, it also fueled investor concerns that Athens is heading to a default. In fact, the latest proposal offered by Greece’s new antiausterity government suggested that the bundling was the first step in restructuring its loans to the IMF, a move that is widely seen as a nonstarter with the fund.

Analysts warn a Greek default is weeks away without an emergency financing deal, a fate that could propel the country out of the eurozone and send shock waves through the European and global markets.

Mr Rice said the talks were deadlocked over pensions, taxes and financing.

Pensions and wages account for roughly 80 per cent of Greece’s total budget spending, “so it’s not possible for Greece to achieve its medium-term fiscal targets without reforms, especially of pensions,” he said.

He also warned against a tax increase in Greece.

“The policy of increasing already high rates on a low tax base, again, is not sustainable,” Mr Rice said. Rather, the government needed to simplify the value-added tax system and collect the full amount of revenues due under the VAT.

While Athens has resisted creditor calls for overhauling its pension and wage policies, European officials have rejected Greece’s requirements for a restructuring of its debt, which is largely held by eurozone member countries and the IMF.

Mr Rice said a weak overhaul of pension and wages in Greece would require more cash to cover Athens’ budget gaps and more debt relief from its European creditors.

Greece’s spending is outpacing revenues, making it increasingly difficult to pay its debt obligations. The IMF says Greece needs to achieve a 3.5 per cent budget surplus over the next several years in order to be able to pay its bills. That would require a reduction of pension payments worth 1 per cent of GDP, an increase in VAT collections worth 1 per cent of GDP and other overhauls to make the economy more competitive and improve growth prospects. It would also require debt maturity extensions from Europe.

“There’s a trade off in reaching agreement in the discussions,” Mr Rice said. “The more distant the measures agreed and targets are from the original commitment made in 2012, the higher the need would be for additional financing and indeed, debt relief to make Greece’s debt sustainable.”

IMF Managing Director Christine Lagarde is scheduled to head to Europe next week, where she is likely to meet with top eurozone officials to discuss the bailout talks.

Mr Rice said the IMF remains ready to resume talks, though he didn’t indicate what would be necessary to re-engage.

[greengiraffe]

Greece bailout talks end without a deal, stoking default fears
GABRIELE STEINHAUSER THE AUSTRALIAN JUNE 15, 2015 7:13AM
Picture: AP Source: AP


Greg Ip: Greece’s Economic Woes Go Beyond Debt
Talks between Greece and its European creditors broke down over the weekend after the two sides failed to bridge major differences, leaving it to eurozone finance ministers to make a final push to reach a deal to avert a Greek default.

Despite a new bailout plan submitted by Greece, the government’s proposals for spending cuts and economic overhauls remain as much as €2 billion ($2.89 billion) annually short of what Athens’s creditors have demanded, European Commission spokeswoman Annika Breidthardt said Sunday.

“In addition, the Greek proposals remain incomplete,” she said.

No further talks with the Greek government are planned until a meeting of eurozone finance ministers in Luxembourg on Thursday, Ms. Breidthardt said. That leaves the two sides little time to reach an agreement before the eurozone portion of Greece’s €245 billion bailout expires June 30, the same day Greece faces a €1.6 billion payment to the International Monetary Fund.

Appearing to contradict European officials, Greek Deputy Prime Minister Yannis Dragasakis said the government in Athens had submitted proposals that “fully cover the fiscal gap,” but said that the country’s creditors had insisted the gap be covered solely through cuts in pensions and increases in sales taxes. He added that Greece was still pushing for a deal and that the country’s delegation stood ready to reach a “mutually beneficial agreement.”

The collapse in negotiations comes as senior officials from all 19 eurozone countries have begun discussing jointly the possibility of Greece and its potential exit from the euro, a sign of the mounting pressure on Athens to agree to its creditors’ terms.

At a dinner in Bratislava, Slovakia, on Thursday aimed at preparing for the finance ministers’ meeting, senior officials from the ministries sketched out three outcomes for Greece, according to two officials familiar with the discussions.

The IMF had just called off its talks with Greece, frustrated with five months of negotiations that have failed to yield an agreement on exactly what policy overhauls and spending cuts Athens must agree to make in exchange for sustained financial aid.

One outcome, which eurozone officials considered less likely, foresaw a deal being struck between Greece, the IMF and the eurozone, and Athens actually implementing all the necessary economic measures before its bailout expires at the end of June.

The second outcome, seen by officials as more likely, would involve a technical extension to Greece’s bailout program until the end of the year or early 2016 to allow more time for Athens to implement the measures.

While the Greek government has signaled it would be on board with such an extension, officials cautioned that it would still require Athens to agree on specific measures this month. “There is a question mark over whether the Greek side is ready to reach such an agreement,” an official familiar with the discussions said.

But the most striking outcome was the third one, described as “plan B,” which saw no deal being reached. This outcome would lead to “a very high probability of default” for the government in Athens, an official said.

The official said it was the first time there had been a discussion among all 19 eurozone members about such an option.

He added, however, that the discussion was very brief, signaling that it could have also been intended as an attempt to pressure the Greek government to present credible proposals.

An attempt by Slovenia, Slovakia and Lithuania to start a discussion on the idea in April was shot down by the chairman of the group of eurozone finance ministers, officials present at the meeting said.

With time running out, large differences persist over a set of measures creditors say are key for Greece’s economy to recover, but that Athens says would further push it into recession.

In a sign that the pressure was being felt in Athens, a senior Greek government official said Friday that Greece was ready to present counterproposals to its creditors.

A delegation of Greek officials, including top ministers and technical experts, traveled to Brussels on Saturday to meet representatives of the institutions and discuss the government’s updated plans in the latest effort to unlock the impasse in negotiations.

“Positions are still far apart,” one European Union diplomat said, adding that senior officials at the European Commission, the EU’s executive arm, “are worried whether an agreement can be reached on time.”

— Harriet Torry contributed to this article.

[greengiraffe]

Actually this whole Grexit episode is a soap opera... 4 yrs is a long time to ring fence all creditor exposures and for well connected people to continue their capital flight and hence now the "righteous" consters are there to "cry dad and mum" about being unfairly treated with austerity... IMHO just end it and let Greece sort out its own problems based on whatever habits they deem fit

With modern banking risks management and efficient information flows, it is unimaginable if any conservative financiers will be willing to keep Greece on their lifeline post their initial fling (consistent Tax evasion and leakages) of Grexit in 2011 with their old habits.

Greece PM Tsipras defiant over creditor demands
NEKTARIA STAMOULI THE AUSTRALIAN JUNE 16, 2015 7:15AM

Greek collapse can be contained
French President Francois Hollande, pictured at a press conference in Algiers yesterday, French President Francois Hollande, pictured at a press conference in Algiers yesterday, urged the Greek government to quickly return to the negotiating table with its official creditors. Picture: AFP Source: AFP

Greek Prime Minister Alexis Tsipras has expressed defiance over demands by his country’s creditors, insisting lenders soften their calls for pension cuts, though a senior government official said Athens was prepared to return to talks at any time.

The lack of progress in bailout negotiations has raised fears of a default on Greece’s debt and a possible exit from the currency bloc. The two sides have failed to bridge major differences on a set of reforms Greece has to undertake in exchange for desperately needed financial aid, with the country’s lenders pushing for more pension cuts and labor reforms.

French President François Hollande called for a quick return to talks. One German official warning that the European Union should start making plans for a “state of emergency” in Greece if a deal isn’t reached.

The European Commission quickly dismissed on Sunday what it called the Greek government’s “vague and repetitive” latest proposals to the lenders——the International Monetary Fund and other eurozone countries.


The speed of the dismissal suggested that Mr Tsipras may be gambling he can get a softer bailout deal directly from his fellow eurozone leaders at a European Union summit later this month.

Mr Tsipras said on Monday, in his first statement since the weekend talks, that Greece could wait until the “institutions adhere to realism.”

“One can only suspect political motives behind the fact that the institutions insist on further pension cuts,” he said.

A senior official later said that the Greeks were prepared to return to negotiations whenever they get the invitation. “The Greek premier wants to keep the channels of communication open,” the official said.

Time is ticking before the eurozone portion of Greece’s €245 billion ($356 billion) bailout expires June 30, the same day Greece faces a €1.6 billion payment to the IMF.

Mr Hollande urged the Greek government to quickly return to the negotiating table with its official creditors.

“This is a message to Greece. It doesn’t have to wait; it must get back to the discussion with the institutions,” Mr Hollande said in a news conference on the sidelines of the Paris Air Show. He said the absence of a deal on Greek debt would lead to “turbulent times.”

Mr Hollande said he would personally tell Mr Tsipras: “Let’s not waste time, let’s resume the negotiation as fast as possible.”

The Commission argued that Greece’s creditors have made significant concessions in recent talks, but that Athens’ reform efforts remain too small.

“I believe the concessions overall” that creditors have made are “quite substantial and it’s not a one-way street,” said Margaritis Schinas, a spokesman for Commission President Jean-Claude Juncker.

Mr Schinas said that Mr Juncker still believes a solution can be found if there are greater reform efforts from Greece and political will from its creditors.

European stocks and the euro fell in early trading Monday over the breakdown of the weekend talks.

Eurozone finance ministers will resume discussions on the Greek situation on Thursday when they meet in Luxembourg. The German finance ministry said it was working toward achieving a deal there.

“We are working toward an agreement with all the powers we have available,” spokesman Martin Jäger told reporters. He said it’s up to Greece to present an adequate package of measures for fiscal reform.

Spain’s Foreign Affairs Minister Jose Manuel Garcia-Margallo said he sees “some risk” that Greece may leave the eurozone, noting that “membership in any club implies abiding by the rules.”

Germany’s EU Commissioner, Guenther Oettinger, told reporters the bloc should start making plans for a “state of emergency” in Greece from July 1 if an agreement isn’t reached.

[greengiraffe]

http://www.theguardian.com/business/2015...-creditors

ECB is confident that Grexit will have little impact on the financiers that have exposure to Greece, otherwise they won't be forcing Greece against the wall

[CCUV]

Actually this whole Grexit episode is a soap opera... 4 yrs is a long time to ring fence all creditor exposures and for well connected people to continue their capital flight and hence now the "righteous" consters are there to "cry dad and mum" about being unfairly treated with austerity... IMHO just end it and let Greece sort out its own problems based on whatever habits they deem fit

With modern banking risks management and efficient information flows, it is unimaginable if any conservative financiers will be willing to keep Greece on their lifeline post their initial fling (consistent Tax evasion and leakages) of Grexit in 2011 with their old habits.

Greece PM Tsipras defiant over creditor demands
NEKTARIA STAMOULI THE AUSTRALIAN JUNE 16, 2015 7:15AM

Greek collapse can be contained
French President Francois Hollande, pictured at a press conference in Algiers yesterday, French President Francois Hollande, pictured at a press conference in Algiers yesterday, urged the Greek government to quickly return to the negotiating table with its official creditors. Picture: AFP Source: AFP

Greek Prime Minister Alexis Tsipras has expressed defiance over demands by his country’s creditors, insisting lenders soften their calls for pension cuts, though a senior government official said Athens was prepared to return to talks at any time.

The lack of progress in bailout negotiations has raised fears of a default on Greece’s debt and a possible exit from the currency bloc. The two sides have failed to bridge major differences on a set of reforms Greece has to undertake in exchange for desperately needed financial aid, with the country’s lenders pushing for more pension cuts and labor reforms.

French President François Hollande called for a quick return to talks. One German official warning that the European Union should start making plans for a “state of emergency” in Greece if a deal isn’t reached.

The European Commission quickly dismissed on Sunday what it called the Greek government’s “vague and repetitive” latest proposals to the lenders——the International Monetary Fund and other eurozone countries.


The speed of the dismissal suggested that Mr Tsipras may be gambling he can get a softer bailout deal directly from his fellow eurozone leaders at a European Union summit later this month.

Mr Tsipras said on Monday, in his first statement since the weekend talks, that Greece could wait until the “institutions adhere to realism.”

“One can only suspect political motives behind the fact that the institutions insist on further pension cuts,” he said.

A senior official later said that the Greeks were prepared to return to negotiations whenever they get the invitation. “The Greek premier wants to keep the channels of communication open,” the official said.

Time is ticking before the eurozone portion of Greece’s €245 billion ($356 billion) bailout expires June 30, the same day Greece faces a €1.6 billion payment to the IMF.

Mr Hollande urged the Greek government to quickly return to the negotiating table with its official creditors.

“This is a message to Greece. It doesn’t have to wait; it must get back to the discussion with the institutions,” Mr Hollande said in a news conference on the sidelines of the Paris Air Show. He said the absence of a deal on Greek debt would lead to “turbulent times.”

Mr Hollande said he would personally tell Mr Tsipras: “Let’s not waste time, let’s resume the negotiation as fast as possible.”

The Commission argued that Greece’s creditors have made significant concessions in recent talks, but that Athens’ reform efforts remain too small.

“I believe the concessions overall” that creditors have made are “quite substantial and it’s not a one-way street,” said Margaritis Schinas, a spokesman for Commission President Jean-Claude Juncker.

Mr Schinas said that Mr Juncker still believes a solution can be found if there are greater reform efforts from Greece and political will from its creditors.

European stocks and the euro fell in early trading Monday over the breakdown of the weekend talks.

Eurozone finance ministers will resume discussions on the Greek situation on Thursday when they meet in Luxembourg. The German finance ministry said it was working toward achieving a deal there.

“We are working toward an agreement with all the powers we have available,” spokesman Martin Jäger told reporters. He said it’s up to Greece to present an adequate package of measures for fiscal reform.

Spain’s Foreign Affairs Minister Jose Manuel Garcia-Margallo said he sees “some risk” that Greece may leave the eurozone, noting that “membership in any club implies abiding by the rules.”

Germany’s EU Commissioner, Guenther Oettinger, told reporters the bloc should start making plans for a “state of emergency” in Greece from July 1 if an agreement isn’t reached.

I am not too sure about it. A Grexit is likely to cause euro to spike as Grexit is seen as an improvement of euro land's budgetary and finance. A big spike in Euro will cause euro land to go back into recession as export and tourism will be hit. Against conventional wisdom,i do think the German will want to keep Greece in euro land so as to weaken the euro dollars for the benefit of German export and employment. A weak euro is a "bigger plus" for Germany than any other European countries. A big spike in Euro will also put pressure on the stock market.

[greengiraffe]

Actually this whole Grexit episode is a soap opera... 4 yrs is a long time to ring fence all creditor exposures and for well connected people to continue their capital flight and hence now the "righteous" consters are there to "cry dad and mum" about being unfairly treated with austerity... IMHO just end it and let Greece sort out its own problems based on whatever habits they deem fit

With modern banking risks management and efficient information flows, it is unimaginable if any conservative financiers will be willing to keep Greece on their lifeline post their initial fling (consistent Tax evasion and leakages) of Grexit in 2011 with their old habits.

Greece PM Tsipras defiant over creditor demands
NEKTARIA STAMOULI THE AUSTRALIAN JUNE 16, 2015 7:15AM

Greek collapse can be contained
French President Francois Hollande, pictured at a press conference in Algiers yesterday, French President Francois Hollande, pictured at a press conference in Algiers yesterday, urged the Greek government to quickly return to the negotiating table with its official creditors. Picture: AFP Source: AFP

Greek Prime Minister Alexis Tsipras has expressed defiance over demands by his country’s creditors, insisting lenders soften their calls for pension cuts, though a senior government official said Athens was prepared to return to talks at any time.

The lack of progress in bailout negotiations has raised fears of a default on Greece’s debt and a possible exit from the currency bloc. The two sides have failed to bridge major differences on a set of reforms Greece has to undertake in exchange for desperately needed financial aid, with the country’s lenders pushing for more pension cuts and labor reforms.

French President François Hollande called for a quick return to talks. One German official warning that the European Union should start making plans for a “state of emergency” in Greece if a deal isn’t reached.

The European Commission quickly dismissed on Sunday what it called the Greek government’s “vague and repetitive” latest proposals to the lenders——the International Monetary Fund and other eurozone countries.


The speed of the dismissal suggested that Mr Tsipras may be gambling he can get a softer bailout deal directly from his fellow eurozone leaders at a European Union summit later this month.

Mr Tsipras said on Monday, in his first statement since the weekend talks, that Greece could wait until the “institutions adhere to realism.”

“One can only suspect political motives behind the fact that the institutions insist on further pension cuts,” he said.

A senior official later said that the Greeks were prepared to return to negotiations whenever they get the invitation. “The Greek premier wants to keep the channels of communication open,” the official said.

Time is ticking before the eurozone portion of Greece’s €245 billion ($356 billion) bailout expires June 30, the same day Greece faces a €1.6 billion payment to the IMF.

Mr Hollande urged the Greek government to quickly return to the negotiating table with its official creditors.

“This is a message to Greece. It doesn’t have to wait; it must get back to the discussion with the institutions,” Mr Hollande said in a news conference on the sidelines of the Paris Air Show. He said the absence of a deal on Greek debt would lead to “turbulent times.”

Mr Hollande said he would personally tell Mr Tsipras: “Let’s not waste time, let’s resume the negotiation as fast as possible.”

The Commission argued that Greece’s creditors have made significant concessions in recent talks, but that Athens’ reform efforts remain too small.

“I believe the concessions overall” that creditors have made are “quite substantial and it’s not a one-way street,” said Margaritis Schinas, a spokesman for Commission President Jean-Claude Juncker.

Mr Schinas said that Mr Juncker still believes a solution can be found if there are greater reform efforts from Greece and political will from its creditors.

European stocks and the euro fell in early trading Monday over the breakdown of the weekend talks.

Eurozone finance ministers will resume discussions on the Greek situation on Thursday when they meet in Luxembourg. The German finance ministry said it was working toward achieving a deal there.

“We are working toward an agreement with all the powers we have available,” spokesman Martin Jäger told reporters. He said it’s up to Greece to present an adequate package of measures for fiscal reform.

Spain’s Foreign Affairs Minister Jose Manuel Garcia-Margallo said he sees “some risk” that Greece may leave the eurozone, noting that “membership in any club implies abiding by the rules.”

Germany’s EU Commissioner, Guenther Oettinger, told reporters the bloc should start making plans for a “state of emergency” in Greece from July 1 if an agreement isn’t reached.

I am not too sure about it. A Grexit is likely to cause euro to spike as Grexit is seen as an improvement of euro land's budgetary and finance. A big spike in Euro will cause euro land to go back into recession as export and tourism will be hit. Against conventional wisdom,i do think the German will want to keep Greece in euro land so as to weaken the euro dollars for the benefit of German export and employment. A weak euro is a "bigger plus" for Germany than any other European countries. A big spike in Euro will also put pressure on the stock market.

no worries, FX mkt will sort itself out... I have never look at fx rates as there are simply too many factors in it

[greengiraffe]

http://www.cnbc.com/id/102761862

EUROPE NEWS
My Greek investment will work out: Wilbur Ross
Dhara Ranasinghe | @DharaCNBC
5 Hours Ago
CNBC.com


U.S. billionaire Wilbur Ross told CNBC that he was confident his investment in Greece's third-largest bank would work out, even as the country appears to be edging closer to defaulting on its debt.
Ross, well known for his investments in distressed assets, is one of a group of investors who pumped 1.3 billion euros ($1.47 billion) into Greece's Eurobank Ergasias last year.

Read MoreGreece defiant, accused of 'breaking all the rules'
Greek banks have been pummelled by an economy that has slipped back into recession and an exit of cash amid uncertainty over the country's future. Talks between Greece and its international creditors over unlocking aid for reforms collapsed at the weekend, raising concerns that Athens is heading for a debt default that could result in it leaving the euro zone.

However Ross insisted on Tuesday: "I think it will (work out) because I think they will make a deal at the end of the day."


Chris Ratcliffe | Bloomberg | Getty Images
Ross said the investment in Eurobank Ergasias was loss-making, but added: "we're used to the rollercoaster -- that comes with the territory. If this works out as well as Ireland I'd be thrilled."

Last year, Ross sold his stake in Bank of Ireland for almost half a billion euros – almost triple the value of an investment made during the euro zone crisis.

Ross said he believed that Greece would reach a deal with its creditors because a default would make the economy a "shambles."

"Greece can't afford to default, there's no liquidity in the country whatsoever at this point," he said.

"The banks, of which we have one, are 80-billion odd euros into the ELA (Emergency Liquidity Assistance). A default doesn't resolve those issues and would make the economy a shambles. So they will make an accommodation," he added.

Because of deposit outflows, the Bank of Greece has replaced the loss of deposits with emergency funding from the European Central Bank, officially known as Emergency Liquidity Assistance.

Read More'The ball lies firmly with Greece': ECB's Draghi

Greek banks are reliant on this funding and analysts warn that if the central bank curbs this liquidity, Greece may have no option but to impose capital controls.

Asked whether the imposition of capital controls would be catastrophic for Greece, Ross added: "I think it would be because there's no liquidity there right now. And if you don't have liquidity, how do you have a functioning economy?"


Dhara Ranasinghe
Associate Producer

[greengiraffe]

http://www.mirror.co.uk/news/world-news/...er-5894936

Greece debt crisis: Prime Minister Alexis Tsipras accuses IMF of 'criminal responsibility'
20:11, 16 JUNE 2015
BY GRAHAM HISCOTT
Greece must repay more than £1bn to the International Monetary Fund by June 30 or risk being kicked out of the Euro


GettyOn brink: The Greece debt crisis has deepened
The deadlock over Greece’s debt crisis deepened as hopes faded over a compromise.

Greek Prime Minister Alexis Tsipras accused the ­International Monetary Fund of “criminal responsibility” for the situation over its “fixation on cuts”.

He told his parliamentary group: “The time has come for the IMF proposals to be judged not just by us but ­especially by Europe.”

Mr Tsipras said the ­European Central Bank was using tactics akin to “financial asphyxiation” and creditors were trying to “humiliate” his government.

Talks collapsed last weekend after 45 minutes but eurozone finance ministers are due to meet in ­Luxembourg on Thursday.

GettyGreek Prime Minister Alexis Tsipras addresses his party members and ministers at the Greek Parliament on June 16, 2015 in Athens, GreeceDefiant: Greek Prime Minister Alexis Tsipras
Greece is in a standoff with creditors over the release of £5.1billion of emergency funds to keep its economy afloat.

The country must repay more than £1billion to the IMF by June 30 – or risk being chucked out of the euro.

As Greek shares fell for a third day Mr Tsipras repeated Greece did not want to leave the single currency.

But he said: “We have to seek a deal that will spread the burden evenly and that will not hurt wage earners and pensioners.”

German Chancellor Angela Merkel said she would “do everything possible” to keep Greece in the eurozone but Finnish Prime Minister Juha Sipila said: “We need a miracle to resolve this.”

Greek Finance Minister Yanis ­Varoufakis said this week debt restructuring was the only way forward.

GettyGreek Finance Minister Yianis Varoufakis listens to Prime Minister addressing his MP's and ministers at the Greek Parliament in Athens on June 16, 2015Stand off: Greek Finance Minister Yanis Varoufakis
Greece is digging its heels in over the scale of the austerity deal that includes tax rises and pension reforms.

It seems unlikely ministers will reach any agreement on Thursday but another high-level meeting could take place on Sunday before EU leaders are due to meet in Brussels at the end of June.

Consultants Capital Economics said “the political ramifications of a default to the IMF would be severe”.

It added: “Countries in arrears are generally undeveloped and often war-torn ones like Zimbabwe, Zambia and Iraq.”

GettyEuros
Key questions as euro crisis deepens
Why the panic now?

Time is rapidly running out for Greece, with big debt repayments due and no agreement on emergency funds.

Will the country leave the euro?

No one knows at this stage but it’s more likely than ever. The initial fear is Greece defaulting on its massive debts.

What happens if Greece does leave the euro?

The country could revert to a devalued drachma or parallel currency.

What would that mean if I’m going on holiday there?

Your spending money will go further. But what if I own property in Greece? It would be worth less.

What would Greece leaving the euro mean to our economy?

Far less than two years ago, when it was feared it could spread “contagion” to other weak economies, such as Spain. However, it is still likely to cause big waves in global markets, potentially denting the UK’s economy recovery.

[greengiraffe]

http://www.smh.com.au/business/markets/t...hpusi.html

Toughing it out: why the euro is holding up against Greek fears
Date
June 17, 2015 - 4:31PM
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Mark Mulligan
Mark Mulligan
Markets and economy reporter
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The euro is holding up remarkably well as fears of a Greek default continue to grow.
The euro is holding up remarkably well as fears of a Greek default continue to grow. Photo: Reuters
If traders and investors are nervous about the possibility of a Greek default and exit from the eurozone, then they're certainly not expressing it through the currency markets.

Because despite the growing risk that Greece will miss a series of payments due to the International Monetary Fund at the end of this month, the euro is holding up remarkably well.

In the past four or five weeks we've seen a lot of that bull run in European equities go into reverse.

Ray Attrill, NAB.
On Wednesday afternoon the common currency was buying $US1.1245, down from $US1.13 earlier in the week, but still above its 50- and 100-day moving averages, according to Bloomberg calculations.

<i></i>
Illustration: Simon Letch
It's up 2.4 per cent this month, and has rebounded about 7 per cent from a 12-year low reached three months ago.

The currency is also close to where it was just before the European Central Bank (ECB) started printing money to fund its long-awaited quantitative easing (QE) program in March.

Possible reasons for the euro's stubborn resilience against QE and the flow of gloomy news from negotiations between Greece and its European Union and IMF creditors are manifold.

Some analysts ascribe it to investor confidence that Greece's European colleagues won't let it crash out of the eurozone, whatever it takes. Others say they're sanguine about such a dramatic scenario, figuring that the currency would ultimately strengthen with the fiscally-challenged Greece out of the picture.

Or, as some see it, the euro is simply the beneficiary of a common trade that has recently unwound.

"We think what is happening has to do with the hedging behaviour of investors in eurozone assets from outside," says National Australia Bank's global co-head of foreign exchange strategy Ray Attrill.

"What global investors have been doing really since late last year, when it became clear that the ECB was going to go down the QE route, is buying European – mainly German – equities and selling the euro as a hedge against loss on currency.

"However, in the past four or five weeks we've seen a lot of that bull run in European equities go into reverse – so if you're short the euro, you're actually now over-hedged.

"So to adjust the hedge you buy back euros," he said.

Others just stick to the fundamentals when trying to explain the euro's relative strength.

"I think equity markets are a little more fragile on that [long-short] trade, while the currency markets are taking a more holistic view," said Commonwealth Bank of Australia's chief currency strategist Richard Grace.

"At the same time, the eurozone's current account surplus is very supportive of the exchange rate," he said.

"That surplus is equal to 2.3 per cent of gross domestic product."

This healthy external position owes as much to the success of export powerhouse Germany as to weak demand for imports from countries such as Spain, Portugal and Italy.

Mr Grace also highlights the role of the ECB's outright monetary transactions and European stability mechanism backstops designed to provide liquidity to distressed states with minimal impact on the healthy ones.

Nomura foreign exchange strategist Jens Nordvig agrees that the euro has become a lot more insensitive to Greece's travails – and the chance of a so-called "Grexit" – since the collapse of the country's public finance and debt ratings in 2010 rallied the EU and IMF into bailout mode.

He agrees that faith in the ECB backstops to prevent market contagion may partly explain it.

However, he also adds two other hypotheses: that the negative news flow on Greek debt talks, while hitting bond and share markets, has simply not yet fed into currencies; and that the euro has replaced the yen as a safe-haven currency in times of upheaval.

"By now, it is pretty clear that the eurozone is much more resilient to internal shocks than in 2010," he wrote in a note this week.

"Hence, even if we experienced a Grexit-type scenario, the domino theory of uncontrolled contagion among the rest of the region is likely to prove mostly scaremongering, partly a tale told by the European establishment to keep the euro together," he said.

That all said, most experts warn traders to brace for further volatility in the euro and other currencies as the Greek drama plays out over the next few days.