Greece’s scariest deficit has nothing to do with money

Published: May 7, 2015 2:00 a.m. ET

Market Watch

By ELLIE ISMAILIDOU

MARKETS REPORTER

Ancient Greece was once a magnet for the world’s intellectual elite. Scholarly work out of Athens contributed to everything from logic and philosophy to the politics that formed the basis of modern civilization.

But as the Hellenic Republic struggles to strike an agreement to repay more than €300 billion it owes international creditors, it’s also facing the depletion of its most important asset: human capital.

Greek Banks Are Having Trouble Trading Foreign Currencies

by Vassilis Karamanis

8:43 PM EEST

May 6, 2015

Greek banks are increasingly being hampered from trading currencies, one of most liquid markets, as international dealers cut back credit lines and costs soar, according to people with knowledge of the trades.

International securities firms are curtailing trading with Greece’s major lenders that may expose them to the risk of a default by the nation and the possible use of capital controls to stem outflows from banks, the people said, asking not to be named because they are not authorized to speak publicly.

Those threats are adding to concern that the euro would decline in the event of a default or a Greek exit from the currency region, leaving counterparties exposed to multiple risks, said the people.

E.C.B. Doubts Add to Uncertainties on Greek Debt Lifeline

By JACK EWING and LIZ ALDERMANMAY 6, 2015

The New York Times

FRANKFURT — As Greece mounts an 11th-hour diplomatic offensive across Europe to secure financial aid that it desperately needs to avoid a default, patience with Athens is wearing thin at the European Central Bank.

That could pose big problems for Greece, since the central bank is the country’s biggest creditor and a necessary source of financial support for struggling Greek commercial banks.

ECB Mulls Tighter Greece Rules After 100 Days of Tspiras

Bloomberg

by Karl Stagno NavarraAlessandro Speciale

11:14 AM EEST

May 6, 2015

European Central Bank officials will debate tighter rules for the liquidity that Greek lenders rely on for survival, two people familiar with the matter said, a move that underscores the fragility of the country’s financial system.

The Governing Council will discuss Wednesday whether to raise discounts on the collateral Greek banks pledge in exchange for emergency funding, said the people, who are familiar with the agenda and asked not to be identified. Governors will also review how much more Emergency Liquidity Assistance to offer Greek banks.

Greece Sparks Meltdown in Euro-Area Bonds as Italy, Spain Tumble

Bloomberg

by Anchalee WorrachateEshe Nelson

12:00 PM EEST

May 5, 2015

A slump in euro-area government bonds gathered force on concern Greece’s talks with creditors will fail to clinch a deal in time to prevent a default.

As Greek bonds tumbled, the repercussions spread across the region, with Spain’s 10-year yield rising the most since June 2013 to the highest this year. German bunds, the region’s benchmark sovereign securities, were swept up in the selloff with Treasuries after an unexpected jump in growth for U.S. service industries.

IMF Speaks of More Potential Financing for Greece

Less success in meeting original bailout terms would mean more new money needed

The Wall Street Journal

By IAN TALLEY

May 5, 2015 2:46 p.m. ET

The International Monetary Fund said Tuesday IMF officials didn’t push for large-scale debt relief in recent negotiations for emergency financing for Greece, but rather underscored that more financing would be needed if Athens failed to live up to its original bailout conditions.

“IMF European Department Director Poul Thomsen pointed to the trade-off that needs to be made in reaching agreement in the current discussions,” the IMF said in an emailed statement, referring to the negotiations held in Riga, Latvia, late last month.

Greece blows hot and cold in race to avert cash crunch

Tue May 5, 2015 3:33pm EDT Related: GREECE, IMF

ATHENS/BRUSSELS | BY LEFTERIS PAPADIMAS AND JAN STRUPCZEWSKI

(Reuters) - Greece blew hot and cold with its euro zone partners on Tuesday as it struggled to avert a potentially catastrophic funding crunch this month, when it must make a big debt repayment to the IMF as cash reserves dry up.

Finance Minister Yanis Varoufakis said after talks in Paris and Brussels that he expected euro zone finance ministers to acknowledge next Monday progress towards a cash-for-reform deal, opening the way to easing Athens' liquidity crisis.

Greece Says Compromise Not Possible Under Current Conditions

 Bloomberg

by Marcus BensassonEleni Chrepa

5:25 PM EEST

May 5, 2015

Greece blamed international creditors for the failure to end the impasse over its fiscal crisis, clouding the outlook for talks that some officials had said were making progress.

No deal will be possible until the European Commission and the International Monetary Fund agree to a common set of demands, a government official said on condition of anonymity. Taken together, there are too many red lines and creditors need to better coordinate their message, the official said.

IMF spokeswoman Angela Gaviria said in an e-mail that she had no immediate comment. A European Commission spokesman wasn’t immediately available for comment.

In Greece Syriza Is Still, After Three Months, Insisting On The Same Red Lines

MAY 4, 2015 @ 1:12 PM

By Tim Worstall

CONTRIBUTOR

Forbes

We were all rather hoping that the intensive negotiations over the weekend would produce something of a breakthrough in the Greek debt deadlock. But if today’s reports are to be believed that’s not quite what has happened. Syriza, negotiating for Greece, is still insisting upon the same red lines that must not be crossed they were insisting upon three months ago. And those are the very red lines that the Eurogroup, negotiating on behalf of the creditors, insists must be crossed. Specifically, they are insisting that the welfare state must be made more generous, something entirely unacceptable to the creditor side.

Greece Hurtles Toward IMF Deadline as EU Demands Concessions

by Anabela ReisFrancine Lacqua

1:55 PM EEST

May 5, 2015

Bloomberg

Euro-area finance chiefs urged Greece to bow to their terms for releasing aid within days to avert a cash crunch.

With Greek officials fanning out across the continent to plead their case, Portuguese Finance Minister Maria Luis Albuquerque warned Tuesday that the currency bloc won’t make contingency plans to prepare for a possible breakdown in talks and encouraged Greek Prime Minister Alexis Tsipras to take the offer on the table.

As the Euro Slides, a Coin Meets Its Waterloo

By DANNY HAKIMMAY 4, 2015

New York Times

BRUSSELS — Here at the Belgian Royal Mint, machines called giraffes spit out as many as 850 euros a minute.

At times during the summer of 2008, that many shiny coins would have been worth $1,360. Now it is just under $950, a symptom of Europe’s inability to navigate through crisis. Even as the region’s outlook improves ever so slightly, the currency just cannot shake the specter of moribund growth and the troubles of Greece.

But at the mint, there were more immediate concerns during a recent visit. Like the Battle of Waterloo.

Greece's undeclared domestic default takes hold

By Giorgos Christides

Thessaloniki, Greece

4 May 2015

BBC

When will Greece run out of money? The question has been vexing European capitals and the markets for months, as the stand-off between the new government in Athens and its eurozone creditors remains unresolved.

So far, Greece has managed to both service its external debt and pay for wages and pensions.

But the worst kept secret in the country is that for thousands of people, businesses and institutions relying on government pay cheques, in every practical sense, Greece is already out of money.

Greece has not received any loans from the eurozone or the IMF since August 2014.

There is €7.2bn (£5.3bn;$8bn) left in the country's bailout program, but creditors refuse to release the money before their demands for further reforms, spending cuts and tax increases are satisfied by Athens.

The Greek government, led since January by the leftist Syriza party of Prime Minister Alexis Tsipras, is refusing to "violate its anti-austerity mandate".

Greece aims for deal with lenders, IMF hard on reforms: minister

Mon May 4, 2015 4:52am EDT Related: GREECE, IMF

Greece aims for deal with lenders, IMF hard on reforms: minister

ATHENS

(Reuters) - Greece intends to meet debt payments this month and reach a deal with its international lenders to unlock remaining bailout aid, but the International Monetary Fund insists on tough labor reforms, the country's labor minister said on Monday.

Struggling amid a cash crunch, Athens faces debt repayments to the IMF totaling nearly 1 billion euros this month. It has been borrowing from municipalities and government entities to meet obligations.

Greece's Firebrand Finance Minister Deserves to Be Heard

MAY 4, 2015 2:00 AM EDT

By Mohamed A. El-Erian

Bloomberg view

I have never met or spoken to Yanis Varoufakis, Greece's finance minister. Yet I feel I have gotten to know him through his writing and interviews, and by reading about his interactions with both the official and private sectors in Europe. That's why -- though I understand the rationale for the decision -- I was saddened last week when Prime Minister Alexis Tsipras sidelined Varoufakis from Greece’s complicated and consequential negotiations with its European creditors and the International Monetary Fund.

Greece Targets May Deal as Breakthrough Remains Elusive

Bloomberg 

by Nikos ChrysolorasJeff BlackMarcus Bensasson

4:02 PM EEST

May 3, 2015

Greece said it would push for an agreement with its creditors on a reforms agenda in May amid signs that the two sides are still far apart after four days of intensive negotiations.

Differences remain on issues ranging from fiscal assumptions to asset sales and labor and pension reforms, according to three people familiar with the negotiations. Still, progress has been made in a much improved atmosphere, they said. Another official said that Greece should have enough cash to get through the week and make a 200-million-euro payment to the International Monetary Fund on May 6. The people spoke on condition of anonymity as the talks are confidential. Negotiations resume Monday.

Greek Aid Talks Gain Urgency as Breakthrough Remains Elusive

 Bloomberg

by Nikos ChrysolorasJeff Black

4:02 PM EEST

May 3, 2015

Greece and its international creditors are still far apart on key elements of the country’s bailout agenda after four days of intensive negotiations.

Differences remain on issues ranging from fiscal assumptions to asset sales and labor and pension reforms, according to three people familiar with the negotiations. Still, progress has been made in a much improved atmosphere, they said. Another official said that Greece should have enough cash to get through the week and make a 200-million-euro payment to the International Monetary Fund on May 6. The people spoke on condition of anonymity as the talks are confidential. Negotiations resume Monday.

Is GREXIT a threat to Greece’s security?

By Nicholas Sambanis and Ioannis Galariotis May 3 at 10:16 AM

The Washington Post

Greeks wave their national flag. (Petros Giannakouris/AP)

As the threat of GREXIT looms, it is fair to ask what, if any, consequences such an event would have for Greece’s security.  In recent statements published in the news daily Kathimerini, European Commissioner Dimitris Avramopoulos said Greece’s remaining in the euro zone constitutes a security guarantee. That message, which was also conveyed by Prime Minister Alexis Tsipras in recent statements, was given in the context of a conversation about the security implications of the illegal immigration problem in Greece. Rising numbers of illegal and undocumented migrants with ethno-religious differences from the generally homogenous Greek population is a problem that has been used successfully as a mobilization device by parties nursed by extreme ideological positions. Popular Orthodox Rally (LAOS) leader Giorgos Karatzaferis skillfully brought the issue to the forefront of political debates in the country in early 2000s, and the neo-fascist party Golden Dawn built its electoral success on extremist anti-immigrant rhetoric.

Five Years After First Bailout, Greece Back on the Brink

Athens and its creditors reach another impasse, with time running out to avoid bankruptcy

The Wall Street Journal

By MARCUS WALKER and  NEKTARIA STAMOULI

May 1, 2015 2:20 p.m. ET

ATHENS—Five years into the biggest bailout of a debtor in history, Greece is closer to the brink than ever, with time running out to avert a bankruptcy that could destabilize not only the eurozone, but the global economy as well.

When Europe and the International Monetary Fund first agreed to bail Greece out on May 2, 2010, the plan was to return Greece to growth and bond markets within three years.

Greece Races to Bridge Gap With Creditors Before Debt Bill

by Nikos ChrysolorasCorina Ruhe

7:33 PM EEST

May 1, 2015

Greece is locked in negotiations with international creditors as the country races against the clock to avert a default as early as this month.

While talks have picked up pace in recent days, the two sides are still trying to bridge differences on stalled reforms. It isn’t yet clear that there will be enough progress to clinch a deal in time for the planned May 11 meeting of euro-area finance ministers, some officials warned.

“They’re working hard now and that’s what we’ve gained,” Dutch Finance Minister and Eurogroup President Jeroen Dijsselbloem told reporters in the Hague. “But in the end we only look at the results and we’re not that far yet.”

Ratings agencies say no default if Greece misses ECB, IMF payments

Fri May 1, 2015 7:11am EDT Related: GREECE, IMF

LONDON | BY MARC JONES

(Reuters) - Most top credit rating agencies say they would not cut Greece's rating to default if it misses a payment to the International Monetary Fund or European Central Bank, a stance that could keep vital ECB funding flowing into the financial system.

Greece owes nearly 1 billion euros to the IMF in May and almost 7 billion euros to the ECB over July and August and there are concerns that the government, stuck in funding talks with official lenders, will miss the payments.