Greece

Creditors Lose Patience, Walk Out of Negotiations With Greece

Looming threat of Grexit still looming

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Alexis Tspiras
Wikipedia

Tensions in Europe have boiled over.

Earlier today, representatives of the International Monetary Fund (IMF) walked out of debt negotiations with Greece. You may recall I wrote about these negotiations, saying time was running out for the two sides to come to an accord, back in February. And again in March. And in April. As Matt O'Brien at The Washington Post blogged today, the whole thing has taken on a Groundhog Day–like feel.

Basically, the Greek government owes the international community more money than it can possibly pay back. The country must remain in its creditors' good graces or face default to the tune of several-hundred-billion dollars, which could force it to exit the European monetary union.

But Greece's lefty prime minister, Alexis Tsipras, is none too pleased with the demands its creditors are making. They want Greece to continue with a program of "austerity" that includes reducing government spending, privatizing Greek assets (think: airports and railways), and trimming public pensions. Tsipras campaigned on halting just such a program (began under his predecessor in exchange for earlier bailouts) and has balked at reneging on his promises.

Greece's creditors appear to have run out of patience. Reports The Guardian:

The International Monetary Fund dramatically pulled out of talks with debt-stricken Greece on Thursday after it accused Athens of failing to compromise over labour market and pension reforms.

The Washington-based lender of last resort said its team of negotiators had quit talks in Brussels after reaching a stalemate and would be returning to Washington.

The move left the Greek negotiating team with no option but to say it would also be leaving the talks and heading home to Athens.

The international community is frustrated at Greece's refusal to take the steps required by earlier agreements. Thus far, the IMF and other creditors have held firm, banking on the belief that Tsipras will relent to avoid blowing up the Greek economy.

Meanwhile, Tsipras (and the people who elected him) are frustrated that the rest of Europe is imposing controls on their economy at a time when it's desperately struggling to recover from a deep recession. By taking a hard line at this week's negotiations, Greek representatives were themselves banking on the belief that European leaders want to avoid a "Grexit," which some think could plunge the entire Eurozone into a financial crisis, even more than Greece does.

Although the IMF negotiators' abrupt departure suggests the Greeks overplayed their hand, the two sides may yet manage to cobble together a way forward. A meeting of Eurozone finance ministers is already scheduled for next week in Luxembourg.

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  1. But Greece’s lefty prime minister, Alexis Tsipras, is none too pleased with the demands its creditors are making.

    The people elected him, not the creditors, to run the country into the ground.

  2. This is one case where the creditors really are predatory lenders.

    1. This is the same accusation made of the World Bank

      The difference here is that Greece is a member of the EU and has access to credit markets which ECB rules basically forced people to keep lending.

      Sure there are some vultures in the mix, like the people who tried scalping Argentinian junk debt then suing to get the US Government to try and force them to pay more than market-rate.

      But this problem is 100% a Greek creation. If there is any misbehavior by the rest of the EU its in failing to cut them off 10 years ago.

      1. If there is any misbehavior by the rest of the EU its in failing to cut them off 10 years ago.

        I thought that was pretty obvious. That’s why I call it predatory, there’s no way they could not know ten years ago what the outcome would be, but they (the other EU countries) were happy to rape their own taxpayers so the officials could cling to power.

        1. They can only cling to power if they are feeding the alligators.

        2. ” they (the other EU countries) were happy to rape their own taxpayers so the officials could cling to power.”

          Oh, in that sense… absolutely.

          i just thought ‘predatory lender’ suggested that anyone was profiting unfairly from the Greek debacle. if you consider “preservation of the facade of the EU’s fiscal system” to be the ill-gotten benefit, then sure.

      2. If there is any misbehavior by the rest of the EU its in failing to cut them off 10 years ago.

        This. They enabled the Greek economy, so Europe does have some responsibility here.

        Responsibility which has but one remedy, cut them off NOW before it gets worse.

      3. Argentina isn’t willing to pay market rate. They spent the money and now they don’t want to pay it back. It takes two voluntary parties to make a market.

    2. so they are the assholes if they lend them money and they are the assholes if they don’t lend them money. that is the world’s easiest underwriting decision.

  3. Never trust a Greek asking for money..I say,let them eat chipped wood..

    1. What you did there?

      I seen it.

    2. Does the Greek Prime Minister have hard wood or soft wood? If he gets mouthed while drunk is he a papist?

      1. Well I meant rapist. But papist will do.

      2. “If he gets mouthed while drunk is he a papist?”

        Dammit, do I have to start going to church to eat crackers?

  4. Face it, Creditors you ain’t never gettin yo money back. Just take your lumps, walk away and never ever give them another dime.

    1. These are the same boobs who couldn’t come to that conclusion five years ago.

      Of course, these are the same criminals that violate the debt provisions of the EU treaty themselves.

      1. Some of those same criminals also enjoyed raping the retarded taxpayers of the New World.

    2. Greece, since its independence in the 19th Century, has been in sovereign default approximately half the time.

      You’d think creditors, potential or otherwise, would just stop even contemplating lending to Greece, but no. Uh-uh. Nooooooooo way.

      “Greater fool” theory really is true.

      1. If bailouts are always forthcoming, why wouldn’t you keep lending?

      2. When the only tool you have is lending…

  5. Best news I’ve heard all day.

  6. *Checks portfolio*

    Fuck em.

  7. The only sure-fire way to recover from a deep recession is to deregulate the economy so that what capital stock they do have left can be redirected to the most productive uses possible at the time.

    It’s like a fat guy being strangled by some metal collar with a fixed diameter; sure, starve him long enough and his neck might shrink to the point where he could breathe – but the reality is he’s going to die long before the loses the weight.

    I am, of course, writing metaphorically; I do not advocate strangling overweight people. I merely am commenting, purely using hyperbole, on a matter of public concern under my First Amendment rights to free speech and to petition the Government for redress of grievances. No references to wood chippers should be inferred from this comment.

    1. That’s not a metaphor, it’s a simile.

      1. Go to hell.

        1. That’s a threat, not a simile.

          1. All similes are metaphors but all metaphors are not similes. That is not a threat, its what Tulpa pontificated some time back in the pre-Chipperenzoic era.

            1. I didn’t see no smiley. 😉

        2. You’re not the boss of me! You can’t tell me where to go.

          1. Don’t you have some sabotaging to do?

            1. All day, every day. My favorite is extreme and terrifyingly literal compliance.

  8. God fucking dammit!

    The server squirrels are pissing me off! If they don’t get their act together, I am driving down to DC and renting a mouthwatering wood-chipper!

  9. Where’s Dalibor Rohac?

  10. I’m awaiting the EU adopting “1970s-style deregulation” at any moment.

  11. Commenters Lose Patience With Reason.com Squirrels, Walk Out With Donation Money Still In Hand

  12. Is there any reason to think this isn’t just posturing? One can hope.

  13. Beware of Greeks bearing bonds.

    1. Bearer, or otherwise.

  14. Greece took out three student loans to go to Columbia, then wrote a column in the NYT about defaulting, urging others to do the same.

    1. Was it the Journalism School?

      1. Coincidentally…

    2. You win.

  15. Help me understand why I should give a shit about Greek’s debt problem? One day the world won’t lend the US money because Greece defaulted on loans they could never hope to pay back? I’m not seeing the direct connection. Our idiots in DC are about as fiscally responsible as a drunk Greek sailor at a cathouse, I’ll grant you that, but how is this Greek issue something I should care about? The Greeks voted in guys who said they’d flip the EU the bird on repayment, so why should I care if that doesn’t work out well for them? One way or another, unless all their debt is just forgiven, this train is going off the tracks. Might as well stand back and watch the action.

    1. Then don’t read the article?

      1. I’m just trying to figure out if there’s some hidden catastrophe awaiting everyone if Greece defaults? I’m no international banker, so I figure maybe I should care but don’t know why?? That’s all. Maybe my rant was too harsh, needs menthol or something…

        1. I would guess that if Europe takes a dive, it will bring down the U.S. a bit, too. I have no idea how much, but we do trade a lot with the EU.

        2. I would guess that if Europe takes a dive, it will bring down the U.S. a bit, too. I have no idea how much, but we do trade a lot with the EU.

          1. So today would have been a good day to short the Euro?

            1. The Euro IS short. That is why soccer.

            2. In the short run. In the long run, not necessarily. Without Greece and (potentially the rest of) the Southern European tier, Germany’s persistent trade surpluses put upward pressure on the Euro.

        3. Well there is fear that it will lead to the collapse of the European economy, which in turn will affect the American economy. Whether this is fearmongering I don’t know. In addition it could mark the end of the EU which will have unknown affects. And what Andrew S. said below.

        4. French banks and to a lesser extent German banks are up to their ass in Greek sovereign debt. If Greece goes tits up, France and Germany will have a banking crisis requiring a large bailout. This will cause a bit of havoc as the markets correct. It could cause a recession for several countries, including the US.

          I believe they should go ahead and let the shit hit the fan, because it will hit the fan eventually. Also a Grexit will hopefully put the other countries that have sovereign debt problems, like Spain, on notice that the Eurozone’s patience has run out.

          1. It could cause a recession for several countries, including the US.

            No, the recession is baked into the cake already, the only “cause” is the timing. But we’ve already known that for years.

          2. French banks and to a lesser extent German banks are up to their ass in Greek sovereign debt. If Greece goes tits up, France and Germany will have a banking crisis requiring a large bailout.

            Not really, That bailout has largely already occurred. The banks put their Greek exposure to the ECB and their respective governments.

        5. Jima|6.11.15 @ 6:13PM|#
          “I’m just trying to figure out if there’s some hidden catastrophe awaiting everyone if Greece defaults?”

          Depends on who owns how much Greek paper.
          If bank A owns a ton of it and collapses as a result and bank B owns a ton of bank A paper, and so forth.
          If that cascade happens, we get bit one way or the other.

          1. Oops.
            Hero did a better job sooner.

    2. The fear, I guess, is that Greece abandons the EU, takes a bailout from Putin, and goes full-on fascist.

      1. Hmmm, OK that’s a bit more disturbing than just watching the EU call Greeks deadbeats. Still, a bad debt is a bad debt, doesn’t seem very prudent to keep giving baskets of cash to junkies, right?

        1. Russia taking on a dependent that’s flat broke, has no secure land (or sea) connection with the Rodina, and has a larger neighbour that despises both parties would be pretty imprudent – Putin would be better off ramming his dick in a woodchipper. Of course, people have done much stupider things.

          1. I’m pretty amused by the pro-Greeks wanting China and Russia to bail out Greece. These two won’t give a shit about Greek public opinion and would want to stabilize them somehow. China in turn would want a lot of privatization to allow Chinese companies to buy them.

            1. What Greek assets would the Chinese want to buy?

              1. Ports at least.

              2. Olive groves.

          2. True, but you’re forgetting the EU sanctions against Russia. Imagine a little Russian military base or two.

            1. You Know Who Else argued that we have prop some basketcase in order to stop Russian military expansionism?

              1. A Federal Marshall?

          3. has no secure land (or sea) connection with the Rodina, and has a larger neighbour that despises both parties would be pretty imprudent

            Thank goodness they have no history of doing that.

      2. The fear is that the irrationally leftist government elected by the populace that can’t stop clamoring for free money because fascist?

        I’m not that worried about it.

        1. I’m not saying I agree, but I’ve heard the argument. Greece defaults, exits Euro, economy collapses (even more than it’s already collapsed), new elections, Golden Dawn takes over.

          1. Give them to the Turks.

            1. +1 Quay at Smyrna

            2. Well, that’s my solution to the mess – the Turks will finally be allowed to join the EU, but entrance fee is they have to take over Greece.

    3. The problem isn’t Greece. The problem isn’t the Greek debt held by German/French banks. The problem is that if Greece can default, then why do Portugal, Ireland, Italy, and Spain need to pay their debts? No one can absorb all of those. France would be next to go, and the whole thing could snowball globally.

      Or the fire could break on the other PII(G)S.

      My (mostly metaphorical in this case) money is on the latter.

  16. Leave the EU, don’t leave the EU – but for God’s sake, please stop using the word “Grexit”.

    1. This mashup trend is still not as annoying as throwing “Gate” on the end of any scandal.

      1. Grexitgate.

        Woodchippergate.

        Subpoenagate.

        Hmm.

        Christina AppleGate.

        1. +1. Or -2

          1. Papal Chapeau Gate

            Leather jacket Gate

            1. The pope’s headgear is called a mitre. The pope is revered by Mexicans. A miter is a type of joint where wood joins at queer angles. A miter saw creates a lot of sawdust. You know what else creates a lot of saw dust?

              Illuminati confirmed.

      2. +1 Watergategate.

  17. So other people’s money just left the building?

  18. Out of curiosity, would a Greek financial meltdown make it cheaper to travel there?

    1. It depends on how bad the collapse is.

      A little collapse, and you can travel very cheaply and hot local women will find you very attractive.

      A big collapse, and the ammo and bodyguard bill becomes prohibitive.

      1. A little collapse, and you can travel very cheaply and hot local women will find you very attractive.

        Didn’t read past.

      2. Dudes with bodyguards seem to to all right with the ladies as far as I can tell.

        1. Yes, the dudes who can afford them.

          1. The ladies or the bodyguards?

          2. Which kinda works against the prospect of more affordable travel.

    2. I’ve honestly been banking on that for a few years now. I’ve always wanted to vacation there. I just assume that when they go on the drachma and print their way out of debt, people will be desperate to get their hands on dollars.

      1. Crete’s cheap to go to right now. And, as an added bonus, it’s kinda the Texas of Greece, so there’s that. And the raki is amazing/deadly!

        1. Ha, it only took 30 minutes for my wife to find a place on Airbnb and price flights. I think we have our next vacation.

          1. Instead, go to St. Petersburg, the borsh is better.

  19. They want Greece to continue with a program of “austerity” that includes reducing government spending, privatizing Greek assets (think: airports and railways), and trimming public employee pensions.

    This is not ‘austerity’, this is attempting to spend within your means.

    By this logic, my entire life is one big ‘austere’ moment.

  20. The move left the Greek negotiating team with no option but to say it would also be leaving the talks and heading home to Athens.

    You know who else headed home to Athens?

    1. Mike Stipe, Pete Buck, et al ?

    2. Phillipedes?

    3. Xenophon?

  21. the belief that European leaders want to avoid a “Grexit,” which some think could plunge the entire Eurozone into a financial crisis

    You mean plunge it further into its current financial crisis. The Euro has been nose diving for like almost a decade, this is just theater until the rubber hits the road.

    “If something cannot go on forever, it will stop,”

  22. Meanwhile, Tsipras (and the people who elected him) are frustrated that the rest of Europe is imposing controls on their economy at a time when it’s desperately struggling to recover from a deep recession.

    Uh, no, Europe is imposing controls on their money that the Greeks want.

  23. The international community is frustrated at Greece’s refusal to take the steps required by earlier agreements.

    Cut out the lefty-righty crap and realize that the steps required amount to raising taxes in a country where taxes are already high and not being paid. If your idea of a solution is to burn the economy to the ground, you might want to apply for a job in the Obama or Warren administrations.

    Also, cut out the “international community” bullshit. It’s the morons at the IMF and the idiotic Troika who thought throwing good money after bad was a good idea. Those institutions need to evaporate, they are the exact opposite of free market economics.

    1. “Those institutions need to evaporate.” Hmm, now that sounds like a…..

  24. Greek representatives were themselves banking on the belief that European leaders want to avoid a “Grexit,” which some think could plunge the entire Eurozone into a financial crisis, even more than Greece does.

    Could someone please explain to me how the loser Uncle being forced off the couch and his rent-free existence would “hurt” the household financially?

    1. I second your request…

    2. Greek debt is currently held on creditors’ (including the rest of the Eurozone) books as an asset. Writing off several hundred billion in assets is bad for anyone, and they are hoping to continue pretending that those assets are actually valuable.

      1. My loser uncle owes me $18,000 that he can’t possibly pay back, but I’ll keep him on the couch and allowing him to live rent free because I’m certain he’ll be able to pay back $27,000?

        1. You’ve got it. Although, you are still kind of being too naive. It’s not that *you* think he’ll be able to pay back the $27 grand, it’s that you would try to convince someone else to buy his debt for the low low price of $24 grand.

          1. I think I get you. So I put an ad in Craigslist reading:

            Unemployed Uncle owes $27,000, willing to sell his debt for $24,000 OBO.

            _email to friend_

            * do NOT contact me with unsolicited services or offers

            1. +1 metric shedload of CDOs

        2. If you could pay your taxes with that $27,000 account receivable, would you?

        3. Well, yes. You see, your security for the apartment was the fact that you had this $18,000 loan to use as collateral.

      2. That’s the kind of stupid shit you end up with when you confuse money with wealth.

    3. I’ll try to explain:

      There are 17 loser Uncles in the EU.

      1. That implies that Greece is the economic driver of the EU.

        1. Mmmmm, no.

          Think of Greece as a fuse.

          1. Threatening to detonate itself.

    4. Here:

      “The Last American Hero|6.11.15 @ 6:32PM|#
      French banks and to a lesser extent German banks are up to their ass in Greek sovereign debt. If Greece goes tits up, France and Germany will have a banking crisis requiring a large bailout. This will cause a bit of havoc as the markets correct. It could cause a recession for several countries, including the US.
      I believe they should go ahead and let the shit hit the fan, because it will hit the fan eventually. Also a Grexit will hopefully put the other countries that have sovereign debt problems, like Spain, on notice that the Eurozone’s patience has run out.”

  25. Would a “Grexit” really have much effect on the Eurozone as a whole now? A few years ago, when they owed all that money to banks, sure. But now they owe all the money to the EU and the IMF. They can take their lumps and print a few more euros.

    1. I’ll bet the taxpayers and savers of the EU are thrilled about the EU printing like Mugabe. If Greece were the only country in debt the printing wouldn’t be that bad. Now add in Portugal, Spain, Italy, France…

      Ah, what am I worried about? The Germans are a peaceful lot.

    2. The European bond market doesn’t agree with you.

      There’s been incredible volatility in the EU bond market in the past several weeks. The Bund has been gyrating up and down weirdly. Liquidity is an issue and trying to anticipate how a Grexit will go down and what the consequences maybe is a fools game. All the markets (bond, fx, equities, credit) are really fragile because liquidity is unpredictable.

  26. So who’s worse: Idiot Greek Statists spending so much Free Shit or Idiot Eurocrat statists giving the Greeks money rather than admit that the EU has failed?

    1. The Eurocrats, because at least the Greeks are getting to coast for a little while longer.

  27. Is this what they mean by running out of other peoples’ money?

    1. No, it’s what is meant by “other peoples’ money running out”

    2. This is other people running out of other people’s money.

  28. Are there any good Europhile libertarian takes on this situation? I seriously want a Dalibor Rohac take on this.

  29. Fun fact: When the Porsche Cayenne first shipped, highest per capita sales were in Greece. This led various unsavory non-Guardian-subscribing types to conclude that, maybe, that bailout money to Greece was not going towards the structural rebuilding the EU claimed, and just being embezzled and spent on personal baubles by various well connected mandarins.

    1. People are buying cars because it’s safer than keeping the money in a Greek bank. The inevitability of capital controls will do that; it’s not like Cyprus is as far away from Greece as Iceland.

    2. The EU is scared shitless of structural rebuilding in Greece. Why, that would mean the imposition of economic freedom, something no other EU country wants in their own country in any way, shape, or form.

      No, what the EU wants is more government spending, more government regulation, and higher taxes.

      1. The EU is scared shitless of structural rebuilding in Greece. Why, that would mean the imposition of economic freedom,

        That implies there are Greek politicians who want “economic freedom”.

        No, what the EU wants is more government spending, more government regulation, and higher taxes.

        Thanks goodness the “anti-austerians” are all opposed to those things!

      2. Which is opposed to what Greece wants, which is unlimited spending, tons of government regulation (including keeping their regulations that make it virtually impossible to fire anyone), etc.

        1. That is why the whole thing is idiotic and needs to collapse. The doctor is telling the patient with a terrible heroin problem that the cure is to up the dosage.

    3. DAMN! I wish I could monetize my debt and buy a Cayenne, or more likely a Ferrari. How do I become a country?!? I’ve got about an acre square. Izzat enough?

    4. Greek corruption is scandalous, add that Greeks don’t pay taxes because they know politicians embezzle the money and you have a recipe for bad spanakopita.

      1. Interesting phenomenon that people who regard the government as a bunch of incompetent crooks end up wanting more government. TOP MEN and EAT THE RICH I guess.

        1. I shoulda added it’s a vicious cycle hard to break.

          And it’s interesting to note you have that in Italy and France but the major – MAJOR I submit – difference in those countries is they have serious cash flow through developed industrial and manufacturing base.

          1. France is doing everything in its power to keep their industrial base by forcing them all into insolvency.

            1. Rt. Hon. Judge Woodrow Chipper|6.11.15 @ 7:22PM|#
              “France is doing everything in its power to keep their industrial base by forcing them all into insolvency.”

              So far, the flight to automation has saved quite a few industries, but I’ll bet new regs will soon make that gambit unworkable.

        2. That’s how pyramid schemes “work”.

    5. Speaking of which, I saw some asshole who had put a 4 inch lift and a steel bumper on a Cayenne the other day. I assume he was Greek.

  30. Lotsa political theater it seems here.

    It has a certain ‘omg we have to act on climate change now or else!’ ring to it.

    The EU knew Greece had no industrial base ergo little exports thus help keep wages in check. It’s like lending money to a masterless person who has little chance of repaying the money.

    How could banks not know this?

    1. Supposedly the EU knew full well that Greece was cooking the books and even directed them to an accounting firm that would help.

      1. IMF style.

      2. Actually it was Goldman. They put on a swap that really didn’t do anything but shift the timing of cash flows around. But, because it wasn’t reported on the books, the cash flows coming in made Greece look like it was pulling in more cash than it really was.

        And the people blamed for this were….Goldman.

        1. Goldman gets a bad rap because they’re wicked smart and amoral. They’ll help you hang yourself if you pay them enough.

          Thing is, they one of the few banks backpedaling before 2008, realizing the dangers to their books. We’d be better off if more banks had done the same.

          1. Christophe|6.11.15 @ 10:36PM|#
            “Goldman gets a bad rap because they’re wicked smart and amoral. They’ll help you hang yourself if you pay them enough.”

            Not from me, they don’t.
            It is the job of the lender to make money for the lender’s owners. If someone wants to borrow to bet on his fave nag, and the lender figures out how to make money off the transaction, the lender has done her (like that?) job.

  31. Cayenne goes really well with tzatziki, though…just sayin’

  32. Greece vs. EU: Whoever wins, we lose.

    1. FYI I answered you in the PM links re Mulcair.

      1. I saw, thanks,

    2. I like to think Grexit and all the international drama it entails puts the EU on notice. I have nothing to substantiate that hope, but I like to think a lot of lovely things.

  33. Tspiras is supposedly a lefty economist; why doesn’t he set some lefty policies that increase Greek wealth?
    I mean, as a lefty and a professional, he should have some techniques to fund the sort of free shit he proposes, right?

    1. His insufficiently-dedicated lefty predecessors allowed too much wealth to escape the country before clamping down on the outflow, ergo it’s still dirty capitalists responsible for the failure of the great Greek socialist state

      1. commodious spittoon|6.11.15 @ 10:21PM|#
        “His insufficiently-dedicated lefty predecessors allowed too much wealth to escape the country before clamping down on the outflow, ergo it’s still dirty capitalists responsible for the failure of the great Greek socialist state”

        Yep, it seems that lefty economists’ plans are nothing other than: “Tax the other guy!”.
        Not a one of them, in my experience, offers a shred of evidence that their proposals will lead to an increase in overall wealth, so they are simply suggesting that the pie be sliced other than what it is.
        If you follow this line of ‘reasoning’ far enough, it suggests that no wealth is ever created, and we are all still dividing up the lichen that Uog brought back to the cave this afternoon, just barely avoiding being eaten by that T-rex! (lefty economists being quite quite similar to bleever creationists)

    2. He could always get Paul Krugman to help him come up with something stimulative, like an alien invasion.

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