Greece’s new Radical Left SYRIZA-led government is spinning its wheels and going nowhere fast in a bid to keep loans coming, the world media says.
Some excerpts of views:
Greece Bailout Talks Bust, Nasty Scenario Looms
Business Insider – Mike Bird
Greece’s bailout talks aren’t going very well.
Prime Minister Alexis Tsipras addressed Greece’s parliament late on Monday, but he gave little new indication on a deal. Greece tentatively agreed back in February to extend its existing bailout, but a lack of technical detail means its creditors still haven’t paid up even as the country is fast running out of money.
So what happens if Greece doesn’t get the cash?
Here’s what Bank of America Merrill Lynch’s researchers call “the ugly scenario”:
In this scenario, Greece fails to demonstrate a credible commitment to reforms in the next few weeks.
In this case, the Europeans and the IMF suspend the current program, the ECB refuses to continue increasing the Emergency Liquidity Assistance (or just lets the Greek banks run out of eligible collateral), the loss of bank deposits accelerates triggering a full bank run, and Greece defaults to the IMF and the ECB.
Unless any of these shocks force the Greek government to go back and seek a deal with the rest of Europe, Grexit within this year becomes inevitable, in our view.
In this scenario, either Europe would offer it as an option, allowing Greece to remain in the EU, or it would become Greece’s only option to avoid a complete collapse of the economy and even a failed state.
A payment to the International Monetary Fund is due April 9, and that’s when some sources suggest the country will run out of cash. But even if Greece can last a week or two longer, the payments it has to make in the rest of the year look insurmountable …
The really brutal reality is that even if the negotiations are resolved (though that looks difficult right now), we’re back to the same position in less than four months. Greece’s support would last only until June, and the country has big payments to make after that, too.
Timetable Not in Greece’s Favor
The Wall Street Journal – The Short Answer
Q: So, when will Greece run out of money?
A: The truth is: Nobody knows. Even Greece. “The liquidity situation is fluid,” some senior Greek officials say. Other Greek policy makers say the piggy bank will be empty by mid-April. In recent weeks the government has tried to meet both its obligations to creditors and domestic payments – above all, pensions and public-sector wages – but it has been slipping deeper into arrears with suppliers of goods and services to the public sector. Meanwhile the government hopes that its latest tax measures will boost revenues, but it’s unclear how effective they will be. When exactly the money runs out depends on how many more domestic payments the government is willing and able to delay.
Q: Does the government have any rainy-day funds left?
A: Not a lot. To meet domestic payments in recent weeks, the government has scraped together cash by borrowing whatever reserves it could find around the public sector. Since late February it has taken over or borrowed at least €1.2 billion from entities ranging from the central bank to the body that oversees EU agricultural subsidies and the country’s job-centre organization. About €500 million of reserves from other state entities are left to tap, according to officials.
A Mishap Should Not Seal Greece’s Fate
Financial Times – Martin Wolf
Since the election of Greece’s Syriza-led government, negotiations over its place in Europe have gone terribly, with posturing on one side and annoyance on the other. An accidental exit from the eurozone has become quite likely.
This is not because Greece wants it nor because its partners are set upon it. It is because Greece is running out of hope, its partners are running out of patience and the negotiations are running out of time. A fork in the road does indeed lie ahead. But the choice of direction has to be deliberate, not accidental.
A looming liquidity crisis is the reason for fearing a precipitate decision. Greece’s creditors want the country to implement reforms before they unlock some €7.2bn in undisbursed bailout funds. Greece needs this money to meet domestic spending obligations and a €450m loan repayment due to the International Monetary Fund.
Since the European Central Bank is curbing credit from Greek banks, the country’s government could run out of money. That might trigger a run by Greek depositors. While the ECB could manage this, it might feel unable or unwilling to do so.
What are the arguments in favour of exit? One is that the costs of contagion to other members are far lower than earlier, as the divergent spreads in yields on government bonds indicate. Another is that Greece has proved unable to reform.
Yet another is that Greece remains internationally uncompetitive, as shown by the sluggishness of its exports
I believe the right choice — and certainly the one the Greeks themselves want — is to discover a mutually satisfactory way to keep Greece inside the eurozone, along with generous but conditional debt relief and further time-limited support.
But a case can also be made for exit, provided it is done in a way that contains chaos and achieves a permanent improvement in Greek competitiveness. But this, too, would require substantial debt relief.
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