World View: Greece Tries to Avoid Bankruptcy as Europe Stands Firm, for Now

AP Photo
The Associated Press

This morning’s key headlines from

  • Greece makes one debt payment, wonders if it can make the next
  • Europeans reject more bailout money for Greece, for now
  • Jean-Claude Jüncker warns of Anglo-Saxon threat to eurozone

Greece makes one debt payment, wonders if it can make the next

Greece's Port of Piraeus
Greece’s Port of Piraeus

Greece’s government apparently succeeded in making a 200 million euro interest payment due on Wednesday. It did so by scraping up money wherever it could. In particular, it passed a law on April 25 giving it the right to confiscate cash reserves and bank accounts of all public institutions, including municipalities, provinces, universities and hospitals.

Greece is scheduled to make two additional payments this month, totaling close to one billion euros.

Having confiscated money from public institutions, it is getting pretty clear that the next step will be private businesses and individual residents. In fact, the first step may occur within days, after the government revealed plans to introduce a surcharge on cash withdrawals from bank accounts. The European Central Bank (ECB) will have to approve the measure, but the surcharge is expected to be one euro for every thousand euro transaction.

A senior finance ministry official said, “The surcharge is just one of a grab-bag of measures we are considering if things get tough.”

The next “grab-bag” measure is expected to be what are called “capital controls” — limiting the amount of money that can be transferred to banks outside the country. Many panicking Greek citizens have already completely cleared out their bank accounts, pulling more than 28 billion euros out of banks. Daily Mail (London)

Europeans reject more bailout money for Greece, for now

Positions continue to be very hard on both sides of the negotiations to provide additional bailout money to Greece. Greek officials continue to stall on providing a list of committed reforms that was promised in February. The list would need to address various economic issues, including Greece’s bloated public sector, curbing tax evasion and corruption, privatizing public businesses, and adjusting generous pension and minimum wage policies. Instead, Greek officials continue to make vague promises about collecting more taxes and ending corruption. As a result, more bailout money is out of the question, for now.

On Tuesday, Greek officials accused the lending institutions — the European Central Bank (ECB), the European Commission (EC), and the International Monetary Fund (IMF), formerly known as “the Troika” — of being at fault: “Serious disagreements between the IMF and the EU are creating obstacles and big risks in the negotiations.”

This infuriated Germany’s finance minister Wolfgang Schaeuble, who said, “Neither the troika, nor Europe, nor Germany can be blamed for Greece’s problems. Greece lived beyond its means for many years.”

However, there apparently is a big disagreement within the Troika. The IMF wants the Troika to simply write off a large percentage of Greek debt, while the EC is opposed such debt relief. Kathimerini and ZeroHedge and Bloomberg

Jean-Claude Jüncker warns of Anglo-Saxon threat to eurozone

Jean-Claude Jüncker in 2005, shaking his fist at British prime minister Tony Blair (BBC)
Jean-Claude Jüncker in 2005, shaking his fist at British prime minister Tony Blair (BBC)

European Commission President Jean-Claude Jüncker said that “Grexit” — meaning Greece exiting the eurozone — is not an option, because it would be part of an Anglo-Saxon conspiracy. According to Jüncker:

The world wants to know which way we are going. We should make sure that everyone understands that the economic and monetary union is irreversible, that the euro is a currency that is here to stay, which is not going to be abolished or suspended. […]

Grexit is not an option. If Greece would accept it, if the others would accept it, that the country would exit the zone of security and prosperity constituted by the eurozone, we would be exposed to huge danger, because the Anglo-Saxon world would do everything to try to decompose, at a regular rhythm, by (the) sale, apartment by apartment, of the eurozone.

Long-time readers know that when Jüncker was chairman of the Eurogroup of eurozone financial ministers, I used to mock him and make fun of him all the time because of all the ridiculous things he said during the various Greek financial crises. The topper occurred in 2011 when journalists caught him in a complete lie and he said, When it becomes serious, you have to lie, to explain why he lied. From that point on, we could always assume that everything he said was a lie, since everything was always serious.

I have not quoted Jüncker for a while, ever since he stopped being Eurogroup chairman, so it’s fun to have him back again saying moronic things about an Anglo-Saxon conspiracy to break up the eurozone. EurActiv

KEYS: Generational Dynamics, Greece, European Central Bank, ECB, International Monetary Fund, IMF, European Commission, EC, Troika, Wolfgang Schaeuble, Jean-Claude Jüncker, Grexit, Eurogroup
Permanent web link to this article
Receive daily World View columns by e-mail