- European Officials to Revamp Greek Aid: European officials are preparing to revamp Greece’s bail-out package after concluding that Athens would be unable to raise money in the markets early next year, as envisaged under a €110 billion ($158 billion) rescue plan. Euro zone ministers this weekend publicly acknowledged that Greece would probably need additional cash from the European Union or other international institutions. We think that Greece does need a further adjustment programme,” said Jean-Claude Juncker, Luxembourg’s prime minister and chairman of the eurogroup of finance ministers. George Osborne, UK chancellor of the exchequer, said changes to the Greek bail-out programme were “inevitable”.Although such a conclusion had been widely accepted by analysts and officials working on the issue, the public recognition marks a turning point in the debate over Greece’s future.
We have been alleging that Greece would be force to restructure for well over a year now (see I Think It’s Confirmed, Greece Will Be the First Domino to Fall and then reference Greek Crisis Is Over, Region Safe”, Prodi Says – I say Liar, Liar, Pants on Fire!). Those who would have followed our advice would have been ahead of all three agencies' downgrade to junk, ahead of the total obliteration of Greek bank's public equity, and ahead of the near halving of Greek publicly traded debt. Well, now it's time to pay attention to my calling the bluff of those banks that say a Greek default will do no material harm - With Greek Debt Yielding 20%+ and Trading at Half Par Value, European Banks Are Trapped! Monday, April 25th, 2011
For those who feel these analyses are barking up the wrong tree, simply realize that a maturity extension is a restructuring - economically, it is essentially a default. The articles above discuss maturity extensions and/or coupon reductions in the emergency loans given. Would anyone be willing to wager whether or not the bonds purchased by the ECB, et. al. are next up? I say damn near guaranteed. After all, Greece cannot dig itself out of this hole. The hole must be partially filled with the sacrifices of the debt investors who put money into Greece. It's really as simple as that.
This perspective on Greece's prospects is actually quite optimistic compared to raw calculations and the absence of anything resembling a modicum of credibility, honesty, or the truth!
Roughly 14 months ago, I went through efforts to clearly illustrate how the reportings of the EU and Greece (as well as the financial reportings of most of the highly indebted EU nations) no only cannot be trusted, but amount to either outright lies or gross inaccuracies that have been repeated in a serial nature. This is evidenced by the postings from the beginning of last year:
Well the WSJ blog reports more of the same as "Luxembourg Lies on Secret Meeting":
Is lying considered an appropriate mode of communication for euro-zone leaders? We have to wonder after a strange episode on Friday evening. Here’s what happened:
Just before 6 p.m., German news magazine Spiegel Online distributed a report saying that euro-zone finance ministers were convening a secret, emergency meeting in Luxembourg that evening to discuss a Greek demand to quit the euro zone. Calls from reporters flooded in to Guy Schuller, the spokesman for Luxembourg Prime Minister Jean-Claude Juncker, the man who is the head of the Eurogroup council of euro-zone finance ministers. In a phone call and text messages with two reporters for Dow Jones and the Wall Street Journal, Mr. Schuller repeatedly said no meeting would be held. He apparently said the same to other news outlets; at least one more moved his denials on financial newswires.
Of course, there was a meeting–although not, apparently, to talk about Greece quitting the currency, which would be an extreme step to say the least. Mr. Juncker even said a few words to reporters who had hustled to Luxembourg to stake out the gathering.
So why the lie? “I was told to say there was no meeting,” said Mr. Schuller, reached by telephone Monday. “We had certain necessities to consider.”
It gets better with choice quotes such as:
- “We had Wall Street open at that point in time,” Mr. Schuller said.
- “There was a very good reason to deny that the meeting was taking place.”
- It was, he said, “self-preservation.”
- Asked whether such deliberate misinformation would undermine the market’s confidence in future euro-zone pronouncements, Mr. Schuller, lamenting that the market had practically no confidence in pronouncements already, said “not at all.”
- When Mr. Juncker, or European Central Bank President Jean-Claude Trichet, or French Finance Minister Christine Lagarde say something to the markets, Mr. Schuller said, “nobody seems to believe it.”
I recommend reading the WSJ blog post for the full story. I leave you with this YouTube clip on the man with the master plan lies...
We have already covered the scenarios encompassing a maturity extension on Greece's debt as well as a potential coupon reduction and/or principal haircuts. You can see each scenario and the results as a professional/institutional subscriber by clicking the following links: