Bueno, chicos, el
final se acerca. Cesación de pagos en Grecia, tal vez, a corto plazo. Lo que
pase no va a ser bueno en el corto plazo para los griegos. Basta con pensar en
nuestro 2001. A mediano plazo, sí, tal vez para el mundo entero, no sólo
Grecia. Acá van dos noticias posteadas hoy en el sitio financiero Zero Hedge:
Título: Greek
Debt Committee Just Declared All Debt To The Troika "Illegal,
Illegitimate, And Odious"
Texto: It was in
April when we got a stark reminder of a post we first penned in April of 2011,
describing Odious Debt, and why we thought sooner or later this legal term
would become applicable for Greece, because two months ago Greek Zoi
Konstantopoulou, speaker of the Greek parliament and a SYRIZA member, said she
had established a new "Truth Committee on Public Debt" whose purposes
was to "investigate how much of the debt is “illegal” with a view to
writing it off."
Moments ago, this
committee released its preliminary findings, and here is the conclusion from
the full report presented below:
All the evidence
we present in this report shows that Greece not only does not have the ability
to pay this debt, but also should not pay this debt first and foremost because
the debt emerging from the Troika’s arrangements is a direct infringement on
the fundamental human rights of the residents of Greece. Hence, we came to the
conclusion that Greece should not pay this debt because it is illegal,
illegitimate, and odious.
As we predicted
over four years ago, Greece has effectively just declared that it will no
longer have to default on its IMF (or any other debt - note that the dreaded
"Troika" word finally makes an appearance after it was officially
banned) simply because that debt was not legal to begin with, i.e. it was
"odious."
If so, this has
just thrown a very unique wrench in the spokes of not only the Greek debt
negotiations, but all other peripheral European nations' Greek negotiations,
who will promptly demand that their debt be, likewise, declared odious, and
made null and void, thus washing their hands of servicing it again.
And another
question: when Greece says the debt was illegal and it no longer has to make
the June 30 payment, what will be the Troika's response: confiscate Greek
assets a la Argentina, declare involutnary default, sue it in the Hague?
Good luck.
---
From the full
just released report by the Hellenic Parliament commission:
Hellenic
Parliament’s Debt Truth Committee Preliminary Findings - Executive Summary of
the report
In June 2015
Greece stands at a crossroad of choosing between furthering the failed
macroeconomic adjustment programmes imposed by the creditors or making a real
change to break the chains of debt. Five years since the economic adjustment
programmes began, the country remains deeply cemented in an economic, social,
democratic and ecological crisis. The black box of debt has remained closed,
and until now no authority, Greek or international, has sought to bring to
light the truth about how and why Greece was subjected to the Troika regime.
The debt, in whose name nothing has been spared, remains the rule through which
neoliberal adjustment is imposed, and the deepest and longest recession
experienced in Europe during peacetime.
There is an
immediate need and social responsibility to address a range of legal, social
and economic issues that demand proper consideration. In response, the Hellenic
Parliament established the Truth Committee on Public Debt in April 2015,
mandating the investigation into the creation and growth of public debt, the
way and reasons for which debt was contracted, and the impact that the
conditionalities attached to the loans have had on the economy and the
population. The Truth Committee has a mandate to raise awareness of issues pertaining
to the Greek debt, both domestically and internationally, and to formulate
arguments and options concerning the cancellation of the debt.
The research of
the Committee presented in this preliminary report sheds light on the fact that
the entire adjustment programme, to which Greece has been subjugated, was and
remains a politically orientated programme. The technical exercise surrounding
macroeconomic variables and debt projections, figures directly relating to
people’s lives and livelihoods, has enabled discussions around the debt to
remain at a technical level mainly revolving around the argument that the
policies imposed on Greece will improve its capacity to pay the debt back. The
facts presented in this report challenge this argument.
All the evidence
we present in this report shows that Greece not only does not have the ability
to pay this debt, but also should not pay this debt first and foremost because
the debt emerging from the Troika’s arrangements is a direct infringement on
the fundamental human rights of the residents of Greece. Hence, we came to the
conclusion that Greece should not pay this debt because it is illegal,
illegitimate, and odious.
It has also come
to the understanding of the Committee that the unsustainability of the Greek
public debt was evident from the outset to the international creditors, the
Greek authorities, and the corporate media. Yet, the Greek authorities,
together with some other governments in the EU, conspired against the
restructuring of public debt in 2010 in order to protect financial
institutions. The corporate media hid the truth from the public by depicting a
situation in which the bailout was argued to benefit Greece, whilst spinning a
narrative intended to portray the population as deservers of their own
wrongdoings.
Bailout funds
provided in both programmes of 2010 and 2012 have been externally managed
through complicated schemes, preventing any fiscal autonomy. The use of the
bailout money is strictly dictated by the creditors, and so, it is revealing
that less than 10% of these funds have been destined to the government’s
current expenditure.
This preliminary
report presents a primary mapping out of the key problems and issues associated
with the public debt, and notes key legal violations associated with the
contracting of the debt; it also traces out the legal foundations, on which
unilateral suspension of the debt payments can be based. The findings are
presented in nine chapters structured as follows:
Chapter 1, Debt
before the Troika, analyses the growth of the Greek public debt since the
1980s. It concludes that the increase in debt was not due to excessive public
spending, which in fact remained lower than the public spending of other
Eurozone countries, but rather due to the payment of extremely high rates of
interest to creditors, excessive and unjustified military spending, loss of tax
revenues due to illicit capital outflows, state recapitalization of private
banks, and the international imbalances created via the flaws in the design of
the Monetary Union itself.
Adopting the euro
led to a drastic increase of private debt in Greece to which major European
private banks as well as the Greek banks were exposed. A growing banking crisis
contributed to the Greek sovereign debt crisis. George Papandreou’s government
helped to present the elements of a banking crisis as a sovereign debt crisis
in 2009 by emphasizing and boosting the public deficit and debt.
Chapter 2,
Evolution of Greek public debt during 2010-2015, concludes that the first loan
agreement of 2010, aimed primarily to rescue the Greek and other European
private banks, and to allow the banks to reduce their exposure to Greek
government bonds.
Chapter 3, Greek
public debt by creditor in 2015, presents the contentious nature of Greece’s
current debt, delineating the loans’ key characteristics, which are further
analysed in Chapter 8.
Chapter 4, Debt
System Mechanism in Greece reveals the mechanisms devised by the agreements
that were implemented since May 2010. They created a substantial amount of new
debt to bilateral creditors and the European Financial Stability Fund (EFSF),
whilst generating abusive costs thus deepening the crisis further. The
mechanisms disclose how the majority of borrowed funds were transferred
directly to financial institutions. Rather than benefitting Greece, they have
accelerated the privatization process, through the use of financial
instruments.
Chapter 5,
Conditionalities against sustainability, presents how the creditors imposed intrusive
conditionalities attached to the loan agreements, which led directly to the
economic unviability and unsustainability of debt. These conditionalities, on
which the creditors still insist, have not only contributed to lower GDP as
well as higher public borrowing, hence a higher public debt/GDP making Greece’s
debt more unsustainable, but also engineered dramatic changes in the society,
and caused a humanitarian crisis. The Greek public debt can be considered as
totally unsustainable at present.
Chapter 6, Impact
of the “bailout programmes” on human rights, concludes that the measures
implemented under the “bailout programmes” have directly affected living
conditions of the people and violated human rights, which Greece and its
partners are obliged to respect, protect and promote under domestic, regional
and international law. The drastic adjustments, imposed on the Greek economy
and society as a whole, have brought about a rapid deterioration of living
standards, and remain incompatible with social justice, social cohesion,
democracy and human rights.
Chapter 7, Legal
issues surrounding the MOU and Loan Agreements, argues there has been a breach
of human rights obligations on the part of Greece itself and the lenders, that
is the Euro Area (Lender) Member States, the European Commission, the European
Central Bank, and theInternational Monetary Fund, who imposed these measures on
Greece. All these actors failed to assess the human rights violations as an
outcome of the policies they obliged Greece to pursue, and also directly
violated the Greek constitution by effectively stripping Greece of most of its
sovereign rights. The agreements contain abusive clauses, effectively coercing
Greece to surrender significant aspects of its sovereignty. This is imprinted
in the choice of the English law as governing law for those agreements, which
facilitated the circumvention of the Greek Constitution and international human
rights obligations. Conflicts with human rights and customary obligations,
several indications of contracting parties acting in bad faith, which together
with the unconscionable character of the agreements, render these agreements
invalid.
Chapter 8,
Assessment of the Debts as regards illegtimacy, odiousness, illegality, and
unsustainability, provides an assessment of the Greek public debt according to
the definitions regarding illegitimate, odious, illegal, and unsustainable debt
adopted by the Committee.
Chapter 8
concludes that the Greek public debt as of June 2015 is unsustainable, since
Greece is currently unable to service its debt without seriously impairing its
capacity to fulfill its basic human rights obligations. Furthermore, for each
creditor, the report provides evidence of indicative cases of illegal,
illegitimate and odious debts.
Debt to the IMF
should be considered illegal since its concession breached the IMF’s own
statutes, and its conditions breached the Greek Constitution, international
customary law, and treaties to which Greece is a party. It is also
illegitimate, since conditions included policy prescriptions that infringed
human rights obligations. Finally, it is odious since the IMF knew that the
imposed measures were undemocratic, ineffective, and would lead to serious
violations of socio-economic rights.
Debts to the ECB
should be considered illegal since the ECB over-stepped its mandate by imposing
the application of macroeconomic adjustment programs (e.g. labour market
deregulation) via its participation in the Troïka. Debts to the ECB are also
illegitimate and odious, since the principal raison d’etre of the Securities
Market Programme (SMP) was to serve the interests of the financial
institutions, allowing the major European and Greek private banks to dispose of
their Greek bonds.
The EFSF engages
in cash-less loans which should be considered illegal because Article 122(2) of
the Treaty on the Functioning of the European Union (TFEU) was violated, and
further they breach several socio-economic rights and civil liberties.
Moreover, the EFSF Framework Agreement 2010 and the Master Financial Assistance
Agreement of 2012 contain several abusive clauses revealing clear misconduct on
the part of the lender. The EFSF also acts against democratic principles,
rendering these particular debts illegitimate and odious.
The bilateral
loans should be considered illegal since they violate the procedure provided by
the Greek constitution. The loans involved clear misconduct by the lenders, and
had conditions that contravened law or public policy. Both EU law and international
law were breached in order to sideline human rights in the design of the
macroeconomic programmes. The bilateral loans are furthermore illegitimate,
since they were not used for the benefit of the population, but merely enabled
the private creditors of Greece to be bailed out. Finally, the bilateral loans
are odious since the lender states and the European Commission knew of
potential violations, but in 2010 and 2012 avoided to assess the human rights
impacts of the macroeconomic adjustment and fiscal consolidation that were the
conditions for the loans.
The debt to
private creditors should be considered illegal because private banks conducted
themselves irresponsibly before the Troika came into being, failing to observe
due diligence, while some private creditors such as hedge funds also acted in
bad faith. Parts of the debts to private banks and hedge funds are illegitimate
for the same reasons that they are illegal; furthermore, Greek banks were
illegitimately recapitalized by tax-payers. Debts to private banks and hedge
funds are odious, since major private creditors were aware that these debts
were not incurred in the best interests of the population but rather for their
own benefit.
The report comes
to a close with some practical considerations.
Chapter 9, Legal foundations for
repudiation and suspension of the Greek sovereign debt, presents the options
concerning the cancellation of debt, and especially the conditions under which
a sovereign state can exercise the right to unilateral act of repudiation or
suspension of the payment of debt under international law.
Several legal
arguments permit a State to unilaterally repudiate its illegal, odious, and
illegitimate debt. In the Greek case, such a unilateral act may be based on the
following arguments: the bad faith of the creditors that pushed Greece to
violate national law and international obligations related to human rights;
preeminence of human rights over agreements such as those signed by previous
governments with creditors or the Troika; coercion; unfair terms flagrantly
violating Greek sovereignty and violating the Constitution; and finally, the
right recognized in international law for a State to take countermeasures
against illegal acts by its creditors , which purposefully damage its fiscal
sovereignty, oblige it to assume odious, illegal and illegitimate debt, violate
economic self-determination and fundamental human rights. As far as
unsustainable debt is concerned, every state is legally entitled to invoke
necessity in exceptional situations in order to safeguard those essential
interests threatened by a grave and imminent peril. In such a situation, the
State may be dispensed from the fulfilment of those international obligations
that augment the peril, as is the case with outstanding loan contracts.
Finally, states have the right to declare themselves unilaterally insolvent
where the servicing of their debt is unsustainable, in which case they commit
no wrongful act and hence bear no liability.
People’s dignity
is worth more than illegal, illegitimate, odious and unsustainable debt
Having concluded
a preliminary investigation, the Committee considers that Greece has been and
still is the victim of an attack premeditated and organized by the
International Monetary Fund, the European Central Bank, and the European
Commission. This violent, illegal, and immoral mission aimed exclusively at
shifting private debt onto the public sector.
Making this
preliminary report available to the Greek authorities and the Greek people, the
Committee considers to have fulfilled the first part of its mission as defined
in the decision of the President of Parliament of 4 April 2015. The Committee
hopes that the report will be a useful tool for those who want to exit the
destructive logic of austerity and stand up for what is endangered today: human
rights, democracy, peoples’ dignity, and the future of generations to come.
In response to
those who impose unjust measures, the Greek people might invoke what Thucydides
mentioned about the constitution of the Athenian people: "As for the name,
it is called a democracy, for the administration is run with a view to the
interests of the many, not of the few” (Pericles’ Funeral Oration, in the
speech from Thucydides’ History of the Peloponnesian War).
***
Título: Bank Of
Greece Pleads For Deal, Says "Uncontrollable Crisis", "Soaring
Inflation" Coming
Texto: The
situation in Greece has escalated meaningfully since last week. After the IMF
effectively threw in the towel and sent its negotiating team back to Washington
on Thursday, EU and Greek officials agreed to meet in Brussels over the weekend
in what was billed as a last ditch effort to end a long-running impasse and
salvage some manner of deal in time to allow for the disbursement of at least
part of the final tranche of aid ‘due’ to Greece under its second bailout
program. Talks collapsed on Sunday however as Greek PM Alexis Tsipras, under
pressure from the Left Platform, refused (again) to compromise on pension
reform and the VAT, which are “red lines” for both the IMF and for Syriza party
hardliners.
By Monday evening
it was clear that both EU officials and Syriza’s radical left were drawing up
plans for capital controls and a possible euro exit with Brussels looking to
Thursday’s meeting of EU finance ministers in Luxembourg for a possible
breakthrough. That seems unlikely however, given that Athens is sending FinMin
Yanis Varoufakis whose last Eurogroup meeting ended with his being sidelined in
negotiations after putting on a performance that led his counterparts to brand
him an amateur, a gambler, and a time waster. For his part, Varoufakis says no
new proposal will be tabled in Luxembourg as Eurogroup meetings aren’t the
place for such discussions, which is ironic because Jean-Claude Juncker said
something similar not long ago when the Greeks were trying to get a deal done
at the very same Eurogroup meetings.
Perhaps realizing
that pinning everyone’s hopes on a Thursday breakthrough is a fool’s errand,
the EU will reportedly convene a high level, emergency meeting over what we’ve
suggested may be a “Lehman Weekend” for the market.
Against this
backdrop the war of words heated up on Tuesday with Tsipras delivering yet
another incendiary speech to parliament in which the PM claimed the IMF has
“criminal responsibility” for trying to “humiliate an entire people”, which is
ironic because if anyone should be humiliated here it’s probably the IMF given
that Athens employed the old “one move and Greece gets it” routine to force the
Fund to pay itself €730 million in May and now faces the uncomfortable prospect
of being railroaded into disbursing €3.5 billion in doesn’t want to disburse so
that Greece can make June’s payments which have already been delayed and which
Athens now wants to put off for another six months. Meanwhile, Jean-Claude
Juncker has dropped the “Tsipras is my friend” routine altogether, saying he
“doesn’t care about the Greek government” but rather about “the Greek people.”
Juncker (who once famously opined that "when it gets serious, you have to
lie") took it a step further on Tuesday, blaming Athens for misleading
Greeks: “I am blaming the Greeks for telling things to the Greek public which
are not consistent with what I’ve told the Greek Prime Minister,” Juncker said.
“Juncker either hadn’t read the document he gave Tsipras…Or he read it and
forgot about it,” Varoufakis quipped, in a terse response. Finally, France’s
European commissioner, Pierre Moscovici, brushed off Tsipras' contention that
the troika's demands are "absurd," saying creditors' push for pension
and VAT concessions is "far from crazy."
And while the
politicians engage in one-up word battles and play an endless game of headline
hockey, analysts, bankers, and economists are busy speculating on what capital
controls and a Greek exit will look like. Here’s UBS:
It would not be
the first time that capital controls have been introduced in the Eurozone –
there is the precedent of Cyprus, which restricted capital flows between March
2013 and April 2015. Yet, importantly, in the case of Cyprus, capital controls
were imposed as part of a Troika bailout with the aim of protecting the Cypriot
banking system while it was being stabilised and restructured. In contrast, in
Greece capital controls would be imposed in the absence of a deal – as a result
of stalemate in discussions over broader issues of economic policy. Against
this background, we worry that capital controls in Greece would be another step
towards an uncertain course of events and possibly a harbinger of worse things
to follow.
Relative to
Cyprus, capital controls in Greece might also be more painful. Compared to
Cyprus, Greece is a more closed economy (Greece's export quota is 33%, Cyprus'
is 56% (2014)). A larger part of economics activity is dependent on domestic
drivers and the economy can rely much less on trade driven currency inflows to
finance external payments. As a result, recessionary dynamics are likely to get
worse in the domestic economy (and potentially even in parts of the export sector).
Exporters short in cash and reliant on bank credit would face difficulties to
transact (this might include even part of the tourism sector). Import activity
would gradually be rationed to the extent that outflows match the inflow of
Euros from abroad. The domestic cash business would decline in size and
financial conditions and lending activity will tighten. Counterparty risk would
pick up domestically, with collateral in domestic sectors rationed by firms'
capacity to generate cash. In addition to the cash constraints, heightened
uncertainty would make economic actors very cautious (potentially affecting
payment morale), thus restricting economic activity.
And from
Bloomberg:
How would capital
controls work?
They would hurt.
No one knows the specifics for Greece, but here’s what happened in Cyprus: ATM
withdrawals were capped at 300 euros a person per day. Transfers of more than
5,000 euros abroad were subject to approval by a special committee. Companies
needed documents for each payment order, with approvals for over 200,000 euros
determined by available liquidity. Parents couldn’t send children that were
studying abroad more than 5,000 euros a quarter. Cypriots traveling abroad
could carry no more than 1,000 euros with them. Termination of fixed-term
deposits was prohibited, while payments with credit and debit cards were capped
at 5,000 euros. Checks couldn’t be cashed.
How would capital
controls be put in place?
An element of
surprise helps. In Cyprus it started with a long bank holiday, between March 16
and March 28, 2013. That gave the country time to negotiate an accord with
euro-area member states and the International Monetary Fund. Banks re-opened
with restrictions in place and a recapitalization plan for the country’s financial
system, which included the imposition of losses on deposits.
How long might it
last?
There’s no real
limit. Cyprus kept controls in place for two years, even though they were
supposed to be a temporary emergency measure. Limits on transactions gradually
eased over the two-year period, before being lifted completely in April 2015.
Experience from other countries, including Iceland, shows that once in place,
they can only be removed gradually, after a long period of time. Iceland’s
government presented a bill this month to lift capital controls implemented in
2008.
But perhaps the
most dire assessment came from the Bank of Greece, which warned on Wednesday of
an “uncontrollable crisis” in the absence of a deal. Here’s more, from the
press release:
Failure to reach
an agreement would, on the contrary, mark the beginning of a painful course
that would lead initially to a Greek default and ultimately to the country's
exit from the euro area and – most likely – from the European Union. A
manageable debt crisis, as the one that we are currently addressing with the
help of our partners, would snowball into an uncontrollable crisis, with great
risks for the banking system and financial stability. An exit from the euro
would only compound the already adverse environment, as the ensuing acute
exchange rate crisis would send inflation soaring.
All this would
imply deep recession, a dramatic decline in income levels, an exponential rise
in unemployment and a collapse of all that the Greek economy has achieved over
the years of its EU, and especially its euro area, membership. From its
position as a core member of Europe, Greece would see itself relegated to the
rank of a poor country in the European South.
This is why the
Bank of Greece firmly believes that striking an agreement with our partners is
a historical imperative that we cannot afford to ignore. From all the evidence
available so far, it seems that a compromise has been reached on the main
conditions attached to this agreement and that little ground remains to be
covered. Besides, the lowering of the primary surplus targets is a decision of
paramount importance that significantly extends the time needed for fiscal
adjustment and allows for additional degrees of freedom in the conduct of fiscal
policy. Equally important will be the reaffirmation and articulation in more
specific terms of our partners’ willingness to provide debt relief, as
initially stated at the Eurogroup meeting of 27 November 2012. What we need
today is a viable debt deal which will spare future generations burdens that we
have no right to saddle them with.
To get an idea of
how far apart the two sides are, consider the following from Tsipras (via
Bloomberg):
“Our proposals
fully ensure that we meet the budget targets that creditor institutions have
set for 2015 and 2016,” Greek PM Alexis Tsipras tells reporters in Athens after
meeting Austrian Chancellor Werner Faymann.
Savings of EU1.8b
in 2016 alone from pension system aren’t possible; Greek proposals lead to
savings of EU300m. There’s no room for additional pension cuts.
“Our proposals
fully cover the extent of fiscal consolidation demanded, but Greece is a
sovereign state. The Greek government has a recent mandate and it is its own
competence to decide how to tax and where will it find themoney. The demand to
find the savings asked from pension cuts is incomprehensible.”
“If Europe’s
political leaders insist on this incomprehensible demand, they will assume the
cost of a development which will not be beneficial for anyone in Europe.”
Government will
assume responsibility to say “the big No” if no viable agreement is on the
table.
And then of
course there's the incomparable, incorrigible Mr. Schaeuble:
SCHAEUBLE SAID TO
TELL LAWMAKERS PREPARING FOR NO GREECE DEAL
If all of this
sounds unequivocally bad to you and if it seems that capital controls and some
manner of dramatic political and social upheaval are now an inevitability in
Greece, you're not alone, but because we like to preserve our reputation for
staying positive, we'll leave you with the following reassuring words from
Tsipras:
"The real
negotiations are starting now."
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