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Greece’s latest IMF payment: The equivalent of using one credit card to pay off the debt of another credit card

Greece has taken circular funding schemes to a whole new level. It lacks the funds to keep up with debt payments, and the IMF lacks the political will to continue the farce any further.

Alex Christoforou

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Post originally appeared on Zerohedge.

Earlier today, we learned that, contrary to what Greek government officials had been implying for the better part of a week, Athens did not have enough money to make a €750 million payment to the IMF on Tuesday. Instead, Greece borrowed most of the money (€650 million according to unnamed officials) from its IMF SDR reserves. This money must be paid back within 30 days. This effectively means that the IMF paid itself and it sets up a hilariously absurd scenario wherein assuming Greece manages to convince creditors to disburse a €7.2 billion tranche of aid later this month, the IMF will send money to Greece, who will send it right back to the IMF to replenish an IMF fund, which was drawn down by the IMF to pay itself back for money it loaned to Greece a long time ago. Put simply: Greece has taken circular funding schemes to a whole new level.

Meanwhile, the IMF is understandably fed up and according to El Mundo, the Fund will not participate in a new program for the Greeks, something which German FinMin Wolfgang Schaeuble indicated may be a dealbreaker when it comes to structuring another bailout for Athens.

The takeaway: it’s likely over. Greece lacks the cash to keep up the facade and the IMF lacks the political will to perpetuate the farce any further. This suggests that both Greece and the creditors formerly known as the “Troika” will need to resort to Plan B. There’s a problem with that however — namely that EU officials have gone out of their way to make it clear that there is no Plan B, because to admit that such a plan existed would be to admit that the euro is in fact dissoluble after all, something which is taboo in polite discussions among European politicians. Here is but one example, via Reuters:

A top EU official urged Athens and its creditors to make progress in their talks on a cash-for-reform deal on Monday, warning there was no “Plan B” in the event of a Greek default.

“What we now need is real progress,” Frans Timmermans, first vice president of the European Commission, told German newspaper Welt am Sonntag.

When asked whether there was a “Plan B” for the case of Athens defaulting, Timmermans replied: “No, there is no ‘Plan B’ for Greece.”

That’s from Saturday. Here we are just three days later and as it turns out, Plan B does indeed exist and it is essentially a farewell package to the Greeks. here’s Bloomberg with more:

Euro-area governments are considering putting together an aid package for Greece to cushion the country’s economy if it was forced out of the euro, according to two people familiar with the discussions.

The Greek government doesn’t expect to need that help. Prime Minister Alexis Tsipras says he’s not considering leaving the currency bloc and is focused on getting the aid he needs to avoid a default.

Even so, European officials are considering mechanisms to ring fence Greece both politically and economically in the event of a euro breakup, in order to shield the rest of the currency bloc from the fallout, one of the people said.

“There is always a plan B,” Filippo Taddei, an economic adviser to Italian Prime Minister Matteo Renzi, said in an interview in Rome on Tuesday, without referring to the aid package specifically. “But you have to ask yourself who has the ability to step in, in that event. And I think if you start making up a list you realize very quickly that that list is very short.”

While euro-area finance ministers welcomed the progress Greece has made toward qualifying for more financial aid at a meeting in Brussels on Monday, policy makers are still concerned Tsipras may not be prepared to swallow the concessions necessary for a disbursement.

So on Saturday Plan B was unthinkable but on Tuesday there’s “always a Plan B,” which reminds us of the time when Mario Draghi told Zero Hedge that there’s no such thing as Plan B when it comes to insolvent periphery debtor nations getting cut off from ELA and crashing out of the currency bloc. As a reminder, here is what Draghi said: “If the Euro breaks down, and if a country leaves the Euro, it’s not like a sliding door. It’s a very important thing. It’s a project in the European Union. That’s why you have a very hard time asking people like me “what would happened if. No Plan B.”

Call it plan “B” or plan “C” or plan “contain this trainwreck so redenomination risk doesn’t start creeping into the minds of Spanish and Italian depositors“, but what it amounts to is a DIP loan and the very fact that it’s being mentioned in the media likely means the plan has been hatched. The only remaining question is what the EU’s farewell package to the Greeks will look like.

References:

http://www.zerohedge.com/news/2015-05-12/europe-preparing-greek-bankruptcy-loan-event-grexit

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Trump’s speech in Miami plays up anti-socialism, as Bolton focuses on Venezuela regime change (Video)

The Duran – News in Review – Episode 180.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss Trump’s recent speech in Miami, Florida, where the US President condemned Venezuela’s socialist government and called on military command within the Latin American country to defect over to the Juan Guaido camp.

Venezuela’a elected president Maduro dismissed Trump’s remarks as an “almost Nazi-style” speech.

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Via Washington Times

Venezuela’s embattled president, Nicolas Maduro, is rejecting President Donald Trump’s call for a new day in Venezuela and comparing the tone of the American president’s speech in Miami to that of a Nazi.

Trump said Monday that the U.S. stands behind opposition leader Juan Guaido and condemns Maduro and his government’s socialist policies. Trump pleaded with Venezuela’s military to support Guaido and warned of dire consequences for standing with Maduro.

Maduro responded to Trump in comments broadcast on state television. He accused the U.S. president of speaking in an “almost Nazi-style” and lashed out at Trump for thinking he can deliver orders to Venezuela’s military.

Maduro said, “Who is the commander of the armed forces, Donald Trump from Miami?” and added, “They think they’re the owners of the country.”

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First Venezuela, now Nicaragua? Bolton says Ortega’s days ‘numbered’ & people ‘will soon be free’

The Central American nation has been rocked by unrest since April last year, with protesters demanding the resignation of Sandinista party leader Ortega.

RT

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Via RT…


US President Donald Trump’s top foreign policy advisor John Bolton appears dead set on resuming his decades-long stand-off with Nicaragua President Daniel Ortega, hinting that Washington-backed regime change may be in the offing.

“The Ortega regime has sentenced three farm leaders to 550 years in prison for their roles in protests in 2018, where Ortega’s police forces reportedly killed 300 activists. As President Trump said Monday, Ortega’s days are numbered and the Nicaraguan people will soon be free,” the national security advisor to the US president tweeted on Wednesday.

The leaders of anti-Ortega protests were given jail terms this week, after they were implicated in the deaths of four policemen and a teacher during a shootout last July.

The Central American nation has been rocked by unrest since April last year, with protesters demanding the resignation of Sandinista party leader Ortega, who has been president since 2007, and convincingly won another five-year term in 2016.

The US has repeatedly backed the uprising against the left-wing government, and last November Bolton made a keynote speech calling for the “crumbling” of what he called the “Troika of Tyranny” – Venezuela, Nicaragua, and Cuba – saying the states represented a “a sordid cradle of communism in the Western hemisphere.”

On Monday, Trump name-checked the same three countries, saying their “great potential” would be unlocked with the collapse of socialism. To expedite the process, Congress last year imposed financial measures that would make it difficult for the economically-stricken Nicaragua to obtain international loans, as well as slapping sanctions on top officials in Managua.

Revenge served ice-cold

Bolton’s history with Ortega goes back to the 1980s. Just as now, Ortega was the leader of Nicaragua, first as he spearheaded the revolution in 1979, and when he was elected president in 1985.

The Ronald Reagan administration spent significant financial resources backing the right-wing Contra rebels during the civil war, which lasted nearly the entire decade.

Bolton, at that time a legal specialist, held a number of senior positions in the Reagan White House, and was more than a witness to its shadowy CIA-aided schemes to bypass a Democrat-run Congress ban on helping the opposition militants.

He reportedly played a crucial part in hobbling both the scope of the Iran-Contra investigation and an inquiry into drug- and gun-running militants, who were enabled by Washington.

 

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After he returned to prominence under George W. Bush in yet another chapter of an unsinkable career, Bolton failed to dislodge Venezuela’s Hugo Chavez, the Sandinistas, or Cuba’s Fidel Castro (at one point, he accused Havana of developing biological weapons, without solid evidence). But as a man who with permission from Donald Trump now seems to be steering US foreign policy on dozens of key issues, Bolton has more resources than ever before to settle his lifelong ideological grudges.

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Hungary Prime Minister Attacks Juncker and Soros in Billboard Ad

Hungarian Prime Minister Victor Orbán attacked EC President Jean Claude Jucker and George Soros in a billboard ad.

The Duran

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Via MishTalk:


The EU has never seen anything quite like this. Orbán has a billboard campaign that claims European Commission president Juncker and and George Soros are “Endangering Hungary’s Safety”.

Opening a new front against Brussels a few months before European [parliament] elections, the poster shows the European commission president alongside the Hungarian-American philanthropist George Soros, a familiar target in Hungary.

“You have the right to know what Brussels is planning to do,” the poster says. On its official Facebook page, the Hungarian government says the poster is part of an information campaign to tell the public about Brussels’ migration plans, which it claims “fundamentally endangered Hungary’s safety”.

Although the government has previously run a “Stop Brussels” campaign, the decision to use an image of Junker is an escalation in the Orbán government’s public relations war with the EU’s most senior leaders.

It also exposes the rift in the centre-right European People’s party in the European parliament, which counts Juncker and Orbán, as members.

Orbán was re-elected for a third straight term last April, after a campaign dominated by immigration. A long-term critic of the EU, Orbán has accused NGOs and critical media of being part of a plot orchestrated by Soros to send millions of people to Hungary.

In recent weeks, Orbán has spoken of his hopes that the next European parliament will be dominated by anti-immigration parties.

Birds of a Feather Not

​Juncker once met Orbán with the jokey greeting “hello, dictator” and playfully tapped his face.

Today, Juncker responded Orban Should Leave Europe’s Centre-Right.

European Commission president Jean-Claude Juncker has said Hungarian prime minister Viktor Orban’s ruling Fidesz party should leave the centre-right European People’s Party (EPP) group in the European Parliament (EP).

“Against lies there’s not much you can do,” Juncker was quoted as saying by the Reuters news agency, adding that he had called for Fidesz’s expulsion from the EPP.

​”They didn’t vote for me in the European Parliament,” he said in Stuttgart, Germany, in a speech. “The far right didn’t either. I remember Ms. Le Pen, she said: ‘I’m not voting for you.’ I said: ‘I don’t want your vote.’ There are certain votes you just don’t want,” Juncker said, referring to the French far-right leader Marine Le Pen.

Eurointelligence Comments

Looking at Orbán’s previous record, and noting that one cannot of be sure, we continue doubt that Hungary’s Prime Minister has changed his European strategy and is now working to provoke the exclusion of his party from the EPP. Rather, Orbán seems to be doing one his classic hit-and-runs.

There is little doubt that the new smear campaign will make life on the campaign trail much more difficult for Manfred Weber, the CSU MEP and EPP spitzenkandidat. Juncker himself has now declared more forcefully than ever before that the EPP values are not consistent with keeping Fidesz in.

But we note that the CSU leadership in Munich has in the past consistently worked to maintain close and even warm ties with Orban.

Spitzenkandidat

US readers no doubt need an explanation of Spitzenkandidat. The following video explains.

In short, the term refers to an election process instead of an appointment process to determine the head of the European Commission.

63% of Europeans want the commission president determined by vote. Those in power still support the behind closed doors process for obvious reasons.

Orbán’s mission

Orbán’s mission is to weaken the EU from within. Italy has the same mission, for different reasons, as does President Trump.

EU Splintering

Two days ago I reported a Commerce Study Deems “European Cars a Threat to US National Security”. That’s nonsensical, of course. But Trump’s mission is easy to spot. He is doing his best to bust up the EU.

And now Trump has a lot of help on the inside: Marine Le Pen in France, Victor Orbán in Hungary, and Matteo Salvini in Italy.

I response to Trump, I noted, EU Pokes Trump Again, This Time Over Huawei’ s 5G Technology.

In the UK, Seven UK MPs Split from Labour Party Over Brexit. More MPs joined that parade today.

The splintering of the EU continues with escalating infighting at unprecedented levels.

It is illogical for the UK to want to part of this mess. Yet, the UK Remainers want to stay in.

Mike “Mish” Shedlock

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