As one Zerohedge commenter so eloquently described it:
“Time to apply for another credit card to rollover the last credit card balance.”
In other words, first the Greek government is contemplating using pensions to pay the IMF, and today had no choice but to use social security funds to rollover its debt maturities – a process which didn’t even raise any incremental money but merely kept total Greek leverage flat, in the process raiding some more of Greek entitlement funds.
How much longer, one wonders, can this continue without the population starting to ask very pointed questions? And perhaps ironically, preempting just these questions,moments ago Greece’s biggest pension fund IKA said, via Bloomberg, that “repurchase agreements is a practice which has been in place for the past four years in order to tackle real or potential cash flow problems, secure timely payment of pensions.”
Press reports that use of fund’s reserves for internal borrowing is extraordinary event “do not contribute positively in this crucial period for the economy, exacerbate climate of insecurity and uncertainty among Greek pensioners.”
So with that, we hope that the climate of “insecurity and uncertainty” among Greek pensioners has been restored.
Restored, for now, yes. But the more this charade goes on, Greeks will begin to wake up to the reality that their pensions are being used to prop up a non-EU, war party government in Ukraine…that I dare say, is even more corrupt than the Greek government officials of days past and present.
Of course, should it prove to be anything but, the local population will promptly exhibit very angry tendencies once it is revealed that the “radical left” government plundered Greek pensions to pay the IMF which could then immediately turn around and use the fund to pay the Kiev government, which in turn could pay Putin to keep the gas running.
The transfer of funds from pensioners to the IMF may not be so clear and simple, as some Greek officials are reporting.
Syriza for its part may look to tackle the ‘humanitarian crisis’ in Greece before indirectly funding the war in Ukraine.
Just yesterday we warned that, among the ‘solutions’ the Greek government was exploring in its scramble for cash to pay back The IMF loan, was ‘borrowing’ from the nation’s pension funds. Today we get the sad confirmation that indeed Greece will raid cash reserves in pension funds and other public sector entities to cover its funding needs. As Reuters reports, Greece will use short-term repo transactions to transfer the cash, but one government official said they could not be used to repay the IMF. As the radical left-wing government takes from the implictly wealthier Greeks (pension funders), it is giving free electricity, a rent allowance, and food stamps to the poor.
Keep Talking Greece reports…
The coalition government submitted a draft legislation to tackle the humanitarian crisis in Greece. The measures will benefit impoverished households unable to access to three basic goods: electricity, housing and food.
The draft contains measures among others for free electricity, rent- and food allowances. But also free access to health and public transportation means.
a) Free electricity for up to 300 KhW per household until the end of 2015. The measure refers to some 300,000 households and especially those already in the ‘social price policies program’ of PPC.
Fee-free reconnection of power to primary residence due to outstanding debts to the Public Power Company.
b) Rent-allowance of €70 – €220 per month for up to 30,000 households. The allowance will not be considered as ‘taxable income’ and will not be seized by the state for outstanding debts. However the allowance could be used to cover debt repayments to tax authorities and social insurance funds.
c) Food allowance for the supply of basic food and other items for 300,000 people. The allowance will be distributed through food stamps or some electronic means (‘smart card’ to be charged on weekly basis.)
The allowance-amount will vary depending on the number of the family members. The food and other basic good supplies will be provided by businesses and companies willing to participate in the program.
The government seeks to establish the food program in cooperation with the Greek Orthodox Church and the local municipalities.
Priority will be given to families with under-aged children, jobless and long-term unemployed, tenants under risk to be evicted and families who do not have access to these three basic goods: electricity, housing, food.
The criteria for the beneficiaries to participate in the program will be based on tax declarations and sources of income.
Main criteria is the “poverty line” which is considered “annual income of up to €5.023 per single household and up to €10,547 for a four-member family.”
According 2013-data of Greek Statistics Authority ELSTAT, 35.7% of Greeks live at risk of poverty and social isolation.
Greece remains second only to Ukraine for default risk…