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Who will fold? Christine Lagarde and Angela Merkel at opposite ends of how to deal with Greek debt

Now that Greece is eligible again for loans from the IMF, getting any more money from the fund may hinge on a test of wills between Christine Lagarde and Angela Merkel.

Alex Christoforou

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Post originally appeared on Bloomberg.

Now that Greece is eligible again for loans from the IMF, getting any more money from the fund may hinge on a test of wills between Christine Lagarde and Angela Merkel.

The bailout of as much as 86 billion euros ($95 billion) proposed by European leaders this month assumes financing from the International Monetary Fund and is conditional on Greece seeking a new loan program from the IMF once the current one expires in March. The Washington-based IMF, which requires borrowers to have sustainable debt, has made clear it won’t ask its 187 other member nations to approve a deal until euro-area states significantly ease terms on existing loans.

“There will come a time in the next three months that there will be a tense moment between the IMF and Germany,” said Stephen Jen, a former IMF economist who is now managing partner at SLJ Macro Partners LLP in London. “They are basically telling the Germans there has to be a debt realignment before they would participate.”

IMF spokesman Gerry Rice said Thursday the fund’s participation in the new bailout is contingent on a balanced approach that includes both Greek reforms and a commitment to the required financing. “We’ve said pretty clearly that debt relief is required,” Rice told reporters in a regular briefing in Washington.

Greece’s parliament early Thursday passed a second bundle of measures demanded by the country’s European creditors as Prime Minister Alexis Tsipras urged lawmakers to stop the country from being forced out of the euro. Tsipras won the support of 230 lawmakers in the country’s 300-seat legislature for a bill that will simplify court decisions and apply European rules to failing banks.

The push by Lagarde, who was previously French finance minister, sticks Merkel with the choice of bending to the IMF’s terms or potentially driving the fund away from the bailout. The chancellor sought IMF participation in 2010, over the initial objections of Finance Minister Wolfgang Schaeuble, to secure the fund’s expertise in restructuring struggling countries and benefit from its reputation as a guarantor of strict terms and enforcement.

While Merkel hasn’t signed on to debt relief for Greece, she hasn’t ruled it out. The chancellor told German broadcaster ARD on Sunday that euro-area leaders will discuss extending debt maturities and lowering interest rates “when the first successful assessment of the program being negotiated now is completed.” She dismissed the prospect of a “haircut,” or principal reduction.

If Greece fulfills its end of the accord, and Europe fails to agree on debt relief or offers less-generous terms than the IMF says are needed, then the choice will rest with Lagarde. In 2010, the IMF bent its rules by lending to Greece even though staff questioned whether the country’s debt was sustainable. At the time, fund officials were worried about the financial contagion a Greek default would unleash.

Greece needs debt relief “far beyond” what European creditors have been willing to consider, either by extending repayment for decades or effecting deep writedowns on the value of Greek debt, the IMF said in a staff analysis distributed to the fund’s board on July 10.

The fund estimated Greece’s debt will peak at close to 200 percent of gross domestic product in the next two years, compared with 170 percent forecast in an analysis dated June 26.

Without the 17 billion euros still available under the IMF’s 2012 Greek bailout, or money that may arrive next year in a new program, prospects of an exit from the currency zone may rise.

If Greece fulfills its end of the accord, and Europe fails to agree on debt relief or offers less-generous terms than the IMF says are needed, then the choice will rest with Lagarde

There’s still time for the IMF and European positions on debt relief to be reconciled. While ruling out principal reductions on the European-held debt, the leaders’ proposal says euro-area nations are willing to consider longer grace periods and maturity extensions.

The IMF probably won’t provide new financing in the first round of the European bailout, Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington. If Greece demonstrates it can deliver on promised reforms, and if European leaders follow up with debt relief, the fund could be in a position to disburse more aid in the first quarter of next year, he said.

“I actually don’t view the European and IMF positions to be that far apart,” Kirkegaard said.

The biggest challenge to the new bailout could be Greece’s ability to deliver on reforms without a collapse in support for Tsipras’s Syriza party, which campaigned on an anti-austerity agenda, said Martin Edwards, an international-relations professor at Seton Hall University in South Orange, New Jersey.

“Tsipras is going to have to do something to shore up his support,” said Edwards, who has researched IMF lending programs. “He may be politically spent, having gone through all this brinkmanship.”

References:

http://www.bloomberg.com/news/articles/2015-07-23/lagarde-push-for-greece-debt-relief-sets-up-showdown-with-merkel

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EU leaders dictate Brexit terms to Theresa May (Video)

The Duran Quick Take: Episode 115.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss how EU leaders have agreed on a plan to delay the the Article 50 process which effectively postpones Brexit beyond the 29 March deadline.

The UK will now be offered a delay until the 22nd of May, only if MPs approve Theresa May’s withdrawal deal next week. If MPs do not approve May’s negotiated deal, then the EU will support a short delay until the 12th of April, allowing the UK extra time to get the deal passed or to “indicate a way forward”.

UK PM Theresa May said there was now a “clear choice” facing MPs, who could vote for a third time on her deal next week.

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Theresa May outlines four Brexit options, via Politico

In a letter to MPs, U.K. Prime Minister Theresa May set out the four options she believes the country has in light of Thursday’s decision by EU leaders to extend the Brexit deadline beyond next Friday.

The U.K. is faced with a four-way choice, May wrote late Friday.

The government could revoke Article 50 — which May called a betrayal of the Brexit vote; leave without a deal on April 12; pass her deal in a vote next week; or, “if it appears that there is not sufficient support” for a vote on her deal in parliament next week or if it is rejected for a third time, she could ask for an extension beyond April 12.

But this would require for the U.K. taking part in European elections in May, which the prime minister said “would be wrong.”

May wrote that she’s hoping for the deal to pass, allowing the U.K. to leave the EU “in an orderly way,” adding “I still believe there is a majority in the House for that course of action.”

“I hope we can all agree that we are now at the moment of decision,” she wrote.

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US media suffers panic attack after Mueller fails to deliver on much-anticipated Trump indictment

Internet mogul Kim Dotcom said it all: “Mueller – The name that ended all mainstream media credibility.”

RT

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Via RT


Important pundits and news networks have served up an impressive display of denials, evasions and on-air strokes after learning that Robert Mueller has ended his probe without issuing a single collusion-related indictment.

The Special Counsel delivered his final report to Attorney General William Barr for review on Friday, with the Justice Department confirming that there will be no further indictments related to the probe. The news dealt a devastating blow to the sensational prophesies of journalists, analysts and entire news networks, who for nearly two years reported ad nauseam that President Donald Trump and his inner circle were just days away from being carted off to prison for conspiring with the Kremlin to interfere in the 2016 presidential election.

Showing true integrity, journalists and television anchors took to Twitter and the airwaves on Friday night to acknowledge that the media severely misreported Donald Trump’s alleged ties to Russia, as well as what Mueller’s probe was likely to find. They are, after all, true professionals.

“How could they let Trump off the hook?” an inconsolable Chris Matthews asked NBC reporter Ken Dilanian during a segment on CNN’s ‘Hardball’.

Dilanian tried to comfort the CNN host with some of his signature NBC punditry.

“My only conclusion is that the president transmitted to Mueller that he would take the Fifth. He would never talk to him and therefore, Mueller decided it wasn’t worth the subpoena fight,” he expertly mused.

Actually, there were several Serious Journalists who used their unsurpassed analytical abilities to conjure up a reason why Mueller didn’t throw the book at Trump, even though the president is clearly a Putin puppet.

“It’s certainly possible that Trump may emerge from this better than many anticipated. However! Consensus has been that Mueller would follow DOJ rules and not indict a sitting president. I.e. it’s also possible his report could be very bad for Trump, despite ‘no more indictments,'” concluded Mark Follman, national affairs editor at Mother Jones, who presumably, and very sadly, was not being facetious.

Revered news organs were quick to artfully modify their expectations regarding Mueller’s findings.

“What is collusion and why is Robert Mueller unlikely to mention it in his report on Trump and Russia?” a Newsweek headline asked following Friday’s tragic announcement.

Three months earlier, Newsweek had meticulously documented all the terrible “collusion” committed by Donald Trump and his inner circle.

But perhaps the most sobering reactions to the no-indictment news came from those who seemed completely unfazed by the fact that Mueller’s investigation, aimed at uncovering a criminal conspiracy between Trump and the Kremlin, ended without digging up a single case of “collusion.”

The denials, evasions and bizarre hot takes are made even more poignant by the fact that just days ago, there was still serious talk about Trump’s entire family being hauled off to prison.

“You can’t blame MSNBC viewers for being confused. They largely kept dissenters from their Trump/Russia spy tale off the air for 2 years. As recently as 2 weeks ago, they had @JohnBrennan strongly suggesting Mueller would indict Trump family members on collusion as his last act,” journalist Glenn Greenwald tweeted.

While the Mueller report has yet to be released to the public, the lack of indictments makes it clear that whatever was found, nothing came close to the vast criminal conspiracy alleged by virtually the entire American media establishment.

“You have been lied to for 2 years by the MSM. No Russian collusion by Trump or anyone else. Who lied? Head of the CIA, NSA,FBI,DOJ, every pundit every anchor. All lies,” wrote conservative activist Chuck Woolery.

Internet mogul Kim Dotcom was more blunt, but said it all: “Mueller – The name that ended all mainstream media credibility.”

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Canadian Lawmaker Accuses Trudeau Of Being A “Fake Feminist” (Video)

Rempel segued to Trudeau’s push to quash an investigation into allegations that he once groped a young journalist early in his political career

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Via Zerohedge

Canada’s feminist-in-chief Justin Trudeau wants to support and empower women…but his support stops at the point where said women start creating problems for his political agenda.

That was the criticism levied against the prime minister on Friday by a conservative lawmaker, who took the PM to task for “muzzling strong, principled women” during a debate in the House of Commons.

“He asked for strong women, and this is what they look like!” said conservative MP Michelle Rempel, referring to the former justice minister and attorney general Jody Wilson-Raybould, who has accused Trudeau and his cronies of pushing her out of the cabinet after she refused to grant a deferred prosecution agreement to a Quebec-based engineering firm.

She then accused Trudeau of being a “fake feminist”.

“That’s not what a feminist looks like…Every day that he refuses to allow the attorney general to testify and tell her story is another day he’s a fake feminist!”

Trudeau was so taken aback by Rempel’s tirade, that he apparently forgot which language he should respond in.

But Rempel wasn’t finished. She then segued to Trudeau’s push to quash an investigation into allegations that he once groped a young journalist early in his political career. This from a man who once objected to the continued use of the word “mankind” (suggesting we use “peoplekind” instead).

The conservative opposition then tried to summon Wilson-Raybould to appear before the Commons for another hearing (during her last appearance, she shared her account of how the PM and employees in the PM’s office and privy council barraged her with demands that she quash the government’s pursuit of SNC-Lavalin over charges that the firm bribed Libyan government officials). Wilson-Raybould left the Trudeau cabinet after she was abruptly moved to a different ministerial post – a move that was widely seen as a demotion.

Trudeau has acknowledged that he put in a good word on the firm’s behalf with Wilson-Raybould, but insists that he always maintained the final decision on the case was hers and hers alone.

Fortunately for Canadians who agree with Rempel, it’s very possible that Trudeau – who has so far resisted calls to resign – won’t be in power much longer, as the scandal has cost Trudeau’s liberals the lead in the polls for the October election.

 

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