The Greek Tragedy Continues

If you think the last two weeks on the EU vs Greece battle were brutal, "you ain't seen nothing yet," to quote Al Jolsen. ~~~~~ The EU leaders involved in last weekend's epic negotiations said on Monday morning as the third Greek bailout terns were announced that the worst crisis in the EU's history had been averted. Jean-Claude Juncker, the head of the European Commission said the risk of Greece leaving the Eurozone had been averted. "There will not be a 'Grexit'," he said, referring to the widespread fear that if there had been no deal, Greece could have crashed out of the Eurozone. Juncker added : "In this compromise, there are no winners and no losers....I don't think the Greek people have been humiliated, nor that the other Europeans have lost face. It is a typical European arrangement." Greek Prime Minister Alexis Tsipras said that after a "tough battle," Greece had secured a "growth package" and debt restructuring. Tsipras also said he had the "belief and the hope that...the possibility of 'Grexit' is in the past. The deal is difficult but we averted the pursuit to move state assets abroad. We averted the plan for a financial strangulation and for the collapse of the banking system." ~~~~~ But, Greece will now have to pass reforms demanded by the Eurozone by the end of the day today in order tor receive up to €86 billion of financing for Greece over three years. The reforns are carbon copies of the bailout deal the Eurozone and its troika - the EC, ECB and IMF - has been offering to Greece since Prime Minister Tsipras won the Greek election in January. The reform packages that the Greek Parliament must ratify before the end of today are : **VAT changes - top rate of 23% to extend to processed food, restaurants etc...13% to cover fresh food, energy bills, water and hotel stays, 6% for medicines and books. **VAT discount of 30% to be abolished on islands, but remotest islands to keep discount until next year. **Corporation tax raised from 26% to 29% for small companies. **Luxury tax for big cars, boats and swimming pools up from 10% to 13%. **Farmers' tax up from 13% to 26%. **Early retirement to end (phased in by 2022) with retirement age raised to 67. And no possibility of debt relief. ~~~~~ This reform deal has left many Greeks feeling humiliated and across the political spectrun there is talk of "surrender" -- especially because the Eurozone group included in the agreement a €50 billion Greece-based fund that will privatize or manage Greek public assets, including €25 billion to recapitalize banks. The assets will be in a trust fund beyond government reach, to be sold off by the EU primarily to pay down debt. In a gesture to Greece, €12.5 billion of the proceeds would go to investment in Greece, according to German Chancellor Merkel. This was seen by some Eurozone leaders as Germany trying to make Geeece "a German protectorate" because Germany had originally wanted its own national investment bank to manage the sequestered funds and assets in Germany. Merkel had insisted on this but finally ceded total control over the privatization fund. ~~~~~ And if these reforms and takeovers of Greek sovereignty over its own sovereign assets were not enough, Andreas Dombret, an executive committee member of the European Commission, said today that "bail-in" rules allowing losses from failing banks to be pushed onto bondholders and even large depositors should be introduced for Greek banks as soon as possible : "In my view, this instrument (bail-in) should be available as quickly as possible and not just from the mandatory introductory date of January 1 2016." This means that the EU is already thinking about treating Greek banks like it treated Cypriot banks -- by taking money from Greek citizens and others who have deposits in Greek banks to help pay for its loans to Greece. ~~~~~ Many members of the Tsipras coalition are angry and refusing to vote for what they see as blackmail by the EU. They see the Greek economy under increasing, terminal strain, with businesses closing and others struggling to pay suppliers. They see the ECB maintaining Greek banks at near-failure levels of liquidity. The terms imposed by lenders led by Germany forced Prime Minister Alexis Tsipras to abandon promises of ending austerity and are now fracturing his government. "Clearly the Europe of austerity has won," Greece's Reform Minister George Katrougalos said."Either we are going to accept these draconian measures or it is the sudden death of our economy through the continuation of the closure of the banks. So it is an agreement that was practically forced on us." Labour Minister Panos Skourletis said the terms were not viable and would lead to new elections this year. ~~~~~ And now we learn that the IMF warned the EU that Greece's public debt was now "highly unsustainable" and urged debt relief on a scale "well beyond what has been under consideration to date." Late on Tuesday, the IMF made public its advice to the Eurogroup of finance ministers at the weekend. That advice included proposals to massively reduce Greece's enormous debt by a write off. The IMF study said that to avoid a write-off, EU countries would have to give Greece 30 years to repay all its European debt, including new loans, and a dramatic extension on the maturity of its debts. The split between the the IMF and Greece's European creditors is significant. One senior IMF official said the fund would only participate in a third bailout for Greece if EU creditors produce "a clear plan," saying the current deal "is by no means a comprehensive, detailed agreement." Further, the IMF gave the report to Eurozone leaders in advance, so they already knew how unhappy the IMF was when they did the deal last weekend. This brings into question the validity of the reform measures demanded by the Eurozone and endorses the kind of debt write-offs the Greek public have been arguing for. It also makes Tsipras's job close to impossible as he tries to hold his party together to pass the reform package. He will undoubtedly rely on moderate and conservative parliament member votes. This will likely lead to an early snap election to replace Tsipras. ~~~~~ So, dear readers, as Greek pharmacists and public workers strike and Alexis Tsipras sees several key members resign from his cabinet, the Greek Parliament is now in session and will decide tonight on Greece's future. Whatever the outcome, one thing is sure. Greece is in a worse position financially and fiscally to carry out Bailout 3 than it was to carry out Bailout 2 -- the EU has crippled Greece, led by Germany and its Chancellor, Angela Merkel. The Greek tragedy winds its way to an end that promises economic collapse, bank failure and bankruptcy. Merkel, Germany, northern Europe and the ECB know this. The IMF told them. What is the EU's game plan? To destroy the smallest, weakest Eurozone member state. Why? We have no idea. Unless it is pure hatred for an ancient culture that manages its society differently and that their recent northern souls cannot understand. They would do well to consider that Pericles led the Athenian democracy when northern European Germanic tribes were living in huts worshipping Druidic gods.