German Vice Chancellor Sigmar Gabriel Sunday warned debt-hit Greece that patience is running out across Europe as Athens struggles to reach a deal with its creditors to avoid default.
"We want to help Greece and keep it in the euro. However, not just time is running out but also, everywhere in Europe, patience," Gabriel wrote in a commentary for the mass-circulation Bild daily.
"All over Europe there is a growing sentiment: Enough!"
The warning was unusually blunt for Gabriel, the head of the center-left Social Democrats, which are junior coalition partners to Chancellor Angela Merkel's conservatives.
Gabriel, who is also economy minister, attacked Greece's negotiating process and warned that Germany, seen as Europe's effective paymaster, could stop supporting Athens.
"Every new supposed 'final attempts' to reach agreement are beginning to make the entire process look ridiculous," he wrote, according to an excerpt from the article to be published Monday.
"Ever more people feel they are being led around by the nose by the Greek government.
"If the agreement doesn't come soon, it will threaten to snap the patience of many in Europe," Gabriel warned.
"The game theorists of the Greek government are just about to gamble away the future of their country. And that of Europe as well."- (from ekathimerini.com)
It makes you wonder if Greece is serious at all, Its not looking good and Greece and the creditors are not thinking that this is going to happen:
Greece is under heavy pressure to convince its creditors it can hit ambitious fiscal targets ahead of scheduled meetings on Monday of eurozone finance ministers and, later in the day, of eurozone heads of government.
European leaders have said Monday’s high-level meetings won’t reach any agreements unless Greece first presents convincing policy measures to inspectors from the International Monetary Fund, the European Union Commission and the European Central Bank, which oversee Greece’s bailout program.
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Finding measures to reach the fiscal targets creditors want has become crucial for unlocking fresh bailout financing for Greece, without which the country would have to default on its debts in coming weeks, including on loan repayments to the IMF on June 30 and on bonds held by the European Central Bank in July and August.
Failure to agree on Monday could quickly lead to capital controls in Greece, European officials said. The officials said a majority of members on the ECB’s governing council is increasingly impatient with what it sees as Mr. Tsipras’s stonewalling and anti-creditor rhetoric at a time when deposits are fleeing from Greek banks at a rate of around €1 billion a day. Greece’s central bank, which is a member of the ECB, is having to cover that deposit flight.
A summit failure on Monday could well prompt the ECB’s governing council to curb theprovision of central-bank liquidity to Greek banks as early as this coming week, the officials said. Such a move would force Greece to impose capital controls that limit bank withdrawals, money transfers abroad and other financial transactions, likely plunging Greece’s economy deeper into recession.
The new Greek proposals include elimination of many tax breaks, including scrapping exemptions on taxes on income from labor and capital, as well as levies on fuel, retail sales and other items. The extra revenues that this move could achieve, some officials hope, would allow shallower cuts in government pension spending, which could make the overall package less politically painful for the Athens.
Under one version of the proposal, pension spending would be lowered by 0.5% of gross domestic product a year, compared with 1% of GDP under a proposed package of policy measures put forward by the IMF, the EU Commission and ECB in early June. That policy package was compiled after a summit of key European leaders in Berlin on June 2, where German Chancellor Angela Merkel and others decided to present Mr. Tsipras with the outlines of their final offer.
The Greek premier was told he could only change measures in that proposed package if he offers alternative measures that achieve the same fiscal effect. Mr. Tsipras has repeatedly denounced measures demanded by the creditors.
German Chancellor Angela Merkel, pictured above with Greek Prime Minister Alexis Tsipras at the Eastern Partnership summit in Riga, Latvia, on May 22, is central to the talks about Greece’s bailout. PHOTO: JAKUB DOSPIVA/CTK/ZUMA PRESS
Meanwhile, his government’s proposed alternative measures up to now have been dismissed by lenders as falling a long way short of what is needed to put Greece’s public finances on a sustainable footing. In particular, the IMF, with German backing, has insisted that major cuts in pension spending are unavoidable.
A cull of tax exemptions that Greece’s cabinet will consider on Sunday would not only allow for smaller pension cuts, supporters of the idea hope, but would also allow Greece to avoid imposing a hefty increase in value-added tax on electricity—another measure the IMF and EU have proposed but which is politically hard to sell for Syriza.
It wasn’t clear late on Saturday whether Mr. Tsipras had thrown his support behind the proposal from the pragmatic members of his government. Mr. Tsipras, in recent weeks, has shown defiance toward Greece’s main creditors—other eurozone governments and the IMF,—rejecting their demands and insisting creditors, not Athens, produce more-acceptable proposals.
Some members of Syriza and of the cabinet, including Finance Minister Yanis Varoufakis,have continued to press Mr. Tsipras to stand firm. The hard-line camp in Athens argues that creditors, led by German Chancellor Angela Merkel, will offer Greece a more-lenient deal at the last minute rather than countenance a Greek debt default and exit from the eurozone.
Eliminating all tax exemptions in Greece’s complicated tax code could raise around €3 billion a year in extra revenue, the Bank of Greece estimated in its recent annual report.
Greek governments of all political persuasions have so far shied away from scrapping tax exemptions en masse for fear of angering various interest groups that benefit from the breaks, ranging from farmers to hoteliers on Greek islands. Mr. Tsipras’s left-wing Syriza party has also shunned this option so far.
Nor was it clear late Saturday whether the latest Greek proposals, if endorsed by the cabinet, would convince officials from the IMF, EU Commission and ECB. Those three institutions have complained for weeks that Athens hasn’t put forward sufficiently concrete or comprehensive policy overhauls.
In the past, those institutions have signaled to Greece that they were open to scrapping tax exemptions, but they have also warned that Greece’s economy is already heavily taxed and that spending cuts, including to pensions, are also unavoidable.
Ok, lets check with the street in Greece. What is the atmosphere over there? What are the people thinking? As it turns out they are thinking it is the end, but screw it, Im getting a drink:
Greeks do not know for certain if their banks will stay open next week, nor even whether euros or drachmas will emerge from cash machines beyond this month.
But in the graffiti-stained streets of Athens, alongside the shuttered windows of countless abandoned shops, the bars and restaurants are full of people trying to forget their troubles.
“You do get the sense that it’s like the last days of Pompeii,” said Marie-Therese Iatrou, a 49-year-old Athenian. “It’s like ‘sod it, I’m going to go out and have a drink with my friends’. Someone said they haven’t paid for their electricity or their rent, but they’re going to go out.”
As Greece moves inexorably towards the peak of its national crisis, the atmosphere in Athens says much about the ordeal of the country’s people. There are no visible signs of panic - at least not so far. No queues have formed outside banks; no crowds are panic-buying from supermarkets.
Instead, ordinary Greeks are overcome by weariness and fatalism. “There’s a level of fatigue and cynicism because this has been going on for five years now,” said Ms Iatrou. “We’re reaching the stage of resignation: that whatever is going to happen - let it happen.”
But what happens if things collapse? It wont be good. As a matter of fact, it would kind of be like what happened to our country during the crash of 2008, but with Greece not being able to pull out of the fatal dive as we did:
And what could happen in the coming days is the macroeconomic version of an avalanche. The worst-case scenario would begin with a run on the banks, forcing the government to impose capital controls and restrict all withdrawals.
The first boulders of this particular landslide may already have tumbled down the mountainside. Last Friday alone, Greeks withdrew €1.5 billion (£1.1 billion) from their accounts, bringing the total spirited out of the banking system last week to €5 billion (£3.6 billion).
The European Central Bank has responded with an emergency injection of €1.75 billion (£1.2 billion), which should ensure that Greek banks open their doors on Monday. What happens from Tuesday onwards is anyone’s guess.
The next stage of the avalanche would be a failure to repay €1.5 billion (£1.1 billion) to the International Monetary Fund by the due date of 30 June. If that happens, events could then unfold with inexorable power. A formal default could make Greece’s membership of the euro – and perhaps even of the European Union - impossible to sustain.
So it is that ordinary people must endure a profound sense of uncertainty. “It’s like living with lead in your stomach,” said Ms Iatrou. “You can’t plan ahead: you can’t be secure in the knowledge that you will get your pension. We simply don’t know what’s going to happen next week or next month.”
So to sum up this is the way I look at it:
Greece is like a 10 year old kid who has a lemonaid stand who was having a very bad time running it and now is billions in debt. The EU is like a limo pulling up with 40 and 50 something bankers getting out and offering to bail out the kid and handing him a 330 page contract and telling him to sign it without a lawyer. The kid desperate for funds signs it and is now on the hook. 2 years later still running his lemonaid stand like a bozo losing all kinds of money he is out of money again in part to to the high payments hes been making to the suits. They sit him down at a table. "How are you going to pay us?" The kid is hemming and hawing, stalling, and wondering if that 200 dollars in birthday money is going to help.
So what do I think is going to happen? I don't think a viable deal is going to be reached on Monday. Let me restate. I think there is a 65% chance there is no deal and the markets tumble. Then tumble some more as things sink in and the headlines peel off day by day how there is an emergency injection of funds, then greece is out again, the atms turn off, there is foodlines, etc. Panic. There is also a 35% chance that a barebones restructure deal is tentatively put in place that puts a bandaid over things for a few weeks, then the shit hits the fan later in July. Either way, not good, but one has drop this week, the other a drift down slower next week.
So as for the QQQ we will have to see how this news is shoehorned into the technicals of the stock and its reaction over the next few days. Then I will return to charting when we are in normal tech action with the markets not being news driven as they are now.
Stay tuned for tomorrow, when I go over some stock pics for the upcoming week.
Tradinginsider
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